Section 17: Property Conditions and Disclosures

Question 1

Property Conditions And Disclosures:
When In Doubt Disclose:
* When should there be disclosures?
o When ________ exist that affect property value or intended use by
someone else normally in a real estate transaction for sale.

Answer 1

Conditions

Question 2

Property Conditions And Disclosures:
When In Doubt Disclose:
* ________:
Declare, explain, obtain documentation, give choices to the parties so that they can make an informed decision and not hold other party liable.

Answer 2

Disclosure

Question 3

Property Conditions And Disclosures:
When In Doubt Disclose:
Agents’ best recourse is to be the ________ of the source and to disclose anything that you feel is important to the transaction.

Answer 3

Source

Question 4

Property Conditions And Disclosures:
When In Doubt Disclose:
* Our duty is to protect the public, as well as ourselves and the brokerage.
* Often best said- if ________ would want to know about it, disclose it.

Answer 4

You

Question 5

Property Conditions And Disclosures:
Duties of Disclosures:
* Any individual who is party to a real estate transaction and has knowledge of something that could ________ impact the transaction has a duty to disclose.

Answer 5

Materially

Question 6

Property Conditions And Disclosures:
Duties of Disclosures:
* Common law has imposed duties on ________ of real estate, especially residential to disclose any material facts known to the seller affecting the value or desirability.

Answer 6

Sellers

Question 7

Property Conditions And Disclosures:
Duties of Disclosures:
* SELLERS must disclose:
o Written list of known property ________.
o Answer buyer questions regarding property condition.
o Disclose any information wherein previous disclosure might lead to false assumption.

Answer 7

Defects

Question 8

Property Conditions And Disclosures:
Duties of Disclosures:
* Buyers also have a duty to deal honestly and fairly with all parties including the seller.
o BUYERS who knowingly can’t close on a transaction are guilty of failure to disclose pertinent facts and can be held ________ for damages.

Answer 8

Liable

Question 9

Property Conditions And Disclosures:
Duties of Disclosures:
o Buyers are responsible for actual notice however: the buyer is ALSO responsible for inspection of ________, like public records for liens, or attachments.

Answer 9

Notices

Question 10

Property Conditions And Disclosures:
Duties of Disclosures:
* Real estate agents have a duty to ________ parties involved in a transaction – not just the person or entity that they are representing but also to the other party and agents.

Answer 10

All

Question 11

Property Conditions And Disclosures:
Duties of Disclosures:
* Real Estate Brokers and Agents have the MOST liability since they are licensed and trained in ALL aspects of ________.

Answer 11

Disclosure

Question 12

Property Conditions And Disclosures:
Duties of Disclosures:
Agent Disclosures:
o Agents must disclose any information that may negatively affect the ________ paid.

Answer 12

Price

Question 13

Property Conditions And Disclosures:
Duties of Disclosures:
Agent Disclosures:
o Must also disclose IF KNOWN, that their party may not be able to ________.

Answer 13

Perform

Question 14

Property Conditions And Disclosures:
Duties of Disclosures:
Agent Disclosures:
o Sellers agent may know of a ________ that could prohibit the sale.

Answer 14

Divorce

Question 15

Property Conditions And Disclosures:
Duties of Disclosures:
Agent Disclosures:
o Buyers agent may know that buyer is planning on filling for ________.

Answer 15

Bankruptcy

Question 16

Property Conditions And Disclosures:
Duties of Disclosures:
* Realtors® may be held to an even HIGHER standard as they all pledge to abide by and
uphold the National Code of Ethics.
* The “________” is the easiest answer to disclosure.
o Would you want someone to disclose this item to you
o If you answer yes, DISCLOSE IT!
* It is always better to error on the side of caution and to disclose vs not disclose and face consequences later.

Answer 16

Golden Rule

Question 17

Property Conditions And Disclosures:
Contracts:
* Agents commonly use Boilerplate contracts and addendums drafted and modified by the ________ for real estate contracts.
* In the contracts are certain stipulations that must be followed by all parties in order to protect not only the agent/broker but also buyers and sellers.

Answer 17

Arizona Association of Realtors (AAR)

Question 18

Property Conditions And Disclosures:
Seller Property Disclosure Statements (SPDS):
Purchase Contract requires the seller to provide the buyer with the Seller Property Disclosure Statements (SPDS) within ________ Days of the acceptance of the contract.

Answer 18

3 Days

Question 19

Property Conditions And Disclosures:
o SPDS means ________.

Answer 19

Seller Property Disclosure Statements

Question 20

Property Conditions And Disclosures:
Seller Property Disclosure Statements (SPDS):
 Seller Property Disclosure Statements (SPDS) is a very important source of information that buyers and inspectors rely upon to educate themselves on the history of the home.
 The sellers will fill out the SPDS to the best of their ability and must disclose latent defects, ownership history, ________, previous damages and so on.

Answer 20

Pests

Question 21

Property Conditions And Disclosures:
Seller Property Disclosure Statements (SPDS):
* Buyers will have their inspection period to investigate any items found in the Seller Property Disclosure Statements (SPDS).
or any other type of inspection they deem necessary pertinent to the sale.
*This is also known as the buyers ‘________’.

Answer 21

Due Diligence Period

Question 22

Property Conditions And Disclosures:
Seller Property Disclosure Statements (SPDS):
 ________:
Steps taken by someone to verify important information.

Answer 22

Due Diligence

Question 23

Property Conditions And Disclosures:
Seller Property Disclosure Statements (SPDS):
 In Arizona it is commonly the ________ Day Due Diligence inspection period unless agreed to otherwise.

Answer 23

10 Day

Question 24

Property Conditions And Disclosures:
________:
* At the end of the inspection period, buyers sign a this to give to sellers.

Answer 24

Buyers Inspection Notice and Sellers Response (BINSR)

Question 25

Property Conditions And Disclosures: Due Diligence Inspection Period: o BINSR means ________.

Answer 25

Buyers Inspection Notice and Sellers Response

Question 26

Property Conditions And Disclosures: Buyers Inspection Notice and Sellers Response (BINSR): o After receipt the buyer must ________ any defects that they deem important that they want the seller to fix before closing.

Answer 26

Disclose

Question 27

Property Conditions And Disclosures: Buyers Inspection Notice and Sellers Response (BINSR): Buyer's Duties: o Accept property in condition. o Ask for repairs to be made. o Or can elect to ________ the contract.

Answer 27

Cancel

Question 28

Property Conditions And Disclosures: Buyers Inspection Notice and Sellers Response (BINSR):  If elect to cancel, buyers are entitled to their ________ back.

Answer 28

Earnest Money Deposit

Question 29

Real Life Note: The Due Diligence Inspection period is NOT to be used as an opportunity to renegotiate the offer and acceptance terms. This is often done, but it is incorrect. The Buyers Inspection Notice and Sellers Response (BINSR) does NOT discuss money, or terms but instead address the ________ condition of the property.

Answer 29

Physical

Question 30

Property Conditions And Disclosures: Quiz: Choose the correct statements that explain duties of disclosure… Seller must present a written list of known property defects Brokers are not held to the same standard of duty to deal with honesty and fairness. Buyers are responsible for inspections of notice Agents must disclose any information that may negatively affect the price paid

Answer 30

Seller must present a written list of known property defects Buyers are responsible for inspections of notice Agents must disclose any information that may negatively affect the price paid

Question 31

Property Conditions And Disclosures: Study Guide: What are a potential buyer’s options at the end of the inspection period?

Answer 31

At the end of the inspection period, buyers have three options: Accept the property, Reject (Cancel), or counter the property's condition. If they choose to accept, it's taken as-is. If they cancel, everyone is returned to the standard starting point. If they counter the condition, the buyers will present the BINSR to sellers in Arizona. (BINSR Buyers Inspection Notice and Sellers Response.)

Question 32

Property Conditions And Disclosures: Study Guide: Your client (a buyer), six days after signing a purchase contract, decides that they no longer want to buy the home and gives you no reason as to why. Can they receive their earnest money back?

Answer 32

If the client elects to cancel, buyers are entitled to their Earnest Money back.

Question 33

Property Conditions And Disclosures: Study Guide: What is the purpose of the SPDS?

Answer 33

SPDS is a significant source of information that buyers and inspectors rely upon to educate themselves on the home's history. The sellers will fill out the SPDS to the best of their ability and must disclose latent defects, ownership history, pests, previous damages, and so on.

Question 34

Property Conditions And Disclosures: Study Guide: A day after receiving the SPDS, your client (a buyer) calls you and asks for your opinion on a roofing repair done in 2015. They want to know if you think it was done correctly. How would you proceed?

Answer 34

As real estate agents, you are not qualified or licensed to discuss the construction or defects in real property. The best course of action here would be to refer them to a licensed roofer for a more qualified opinion.

Question 35

Property Conditions And Disclosures: Quiz: How many days does a seller have to furnish SPDS to a buyer after acceptance of the contract? Two Three Ten Ten business days

Answer 35

Three

Question 36

Property Conditions And Disclosures: Quiz: What is a seller not required to disclose? Private airports nearby Proximity to a sex offender Expansive soils Fissures

Answer 36

Proximity to a sex offender

Question 37

Property Conditions And Disclosures: Quiz: Which of these issues does not require disclosure? Sick building syndrome A previous occupant with HIV Dry wells Polychlorinated biphenyls

Answer 37

A previous occupant with HIV

Question 38

Property Conditions And Disclosures: Quiz: What is a seller not required to disclose to the buyer? List of known property defects Minimum acceptable price Answers about property condition Any information wherein previous disclosure might lead to false assumption

Answer 38

Minimum acceptable price

Question 39

Property Conditions And Disclosures: Quiz: All of the following statements except which one are true with regards to disclosures in real estate? Material Facts Must Disclosed if Known Seller is liable in Arizona to disclose existence of haunted houses The house was the site of a natural death years ago The agent must correct any misconceptions that the buyers may have about the property

Answer 39

Seller is liable in Arizona to disclose existence of haunted houses

Question 40

Property Conditions And Disclosures: Quiz: What must be signed by the buyer after the inspection period? SPDS Due diligence report Home inspection BINSR

Answer 40

BINSR

Question 41

Property Conditions And Disclosures: Quiz: If a buyer elects to cancel the contract during the inspection period, what will they receive? Earnest money BINSR Down payment Home inspection fee

Answer 41

Earnest money

Question 42

Property Conditions And Disclosures: Quiz: What options does a BINSR not provide to a potential buyer? Elect to cancel the contract Lower their offer price Ask for repairs to be made Accept the property in condition

Answer 42

Lower their offer price

Question 43

Property Conditions And Disclosures: SPDS/BINSR: To be used solely and exclusively by members of the ________.

Answer 43

Arizona Association Of Realtors® (AAR)

Question 44

Property Conditions And Disclosures: Material Facts and Defects: * ________: Items that if known would have changed the outcome.

Answer 44

Material Facts

Question 45

Property Conditions And Disclosures: Material Facts and Defects: * Material Facts: * If Material facts are not disclosed and discovered later that a party had knowledge, this is grounds for the other party to seek damages and ________.

Answer 45

Remedies

Question 46

Property Conditions And Disclosures: Material Facts and Defects: * Material Facts: * Failure to disclose material facts or defects is common ground for lawsuits against agents – especially when agent is self-representing as an ‘________’.

Answer 46

Owner Agent

Question 47

Property Conditions And Disclosures: Material Facts and Defects: * Material Facts: * Parties cannot claim ________ to certain situations like roof leaks or broken pipes.

Answer 47

Ignorance

Question 48

Property Conditions And Disclosures: Material Facts and Defects: * Material Defects: Known flaws or defects that would affect the outcome of sale. * All parties must advise if material defects are known as it would directly affect the outcome of the sale or the ________ of value.

Answer 48

Consideration

Question 49

Property Conditions And Disclosures: Material Facts and Defects: * Latent Defects: Not readily known or visible but materially affects use or value. * All parties must advise if material defects are known as it would directly affect the outcome of the sale or the consideration of value. * Parties do not have to disclose LATENT defects as they may not ________ about them.

Answer 49

Known

Question 50

Property Conditions And Disclosures: Material Facts and Defects: * Latent Defects: o ________ in the ground or old wiring inside the walls can’t be seen. So, this would be something they may not be aware of as a seller.

Answer 50

Radon Gas

Question 51

Property Conditions And Disclosures: Material Facts and Defects: ________: ‘Buyer Beware’ philosophy that the buyer is own their own.

Answer 51

Caveat Emptor

Question 52

Property Conditions And Disclosures: Material Facts and Defects: Caveat Emptor: o No longer true as buyers are not experts in all things and rely on experts to facilitate in the transactions – thus placing ________ responsibilities on agent.

Answer 52

Fiduciary

Question 53

Property Conditions And Disclosures: Agency Specific Disclosures: * Relationships between agent and client: o If related or somehow ________, the agency MUST be disclosed in contract.

Answer 53

Interconnected

Question 54

Property Conditions And Disclosures: Agency Specific Disclosures: * Relationships between agent and client: o Representing a family members or if they have any ________ in a business who is making offer on a home.

Answer 54

Ownership Interest

Question 55

Property Conditions And Disclosures: Agency Specific Disclosures: * Relationships between agent and client: o ________ is a mandatory disclosure to everyone. This occurs when the agent owns the home.  The general public would be at an unfair advantage in dealing with an agent who does not disclose that they are licensed when selling their own home.

Answer 55

Owner [Agency]

Question 56

Property Conditions And Disclosures: Agency Specific Disclosures:  ________: Advertisements for real property where the agent fails to tell the general public that they are a licensed agent.

Answer 56

Blind Ad’s

Question 57

Property Conditions And Disclosures: Agency Specific Disclosures:  Blind Ad’s:  The Brokers name (Brokerage who employs agent) MUST be written in the ad in a predominantly displayed manner. * Brokers ________ is Acceptable.

Answer 57

Logo

Question 58

Property Conditions And Disclosures: Agency Specific Disclosures: Contractual Obligations: *Agents should never assume the duty of a home inspector, attorney, accountant or any other licensed field. *Always suggest that clients seek the advice of a ________ professional in that field.

Answer 58

Licensed

Question 59

Property Conditions And Disclosures: Agency Specific Disclosures: Contractual Obligations: Home or property inspectors are licensed under the governing body of the ________ in Arizona. NOT the ADRE.

Answer 59

Board of Technical Registration (BTR)

Question 60

Property Conditions And Disclosures: Agency Specific Disclosures: Contractual Obligations: Could be found guilty of a felony by “________”.

Answer 60

Impersonating a Licensed Professional

Question 61

Property Conditions And Disclosures: Agency Specific Disclosures: Contractual Obligations: Remember: C.C.R.P. 1. 2. 3. 4.

Answer 61

1. Contractual Duties and Obligations 2. Confidentiality Terms of Offers 3. Relationships between Agent and Client 4. Price

Question 62

Property Conditions And Disclosures: Agency Specific Disclosures: Contractual Obligations: * Price: o Agents are hired to represent their clients in the fairest manner possible. o Duty to disclose the fair market price is ________ to sellers and the public.

Answer 62

Invaluable[Critical]

Question 63

Property Conditions And Disclosures: Agency Specific Disclosures: Contractual Obligations: * Price:  Sellers who price their homes too ________ are leaving money on the table.

Answer 63

Low

Question 64

Property Conditions And Disclosures: Agency Specific Disclosures: Contractual Obligations: * Price:  Sellers who price their homes too ________ face longer then needed selling time, stagnation of listings and eventually a termination of listing agreement.

Answer 64

High

Question 65

Property Conditions And Disclosures: Agency Specific Disclosures: Contractual Obligations: * Price:  Sellers who price their homes too low are leaving money on the table.  Sellers who price their homes too high face longer then needed selling time, stagnation of listings and eventually a termination of listing agreement.  Liability could be placed on broker for failing to properly ________ property.

Answer 65

Price

Question 66

Property Conditions And Disclosures: Agency Specific Disclosures: Contractual Obligations: * Confidentiality: o Clients will discuss things sometimes that are confidential. o Brokers/Agents need to understand what needs to be ________ confidential.

Answer 66

Kept

Question 67

Property Conditions And Disclosures: Agency Specific Disclosures: Contractual Obligations: * Confidentiality: o If it is a “________” of the contract or property, it NEEDS to be shared with the potential buyers.

Answer 67

Material Fact

Question 68

Property Conditions And Disclosures: Agency Specific Disclosures: Contractual Obligations: * ________: o Agents should NEVER hurt their clients negotiating position unless they have information that their client may not be able to perform.

Answer 68

Confidentiality

Question 69

Property Conditions And Disclosures: Agency Specific Disclosures: * Terms of Offers: o Disclosure of another offers terms could affect the outcome of other agents and their clients offers, NEVER disclose ________ offers terms to other parties.

Answer 69

Another

Question 70

Property Conditions And Disclosures: Agency Specific Disclosures: * Terms of Offers: o Agents are OBLIGATED to share with their sellers that a buyer has the ability to offer ________ than their current offer if they know this.

Answer 70

More

Question 71

Property Conditions And Disclosures: Agency Specific Disclosures: * Terms of Offers: o You may NOT disclose to another party that your seller would have taken ________ for a listing that you are representing on the purchase price.

Answer 71

Less

Question 72

Property Conditions And Disclosures: Agency Specific Disclosures: * Terms of Offers:  Brokers must share all offers that come in with the seller, even if they are under contract, unless otherwise written to ________ offers.  Seller may want to have backup offers in case the current buyer fails.

Answer 72

Hold

Question 73

Property Conditions And Disclosures: * Megan’s Law: State registration systems to maintain a database of registered ________. Designed to enhance the safety of the neighborhood and it’s residents.

Answer 73

Sex Offenders

Question 74

Property Conditions And Disclosures: Megan’s Law: * Sex offenders are defined as anyone who: o Kidnaps children. o Commits sexual crimes against children. o Or has committed ________ violent crimes.

Answer 74

Sexually

Question 75

Property Conditions And Disclosures: Megan’s Law: * Certain states require licensees to disclose this information to prospective owners/tenants. This disclosure is ________ required in ARIZONA.

Answer 75

Not

Question 76

Property Conditions And Disclosures: Megan’s Law: * Many times, the State will send out ________ to all residents in an area where an offender is to either relocate to or if already living there was convicted a sex crime.

Answer 76

Notices

Question 77

Property Conditions And Disclosures: Megan’s Law: o In ARIZONA:  Licensees DO NOT disclose this information due to the ________ law.  IMPORTANT: May ONLY refer clients to the resources available, i.e.: government websites.

Answer 77

Stigmatized Property Law

Question 78

Property Conditions And Disclosures: Quiz: TRUE or FALSE: Failing to disclose material defects is not enough to pursue a lawsuit against an agent. True False

Answer 78

False

Question 79

Property Conditions And Disclosures: Planned Unit Development Community Disclosures: * Sellers of Real Property are required to disclose the existence of an HOA and the known terms of any ________ that are in effect for that community or PUD.

Answer 79

Covenants, Conditions and Restrictions (CC’Rs)

Question 80

Property Conditions And Disclosures: Planned Community Disclosures: o P.U.D. means ________. They have zoning ordinances designed to enhance a general area.

Answer 80

Planned Unit Development

Question 81

Property Conditions And Disclosures: Planned Unit Development Community Disclosures: * Buyers of property located in an HOA maintained community will need to understand the extent of the Covenants, Conditions and Restrictions (CC’Rs), the financial reports of the HOA and the ________ owed.

Answer 81

Assessments

Question 82

Property Conditions And Disclosures: Planned Unit Development Community Disclosures: o H.O.A. means ________.

Answer 82

Home Owners Association

Question 83

Property Conditions And Disclosures: Planned Unit Development Community Disclosures: o C.C.R.’s means ________.

Answer 83

Covenants, Conditions and Restrictions (CC’Rs)

Question 84

Property Conditions And Disclosures: Planned Unit Development Community Disclosures: CCR’s: Covenants, Conditions and Restrictions: During the inspection periods, escrow companies or sometimes the owners will order and supply buyers with copies of the Covenants, Conditions and Restrictions (CC’Rs), HOA bylaws and rules for review. * Buyers must ________ and accept that they have had the opportunity to review these documents to proceed with the sale if elected.

Answer 84

Sign

Question 85

Property Conditions And Disclosures: Planned Unit Development Community Disclosures: CCR’s: Covenants, Conditions and Restrictions: During the inspection periods, escrow companies (sometimes the owners) will order and supply buyers with copies of the Covenants, Conditions and Restrictions (CC’Rs), HOA bylaws and rules for review: 1. The ________ of assessments, and frequency at which they are paid.

Answer 85

Amount

Question 86

Property Conditions And Disclosures: Planned Unit Development Community Disclosures: CCR’s: Covenants, Conditions and Restrictions: During the inspection periods, escrow companies (sometimes the owners) will order and supply buyers with copies of the Covenants, Conditions and Restrictions (CC’Rs), HOA bylaws and rules for review: 2. What is ________ in the HOA assessments i.e. trash, insurance, pool etc.

Answer 86

Covered

Question 87

Property Conditions And Disclosures: Planned Unit Development Community Disclosures: CCR’s: Covenants, Conditions and Restrictions: During the inspection periods, escrow companies (sometimes the owners) will order and supply buyers with copies of the Covenants, Conditions and Restrictions (CC’Rs), HOA bylaws and rules for review: 3. Full ________ statements of the HOA and current residents to ensure financial worthiness.

Answer 87

Accounting

Question 88

Property Conditions And Disclosures: Planned Unit Development Community Disclosures: CCR’s: Covenants, Conditions and Restrictions: During the inspection periods, escrow companies (sometimes the owners) will order and supply buyers with copies of the Covenants, Conditions and Restrictions (CC’Rs), HOA bylaws and rules for review: 4. Any notices of impending ________ of future assessments.

Answer 88

Special Assessments

Question 89

Property Conditions And Disclosures: ________: Property which buyers or tenants may shun for reasons that are unrelated to its physical condition or features.

Answer 89

Stigmatized Property

Question 90

Property Conditions And Disclosures: Stigmatized Property: * These can include ________ of an occupant, murder, suicide.

Answer 90

Death

Question 91

Property Conditions And Disclosures: Stigmatized Property: * These can include the belief that a house is ________ or has other spiritual issues.

Answer 91

Haunted

Question 92

Property Conditions And Disclosures: Stigmatized Property: * These can include owners of properties who suffer from serious illness such as ________ are protected, and details of these illness can NOT be shared with parties.

Answer 92

HIV/AIDS

Question 93

Property Conditions And Disclosures: Stigmatized Property: *Refer clients to the ________ – be the source of the source. Not the SOURCE.

Answer 93

Buyers Advisory

Question 94

Property Conditions And Disclosures: Agent’s Compensation: * All compensation paid to a party in a real estate transaction must be made ________ to all.

Answer 94

Public

Question 95

Property Conditions And Disclosures: Agent’s Compensation: * Kickbacks: A form of payment made to someone who has ________ a transaction.

Answer 95

Facilitated

Question 96

Property Conditions And Disclosures: Agent’s Compensation: Kickbacks: * Kickbacks are forbidden and illegal, and normally are not ________.

Answer 96

Disclosed

Question 97

Property Conditions And Disclosures: Agent’s Compensation: Kickbacks: * Commissions and referrals are legal, if licensed at time of contract and ________.

Answer 97

Disclosed

Question 98

Property Conditions And Disclosures: Agent’s Compensation: Kickbacks: * Commissions and referrals are legal, if licensed at time of contract and disclosed: o If a firm has a business interest in a 3rd party vendor, this must be disclosed, even if that vendor is not ________ by anyone in the transaction.

Answer 98

Used

Question 99

Property Conditions And Disclosures: Agent’s Compensation: Kickbacks: * Commissions and referrals are legal, if licensed at time of contract and disclosed: o If a vendor is paying a referral or commission to anyone, it must be disclosed and appear on the ________.

Answer 99

Settlement Statement

Question 100

Property Conditions And Disclosures: Agent’s Compensation: Kickbacks: * Commissions and referrals are legal, if licensed at time of contract and disclosed: o It is ________ to encourage clients to use vendors who pay you as normally those fee’s would be unjustly passed onto the client.

Answer 100

Unethical

Question 101

Property Conditions And Disclosures: Agent’s Compensation: Kickbacks: * Commissions and referrals are legal, if licensed at time of contract and disclosed: o It’s recently being argued that affiliate relationships where no compensation is given is being challenged as a form of ‘________’.

Answer 101

Referral

Question 102

Property Conditions And Disclosures: Case Study: What law requires sex offenders to be placed on a list?

Answer 102

Megan's Law

Question 103

Property Conditions And Disclosures: Case Study: A local hardware store is selling generic red yard signs that say “For Sale” and have an open space for a phone number. Your brother purchases one to sell his home, then calls you and asks if he can put your phone number on the sign to handle phone calls about the property (since you are a real estate agent/expert), but he still wishes to sell FSBO. Can you allow him to do this?

Answer 103

Yes and NO. Representing a family member is legal, but in this case, he asks to be an unrepresented owner or FSBO (for sale by the owner). In this case, you can only provide advice but can NOT mislead the public to think the house is being sold or represented by an agent. So, it's best to either say no, you can not assist, or to have him agree to a listing, enabling you to place your BROKERAGE sign on the property.

Question 104

Property Conditions And Disclosures: Case Study: What’s the difference between Material Defects and Latent Defects?

Answer 104

Material Defects are the known flaws or defects that would affect the outcome of a sale. While Latent Defects are not readily known or visible, they materially affect use or value.

Question 105

Property Conditions And Disclosures: Case Study: Your client (a seller) needs to disclose a monthly HOA assessment to a buyer who closes on the home. Who can be sued by the buyer?

Answer 105

If you, as an agent (or your broker), knew of an HOA and DID NOT disclose it, that would be a fraud. But, if you did not know about it, only the seller could be sued for failure to disclose a material fact. Here is an example of who knew what, and that is usually the party who is liable.

Question 106

Property Conditions And Disclosures: Case Study: While showing a home in Gilbert, AZ to a client (a buyer), a neighbor comes by to say hello and mentions to your client that the previous owner was a sex offender. Your client then asks you if you can verify this. How would you respond?

Answer 106

Certain states require licensees to disclose this information to prospective owners/ tenants. However, in Arizona, you may only refer clients to the resources available, i.e., government websites, for the details.

Question 107

Property Conditions And Disclosures: Quiz: What is a material fact? Known flaws or defects that would affect the outcome of the sale A buyer beware philosophy Items that are readily visible Not readily known or visible but material affects use or value

Answer 107

Known flaws or defects that would affect the outcome of the sale

Question 108

Property Conditions And Disclosures: Quiz: All of the following statements except which one are true with regards to disclosures in real estate? Material Facts Must Disclosed if Known Seller is liable in Arizona to disclose existence of haunted houses The house was the site of a natural death years ago The agent must correct any misconceptions that the buyers may have about the property

Answer 108

Seller is liable in Arizona to disclose existence of haunted houses

Question 109

Property Conditions And Disclosures: Quiz: Which party is ultimately responsible for the discovery of school rankings in a properties’ area? Listing agent Escrow/title company The buyer(s) The buyer’s agent

Answer 109

The buyer(s)

Question 110

Property Conditions And Disclosures: Quiz: What must a seller’s agent not keep confidential? Client’s need to sell the home quickly The death of an occupant in the home Material facts Willingness to take a lower offer price

Answer 110

Material facts

Question 111

Property Conditions And Disclosures: Quiz: A cracked foundation covered by carpeting is considered a: Material fact Material defect Latent defect Caveat emptor

Answer 111

Latent defect

Question 112

Property Conditions And Disclosures: Quiz: A home was once the site of a murder. What law prohibits an agent from disclosing this? Statute of frauds Megan’s law Planned community law Stigmatized property law

Answer 112

Stigmatized property law

Question 113

Property Conditions And Disclosures: Quiz: Even with disclosure, which of these practices are illegal? Kickbacks Commissions Referrals Both B and C

Answer 113

Kickbacks

Question 114

Property Conditions And Disclosures: Truth in Lending Disclosures: * _______: Also known as Regulation Z (Reg Z) required lenders to show the total cost of borrowing money.

Question 115

Property Conditions And Disclosures: Truth in Lending Disclosures: Truth in Lending Act [TILA]: * Enforced under the _______ and falls under the Consumer Financial Protection Bureau (CFPB).

Answer 115

Frank-Dodd Act

Question 116

Property Conditions And Disclosures: Truth in Lending Disclosures: Truth in Lending Act [TILA]: * Enforced under the Frank-Dodd Act and falls under the _______.

Answer 116

Consumer Financial Protection Bureau [CFPB]

Question 117

Property Conditions And Disclosures: Truth in Lending Disclosures: Truth in Lending Act [TILA]: * Reg Z ONLY applies to financing for _______.

Answer 117

Residential Loans

Question 118

Property Conditions And Disclosures: Truth in Lending Disclosures: Truth in Lending Act [TILA]: * Lenders are required to compute the true cost of borrowing and show it in the _______.

Answer 118

Annual Percentage Rate (APR)

Question 119

Property Conditions And Disclosures: Truth in Lending Disclosures: Truth in Lending Act [TILA]: * Loan costs, discount points, and _______ are all calculated into the Annual Percentage Rate (APR).

Answer 119

Lender Fees

Question 120

Property Conditions And Disclosures: Truth in Lending Disclosures: Truth in Lending Act [TILA]: o APR means Annual Percentage Rate: This is the effective rate of _______ interest on a loan.

Answer 120

Total

Question 121

Property Conditions And Disclosures: Truth in Lending Disclosures: Truth in Lending Act [TILA]: * Penalties can be severe and include forfeiture of ALL _______ on a loan and up to $1000 PER occurrence or loan where the violation was found.

Answer 121

Interest

Question 122

Property Conditions And Disclosures: Advertising and Regulation Z: * Credit terms that are offered in the advertisement now must be all inclusive to the _______.

Answer 122

Annual Percentage Rate (APR)

Question 123

Property Conditions And Disclosures: Advertising and Regulation Z: * Lenders must disclose in all forms of advertising the ‘_______’ cost of borrowing money by publishing in a clear and evident manner the Annual Percentage Rate (APR).

Answer 123

True

Question 124

Property Conditions And Disclosures: Advertising and Regulation Z: * Advertising Terms that invoke the Reg Z rules are known as _______.

Answer 124

Trigger Terms

Question 125

Property Conditions And Disclosures: Advertising and Regulation Z: * _______: Then any terms used in advertising that requires full disclosure of Annual Percentage Rate (APR).

Answer 125

Trigger Term

Question 126

Property Conditions And Disclosures: Advertising and Regulation Z: * If any of these terms are used, the lender must disclose the true Annual Percentage Rate (APR): 1. 2. 3. 4.

Answer 126

1. Payment Terms 2. Interest Rates 3. Term, Length or Amount of Payments 4. Down Payment

Question 127

Property Conditions And Disclosures: Environmental Regulations: * _______ regulations mandate that the public be made aware of environmental concerns that may impact their safety and well-being.

Answer 127

Federal

Question 128

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * Lead-Based Paint: o This is banned for use in 1978 under the '_______'.

Answer 128

U.S. Consumer Product Safety Commission Rule

Question 129

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * _______: o These addendums are used to notify the public that paint may have been used in homes built prior to 1979.

Answer 129

Lead-Based Paint

Question 130

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: *CERCLA [Superfund] means _______.

Answer 130

Comprehensive Environmental Response Compensation & Liability Act

Question 131

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: *Comprehensive Environmental Response Compensation & Liability Act (CERCLA) [Superfund]: This act passed in the 1980s to prohibit illegal dumping of _______Chemicals.

Answer 131

Chemicals

Question 132

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: *Comprehensive Environmental Response Compensation & Liability Act (CERCLA) [Superfund]: o Refers to geographic zones in the United States contaminated by hazardous waste and are identified as candidates for cleanup by the _______.

Answer 132

Environmental Protection Agency (EPA)

Question 133

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: *Comprehensive Environmental Response Compensation & Liability Act (CERCLA) [Superfund]: o Public health concerns remain to be impactful on the overall value of affected sites. o Responsibility for cleanup costs falls on _______ who created or knew about the illegal practices. Homeowners may be held liable for cleanup.

Answer 133

Owners

Question 134

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: *Comprehensive Environmental Response Compensation & Liability Act (CERCLA) [Superfund]: o Sellers and real estate licensees liable for improper or _______.

Answer 134

Non-Disclosure

Question 135

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * _______: o Sites that are in the process of being redeveloped for use by the general public that were once contaminated by chemicals or other waste.

Answer 135

Brownfields

Question 136

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * Brownfields: o Any previously developed land that is not currently in use that may be potentially _______ is also a brownfield.

Answer 136

Contaminated

Question 137

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * Water Quality Assurance Revolving Fund (WQARF) Sites: o Arizona sites where groundwater and/or soil contamination is present and qualify for _______ from Water Quality Assurance Revolving Fund (WQARF).

Answer 137

Funds

Question 138

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * _______: o Arizona sites where groundwater and/or soil contamination is present and qualify for funds from this entity. Location and type of contamination can be found in public databases.

Answer 138

Water Quality Assurance Revolving Fund (WQARF) Sites

Question 139

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: o _______: A material of microscopic fibers with highly fire-retardant properties that was once used in certain construction materials, such as insulation, flooring, roofing and other common uses. o Discovered to cause multiple conditions including cancer, fibromyalgia.

Answer 139

Asbestos

Question 140

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * Asbestos: o Asbestos BAN is an _______ rule enacted in 1989: asbestos no longer manufactured in building materials however asbestos-based materials still in use.

Answer 140

Environmental Protection Agency (EPA)

Question 141

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * Asbestos: o This is used for insulation, “popcorn” ceilings, pipe insulation. o After discovery and disclosure, professional _______ is required.

Answer 141

Remediation

Question 142

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * _______: o This is a geographic area that is commonly saturated with water that supports a variety of vegetation like a bog, swamp, bayou.

Answer 142

Wetlands and Floodplains

Question 143

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * Wetlands and Floodplains: o State and the federal governments regulate and _______ wetlands, generally under water laws.

Answer 143

Protect

Question 144

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * Wetlands and Floodplains: o Arizona wetlands less than ________% of Arizona land is classified as wetland. i.e. wetlands projects near Phoenix and Tucson include Tres Rios Wetlands, Sweetwater Wetland Park, and West Wetlands Park.

Answer 144

1%

Question 145

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * Wetlands and Floodplains: o _______: Expanded federal government's authority over water resources in the nation – intent was to reduce pollution in waterways, especially where human life or health may be endangered.

Answer 145

Water Quality Improvement Act of 1970

Question 146

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * Wetlands and Floodplains: o _______: This Act gave the EPA authority to regulate industrial byproducts dumped into waterways, wetlands, and other water resources.

Answer 146

Water Pollution Control Act Amendment 1972 (a.k.a. The Clean Water Act]

Question 147

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * Wetlands and Floodplains: o _______: This is a geographic area located near a river or stream that is prone to flooding.

Answer 147

Flood Plain

Question 148

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * Wetlands and Floodplains: o _______: This Act states if building in a flood zones this information must be disclosed to a buyer before the paperwork is signed.

Answer 148

Flood Control Act 1969

Question 149

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * Wetlands and Floodplains: o Seller’s property disclosure from previous _______ inflicted upon a structure must be disclosed in writing to the prospective buyer.

Answer 149

Flood Damage

Question 150

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * Wetlands and Floodplains: o _______: This Act is under the management of Federal Emergency Management Administration (FEMA).

Answer 150

National Flood Insurance Act of 1968

Question 151

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * Wetlands and Floodplains: o _______:  Provides flood insurance, meant to develop flood plain maps, and enhances management of designated flood plain areas.

Answer 151

National Flood Insurance Act of 1968

Question 152

Property Conditions And Disclosures: Environmental Regulations: * Multiple Federal agencies have mandated disclosures on known issues including: * Wetlands and Floodplains: o National Flood Insurance Act of 1968:  Purpose of flood insurance is to protect property owners _______ against water damage.

Answer 152

Financially

Question 153

Property Conditions And Disclosures: Environmental Regulations: Real Life Note: FEMA retains responsibility for _______ flood insurance coverage. You can obtain a flood insurance policy from many insurance companies, but FEMA is the actual underwriter. There are more than five million policyholders nationwide providing nearly $1.3 trillion in coverage against flood.

Answer 153

Underwriting

Question 154

Property Conditions And Disclosures: Environmental Regulations: Quiz: Which of these terms references a location to be saturated with water that supports a variety of vegetation… River Plain Wetland Swamp Plain Flood Road

Answer 154

Wetland

Question 155

Property Conditions And Disclosures: Environmental Regulations: Study Guide: What is the purpose of the Truth In Lending Disclosure?

Answer 155

Truth in Lending disclosure, also known as Regulation Z (Reg Z), required lenders to show the total cost of borrowing money.

Question 156

Property Conditions And Disclosures: Environmental Regulations: Study Guide: A lender advertises “Low-Interest Rates for 30-year mortgages!” on a highway billboard. What else must be put on the billboard? What regulation requires this?

Answer 156

Lenders must disclose in all forms of advertising the ‘true’ cost of borrowing money by publishing it in an evident manner. Advertising Terms that invoke the required Reg Z rules are known as trigger terms.

Question 157

Property Conditions And Disclosures: Environmental Regulations: Study Guide: Your client is selling a home built in 1974. What additional addendum regarding paint must be given to the buyer?

Answer 157

Lead-based paint was banned for use in 1978 under the U.S. Consumer Product Safety Commission rule. Lead-based paint addendums notify the public that color may have been used in homes built before and including in 1978.

Question 158

Property Conditions And Disclosures: Environmental Regulations: Study Guide: A home sustained flooding damage in 2005, and the original owner properly repaired and disclosed this, then sold the house to your client. Does your client need to disclose this flooding damage to a new buyer? If so, who besides the seller can be sued for non-disclosure?

Answer 158

Seller’s property disclosure from previous flood damage inflicted upon a structure must be disclosed to the prospective buyer in writing. In the case of nondisclosure, the seller and agent would be responsible.

Question 159

Property Conditions And Disclosures: Environmental Regulations: Quiz: Which of these terms does not require the lender to disclose true APR on an advertisement? Payment terms Interest rates Customer satisfaction rate Down payment

Answer 159

Customer satisfaction rate

Question 160

Property Conditions And Disclosures: Environmental Regulations: Quiz: A seller is aware of asbestos insulation in their attic. What must be done before selling the house? Nothing required if built before 1989 Disclosure Blow new insulation on top Inform the appraiser

Answer 160

Disclosure

Question 161

Property Conditions And Disclosures: Environmental Regulations: Quiz: What regulation requires lenders to show the total cost of borrowing money? Planned community law Statute of frauds Lender’s code of ethics Truth in lending

Answer 161

Truth in lending

Question 162

Property Conditions And Disclosures: Environmental Regulations: Quiz: Home’s built before what year require a lead based paint addendum? 1960 1978 1969 1980

Answer 162

1978

Question 163

Property Conditions And Disclosures: Environmental Issues: * Environmental Laws is managed by the __________: * A home seller is required to disclose any environmental issues that could reasonably present a problem to future owners.

Answer 163

Environmental Protection Agency (EPA)

Question 164

Property Conditions And Disclosures: Environmental Issues: __________: Caused by the excessive build-up of moisture in an enclosed location like an attic or inside walls without proper ventilation.

Answer 164

Mold

Question 165

Property Conditions And Disclosures: Environmental Issues: Mold: o Mold spores need an __________ i.e. (wood), oxygen, and moisture to thrive.

Answer 165

Organic Surface

Question 166

Property Conditions And Disclosures: Environmental Issues: Mold: o These conditions can lead to mold infestations in a structure can be excessive moisture in interior areas leads to mold. o Commonly found in areas where __________ accumulates – laundry, baths, kitchens.

Answer 166

Water

Question 167

Property Conditions And Disclosures: Environmental Issues: * __________: Naturally occurring radioactive gas that can cause lung cancer. o Caused from the decaying of rocks, you can’t see or smell the gas.

Answer 167

Radon

Question 168

Property Conditions And Disclosures: Environmental Issues: * Radon: o More common in some parts of the USA. Not common in AZ. o __________ is required if Radon is known and is an issue.

Answer 168

Disclosure

Question 169

Property Conditions And Disclosures: Environmental Issues: * Radon: o The EPA may offer __________ assistance to property owners for the remediation of radon, asbestos, or lead-based paint.

Answer 169

Financial

Question 170

Property Conditions And Disclosures: Environmental Issues: * Underground Storage Tanks (UST): o Prior to the 1980s most USTs were made of bare steel. o Steel is likely to corrode over time and allow UST contents to __________ into the environment.

Answer 170

Leak

Question 171

Property Conditions And Disclosures: Environmental Issues: * Underground Storage Tanks (UST): o Hazardous substance can seep into the soil and contaminate __________. o Leaking UST can present other risks including the potential for fire and explosion.

Answer 171

Groundwater

Question 172

Property Conditions And Disclosures: Disclosure/Consumer Protection: * Disclosures made to the general public that are a __________ and not a health concern but still need to be made aware.

Answer 172

Nuisance

Question 173

Property Conditions And Disclosures: Disclosure/Consumer Protection: * Disclosures made to the general public that are a nuisance and not a health concern but still need to be made aware: * __________: o Any type of airport noise, smells or even sights could be a nuisance.

Answer 173

Military Airports and Ancillary Military Facilities

Question 174

Property Conditions And Disclosures: Disclosure/Consumer Protection: * Disclosures made to the general public that are a nuisance and not a health concern but still need to be made aware: * Military Airports and Ancillary Military Facilities: o Real estate agents showing properties in Surprise must carry a map showing the Luke AFB __________.

Answer 174

Flight Plans

Question 175

Property Conditions And Disclosures: Disclosure/Consumer Protection: * Military Training Routes and Military Restricted Airspace: o Military areas where high speed passes, fly overs or simulated __________ activities can take place.

Answer 175

War Time

Question 176

Property Conditions And Disclosures: Disclosure/Consumer Protection: * __________: These areas must be made known to potential buyers as areas of intense military operations. Always provide Disclosure!

Answer 176

Military Training Routes and Military Restricted Airspace

Question 177

Property Conditions And Disclosures: Disclosure/Consumer Protection: * __________: o Some owners love the opportunity to live on or near an airport but many people see the coming and going of aviation traffic as a problem.

Answer 177

Public and Private Airports

Question 178

Property Conditions And Disclosures: Disclosure/Consumer Protection: * __________: o Soil that tends to strain a home’s foundation because the ground shrinks and swells, according to changing levels of moisture is a disclosure.

Answer 178

Expansive Soils [Shrink Well]

Question 179

Property Conditions And Disclosures: Disclosure/Consumer Protection: * __________: o These are shown on maps printed by Arizona Geological Survey. As a realtor you would want to make this available to potential buyers.

Answer 179

Fissures

Question 180

Property Conditions And Disclosures: Disclosure/Consumer Protection: * Fissures: o __________: The gradual caving in or sinking of an area of land. The shrinking of the soil is due to the groundwater being used and not replaced. This is the direct reason causing the fissures.

Answer 180

Subsidence

Question 181

Property Conditions And Disclosures: Disclosure/Consumer Protection: * __________: o Cows and Dairy farms can carry smells for miles even if they are not readily available to see, smells can carry.

Answer 181

Farms and Ranches

Question 182

Property Conditions And Disclosures: Disclosure/Consumer Protection: Quiz: What are some of the required disclosures that must be made to the general public? Nuisances such as airport smells, noise and sight. Owners living near military training routes are susceptible to ground shocks and high speed passes. Cows and Dairy farms smells may carry for miles which must be disclosed. Full disclosure of pros and cons living near an airport is not necessary.

Answer 182

Nuisances such as airport smells, noise and sight. Owners living near military training routes are susceptible to ground shocks and high speed passes. Cows and Dairy farms smells may carry for miles which must be disclosed.

Question 183

Property Conditions And Disclosures: Disclosure/Consumer Protection: Case Study: Your client (a seller) is selling a home in an agricultural area covered with dairy farms. What information would need to be disclosed to potential buyers?

Answer 183

Disclosures made to the general public that are a nuisance and not a health concern still need to be made aware. Cows and Dairy farms can carry smells for miles even if they are not readily available to see; scents can have. It must be disclosed.

Question 184

Property Conditions And Disclosures: Disclosure/Consumer Protection: Case Study: How would you, as an agent, determine if the home your client was selling was near an airport?

Answer 184

Real estate agents showing properties in Surprise must carry a map showing the Luke AFB flight plans to determine if the home your client is selling is near an airport.

Question 185

Property Conditions And Disclosures: Disclosure/Consumer Protection: Case Study: What environmental issue with a home would have needed to be disclosed?

Answer 185

A home seller must disclose any environmental issues that could reasonably present a problem to future owners—for example, Mold and Radon.

Question 186

Property Conditions And Disclosures: Disclosure/Consumer Protection: Case Study: What is a fissure, and what causes them to form?

Answer 186

As shown on maps printed by the Arizona Geological Survey, Fissures would want to be made available to potential buyers. Subsidence is the shrinking of the soil due to groundwater being used and not replaced. This is the direct reason behind the fissures.

Question 187

APR and Interest Rates Math: What's more important? __________ vs ___________ is a question you should ask your clients when they are looking for homes to purchase. To be able to calculate payments is a must in the field. These example questions will help you understand how to calculate APR and payments for your clients. There are two types of questions, those that have PITI (budget loan) and those that have just principal and interest loans. Make sure you read the questions!

Answer 187

Payment vs Price

Question 188

APR and Interest Rates Math: The Hood Family just bought a new home in Sherwood Forest and got a loan that includes: principal, interest, taxes and insurance in one monthly payment. Their total payment is $2150 per month. Their taxes are $3200 for the year and insurance is $1000 for the year. What amount of their monthly loan is going towards taxes and insurance and what is being applied towards their principal and interest

Answer 188

* $3,200 taxes + $1,000 insurance = $4,200 yearly taxes and insurance * $4,200 ÷ 12 = $350/month * $2,150 -$350 = $1,800 o $350 to taxes/insurance and $1,800 to principal/interest

Question 189

APR and Interest Rates Math: Find the principal amount that will be applied to the loan balance from the next monthly payment assuming a 30 year fixed interest rate loan for $300,000 at a 4.5% interest rate and a payment of $1520 that includes only principal and interest (non-budget loan).

Answer 189

* $300,000 x .045 (4.5%) = $13,500 Annual Interest * $13,500 ÷ 12 = $1,125 Monthly Interest * $1,520 - $1,125 = $395 Principal Amount o $395 applied

Question 190

APR and Interest Rates Math: The December 1st payment is made on John’s home. His payment is $918 and his original loan balance is $145,000 with an interest rate of 5.375%. Assuming he currently owes $139,412 what will his loan balance be after this payment is applied?

Answer 190

* $145,000 x .05375 = $7,794 Annual Interest * $7,794 ÷ 12 = $649 Monthly Interest * $918 - $649 = $269 Principal * $139,412 - $269 = $139,143 o $139,143 loan balance remaining

Question 191

APR and Interest Rates Math: Eileen has a tax bill of $982 and her insurance policy is $618. She has a package loan that pays her taxes and insurance on her behalf and her monthly payment is $740. What amount is Eileen paying towards principal and interest?

Answer 191

* $982 taxes + $618 insurance = $1,600 * $1,600 ÷ 12 = $133.33 (amount per month going towards her taxes and insurance) * $740 -$133.33 = $606.67 o $606.67 is her principal and interest.

Question 192

APR and Interest Rates Math: Using that example from above, if we know that $113.67 went to principal that month and her loan amount is $85,500, what is her interest rate?

Answer 192

* $606.67 P&I - $113.67 Principal = $493 Interest on the Loan * $493 x 12 months = $5,916 * $5,916 ÷ $85,500 = .0692 or 6.92% o 6.92% interest rate

Question 193

APR and Interest Rates Math: Renee has a payment of $1720/month. Find the loan balance after making 3 monthly payments. Beginning loan amount is $231,000. Interest rate is 8% for a 30 year loan

Answer 193

* $231,000 x .08 = $18,480 Annual Interest * $18,480 ÷ 12 = $1,540 Monthly Interest * $1,720 - $1,540 = $180 Principal o $231,000 - $180 = $230,820 New Balance at the beginning of month 2 * $230,820 x .08 = $18,465.60 * $18,465.6 ÷ 12 = $1538.80 Monthly Interest * $1,720 - $1,538.80 = $181.20 Principal o $230,820 – $181.20 = $230,638.80 New Balance at the beginning of month 3 * $230,638.80 x .08 = $18,451.10 * $18,451.10 ÷ 12 = $1,537.60 Monthly Interest * $1,720 - $1,537.60 = $182.41 Principal * $230,638.80 - $182.41 = $230,456.39 o $230,456.39 new balance at the beginning of month 4

Question 194

APR and Interest Rates Math: Mother Hubbard lives in suburbia estates. The same model house down the street just sold $295,000 and another house, 5% smaller in size but with a pool sold for $280,000. According to her mortgage statements, she paid $14,880 in annual interest for her home last year. She was thinking about refinancing her rate from 5.5%. What is her loan amount?

Answer 194

* $14,880 (annual interest) ÷ .055 (5.5%) = $270,545 * Ignore the noise and the loss misleading data that you don’t need. o Her loan amount is $270,545

Question 195

APR and Interest Rates Math: What is the first year's interest on a mortgage for $200,000 at 6% interest for 30 years?

Answer 195

* $200,000 (Amount of Mortgage) x 0.06 (Interest Rate) = $12,000 * Put into the “T” the loan balance is the bigger # and the Rate was provided, so we need to find the smaller #

Question 196

APR and Interest Rates Math: A 20-year mortgage at 5.5% carries a monthly payment of $6.60 per thousand. What is the total monthly payment for a $275,000 mortgage?

Answer 196

* $275,000 ÷ $1,000 = 275 units (or cost) of $1,000 each * 275 x $6.60 (Payment per Thousand) = $1,815 per month **This is common for borrowers to understand how much money it is going to cost them per every $1000 that the either borrow or pay out of pocket for. In this case, every $1000 that a borrower puts down on the down payment would reduce their loan payments by $6.60. So if they put $10,000 down, it would save them $66.00/month - OR, if they bought a house that was $10,000 more, then that house would cost them $66.00 more per month.

Question 197

APR and Interest Rates Math: Banker Bill loaned Lilly $25,000 to redo her kitchen. The terms were 6% interest only loan with a duration of 10 years. What was the total interest Banker Bill would receive if Lilly only used 4 years to pay back the loan?

Answer 197

* $25,000 x .06 = $1500 interest per year * $1500 interest per year x 4 year = $6,000 in interest

Question 198

APR and Interest Rates Math: What would the difference be in your interest payments if your lender originally quoted you 8% and then rates changed and are now 8 ¾? The loan would be for $330,000.

Answer 198

* $300,000 x .08 = $24,000 in interest over the year * $300,000 x .0875 = $26,250 in interest over the year * $26,250 - $24,000 = $2,250 in extra interest at the higher rate o $2,250