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8.
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You had a listing where the seller was desperate to sell and he told you that he would take much less than the asking price. You worked diligently but no offers were made and the listing expired. The seller lists the property with another broker. Later on, one of your buyers is interested in the seller's property. Are you able to tell your buyer what the seller told you about being desperate to sell and being inclined to take a low offer?
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Just because the seller is no longer your principal does not mean that there is no duty of confidentiality. A duty of confidentiality survives the expiration of the listing agreement. Even if you have a broker agreement with a buyer, you cannot divulge anything told to you in confidence under a principal-agent relationship. If anyone else had given you this information, or if the information came to the buyer through an independent means, it would be permissible to advise the buyer with the information to get the best possible deal. There are six duties an agent has to a principal: - Obedience - to take direction from the principal
- Loyalty - put the principal's interests first
- Disclosure- disclose anything to the principal that could help or hurt them
- Confidentiality - do not repeat anything that the principal told you in confidence
- Account - keep the seller informed and safeguard any money they may entrust to you
- Duty of reasonable care and diligence - use all skill to best of ability on behalf of principal
Duties to third parties include fair and honest treatment, following the letter of the law, and giving someone information about something that could potentially hurt them, even if you don't represent them.
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11.
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What information is published by the New Jersey Department of Community Affairs pertaining to leasing property in New Jersey?
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This booklet, introduced in 1976, remains the definitive tenant-landlord guide. It keeps agents, tenants and landlords informed on the issues involved in renting/leasing real estate. Available in English and Spanish, you can find information regarding security deposits, the ADA, public housing, mobile home parks, smoke detectors pets, etc. This pamphlet should be given to new tenants, is available online and can keep everyone informed and compliant. Truth in lending is given to consumers who are borrowing money and Consumer Briefs are published by the New jersey Division of Consumer Affairs.
Incorrect answer. Please choose another answer.
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12.
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In 1975, steps were taken to adjust the zoning requirements in every municipality in New Jersey. It was designed to make sure that the income groups represented in the population, which included low and moderate incomes, had a fair amount of housing or upcoming development. The catalyst was a community that had a very high percentage of buildable land zoned as industrial, leaving none for residential development. This ruling was not followed by most municipalities causing a second decision. The Fair Housing Act of 1985 built upon the prior legislation by adding time limits and guidelines for housing standards. It also provided a remedy for non-compliant municipalities by allowing the state to bring legal action. What was the original court case that started the measures described in the 1975 case?
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The Mount Laurel decisions in 1975 changed the way the state became involved with local implantation of land use and zoning. Although compliance was at a minimum, causing secondary action to be taken, the decisions were far reaching and still apply today. Affordable housing is described as housing that requires thirty percent or less of the renter or owners' income. Municipalities are to use the guidelines of eight to one, one affordable unit for every eight higher priced units. They can also choose to use the affordable housing obligation to build senior housing, or to pay another town to take their allotted affordable housing responsibility. Jenkins v. Morristown, the Supreme Court of New Jersey held that the state's education commissioner had the authority to mandate the of school district boundaries to foster racial balance in the educational system. Clove Hill Swimming Club v. Goldsboro, the New Jersey Supreme court ruled a private swimming club could not base membership on race. Abbot v. Burke provided for funding for poorer school districts to ensure students receive an education in accordance with the state constitution.
Incorrect answer. Please choose another answer.
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20.
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The Farmland Assessment Act was enacted by the state Treasury Department to assist farmers from the rising property taxes in New Jersey. Farmers can apply for relief from assessed values as long as they meet certain requirements, like having been in production for the two years preceding the application. One goal of the legislation is to help protect the open space that many farms provide. Development has caused New jersey to be the most densely populated state in the country. To quality under the Act, how many acres, at a minimum, must a farmer have actively devoted to agriculture or horticulture use?
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To qualify for Farm Assessment, land actively used in agriculture or horticulture must be a minimum of five acres in size. In making the area calculation, land under a barn, shed and seasonal farm market are counted but the land under a farmhouse and other lands associated with the farmhouse are not counted. If the Farm Assessment is used, the qualifying land is assessed at its productivity value. The official nickname of New Jersey is the "garden state". Once abundant with fruit and vegetable farms, it is believed that Abraham Browning of Camden stated on August 24th, 1876 on New Jersey Day, that "New Jersey is a barrel, filled with good things to eat and open at both ends, with Pennsylvanians grabbing from the bottom and New Yorkers from the other end." That led to the garden state theme and in 1954 the nickname became official and was added to license plates. We have more farms than some other states but we have a lot fewer than we used to have. Measures like the Farmland Assessment Act work to reduce the tax burden on farmed land and help preserve the open land.
Incorrect answer. Please choose another answer.
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31.
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Smith, who is a licensed real estate salesperson, has listed a property that he owns with his uncle. Another agent has presented an offer and Smith is preparing an agreement of sale. What must be in the agreement to avoid a conflict of interest for agent Smith?
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Not only must the agreement of sale disclose that Smith is an owner of the property, but the listing should have clearly stated the same, and Smith should have verbally informed the buyer before showing them the property. A real estate salesperson, with an interest in the property being sold, has a conflict of interest in the transactions as to the other parties. A real estate salesperson must disclose his or her interest because the other parties have a right to know if an agent will benefit in any way and where his or her loyalties lie. Although the other answers are all parts of a proper sales agreement, the ownership issue is what creates the conflict. Other examples of conflict of interest (without full written disclosure) include referring a friend or relative to furnish goods or services to your client, recommending a property that you stand to benefit from, purchasing your own listing, collecting more than one commission on a sale and helping a relative purchase your listing.
Incorrect answer. Please choose another answer.
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37.
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Mary has rented a storefront and is opening a hair salon. After cleaning and painting the interior she installed several barber chairs, sinks and shelving. After a few years, Mary decided to move to a new location. She gives notice and moves out most of her things on the last day of the lease. She is trying to locate a handyman to move the affixed items and repair any damage caused by the move. At this point, who owns the trade fixtures?
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The status of trade fixtures change as the rental term begins and ends. They begin as Mary's personal property but become trade fixtures as soon as they are installed. Once the lease ends and Mary leaves, they become the landlord's personal property. For a commercial tenant to be able to remove a trade fixture, the trade fixture must be necessary for the tenant's business, be removable without damage to the landlord's property and must be removed within in the time of the lease. If you know you will not have everything removed, repaired and cleaned by the lease end date, you need to make written arrangements with the landlord as to when you will be finished. He is under no obligation to agree, and you should always make sure you are ready to leave when you are scheduled to go. The owner could have signed a new lease to start the next day and if you cause him any monetary loss it will be your responsibility to pay it.
Incorrect answer. Please choose another answer.
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39.
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Jack and Karen, who are brother and sister, own a property together. If one of them should die, the other will automatically own the whole property even if they both have heirs. What form of ownership do Jack and Karen have?
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Joint tenancy is a form of ownership with rights of survivorship. It is formed when the intent of the parties to own property as joint tenants is stated in the documents evidencing ownership, like in a deed. Joint tenants each own the entire property. In this scenario, if Jack dies, Karen will then own the entire property in severalty, meaning as one owner. When an interest in joint tenancy is sold by one of the owners, the ownership converts to tenancy in common. Tenants in common do not have survivorship rights. Further, unlike joint tenants, tenants in common can hold different amounts of interest in the property, like one party can own 25% and the other have 75% interest. Although, even in tenancy in common, the owners have a right to use the entire property. A tenancy by entireties is held by married couples and also has survivorship rights.
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40.
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The right to own property is more than owning your house and yard. There are other rights that are included such as the rights to well water and mineral rights. What other ownership rights come along with the deed to your property?
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Even though it may seem odd, a property owner can sell or lease the air rights they own above their real estate. Simply put, air rights are a property owner's rights to the air above them, which is included as part of their property. If zoning laws permit, you could build as high as allowed, and you could sell the air rights as well. In Manhattan, air rights sell for an average of $225 per square foot, according to the planning department. Compare that to the national average building cost per square foot of $64.44, according to the census bureau. But do not put the sale sign up yet! Because of air traffic the government can regulate the air space just as our waterways are controlled. Navigable water is controlled by Congress, as our waterways were and still are an important necessity of commerce. You have no right to cross your neighbor's property without express written permission or easement. The sale of firearms is strictly enforced and laws vary by state, county and municipality.
Incorrect answer. Please choose another answer.
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43.
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Mrs. Jones is the owner of a large parcel of land that has been in her family for generations. Recently there was a zoning change in her town and the land can now be subdivided into small parcels. Mrs. Jones had promised her family that the land would remain as it always was and pass down through the coming generations. What step can she take to ensure her property will remain a single undivided parcel with future owners?
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A deed restriction is a limitation on the use of the property that is placed on the deed by its owner, typically when it is transferred by deed. The transferee or buyer voluntarily consents to the deed restriction and agrees to abide by it. It applies to all future land owners, except if limited by a time limit. An example of a deed restriction is a limit to build a house in a certain style or with a certain size. In this scenario, by putting a deed restriction in the deed, it will remain a single undivided parcel. Many homeowner associations of planned developments enforce deed restrictions, often called restrictive covenants, that the developer may have put in the master deed, such as pool size restrictions, vehicles, paint and roofing colors etc. A deed restriction cannot be for an illegal use. Many very old deeds contained restrictions against ethnicity, which were no longer valid as discrimination laws were formed.
Incorrect answer. Please choose another answer.
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47.
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Real estate agents often offer their clients a basic analysis to help a seller determine what a house should sell for. Called a Comparative Market Analysis or CMA, they usually use a sampling of sold properties, and sometimes include properties for sale to see what the current competition would be. A CMA is similar to which of the following appraisal methods?
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In a CMA, a real estate agent typically considers lot size, how many bedrooms and baths, amenities, type of heat and air conditioning and condition of the homes. Most agents use 3 sales, sold within the last 6 months and are as similar as possible to the subject property. Then adjustments are made due to the differences between the subject property and the comparable sold homes. This approach is similar to one used by a certified licensed appraiser. But the appraiser's report goes much further. It is based on comparable sales, but also uses the principal of substitution, highest and best use of the property and other formulas to get the most accurate estimate of value. An appraisal is an estimate because the only way to know what a property is really worth is what a ready, willing and able buyer will pay for it. To find comparable properties, an appraiser would compare neighborhoods as well as certain features of the homes.
Incorrect answer. Please choose another answer.
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49.
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Tom and Barb bought a house for $250,000 ten years ago. They put 20 percent down and took out a $200,000 mortgage. In ten years, most of their payments have gone to interest, and the principal is at $160,000. The property is now appraised at $325,000. How much equity does the owner now have in the property?
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Equity is the monetary difference between the appraised value of your home and any debts against the home like a mortgage or any other debt secured by the property. Here, the facts say the property is appraised at $325,000 with a mortgage balance of $160,000. If you minus the $160,000 from the appraised value of $325,000, it leaves you with $165,000 in equity. The other numbers involved in the question are red herrings.
Incorrect answer. Please choose another answer.
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53.
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What is the acronym for the type of loan that features interest rate changes?
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There are many different types of mortgages and loans. One of those is the adjustable rate mortgage (ARM). Most loans are fixed rate, meaning the interest rate on your mortgage will stay the same during the life of the loan, usually 30 years. An ARM is flexible, with rate changes based on several factors. One is the margin, basically the lender's profit. Another is the Index, based on different financial markers, for example Treasury Bills, MTA's or LIBOR. The initial rate starts lower than the current rate and is fixed for a specific time. After that time period is over, the rates will change (often yearly) based on the market indicator the index was based on. The amount the rate can go up or down is capped at a certain percentage, and the amount the loan can change in its lifetime is capped as well. ARMs are popular in a climate of rising interest rates. Instead of being stuck with a higher rate for 30 years, you can benefit when the rates go down again without the time and expense of refinancing.
Incorrect answer. Please choose another answer.
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58.
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Of the five factors considered in a FICO credit score, which factor typically carries the most weight?
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A large part of determining what kind of loan a borrower qualifies for depends of his or her credit score. As with the down payment and total income, the credit score will show the lender what kind of risk the borrower is. According to Experian, scoring is based on 5 factors, each contributing different levels of importance to your total score. The most important is your payment history, which counts for about 35% of the total score. Next is utilization and keeping your credit balances low, which counts for about 30% of the total score. Next is length of credit history, the longer the better, which counts for about 15%. The fourth factor is recent activity. If a bank sees you attempting to borrow other money just before or during the current application, it's a red flag. Recent activity counts for 10%, as well as credit mix, meaning how diverse is your revolving debt. These five things can help you attain good if not great credit, and can open up a world of possibilities.
Incorrect answer. Please choose another answer.
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60.
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What is the basic entitlement under a VA loan if a borrower defaults?
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Government Guaranteed Loans, commonly known as VA or GI loans, were established in 1944, to assist the men and women returning from World War II. In order to make it easier for veterans to buy a home, the Department of Veteran Affairs passed the GI bill, and a large part of that bill was the government guaranteed VA loan. The government would guarantee 25% of a veteran's mortgage (up to $36,000) on a property up to $144,000 and the guaranteed portion is called an entitlement. This allows the veteran's money to go much further. The amounts are set by the FHFA and can change over time depending on area and rising housing prices. In 2018 the average price of a home in the U.S. was $315,000, reinforcing the need for assistance to those who serve. There is also a secondary entitlement available in the amount of 85,067, when added to the first amount gives the veteran up to $121, 087.This could be used as a 25% guarantee of a more expensive home (as long as the buyer qualifies), or a second property when the first entitlement is still in use. The entitlements remain the same even if the buyer defaults on a loan. Other benefits of a VA loan include little to no down payment, no MIP (Mortgage Insurance Premium) utilization of both entitlements at the same time and the ability for qualified spouses and even children to retain a deceased veteran's benefits.
Incorrect answer. Please choose another answer.
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78.
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Rachel has a contract to sell an undeveloped tract of land to Steve and the contract has a closing date of September 10th. Rachel prepared for closing and was ready to close on September 10th, but Steve was not ready for closing and requested an extension. What condition should Rachel have included when the contract was drawn, and can be made a condition of an extension, if granted?
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Time is of the essence means that all parties to the contract will perform and complete their responsibilities by a certain date. Failing to perform on time results in a breach of the contract. Without a time is of the essence clause, contracts may be interpreted to allow a reasonable time to perform, and if and when a contract is breached is more indefinite. In this scenario, if Rachel's contract did not have a Time of the Essence clause, it would be advisable to include a Time is of the Essence clause into the contract with an agreement on an extension, so Steve will be motivated to be ready on time at the next closing date, and if he's not ready, Rachel can declare a breach if she so chooses.
Incorrect answer. Please choose another answer.
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79.
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Carl lists his home for $470,000. John offers $455,000. Carl counters with $460,000. John rejects the counter offer. A few months later, Carl has received no other offers. Can he accept John's offer of $455,000?
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When Carl made a counteroffer to John, it cancelled John's counteroffer. A counteroffer negates the previous offer. In the scenario, there is no offer left to accept as all offers were either cancelled by counteroffer or rejected.
Incorrect answer. Please choose another answer.
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91.
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What are the TILA disclosures at closing?
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TILA is the Truth in Lending Act, established to protect consumers from hidden fees when borrowing money. It was merged with RESPA, the Real Estate Settlement Procedures Act requiring buyers be provided with all the details of their mortgage loan. The statutes were similar but different, and the confusion led to the combining of the two, known as TRID, the TILA RESPA Integrated Disclosures. It still dictates that buyers must be given a written accounting of all the costs of the loan and loan process when the buyer applies for the loan, and includes loan amount, APR (annual percentage rate), payment schedule and other pertinent information. There is much less confusion and more transparency. Answer a is the affidavit of title, title pricing is regulated by the state and the lender will track where the money originates by requiring bank statements, etc.
Incorrect answer. Please choose another answer.
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110.
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John and Mary bought their home in 2016 for $200,000. They were required by the lender to put 20% of the price as a down payment. Within a year of the purchase, housing like theirs has appreciated 10% in value. How much equity do John and Mary have in their home?
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When John and Mary put 20% ($40,000) of the purchase price down on the house that amount became instant equity. The appreciation of 10% of their home they paid $200,000 for equals $20,000. The total of the down payment plus the amount of the appreciation equals $60,000. Very little equity would have resulted from paying down the mortgage since the payments in the early years are almost all interest.
Incorrect answer. Please choose another answer.
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112.
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A borrower is purchasing a home for $320,000 and putting 20% down with a mortgage. He wants to reduce his interest rate on the mortgage by buying two points from the lender. How much will the points cost the borrower up front?
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A borrower will pay 1% of the mortgage amount per point as way to buy down the mortgage rate. To determine how much the points cost, first find the mortgage amount and multiply that number by 2%.
Mortgage amount = $320,000 x .8 = $256,000 Two points = $256,000 x .02 = $5,120
Incorrect answer. Please choose another answer.
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113.
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Jane Doe lists her property with you but she is not willing to pay a 6% commission, as is the policy of your broker. You explain how the commission rate will drive agents to work hard for the sale and after negotiating a bit longer, Jane agrees to pay 6% IF she can net $325,000, otherwise she will pay 5%. What would be the lowest price you could list for if you want the 6% commission, considering the other closing costs are paid outside of closing?
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In order to arrive at the lowest acceptable offer, take the desired amount and divide by 94% (.94). The quotient will be lowest possible selling price to allow for a six percent commission.
325,000 / .94 = $345,744 $345,744 x .06 = $20,744 $345,744 - $20,744 = $325,000
Incorrect answer. Please choose another answer.
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