Real Estate Practice Natinal

Question 1

If a licensee decides to move to a new area of specialization, _________________________________________________________ is the best way to become competent

Answer 1

hands-on training as an apprentice in a mentoring environment

Question 2

An agent should always refer a client to __________________________ if the licensee is NOT competent to protect the client in a specific situation.

Answer 2

another professional

Question 3

Licensees are specifically prohibited from practicing law without a law license. Examples of this behavior include:

Answer 3

Giving legal interpretations of documents involved in a transaction
Preparing legal documents, such as wills, contracts, deeds, or deeds of trust
Discouraging clients from seeking advice of an attorney in negotiations which involve special terms and conditions
Advising a client on how to take title (ideally before closing)

Question 4

When advising a client to see an attorney, it should be done _____________ a client signs anything he/she does not understand.

Answer 4

before

Question 5

If a client wishes to add terms, conditions, or contingencies to a contract, always recommend they talk to an ____________ to prepare the correct wording.

Answer 5

attorney

Question 6

If a client insists on using his/her own wording or contract form, as long as what they want is legal, you must _____ your client.

Answer 6

obey

Question 7

Due diligence is defined as:

Answer 7

1. A fair, proper, and due degree of care and activity. An expressed or implied requirement in certain real estate contracts stating that a person use good faith efforts to perform obligations under a contract. A buyer who makes an offer contingent on obtaining financing must use due diligence in seeking such financing.
2. A time period in which a buyer is given the opportunity to have experts inspect the property, examine the title, and review the leases to determine whether the property matches the buyer’s needs. The due diligence period usually begins after the contract has been signed and acceptance communicated. If the buyer finds objectionable conditions, he or she typically has the right to withdraw from the purchase prior to expiration of the due diligence period.

Question 8

Requirements of a valid listing include:

Answer 8

-signatures of all the owners and the listing licensee
-legal description of the property
-list price – this must be set by the seller
-definite starting and termination date
-broker compensation

Question 9

Exclusive Right to Sell Listing

Answer 9

-The broker is the exclusive agent and receives the commission even if the seller sells the property himself.
-This type of listing eliminates most procuring cause controversies.
-This is the type of listing a broker wants – The broker will be entitled to a commission no matter who sells the property.
-If a seller sells his own property and owes a commission on the sale, the seller had probably signed an Exclusive Right to Sell Listing.

Question 10

Exclusive Agency Listing

Answer 10

-The broker is the exclusive agent and receives the commission unless the seller sells the property themselves.
-The seller competes with the broker.
-This type of listing is often used by builders who reserve the right to sell new construction through their own sales office without paying a commission.

Question 11

Open listing

Answer 11

-The owner reserves the right to list with as many brokers as they choose.
-They also reserve the right to sell the property themselves and avoid paying a commission.
-Open listings are not found in the MLS.
-Only a broker who brings a written contract will be paid.
-Open listings can be compared to FSBO’s where the owner advertises a willingness to cooperate with licensed agents.

Question 12

Net listing

Answer 12

-All money over the amount the owner wants for the sale of the property is treated as the broker’s commission.
-The Net Listing is illegal in some states.
-Other states have strictly regulated it by setting maximum commissions and requiring brokers to provide a CMA to the seller.

Question 13

A “Buyer Rep” is an employment contract wherein the broker will be the __________ agent.

Answer 13

buyer’s

Question 14

All agency agreements must be ____________ to satisfy the Statute of Frauds.

Answer 14

in writing

Question 15

A property manager is a ________________ with a broad scope of responsibilities and liabilities.

Answer 15

general agent

Question 16

A ____________________agreement is used to create this relationship and define the role and responsibilities of the agent and the owner.

Answer 16

management

Question 17

The property manager will provide ______________ financial reports to the owner and will have annual
__________________.

Answer 17

quarterly, annual

Question 18

Net income is effective __________________ minus _______________.

Answer 18

gross income minus operation expenses

Question 19

Operating expenses DO NOT INCLUDE:

Answer 19

Mortgage payments or debt reduction
Depreciation
Capital improvements or expenditures

Question 20

If the property is a condominium complex, the property manager will address insurance issues accordingly. The complex will have a policy to cover all the _________________ or ____________________

Answer 20

public or common areas

Question 21

Listings, Buyer Representation Agreements and Management Agreements will automatically terminate on the agreement termination date. They can also terminate in a variety of other ways, including:

Answer 21

-Fulfillment of Purpose
-Abandonment or Cancellation by the Broker
-Revocation by your Principal
-Mutual Consent
-Bankruptcy of the Seller or the Broker (Foreclosure)
-Destruction of the Property or Condemnation under Eminent Domain
-A Change in the Property Use by Outside Forces (such as Zoning)
-Death - although sales contracts and leases survive death, service contracts are terminated by the death of either party. The broker and seller are the parties to the listing. The salesperson is not a party; therefore, the death of the salesperson will not terminate a listing.

Question 22

A salesperson designed an innovative technology in the office that would substantially improve service to clients. They must:

Answer 22

Obtain permission from their broker before using it

Question 23

When should an agent advise a client to get title work done?

Answer 23

Before closing

Question 24

Which of the following is NOT an example of due diligence in a sales contract?

A buyer obtains a survey because he suspects an enroachment
A broker completes a CMA for a buyer client prior to the buyer making an offer
The seller orders the deed to be prepared and agrees to pay for the buyers’ title policy
A buyer has property inspected to be sure all features are functioning properly

Answer 24

A broker completes a CMA for a buyer client prior to the buyer making an offer

ALL of the items listed are rational, proactive actions often stated in sales contracts that should ordinarily be completed by buyers and sellers EXCEPT a broker completing a CMA for a buyer BEFORE there is an offer made. A CMA can be used by a buyer’s agent to help a buyer make a decision about an offering price, however, at this point there is no contract, so this action is not “in a sales contract.”

Question 25

A licensee has just attended a training seminar about technology in real estate and is excited about using social media with her clients. Which of the following statements about social media in real estate is NOT true? An agent advertising client property on social media needs written permission from the client The use of social media in real estate advertising is growing An agent with permission to advertise a property on social media does not have to worry about protecting confidential information about the client An agent advertising on social media must comply with all the same laws and rules as print and broadcast advertising

Answer 25

An agent with permission to advertise a property on social media does not have to worry about protecting confidential information about the client

Question 26

A sales agent just obtained a listing. The seller has told the agent that she needs to sell the property because she is going through a divorce. What must the salesperson do?

Answer 26

Obtain the signatures of all owners on the listing agreement The purpose of listings is to place a seller's property on the market and find a buyer. In order to have a Valid Listing, which is the goal of this sales agent and the seller here, the following items need be obtained and provided in the listing: Signatures of all the owners and the listing licensee Legal Description of the property List Price – this must be set by the seller Definite starting and termination date Broker compensation

Question 27

Which of the following would NOT be an operating expense included in the property manager’s operating budget?

Answer 27

Mortgage Operating Expenses are recurring costs necessary for the monthly operation and maintenance of a property. Some of the major operating expenses include: taxes and insurance, utilities, payroll, and reserve funds for repairs and maintenance. Operating expenses are NOT included from: Mortgage Payments/Debt Reduction Depreciation Capital Improvements/Expenditures

Question 28

Which of the following would be most likely to hire a property manager? NAR An association A corporation FIRREA

Answer 28

An Association Property Managers are General Agents that have many responsibilities and liabilities across several areas, including financing & marketing of properties, managing tenant relationships & occupancy, facility management, and administration of insurances and lease agreements. FIRREA is a law enacted to regulate savings and loans and real estate appraisal. The NAR is a trade organization of realtors that doesn't collectively own and manage property. Corporations are primarily business entities. An Association, like a Home Owner’s Association in a condominium complex, would be responsible for hiring a property manager to oversee the maintenance of the complex and to maintain property values for unit owners.

Question 29

A condominium complex has liability insurance. This is least likely to cover:

Answer 29

A unit owners carpet damage by a broken water pipe In condominium complexes, owners of individual units have their own policies to cover that specific unit and liabilities associated with it and the owner. The complex as a whole will have ITS OWN policy that covers ALL public or common areas, such as elevators, hallways, lobbies, parking lots, or recreational areas. If an individual unit's carpet was damaged, coverage would fall on the insurance policy of that specific tenant and their unit rather than the complex as a whole.

Question 30

The law requires that every broker must prominently display the HUD Equal Housing Opportunity Poster in his or her _______________.

Answer 30

office

Question 31

Failure to display the poster may be considered ________________evidence of discrimination – evidence so great that no further investigation is necessary.

Answer 31

prima facie

Question 32

If a broker fails to display the poster, the broker is guilty of ______________________.

Answer 32

discrimination

Question 33

When a complaint is made to HUD, HUD will try ____________ and conciliation to resolve the problem before pursuing the matter in court.

Answer 33

Mediation

Question 34

Victims have up to ____ __________ to seek mediation through HUD and up to _______ ______to file a complaint with the courts.

Answer 34

1 year, 2 years

Question 35

Americans with Disabilities Act (ADA) Exemptions

Answer 35

Single-Family Homes Private Clubs Historic Buildings Religious Organizations

Question 36

A condominium owner’s policy will most likely cover the owner if:

Answer 36

A guest slips in the owners kithen In condominium complexes, owners of individual units have their own policies to cover that specific unit and liabilities associated with it and the owner. The complex as a whole will have ITS OWN policy that covers ALL public or common areas, such as elevators, hallways, lobbies, parking lots, or recreational areas. If someone gets hurt within a unit, coverage would fall on the insurance policy of that specific tenant and their unit rather than the complex as a whole.

Question 37

Prior to its amendments, the Civil Rights Act of 1968 prohibited discrimination based on:

Answer 37

The Civil Rights Act of 1968 (also referred to as Title VIII or the Federal Fair Housing Act) prohibited discrimination on the basis of race, color, national origin, and religion prior the amendments that following in subsequent years.

Question 38

An investor has 15 rent houses. She has hired an agent to lease the houses. Which of the following actions by the agent would NOT be in violation of fair housing laws? Refusing to show the houses to anyone over 75 years old Refusing to show the houses to any Hispanic couples Refusing to show the houses to any unmarried pregnant woman Reusing to show the houses to any single parents with children

Answer 38

While national origin (Hispanic) and familial status (a parent with a child or a pregnant woman) are both protected categories under fair housing laws, age is not protected. Therefore, there is no violation in refusing to show property to anyone over 75 years of age.

Question 39

Federal Do Not Call List is administered by?

Answer 39

Federal Trade Commission

Question 40

Whenever money is held in a trust account, whether the funds relate to a lease or sale, before funds can be released from the account, _____ ______________ to the transaction must be notified

Answer 40

both parties i.e., both landlord and tenant, or both buyer and seller

Question 41

_______________ Law is a federal law requiring all states to release information to the public about known convicted sex offenders when necessary to protect public safety.

Answer 41

Megan’s

Question 42

Puffing is NOT misrepresentation. Puffing is _________________

Answer 42

marketing

Question 43

Errors & Omissions (E&O) Insurance

Answer 43

Insurance protects both broker and sales licensees from a legal claim or liability for mistakes, errors, and negligence in usual listing and selling activities. It does NOT provide protection for fraud, punitive damages, or the personal/non-business actions of licensees.

Question 44

General Liability Insurance

Answer 44

Liability risks may include bodily injury or property damage caused by direct or indirect actions of the insured. General Liability Insurance protects a company’s assets if someone is injured on company property. General liability insurance coverage most often appears in homeowners’ insurance policies obtained by individual homeowners.

Question 45

What is the purpose of a property management trust account?

Answer 45

hold tenants security deposit

Question 46

A broker is running short of funds to meet this month’s operating expenses. She places a client’s earnest money deposit in her business account and uses it to pay her rent. After her next closing, she replaces the client’s deposit in her trust account. The broker:

Answer 46

The practice that the broker has engaged in is an example of conversion

Question 47

Accurate record-keeping is the responsibility of all brokers. If a broker’s computers are stolen, what steps could have been taken to protect records?

Answer 47

cloud storage

Question 48

Which of the following facts about a listed property must be disclosed?

Answer 48

structural defects ALL material facts about properties MUST be disclosed. Two large items that have to be disclosed are deaths due to structural defects, and murders that have occurred on the property. Deaths by natural causes or suicide do NOT have to be disclosed, and those that happened due to HIV/AIDS should NEVER be disclosed.

Question 49

A high-rise condominium property is advertised as having the “Most beautiful view of the city.” This ad is best described as:

Answer 49

puffing

Question 50

A sales agent is showing a property. He trips inside the house, causing major damage to property of the owner. What type of insurance will cover this accident?

Answer 50

General Liability

Question 51

General liability insurance will:

Answer 51

In addition to insuring a broker or their sales agents against bodily injury or property damage incurred on their behalf, General Liability insurance also protects a company's assets if someone is injured on company property.

Question 52

Who must be notified to take money out of the trust account in a real estate transaction?

Answer 52

BOTH parties (Buyer and Seller) Whenever money is held in a Trust Account, whether the funds relate to a lease or a sale, before funds can be released from the account, BOTH parties (Buyer and Seller) to the transaction must be notified (i.e. the landlord and the tenant, the buyer and the seller). Other parties outside of the two do not need to be notified, only the two involved in the transaction.