To increase the effective yield on a $250,000
loan by 1/4% when one discount point is
equivalent to an increase in the APR of 1/8%,
how much would the lender collect at settlement
in loan discount?
The formula for determining the value of
investment property is
Detailed Answer
a. Net operating income is divided by the
appropriate capitalization rate to arrive at
the value of the property.
3
IRS Form 8300 must be filed at what point
in a real estate transaction?
Detailed Answer
c. The IRS requires IRS Form 8300 be filed
on all cash payments over $10,000.
4
Which of the following terms best describes
the parties to a purchase-and-sales contract?
Detailed Answer
b. a refers to lender/borrower parties, c
defines parties in a transfer of property,
and d refers to parties in a unilateral
contract.
5
The Smiths offer to buy the Brown’s house
for $125,000, with the closing scheduled for
June 15. The Browns sign a written acceptance,
with the provision that the closing is to
be on June 16. At this point, which of the
following can occur?
Detailed Answer
a. When the Browns made a counteroffer, it
constituted a rejection of the original
offer. The Smiths are now free and may
accept or reject the counteroffer.
6
You’re the buyer’s agent for Robert and Debbie,
who will be selling their present home
with you, in the purchase of 1234 Main
Street, listed by ABC Realty.What is your
agency relationship with all parties?
Detailed Answer
c. Under the Law of Agency, Robert and
Debbie are your clients; the seller of 1234
Main St. is your customer. You owe a duty
of fairness to all parties.
7
Amy Reed, a salesperson for ABC Realty, is
required by contract to attend meetings,
dress in a uniform, and prospect for four
hours per day. She receives a biweekly paycheck,
less withholdings for taxes and Social
Security. Amy’s relationship with the firm is
that of
Detailed Answer
a. This is a description of the typical characteristics
of employee status.
8
At a general meeting of a brokers’ trade
association, several members begin talking
about fees and business practices. This sort
of activity could be considered
Detailed Answer
a. Any discussion of fees between competitors
could be viewed as an attempt to conspire
to set the cost of real estate
brokerage services, a violation of antitrust
law.
9
The death or incapacity of the principal will
Detailed Answer
a. Death or incapacity or either party terminates
the agency by operation of law.
10
The correct formula for estimating value
using the cost approach is
Detailed Answer
c. The formula is: cost to reproduce – depreciation
+ value of land = value.
