PSI National Exam for Real Estate Questions. (Answered). 2022/2023.

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PSI National Exam for Real Estate Questions. (Answered). 2022/2023. A written agreement in which a purchaser agrees to buy and a seller agrees to sell is called - ✔✔a contract Antitrust la... ws prohibit competing brokers from all of the following - ✔✔1. boycotting other brokers in the marketplace. 2. dividing the market to restrict competition. 3. agreeing to set sales commissions and management rates. When a sewer line is installed down a rural road, the cost will probably be shared by - ✔✔all current owners of real estate fronting on that road State laws differ on whether a buyer is entitled to know about - ✔✔a suicide that occurred in the house last year. A lawsuit for inverse condemnation may be brought by - ✔✔a homeowner When is racial discrimination in the rental of rooms or apartments permitted? - ✔✔Under no circumstances The real estate broker who is listing a house for sale should personally verify - ✔✔the number of square feet in the building Real property can be converted to personal property by - ✔✔Severance Prospective buyers made an offer on a property. The seller did NOT accept, but made a counteroffer. The prospective buyers signed the counteroffer and the real estate agent delivered their acceptance to the seller. In the interim, the same buyers had found another house that they liked better and made an offer on it, which was accepted. Which of the following is TRUE? - ✔✔Both contracts are valid Although states make specific laws governing water rights and the rights in land that borders water, most states generally follow one of two basic doctrines regarding water rights. In many states, the common law doctrine of riparian and littoral rights dictates that water rights are automatically conveyed with property. In others, all water rights are controlled by the state under the doctrine of - ✔✔prior appropriation The purpose of requiring an earnest money deposit in a real estate sales contract is to - ✔✔provide evidence of the buyer's intention to carry out the contract. A buyer is getting a fully amortized loan for $220,000. The bank will give the buyer the loan for 15 years at 5 1/2% or for 30 years at 6 1/2%. To the nearest cent, what is the difference between the monthly payments for these two loans? (BE SURE TO USE THE AMORTIZATION TABLE.) - ✔✔$409.20. A borrower has defaulted on the mortgage. The mortgage contains an acceleration clause. This permits the lender to - ✔✔demand immediate payment of the entire note The FHA functions MOST like - ✔✔an insurance company 1. They are used to buy down interest rate. 2. They are a function of the marketplace. 3. They are paid by either the buyer or the seller. - ✔✔discount points When land is conveyed to a trustee, the trustee may - ✔✔do whatever is permitted under the trust agreement A prospective buyer made an offer to purchase a property. The owner responded with a counteroffer. While the buyer was reviewing the counteroffer, the owner received a better offer. The owner can accept the second offer if - ✔✔the owner withdraws the counteroffer before it is accepted. While an agent is showing a listed property, the seller and the buyer enter into an oral agreement for the purchase of the home. If a dispute over the terms arises later, the agreement may be unenforceable because - ✔✔the agreement does not comply with the Statute of Frauds Earnest money should be deposited into a trust account - ✔✔in a timely manner, according to state laws A deed restriction is applicable to the activities of - ✔✔all owners, present and future An easement can be terminated by - ✔✔prescription Depreciation is calculated based on the - ✔✔cost of the building only Which of the following approaches MOST reliably estimates the sales price of a single-family residence? - ✔✔Market data A seller mentions to his agent that the previous owners of his property may have dumped hazardous waste on the site. Under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), who is liable for damages from the dumping prior to the sale of the property? - ✔✔Seller The escrow officer or closing agent MUST give information regarding the sales price and seller's social security number to - ✔✔IRS A broker supplies the financing for a project to build condominiums with the stipulation that he has the exclusive right to sell the completed condos. Which of the following BEST describes this relationship? - ✔✔Agency coupled with an interest If you own a building free and clear that is worth $115,000 and want an annual return of 12%, what net income is needed each month? - ✔✔$1,150 Usury laws were enacted to protect the - ✔✔borrower At the time of listing, the seller tells the listing agent they are moving because the neighbor has loud parties every weekend. The agent should - ✔✔tell potential buyers about the parties When one of the parties to an agreement fails to perform one of its conditions, that contract is deemed to be - ✔✔breached Which of the following is NOT a consideration in the definition of market value? - ✔✔Buyer and seller must agree to appraised value One common method for controlling the problems created by conflict of interest in dual representation is - ✔✔allowing a broker to designate separate salespeople within the company as legal representatives of each of the clients. Ownership of common stock in a corporation gives - ✔✔an interest that is classified as personal property At the closing on June 15, the buyer is assuming a mortgage presently on the property, on which the monthly interest charge is currently $600. The seller has made the payment due on June 1. Assuming a VA mortgage, what is the adjustment made at closing? - ✔✔Debit seller $300; credit buyer $300 Too much leverage may result in - ✔✔negative cash flow A major reason for buying and owning a condominium rather than a detached single-family home is that - ✔✔a condominium tends to be more affordable An adjustable rate loan should include all of the following elements - ✔✔1. margin 2. life-of-the-loan cap 3. index Regulation Z requires that the borrower be fully informed of all of the following - ✔✔1. loan fees. 2 .the origination fee. 3. the annual percentage rate A couple signed a lease on an apartment for a period of 1 year. The lease does NOT contain an automatic renewal clause. The couple plans to move out at the end of the lease rather than renew it. How much notice MUST they give to comply with the lease term? - ✔✔No notice is required The relationship in which the agent is placed in the position of trust and confidence to the principal is known by the term - ✔✔fiduciary A couple are moving to a new city. They have decided to rent temporarily before buying a house to see which part of the city they would like to live in. What type of lease would BEST suit the couple's needs? - ✔✔Month-to-month lease A broker says, while showing a rural property, "This property has the world's purest well water." This would be an example of - ✔✔an expression of opinion, or puffing, which could lead to misrepresentation A contract has been drawn which obliges the sellers to convey title to their land to the buyers if the buyers come up with $22,000 on or before December 31st. This is called - ✔✔an option contract Errors and Omissions insurance covers the broker for - ✔✔unintentional misrepresentations The land description T3N, R4W Principal Meridian refers to what method of property description? - ✔✔Rectangular survey. All of the following are methods to calculate the reproduction or replacement cost of a building EXCEPT - ✔✔straight-line method The buyer is assuming a mortgage presently on the property in the amount of $110,000. What is the adjustment made at closing? - ✔✔Credit buyer $110,000; debit seller $110,000 A salesperson lists a property with a contract that allows for subagency and dual agency. The salesperson is - ✔✔an agent to the broker and a subagent to the principal. The amount of commission to be paid is - ✔✔agreed upon by the seller and agent on the contract. An appraiser MUST be licensed or certified to handle Federally related work on residential property valued at more than - ✔✔$250,000 An odorless, radioactive gas that can cause cancer - ✔✔Radon The document used in a real estate sale that establishes the legal rights of the buyer and seller is the - ✔✔purchase contract A prospective seller asks a salesperson to recommend a listing price for a property. The salesperson should suggest - ✔✔a competitive market analysis to determine the property's value. Two lots of the same size are sold on a street. The lot on the corner sells for $20,000 more than the lot in the middle of the street. Which of the following characteristics MOST likely explains the price difference? - ✔✔Situs An agency relationship between a property owner and a property manager is usually created by - ✔✔management agreement . On January 15, a seller paid $960 in annual property tax for the current calendar year. A buyer is purchasing the house with the closing set for March 1. What will be the seller's credit for the property taxes already paid if the buyer pays for the day of closing? Use a 360-day year and a 30-day month. - ✔✔$800 Which of the following is NOT usually prorated at closing - ✔✔Special tax assessments Which of the following is usually prorated at closing? - ✔✔1. Homeowners association fees. 2. Property taxes. 3. Transferred homeowner's insurance. In MOST states, foreclosed property is sold through - ✔✔public auction A commercial property lost value because a recently constructed highway moved traffic away from the property. This is an example of - ✔✔economic or external obsolescence A managing broker can be held responsible for - ✔✔all real estate activities of salespersons. What is the term used for the person or organization who acts as an intermediary for the purpose of obtaining Financing? - ✔✔Mortgage broker According to the Truth-in-Lending Act, if any "trigger terms" are used in an ad, all of the following disclosures MUST appear in the ad - ✔✔1. cash price or amount of the loan 2. amount of down payment required 3. number, amount, and frequency of payments In an exclusive right-to-sell listing, an owner lists the property for sale with how many brokers - ✔✔One A seller tells the listing agent that her home was treated for termites 10 years ago, so there are no termites now. Before listing the property, the agent should - ✔✔tell the seller to disclose the termite treatment on the property disclosure When a principal authorizes an agent to perform a particular act or transaction, it is an example of a - ✔✔special agency The day after a broker's listing on a house expired, it was listed with another broker and offered in the MLS. Several days later, a third licensee called the first broker and asked for the key to show the home. The broker should inform the caller that - ✔✔he is no longer the listing agent If conditions for purchase are included in a deed and these conditions are violated, what is the penalty? - ✔✔Return of the property to the original owner Which is true of BOTH special assessments and ad valorem taxes - ✔✔Deliquent payment is grounds for sale of property Why was the Jones vs. Mayer decision of 1968 important? - ✔✔By upholding the Civil Rights Act of 1866, the Supreme Court removed all exceptions to racial discrimination in housing An Environmental Impact Statement (EIS - ✔✔projects the impact on the environment of a proposed project. Which of the following BEST illustrates the concept and intent of a buffer zone? - ✔✔Garden apartments located between a single-family residential neighborhood and a shopping center. A broker has brought a ready, willing, and able buyer to a seller. In MOST listing contracts, the broker has earned his commission when - ✔✔the seller accepts the offer Which rule-of-thumb version is being offered to an investor who is told that a house renting for $900 a month should sell for about $90,000? - ✔✔GRM A judgment has been properly recorded. Any subsequent purchasers, whether they have actually examined the record or not, have been given - ✔✔constructive notice When a property owner uses his home as collateral for a loan and creates a lien in favor of the lender, title is held by the - ✔✔mortgagor The buyer wants to make the purchase offer contingent on a complex mortgage arrangement. The buyer's agent Who is drawing up the contract should - ✔✔suggest the buyer ask a lawyer to furnish the wording The practice of inducing panic selling in a neighborhood for financial gain is - ✔✔blockbusting. The real estate contract for a specific property for use as an unlicensed whiskey sales operation was forced to terminate. The termination was the result of - ✔✔impossibility of performance The sellers have agreed to give the buyer a carpet allowance to replace the family room carpet. They will allow $19.95 per square yard for carpet plus $5 per square yard for pad and installation. If the family room is 22'6"x 15', how much will it cost the sellers (to the nearest cent)? - ✔✔$935.63 The Department of Housing and Urban Development estimates that most private homes built before 1978 contain potentially dangerous levels of lead. Because of this, some Federal agencies, such as FHA, - ✔✔require the buyer to acknowledge disclosure of the presence of any known lead paint A tenant rented an apartment, signing a 15-month lease. After the lease expired, the tenant paid 1 month's rent and got a receipt. What kind of leasehold goes the tenant have? - ✔✔Holdover tenancy How does a creditor who has obtained a judgment get satisfaction against a debtor who will not pay? - ✔✔Writ of execution Timeshare ownership programs MOST often use which of the following ownership forms? - ✔✔tenancy in common In every real estate transaction, a legal description of the real estate MUST appear in the transaction documents. What kind of legal description should be used in MOST transactions? - ✔✔the same one used in prior transfers of the parcel, verified by a surveyor A landowner wishes to build a neighborhood grocery store on a busy street in an area zoned for residential use. Which of the following would MOST likely be used to obtain permission for this store? - ✔✔Conditional use permit or zoning varience An environmental impact statement typically describes the effects of a proposed project on factors such as - ✔✔public health and safety Although states make specific laws governing water rights and the rights in land that borders water, most states generally follow one of two basic doctrines regarding water rights. Either riparian and littoral rights are automatically conveyed with property, or all water rights are controlled by the state under the doctrine or prior appropriation. The doctrine of prior appropriation is MOST likely to be followed in states where - ✔✔water is scarce When more than one approach to value is applied to a property and different indications of value are produced, how should the final estimate of value be determined? - ✔✔Reconciliation When preparing a market data estimate of value, which of the following categories of adjustment is essential? - ✔✔1. the date of sale of the comparables 2. the amount of square footage 3. the location of the property If all other factors are equal, in which location is a parking lot likely to bring the highest sales - ✔✔business district zoned for a six-story office building Parcels A, B, and C are located side by side and owned by three different owners. A is worth $20,000, B is worth $27,000, and C is worth $16,000 for a total of $63,000. A developer believes that if all three can be purchased, the larger parcel would be worth $85,000. By assembling these under one owner they would be worth $22,000 more than their individual values. This demonstrates which principle of value? - ✔✔plottage A loan which requires the borrower to pay interest only until the maturity date (or due date), and then pay the entire principal on the maturity date, is called a - ✔✔term loan The real estate licensee who accepts an undisclosed fee for referring a buyer to a specific title company may be in violation of - ✔✔RESPA Which of the following events would AUTOMATICALLY cancel a listing agreement? - ✔✔property owners death Another term for the owner of a property listed with your firm is the - ✔✔client A contract has been drawn which obliges the sellers to convey title to their land to the buyers if the buyers come up with $22,000 on or before December 31. This is called - ✔✔an option contract An agreement to purchase that has NOT yet closed is - ✔✔an executory contract An amount of money, agreed to in writing by buyer and seller, that will serve as full compensation if one party does not live up to a sales contract is called - ✔✔liquidated damages For Federal income tax purposes, which of the following are costs of homeownership that may be deducted from gross income? - ✔✔Mortgage loan interest, local property taxes, mortgage loan origination fees When someone has living heirs but dies without leaving a will, the estate is distributed according to the - ✔✔statue of descent The Civil Rights Act of 1866 prohibits any type of discrimination based on - ✔✔race An agent shows a home to a couple and mentions that it has a lovely fireplace in the living room. After buying the home, the buyers and agent discover that the brick fireplace is just a decorative fireplace and is not "wood burning." Which of the following would BEST protect the agent from financial loss? - ✔✔E&O coverage The sellers have agreed to give the buyers an allowance of $16.95 per square yard to retile the kitchen. If the kitchen is 10 feet x 14 feet, how much will it cost the sellers (to the nearest dollar)? - ✔✔$264 A couple bought a rental house for $195,000. Its assessed value was $180,000. If the tax rate is $1.50 per $100 of assessed value, what is the monthly contribution the lender will REQUIRE for taxes? Round to the nearest cent - ✔✔$225.00 The economic characteristics of land are - ✔✔scarcity, location, and durability A homeowner is willing to let his neighbor park an RV in his backyard. He does NOT want to make the permission permanent in case he dislikes others who might move next door in the future. What should he give his neighbor? - ✔✔A license Which of these Federal laws regulates the advertisement of a lender's credit terms (rates, payment, etc.)? - ✔✔Regulation Z Which of the following may be considered prima facie evidence of discrimination by a broker? - ✔✔Failure to display the equal housing opportunity poster at the broker's place of business An agency relationship based on a formal agreement between the parties, either written or verbal, is - ✔✔express agency An agency relationship based on the actions of the parties is - ✔✔implied agency An agent has a fiduciary relationship with the - ✔✔client or principle The type of agency that exists between the real estate agent and his client is usually - ✔✔special agency In Louisiana, the law states that, unless there is a written agreement to the contrary, the agent represents - ✔✔the person he is with Representing two principals to a transaction without the knowledge and consent of both is - ✔✔undisclosed dual agency What is grounds for termination of an agency relationship - ✔✔1. mutual agreement 2. destruction or condemnation of the property 3. death or incapacity of either party An agency relationship in which the agent is given an interest in the subject of the agency, such as the property being sold is called - ✔✔agency coupled with an interest An example of price fixing would be - ✔✔two brokers agreeing to set the same fee structure. An agent representing both the buyer and seller in a transaction with the written consent - ✔✔a disclosed dual agent. An agent for a seller must disclose his agency relationship to the buyer when? - ✔✔at the first substantive contact The person who is represented by the licensee is the - ✔✔principle A vendor wants to give you, the agent, a gift for services. What should you do? - ✔✔Tell your broker Once a seller accepts a ready, willing, and able buyer, the agent is entitled to a commission because of the principle of - ✔✔procuring cause A buyer makes an offer on a house. Before the listing agent has had a chance to present the offer to the seller, a better offer comes in. What should the agent do with the first offer - ✔✔present it along with the second offer When an agent should have known that a statement about a material fact was false, this is called: - ✔✔negligent misrepresentation There are three basic types of buyer agency agreements. In which type is the agent guaranteed a commission regardless of who sells the property? - ✔✔exclusive buyer agency The intentional misrepresentation of a material fact is: - ✔✔fraud Which of the following is NOT required to have a real estate license? - ✔✔1. anyone selling his own property 2. attorneys selling property as part of their professional duties for a client. 3. appraisers, trustees, and escrow clerks When the commission is shared between the listing broker and the selling broker, this is known as: - ✔✔broker cooperation If an agent is working as an independent contractor for the broker: - ✔✔the agent is responsible for paying his own Social Security and income taxes A hidden structural defect that would not be discovered by ordinary inspection - ✔✔latent defect Which of the following is an agent required to disclose to a potential buyer? - ✔✔the property contains asbestos insulation An owner agrees to pay a commission if his property is sold but doesn't want to sign a listing agreement. What type of agency is this? - ✔✔Express Which of the following is NOT a valid reason for terminating an agency relationship - ✔✔The seller decides he would rather sell the house himself [Show More]

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