1. A first-year licensee without either a degree in finance, or a strong background in real estate investment should generally refrain from:
A. listing commercial income property. Correct
B. representing an owner who wants to sell raw land to a developer.
C. representing a first-time home buyer.
D. acting as the seller's agent in selling an oceanfront lot to a retiree.
Explanation
Commercial income properties require specialized knowledge of finance and investment analysis, which a new licensee may lack. Residential transactions, like representing a first-time buyer or selling a lot, are more straightforward. Inexperience in complex commercial deals risks errors and liability.
2. Which of the following laws are enforced by the Consumer Financial Protection Bureau (CFPB)?
A. RESPA and TILA Correct
B. TILA and Anti-Trust
C. RESPA and the Fair Housing Act
D. Anti-Trust and the Fair Housing Act
Explanation
The CFPB enforces RESPA and TILA, which regulate real estate settlement procedures and truth in lending. These laws ensure transparency in mortgage and closing processes. Anti-trust and Fair Housing are handled by other agencies.
3. Buyers write an offer for $325,000 with 20% down payment, which is accepted. They must pay 1 1/2 discount points to obtain financing. What amount will they owe for points?
A. 2437. 50
B. 3900 .00
C. 4875 .00 Correct
D. 6500 .00
Explanation
The loan amount is $260,000 (80% of $325,000). One and a half points (1.5%) of $260,000 equals $3,900. Discount points are fees paid to reduce the interest rate.
4. In most states, for a deed to be recorded, it must be in writing and
A. signed by the buyer.
B. include the sales price.
C. acknowledged. Correct
D. free of all liens.
Explanation
A deed must be in writing and acknowledged (notarized) to be recorded in most states. Acknowledgment verifies the grantor's identity and intent. Sales price and buyer signature are not required.
5. A buyer signs an offer and the listing broker submits it to the seller. What would the outcome be if the seller signs it and puts it in a desk drawer?
A. The contract is not binding on the buyer because the buyer wasn't informed of the seller's acceptance. Correct
B. The contract has been signed by both parties and is binding.
C. Equitable title has been passed to the buyer.
D. The buyer can sue for specific performance.
Explanation
A contract requires acceptance to be communicated to the offeror to be binding. If the seller signs but does not inform the buyer, no contract is formed. The buyer cannot be bound without notification.