Instructions: Circle the correct answer. Be sure to answer all questions.
1. A real estate broker acting as the agent of the seller
a) can make a profit, if possible, in addition to the commission
b) is obligated to render faithful service to the seller
c) can accept a commission from the buyer without the seller's approval
d) can agree to a change in price without the seller's approval
2. Which of the following would probably NOT be included in a list of deed restrictions?
a) minimum size of buildings to be constructed
b) types of buildings that may be constructed
c) activities that are not to be conducted at the site
d) allowable ethnic origins of purchasers
3. A landowner who wants to use the property in a manner that is prohibited by a local zoning ordinance can try to obtain which of the following from the municipality?
a) Occupancy permit
b) Variance
c) Downzoning
d) Dezoning
4. When a person buys a house using a mortgage loan, the difference between the amount owed on the property and what it is worth represents the homeowner's
a) tax basis
b) capital gain
c) replacement cost
d) equity
5. A legally enforceable agreement under which two parties agree to do something for each other is known as a(n)
a) option agreement
b) legal promise
c) valid contract
d) escrow agreement
6. The statute of frauds which requires that a contract must be in writing to be enforceable applies to
a) all real estate contracts of any sort
b) bilateral contracts only
c) all real estate sales agreements
d) all contracts
7. A suit for specific performance filed by a purchaser under a real estate contract asks for
a) a new contract
b) a deficiency judgment
c) money damages
d) the conveyance of the property
8. Which of the following is NOT one of the essentials of a valid contract?
a) consideration
b) legality of object
c) earnest money
d) offer and acceptance
9. A homeowner's insurance policy may cover which of the following claims
a) negligence of homeowner to another party off the premises
b) slip and fall on premises
c) dog bite
d) all the above
10. The person who makes a will is called
a) executor
b) attorney-in-fact
c) a testator
d) an administrator
11. The parole evidence rule
a) allows evidence of writings that are consistent and merely explain the terms of the writing
b) excludes oral evidence that contradict the terms of writing
c) both a&b
d) none of the above
12. First time homebuyer credit:
a) expired May 1, 2010, except for certain members of military foreign service & intelligence community
b) was up to $8,000.00 credit for 1st time home buyers
c) wass up to $6,500.00 credit for 2nd time home buyer who live in the new home for 5 consecutive years of the last 8
d) all of the above
13. Khalif signed an Agreement of Sale to purchase a home for $285,000.00. The seller refused to sign that agreement. Which is true:
a) buyer needs to revoke his offer before it is accepted if he does not want to buy now
b) seller may still owe commission
c) buyer can get specific performance and force seller to sign
d) all of the above
14. According to a recent article discussed in class, the taxpayer credit applicability was questioned concerning:
a) whether 5 consecutive years means 60 consecutive months
b) whether a couple who makes close to one million dollars may take 1/2 of the credit if wife claims less than $100,000.00 as her earnings
c) both A & B
d) none of the above
15. Seller G listed her residence with broker D. Broker D secured an offer at full price and terms of the listing from buyers who were willing and able to pay cash for the property. Then seller G rejected the buyers' offer. In this situation seller G
a) must sell her property
b) is liable to the buyers for specific performance
c) owes commission to broker D
d) is liable to the buyers for compensatory damages
16. Which is a similarity between an open listing and exclusive agency listing?
a) both grant an exclusive right to sell to whichever broker procures a buyer for the seller's property
b) under both the seller avoids paying the broker a commission is the seller sells the property himself or herself
c) under both the seller is guaranteed to net a certain amount
d) under both the broker earns a commission regardless of who sells the property, as long as it is sold within the listing period
17. The parties to the listing contract are
a) the seller and the salesperson
b) the broker and the salesperson
c) the seller and the buyer
d) the seller and the broker
18. A comparative market analysis
a) can help the seller price the property
b) is the same as an appraisal
c) should not be retained in the property's listing file
d) by law must be completed for each listing taken
19. A property was listed with a broker who belonged to a multiple-listing service and was sold by another member broker for $53,500. The total commission was 6 percent of the sale price. The selling broker received 60 percent of the commission, and the listing broker received the balance. What was the listing broker's commission?
a) $1,926
b) $1,464
c) $2,142
d) $1,284
20. A real estate purchaser is said to have equitable title when
a) the sales contract is signed by both buyer and seller
b) the transaction is closed
c) escrow is opened
d) a contract for deed is paid off
21. When the buyer promises to purchase the seller's property only if he can sell his present home, the buyer's protection from owning two homes is
a) an escrow
b) an option
c) an equitable title
d) a contingency
22. An option to purchase binds
a) the buyer only
b) the seller only
c) neither buyer nor seller
d) bother buyer and seller
23. The purchaser of real estate under an installment contract
a) generally pays no interest charge
b) receives title immediately
c) is not required to pay property taxes for the duration of the contract
d) is called a vendee
24. The Ahmeds offer in writing to purchase a house for $120,000, including its draperies, with the offer to expire on Saturday at noon. The Whitmans reply in writing on Thursday, accepting the $120,000 offer but excluding the draperies. On Friday, while the Ahmeds are considering this counteroffer, the Whitmans decide to accept the original offer, draperies included, and state that in writing. At this point, the Ahmeds
a) must buy the house and have the right to insist on the draperies
b) are not bound to buy
c) must buy the house and but are not entitled to the draperies
d) must buy the house and can deduct the value of the draperies from the $120,000
25. Quentin makes an offer to purchase certain property listed with broker M and leaves a deposit with broker M to show good faith. M should
a) immediately apply the deposit to the listing expenses
b) put the deposit in an account as provided by state law
c) give the deposit to the seller when the offer is presented
d) put the deposit in her checking account
26. A buyer wants to make an offer to purchase a house that she suspects has a wet basement. The buyer is afraid that the house may be sold to someone else before she has a chance to get information about the structure. How should she proceed?
a) ask the real estate salesperson to guarantee that the basement is dry
b) ask the seller to repair the basement before she makes an offer
c) make an offer to purchase that is contingent on a structural inspection
d) hire a contractor to give an estimate for repair before making an offer
27. . An agreement of sale in Pennsylvania must contain all of the following EXCEPT a
a) disclosure of whom the broker represents
b) disclosure that the rate of commission has been negotiated
c) statement about the recovery fund
d) statement for a house on a lot zoned for single-family dwellings
28. Estimated statements of closing costs must be provided to buyers and sellers
a) prior to settlement
b) after acceptance of an offer
c) within 24 hours of communication of acceptance of an offer
d) prior to the signature on the agreement of sale
29. A buyer makes an offer to purchase. The broker cannot locate the seller to present the offer. In the meantime, the broker receives an offer for a higher price from another buyer. How should the broker proceed?
a) decide which offer is best to present to the seller
b) present the offer for the higher price
c) call the first buyer and tell the buyer the broker cannot present the offer because it is too low
d) present both offers to the seller
30. Rhonda purchased her home for cash 30 years ago. Today, Rhonda receives monthly checks from the bank that supplement her income. Rhonda most likely has obtained a(n)
a) reverse-annuity mortgage
b) adjustable-rate mortgage
c) shared-appreciation mortgage
d) overriding deed of trust
31. Which of the following characteristics is true of a fixed-rate home loan that is amortized according to the original payment schedule?
a) the amount of interest to be paid is predetermined
b) the interest rate change may be based on an index
c) the loan cannot be sold in the secondary market
d) the monthly payment amount will fluctuate each month
32. In a loan that requires periodic payments that do not fully amortize the loan balance by the final payment, what term best describes the final payment?
a) adjustment payment
b) acceleration payment
c) variable payment
d) balloon payment
33. Funds for Federal Housing Administration (FHA) loans are usually provided by
a) the seller
b) the Federal Housing Administration (FHA)
c) the Federal Reserve
d) qualified lenders
34. Under the provisions of the Truth-in-Lending Act (Regulation Z), the annual percentage rate (APR) of a finance charge includes all of the following components EXCEPT
a) the loan origination fee
b) the loan interest rate
c) discount points
d) the broker's commission
35. A home is purchased using a fixed-rate, fully amortized mortgage loan. Which of the following is true regarding this mortgage?
a) each payment amount is the same
b) the principal amount in each payment is greater than the interest amount
c) a balloon payment will be made at the end of the loan
d) each payment reduces the principal by the same amount
36. A borrower obtains a mortgage loan to make repairs on her home. The mortgage document secures the amount of the loan as well as any future funds advanced to the borrower by the lender. This borrower has obtained a(n)
a) wraparound mortgage
b) open-end loan
c) blanket loan
d) growing equity mortgage
37. The federal Equal Credit Opportunity Act prohibits lenders from discriminating against potential borrowers on the basis of all of the following EXCEPT
a) amount of income
b) sex
c) dependence on public assistance
d) race
38. Which of the following is an example of a conventional loan?
a) an installment sale
b) a mortgage loan insured by the Federal Housing Administration
c) a 60 percent loan-to-value ratio first mortgage loan secured through a credit union
d) a loan obtained through a private lender with a VA guarantee
39. In an adjustable-rate mortgage loan, the interest rate is tied to an objection economic indicator called
a(n)
a) index
b) mortgage factor
c) reserve requirement
d) discount rate
40. Which of the following is true of real estate closings in Pennsylvania?
a) closings are generally conducted by real estate salespeople
b) the buyer usually receives the rents for the day of closing
c) the seller pays the brokers' fees
d) the buyer pays for title insurance
41. Legal title passes from the seller to the buyer
a) on the date of execution of the deed
b) when the closing statement has been signed by the parties
c) when the deed is recorded
d) when the deed is delivered and accepted
42. Which of the following would a lender generally require to be produced at the closing?
a) title insurance policy
b) market value appraisal
c) application
d) credit report
43. When an item to be prorated is owed but has not been paid by the seller,
a) the amount owed is a credit to the buyer
b) the amount owed is a debit to the seller
c) the amount owed is a debit to the buyer
d) both a & b
44. The RESPA Uniform Settlement Statement must be used to illustrate all settlement charges for
a) every real estate transaction
b) transactions financed by VA and FHA loans only
c) residential transactions financed by federally related mortgage loans
d) all transactions involving commercial property
45. The seller collected rent of $400, payable in advance, from the tenant on August 1. At the closing on August 15, the
a) seller owes the buyer $400
b) buyer owes the seller $400
c) seller owes the buyer $200
d) Buyer owes the seller $200
46. Security deposits should be listed on a closing statement as a credit to the
a) buyer
b) seller
c) lender
d) broker
47. A building was bought for $50,000, with 10 percent down and a loan for the balance. If the lender charged the buyer two discount points, how much cash did the buyer need at closing to pay the fee?
a) $6,900
b) $5,900
c) $5,200
d) $900
48. A buyer of a $50,000 home has paid $2,000 in earnest money and has a loan commitment for 70 percen of the purchase price. How much more cash does the buyer need to complete the transaction provided there are no other closing costs?
a) $10,000
b) $13,000
c) $15,000
d) $35,000
49. The Real Estate Settlement Procedures Act (RESPA) applies to the activities of
a) a broker selling commercial and office buildings
b) security salespersons selling limited partnerships
c) Ginnie Mae or Fannie Mae when purchasing loans
d) lenders financing the purchase of a borrower's residence
50. The purpose of RESPA is to
a) make sure buyers do not borrow more than they can repay
b) make real estate brokers more responsive to buyer's needs
c) prohibit affiliated business arrangements
d) inform buyers about the costs of settling or closing a transaction