Rockwell Real Estate Exam WA 2 Flashcards

Rockwell Real Estate Exam WA 2 Flashcards PMI is private mortgage insurance that protects the lender in case ofA. fireB. water damageC. default by the borrowerD. None of the above

• default by the borrowerPMI is private mortgage that

protects the lender in the event that the borrower defaults on the loan.In a VA transaction, who pays the points?A. The buyerB.The sellerC. As negotiated between the buyer and sellerD.The government

• As negotiated between the buyer and sellerDiscounted

points paid in a VA loan transaction may be paid by the buyer, the seller, or a third party, depending on what the parties negotiate.A principal is not liable for the act of an agent or subagent

unless:A. the agent acted without authorityB. the act had

serious financial consequences for the principalC. the principal participated in or authorized the actD. None of the above

• the principal participated in or authorized the actA

principal usually won't be held liable for the act of an agent or subagent unless the principal authorized or participated in the act. The principal may also be held liable if she benefited from the agent's act and the injured party wont be able to obtain compensation from the agent.If a seller wants to help a prospective buyer qualify for an institutional loan, which of the following options will reduce the buyer's interest rate?A. BuydownB. Equity ExchangeC.Lease/optionD. Silent wrap

• BuydownWith a buydown, the seller can lower the

interest rate on the buyer's loan, which may allow the buyer to get a loan he might not otherwise qualify for.Once a veteran has used his VA loan entitlement, he can

get another VA loan:A. if the house is sold and the old loan

is paid in fullB. If another veteran substitutes his or her entitlementC. under no circumstanceD. Either A or B

• Either A or BA veteran's loan entitlement is restored if

he sells the property and pays off the VA loan balance, or if the property is sold to another eligible veteran who substitutes her/his entitlement for the seller's entitlement.When a buyer is ready to make an offer, who may OT prepare the offer?A. The buyerB. The buyer's lawyerC. The buyer's agent, writing the terms of the contract himselfD.The buyer's agent, using a pre-printed purchase and sale agreement form

• The buyer's agent, writing the terms of the contract

himselfA real estate agent is not permitted to draft all the provision of a contract for a buyer (this would constitute the unauthorized practice of law). However, a real estate agent can fill out a pre-printed purchase and sale agreement.If a contingency is not fulfilled despite a good faith effort to fulfill it, what may the person who benefits from the contingency do?A. Terminate the agreement and have the earnest money deposit returnedB. Waive the contingency and continue with the agreementC. Sue the other party for a breach of contractD. Either A or B

• Either A or BThe party who benefits from a contingency

may, if the contingency is not fulfilled, terminate the agreement or waive the contingency and complete the purchase anyway Which of the following is not usually a cost to the buyer?A.Origination feeB. Purchase priceC. AppraisalD. Excise tax

• Excise taxThe excise tax on the sales price of the

property is paid to the state by the seller.

APR refers to:A. area property reportB. annual percentage

rateC. agency passing rateD. actual percentage rule

• annual percentage rateThe "APR" is the annual

percentage rate: all of the charges involved in a loan,

expressed as an annual percentage of the loan amount.A seller offers to pay six discount points on behalf of the buyers. This will reduce the buyers' interest rate from 9% to

8%. This is known as a:A. lease/optionB. seller secondC.

buydownD. two-step mortgage

• buydownIn a buydown, the seller pays points to the

lender. The lender will then charge a lower interest rate to the buyer, perhaps enabling them to afford a house they would otherwise not be able to purchase.

Disclosure of and consent to a dual agency:A. are not

required in a transaction where both agents work for the same brokerageB. must occur only after the parties sign the purchase and sale agreementC. must be in writingD.allow the agent to promote the interest of one party over that of another party

• must be in writingDual agency is legal in Washington

only if it disclosed and consented to in writing.

Excise tax is usually paid by the:A. buyerB. sellerC.

lenderD. borrower

• sellerthe excise tax is tax imposed on the sale of the

property A typical listing agreement does NOT authorize the listing

agent to:A. accept an offer to purchase the propertyB.

submit offers to purchase the propertyC. accept earnest money deposits from prospective buyers on behalf of the sellerD. act as the seller's agent

• accept an offer to purchase the propertyUnder a typical

listing agreement, the listing agent may present offers to the seller, but only the seller can accept an offer.When a listing agent transfers his affiliation to another

brokerage:A. the agent automatically takes his listing with

himB. that agent's listings remain with the brokerage, since the listing agreement is a contract between the seller and the firmC. the listing agent is entitled to a referral fee if the listing sells after the transferD. None of the above

• the agent's listings remain with the brokerage, since the

listing agreement is a contract between the seller and the firmA listing agreement is a contract between a seller and a brokerage, and will remain with the brokerage firm even if the licensee who obtained the listing goes to work for another brokerage.If a seller does not want to sell to a member of a protected

class, the agent should:A. take steps to accommodate the

seller's wishesB. include this information in the Comments section of the listingC. explain the fair housing laws to the sellerD. All of the above

• explain the fair housing laws to the sellerIf a seller

indicated an intent to discriminate, the agent should explain the fair housing laws and if necessary, decline to take the listing. Anything the agent does to accommodate discriminatory behavior by the seller may be construed as discriminatory behavior on the part of the agent.Which of the following items is likeliest to cause title to be unmarketable?A. recorded CC&RsB. Adverse possessionC. An encroachment that does not materially affect the property's valueD. Reserved mineral rights

• Adverse possessionAdverse possession would typically

cause title to be unmarketable. The purchase and sale agreement from states that CC&Rs of record, easements, and encroachments that do not interfere with the property's use or value, and reserved oil or mineral rights do not render title unmarketable.

An agency relationship may be terminated by:A. notice

from the agentB. notice from the principalC. mutual agreementD. Any of the above

• Any of the aboveAn agency relationship may be

terminated by the unilateral action of either the buyer or the agent, or by mutual agreement between the parties.

A dual agent must:A. disclose each party's negotiating

position to the other partyB. keep each party's negotiating position confidentialC. act only as a facilitator, with no agency duties to either partyD. receive equal compensation from the two parties

• keep each party's negotiating position confidentialUnder

Washington law, a dual agent must not disclose either principal's confidential information to the other. Information about each party's negotiating position (for example, the highest price the buyer would actually be willing to pay) does not fall within the definition of material facts; as a result, a dual agent can and must keep that information confidential.A large earnest money depositA. guarantees the buyer's performanceB. indicates the buyer's good faith in making an offerC. provides full compensation to the agent if the

buyer defaultsD. All of the above

• indicates the buyer's good faith in making an offerA

significant earnest money deposit indicates to the seller that the buyer is serious about the purchase. It does not,

however, guarantee the buyer's performance or provide full compensation to the agent should the buyer default.

Pest inspections are usually required when:A. Once every

few years there is water in the basementB. there is sawdust-like material below parts of the foundation's wooden structureC. the home has a crawl spaceD. All of the above

• there is sawdust-like material below parts of the

foundation's wooden structureEvidence of wood-boring insects in the property's structure usually means that a pest inspection is required. A pest inspector looks for damage caused by wood-eating insects as a well as wood-damaging organisms such a fungi.Advertisements for residential property should always

include:A. models of a different ethnic origin than the

residents of the neighborhood you are advertising inB.models from the same ethnic group as the residents of the neighborhood you are advertising inC. the Equal Housing Opportunity logo or sloganD. a specific explanation of the standards of the community

• the Equal Housing Opportunity logo or

sloganRegardless of the type of advertising used to market a home, it should always include the Equal Housing Opportunity logo or slogan.

For a property to be useful as a comparable, it should:A. be

in the same neighborhood as the subject propertyB. be of a similar age and quality as the subject propertyC. have sold within the last six monthsD. All of the above

• All of the aboveA comparable should be in the same

location and of similar age, style, and quality as the subject property. Comparables should have sold in the last six months, although older sales may be used if no better options are available and adjustments for changing market conditions are made.

A listing agreement is a contract between the seller and:

the licensee taking the listingB. the firm the licensee taking the listing works forC. the multiple listing serviceD. Any of the above

• The firm the licensee taking the listing works forEven

though an affiliated licensee is the person who actually takes the listing agreement is always between the seller and the brokerage firm.All of the following are necessary elements of a

contingency, except:A. the deadline by which point the

condition must be met or waivedB. the rights of the parties if the condition isn't met or waived by the deadlineC. a clear description of how the condition can be metD. the damage that the party unable to fulfill the contingency will pay the other party

• the damage that the party unable to fulfill the

contingency will pay the other partyA contingency usually benefits the party who is trying to fulfill it, by allowing that party to terminate the agreement if the condition cannot be met. The benefiting party won't be required to pay damages if the condition is not met.

The amount of earnest money deposit:A. is always equal to

5% of the purchase priceB. may never exceed $5,000C.represents two months' salary from the buyerD. depends on the circumstances

• depends on the circumstancesThere is no standard

earnest money deposit; its size depends on the circumstances.

On a settlement statement, the debits represent:A. the

amount of financing in the transactionB. money to be paid to the partyC. costs that the party must pay at closingD.costs that the buyer must pay to the seller

• costs that the party must pay at closingDebits are a cost

that a party must pay at closing, either to the other party or to a third party.Which document should be prepared if the buyer plans to take possession before the closing date?A. Rental agreementB. Sale of buyer's home contingencyC. Bump noticeD. Backup offer

• Rental agreementIf the parties plan to transfer

possession of the property either before or after the closing date, they should sign a rental agreement that includes the rental terms and the amount of rent.