Chapter 1 Flashcards
(36 cards)
Appraisal
An estimation of a property’s value. Usually done by a licensed professional.
Brokerage
The Business of Bringing people together in a real estate transaction.
Commercial
The types of properties that include offices, stores parking lots and more
Development
The term for the construction of improvements upon the land
Elevation Certificate
Insurance agents are required to obtain one of these on any property before issuing quotes for flood insurance.
Financing
Pledging of real property and collateral for the repayment of a loan though a mortgage or deed of trust.
Federal Deposit Insurance Corporation
This agency can fine and withdraw its insurance from lenders that do not carry flood insurance on required mortgages
What does CO mean?
Certificate of Occupancy
Lanie owns a home in the mountains. If the home’s appraised market value is $540,000 and the loan balance is $135,000, what is the loan to value ratio?
25%
Lori has agreed to transact real estate business on behalf of Alex with Alex’s authority. Lori is:
An Agent
What fiduciary duty requires the agent to act with care with respect to handling funds received on behalf of the principal?
Accountability
Another name for an easement is:
Right of way
Halley owns 25 acres of land in a residential area and wants to develop a real estate complex containing 50 single family homes. What type of mortgage can she obtain that will permit her to pay it off as she sells each home?
Blanket
Which of the following is not true about the 1988 Amendment to the Fair Housing Act adding protected classes to the law?
Elderly persons were not added to law. However, senior citizen housing is exempt from the Fair Housing Act if it complies with the exemption requirements. By restricting tenants to people 55 and over, an exemption to the Fair Housing Act could apply.
What is another name for swamps, marshes and bogs?
Wetland
Paula enters into a contract for the purchase of Jordan’s home. Paula applies for a mortgage. The contract requires her to get a document from her mortgage lender stating that the lender will be loaning her the necessary funds. What is that document called?
A commitment
Ownership of real property for an undetermined length of time is called:
A freehold estate
What is not a mixed-use property?
An outlet center with clothing and furniture stores are similar commercial uses, so no mixed use exists. A building with a steakhouse on the first floor and offices on the second floor combine two separate uses, restaurant and office space. A shipping warehouse adjoining an office suite center combine a warehouse and office space. A religious prayer facility with residential housing above it combines a religious use with a residential use.
Barbali manages a commercial office building. One of the tenants contacts her to complain about a broken door lock. What type of maintenance is necessary to repair the lock?
Corrective Maintenance
Biff is hired by owner Gilligan to oversee a residential property complex, including supervising complex employees and maintenance, but he has limited authority. Biff is the:
Property Manager
Julie is looking to buy her first home. She locates one and her offer is accepted. Julie applies for a mortgage. She is told that she can deduct her mortgage interest from her income because she has bought a(n) _____________ home.
A qualified home. Which is a primary or main home for mortgage interest deduction purposes.
Helga purchases an investment property in the city for $750,000. In the first year, the property generated an annual cash flow of $75,000, but she sustains a $25,000 tax loss that she can apply against the income of a very successful car wash that she owns. If Helga is in the 35% tax bracket, what is her after-tax cash flow related to the city property?
$35,000. $75,000 (annual cash flow) + $25,000 (tax loss) = $100,000 x .35 = $35,000. After-tax cash flow is calculated by adding back the tax loss to the income and then multiplying by the tax rate. A tax savings is possible when a tax loss can reduce the taxable income of a separate investment.
The profit realized from the sale of real estate held for 3 years is:
Long term capital gains. This represents the profits on a capital investment, such as real estate. The profit realized from the sale of real estate held for 3 years is long term capital gains. Long term capital gains are profits on assets that are owned for more than 12 months. Short term capital gains are profits on assets that are owned for 12 months or less. Profit on long term capital gains is subject to a reduced tax rate and is not taxed as ordinary gross income, but profit on short term capital gains is taxed as ordinary gross income.
Lev owns a home. Francois is a real estate agent who has visited Lev to try to list Lev’s home for sale, but Lev refuses. Lev nonetheless permits Francois to show 3 prospective purchasers his home. Has an agency been created?
Yes. An agency by estoppel.
An agency by estoppel, which is an implied agency, was created since Lev, the principal, did not stop Francois, the agent, from representing Lev’s interests. An implied agency is formed based on the words or actions of the agent and principal that evidences an intent to form the agency. An express agency is formed through an oral or written agreement. An agency does not necessarily need to be created through a written agreement. A listing agreement is an example of an express agency.
