Tax & Real Estate Property – Business
This chapter is about Tax Definition & Real Estate Property-business
the business practice of bringing together the parties in a practice.
What are two examples of special use property?
schools and cemetary
What is an example of functional obsolescence?
a consumer of real estate services who has entered into an agency relationship with a broker or another licensee employed by a broker.
the process of determining the present value of a property from it’s future income.
What is the salespersons obligation to a buyer under single agency listing?
Inform the buyer
All are examples of real estate except…
What is homeowners insurance?
Insurance to protect owners from fires and other etc.
Special agent definition…
the type of agency in which the principal authorizes the agent to represent the agent in “one specific transaction or business activity”
Which is not used to determine cost approach to estimate value?
-Quantity Survey Method
-Square Foot Method
-Gross Rent Multiplier Method
Gross Rent Multiplier Method
What is steering?
the unlawful act of keeping a buyer away from certain communities or guiding them to purchase in certain communities.
Entitlement to commission when transaction is not consummated.
Except when listing broker does not disclose information
Can a salesperson give legal advice?
No, not unless they are an attorney.
Who determines the commission in a listing contract?
An agreement between the owner and broker
All are typical duties of a property manager with the exception of…
Transfer tax is typically paid by for by whom?
Buyer and seller
An illegal real estate practice caused by inciting fear and panic selling by suggesting that persons of minority background are or may be moving into an area or that the majority of residents are moving out of an area.
Special agency listing definition…
Net listing definition…
a type of listing in which a seller desires to sell real property and receive a guaranteed amount of money for the sale, so that the broker’s commission is any sale price amount of money over and above the guaranteed price to the seller.
The main factor a property manager should use to evaluate a prospective tenant is
can they make monthly rent payments on time.
All are examples of single agency disclosures with the exception of
revealing the owner will except less.
What is the most reliable method of appraisal for residential real estate?
Sales comparison approach
consolidating two separate lots into one.
What would not be a depreciation of value?
What has the greatest effect on real estate value?
Demand of people and location
What rules require fair housing laws to be in a listing contract?
PA Human Relations Act
Typically who pays for title insurance?
What is the transfer tax charged by the state of PA?
1% of the sales price
What should you do about material defect disclosures?
inform the buyer and seller
What is private mortgage insurance?
It protects the lender if their is default
What is the first step in the appraisal process?
Indicate objective of appraisal
What is an example of external depreciation?
Nearby property that suffers from lack of maintenance and is negatively affecting the sellers property.
Who does a selling salesperson represent under buyer agency?
What is not an example of a real estate business violation of the antitrust laws?
opening offices in new locations
the value of real estate above any debt on that property.
Who are the parties in a listing agreement?
owner and listing broker.
All are examples of fiduciary responsibilities under a single agency listing agreement except.. .
negotiate lowest price.
the process of comparing the property values derived from different approaches to value, selecting the most suitable approach for the particular property being appraised and coming to a final conclusion of value.
The following are typical property management operation expenses except…
The following are examples of agricultural property except…
government owned rural land
associated with normal wear and tear.
Proper listing price of the property…
based on seller
Exclusive Right to Sell Listing definition…
A type of listing to list and sell real estate property in which the seller employs one broker but that broker earns a commission “no matter who sells the property including the owner”
What type of property would be most appropriate to use the cost approach method?
25 year old church
Definition of appraisal…
supportable estimate of value
What is the PA law that prohibits discrimination in housing?
PA Human Relations Act
Is special price setting allowed for certain categories of people?
No it’s illegal
When is the consumer notice given?
At the first discussion of needs and motivation.
What are the conditions to when an agreement of sale becomes a binding contract?
When the buyer accepts the offer and the seller is notified.
What does the C stand for in the fiduciary dities
Care and confidentiality
Characteristics of sale and leaseback…
buyer becomes lessor
What is a broker’s obligation to a buyer without buyer agency?
Give the agreement of sale
the unlawful practice of refusing real estate related business services based on location of a person’s real property. ie: lending institutions or insurance companies
What is a way of termination a listing agreement?
What is a type of depreciation that is not curable?
Disclosure requirements to a seller under a listing agreement force brokers to disclose info except…
the buyer had AIDS
Sale and leaseback definition…
a combination real estate transaction where there is both a sale of real property by an owner and then an immediate lease on the same property giving the seller the right to remain in the same property that was just sold.
All are characterisitics of a contract for a deed except…
the buyer receives title when the contract is signed.
Who is considered the lender in a purchase money mortgage?
What is the purpose of RESPA?
to to provide disclosure of closing cost info.
Purchase money order is a debit to the…
Debit to the SELLER (It’s a loan in which the seller provides financing to help buyer)
Balloon Mortgage definition…
A mortgage with a balloon payment
Obligations of an owner in a listing agreement if he refused to sell when presented with a full offer…
He is liable for broker compensation
Is undisclosed dual agency allowable by law?
No, you can lose your license.
Earnest money deposit is a credit to whom
to the buyer
Convert 3 mills to a decimal
Loan origination fee is a debit to whom?
What is prorated by day on a HUD 1?
Interest on an assumed mortgage
What is the source of money for an FHA loan?
A qualified lending institution
What is the role of a mortgage broker?
To find mortgage lenders for borrowers.
What is true about the contract rules regarding printed form sales agreement?
Handwritten words take precedent over printed words
What is a shares appreciation mortgage?
The lender receives a share of capital gain at time of sale.
Determine the value by the Income Approach formula
NET INCOME divided by RATE OF CAPITALIZATION
Fiduciary responsibility in a property management contract is to the
What is the formula for the Gross Rent Multiplier?
SALE PRICE divided by MONTHLY RENT
All are federal income tax deductions for a homeowner except…
An example of an item that is prorated at settlement is…
Paid tax is a credit to whom?
Credit to the Seller
Selling agent represents who in a single agency listing agreement? (Scenario Question)
Dangerfield represents Crawford
What represents dual agency?
1 broker with listing agreement and buying agreement
In a comparison between a land contract and a purchase money mortgage which is true?
Both represent forms of finacing
What is a characteristic of a VA Mortgage?
Must sign an affidavit saying that they intend to occupy the property.
What is a mortgage that includes both real and personal property?
What is a mortgage that will not fully amortize the loan?
Regulation Z requires lenders to…
inform borrowers of HOME MORTGAGE LOANS of closing cost
What is a mortgage that encumbers several parcels of land?
The mortgage amount relative to the property price is called…
Loan to Value
What is a characteristic of negative amortization?
They are commonly found on Adjustable Rate Mortgages (ARM)
What is the max profit a married couple can take on capital gain?
What is a fair housing exemption? (OLD PERSON COMMUNITY SCENERIO)