Missouri Real Estate Exams — Missouri Real Estate Exam Study Guide PDF State Portion
1. A percentage lease is generally used for what type of property?
Answer: A
A percentage lease is generally used for retail properties.
A percentage lease is typically associated with retail properties, where tenants pay a base rent plus a percentage of their sales revenue. This arrangement benefits landlords by aligning their income with the tenant's sales performance.
A) retail
This option is correct because percentage leases are most commonly utilized in retail settings. They allow landlords to share in the success of the tenant's business while providing tenants with a more manageable base rent.
B) multifamily
Multifamily properties generally do not use percentage leases, as the rental income is typically structured around fixed monthly rents rather than sales performance. Therefore, this option is incorrect.
C) industrial
Industrial properties typically operate under fixed lease agreements that do not tie rent to sales figures, making percentage leases unsuitable for this type of property. Thus, this option is also incorrect.
D) healthcare
Healthcare properties generally employ traditional lease structures that do not incorporate sales percentages, focusing instead on stable, predictable income streams. Consequently, this option is incorrect.
Conclusion
The correct answer, retail, highlights the unique nature of percentage leases, which are designed to accommodate the fluctuating sales of retail tenants. Other options, such as multifamily, industrial, and healthcare, do not fit this model, as they rely on fixed rents rather than a performance-based structure. This distinction is crucial for understanding the application of percentage leases in commercial real estate.
Answer: B
The buyer needs $64,500 up front to make the purchase.
To calculate the upfront cost, the buyer must cover both the down payment and the lender's fees. The down payment for a $300,000 home at 20% is $60,000, and the lender charges 1.5 points, which is $4,500. Therefore, the total upfront cost is $60,000 + $4,500 = $64,500.
A) $60,000
This option represents only the down payment of 20% on the home price. While this is a significant portion of the upfront costs, it does not include the additional fees charged by the lender, making this option incorrect.
B) $64,500
This option correctly totals the upfront costs by adding the $60,000 down payment and the $4,500 lender fees (1.5 points). This calculation encompasses all necessary payments to secure the home purchase, confirming that $64,500 is the correct amount needed upfront.
C) $60,900
This option incorrectly suggests an amount that does not correspond to either the down payment or the total costs involved. It fails to account for the lender's fees correctly, rendering this choice incorrect.
D) $63,600
This option appears to be a miscalculation of the total costs. It does not accurately reflect the sum of the down payment and the lender's fees. Thus, it is also incorrect.
Conclusion
The correct answer is $64,500 because it accurately includes both the down payment and the lender's fees. The other options fall short either by omitting necessary costs or miscalculating the total required upfront, confirming that they do not meet the buyer's financial requirements for the purchase.
3. A broker-salesperson is authorized by Missouri license law to do which of the following?
Answer: C
A broker-salesperson is authorized to return to broker status under certain conditions.
A broker-salesperson in Missouri can indeed return to broker status under specific circumstances outlined by the state's licensing regulations. This provision allows them to regain their broker status if they meet the required criteria.
A) accept commissions from any broker
This option is incorrect because a broker-salesperson can only accept commissions from the broker they are affiliated with. Accepting commissions from other brokers without proper authorization is not permitted under Missouri license law.
B) take a listing in her own name
This option is also incorrect. A broker-salesperson cannot take listings in their own name; they must operate under the name of their supervising broker. This ensures that all transactions are properly managed and conducted under the broker's license.
C) return to broker status under certain conditions
This option is correct as it reflects the Missouri license law that allows a broker-salesperson to return to broker status if they fulfill the necessary conditions. This flexibility is built into the licensing system to accommodate career progression and changes in professional status.
D) employ a licensed salesperson
This option is incorrect because a broker-salesperson does not have the authority to employ other licensed salespersons. Only a licensed broker can employ salespersons, as they are the ones responsible for the overall management and compliance of the real estate practice.
Conclusion
The correct answer, C, highlights the unique provision for broker-salespersons to return to broker status under certain conditions, which is a critical aspect of their professional flexibility. In contrast, the other options incorrectly assert permissions that are not granted to broker-salespersons under Missouri law, emphasizing the importance of adhering to the regulations governing real estate practices.
Answer: C
The last date he can make application for license is 30-Nov.
The prospective licensee can make application for the license until November 30th, which is the deadline for submitting applications after completing the required courses and passing the examination.
A) 29-Jun
This date is incorrect because it falls before the completion of the required Missouri practice course on June 29th. An application cannot be submitted until all educational requirements are fulfilled.
B) 29-Jul
This option is also incorrect as it precedes the November 30th deadline. The candidate must wait until he has completed the necessary courses and then has until the end of November to submit his license application.
C) 30-Nov
This is the correct answer because the candidate has until November 30th to apply for his license after completing all required courses and passing the examination. This deadline is in accordance with licensing regulations.
D) 29-Dec
This option is incorrect since it extends beyond the November 30th deadline. The applicant must submit his application by the end of November, making December 29th an invalid choice for application submission.
Conclusion
The correct answer is definitively November 30th because it aligns with the licensing regulations requiring applications to be completed within a specified period after fulfilling all educational obligations. All other options are incorrect as they either fall before the completion of the required courses or exceed the application deadline.
5. An appurtenance is best described as a right
Answer: C
An appurtenance is best described as a right that transfers with the land.
An appurtenance refers to a right or privilege associated with the ownership of land, and it is typically something that is included with the property when it is sold. Thus, it is characterized by its transferability alongside the land.
A) to sell and deed property.
This option is incorrect because selling and deeding property are actions taken by the owner rather than rights associated with the property itself. Appurtenances do not pertain to the act of selling but rather to rights that enhance the property's value or usage.
B) that allows changes to the land.
While changes to the land may be allowed under certain circumstances, this description does not accurately define an appurtenance. Appurtenances are more about rights or benefits that come with the property rather than the authority to modify it.
C) that transfers with the land.
This is the correct answer, as appurtenances are rights, privileges, or improvements that are inherently connected to the property and are automatically transferred to new owners upon sale. This characteristic is fundamental to understanding what an appurtenance is.
D) to the use of chattel.
This option is incorrect because chattel refers to personal property that is not fixed to land, while appurtenances are specifically related to real property rights. Appurtenances do not involve the rights pertaining to personal property.
Conclusion
The definition of an appurtenance fundamentally revolves around the idea that it is a right that transfers with the land, which is why option C is the most accurate. Options A, B, and D do not capture the essence of appurtenances, as they either describe actions, allowances for changes, or pertain to personal property rather than the rights associated with real estate.
Answer: C
5 discount points have to be paid.
In this scenario, the borrower must pay 5 discount points on the $80,000 mortgage, which corresponds to the $4,000 required in loan discount points.
A) 3
Choosing 3 discount points would imply a total cost of $2,400 (3% of $80,000), which is significantly less than the $4,000 required. This option does not meet the payment specified in the mortgage terms.
B) 4
Selecting 4 discount points would result in a total payment of $3,200 (4% of $80,000). Although this amount is closer to the required payment, it still falls short of the $4,000 that the borrower must pay.
C) 5
This option accurately reflects the requirement, as 5 discount points corresponds to a payment of $4,000 (5% of $80,000). Thus, this is the correct calculation and meets the mortgage terms.
D) 6
If the borrower paid 6 discount points, the total would be $4,800 (6% of $80,000), which exceeds the required payment of $4,000. Therefore, this option is incorrect as it does not match the mortgage terms.
Conclusion
The correct answer is 5 discount points, as it equates to the exact payment of $4,000 required by the mortgage terms. Options A, B, and D do not fulfill the necessary criteria, either falling short or exceeding the required amount, demonstrating a clear understanding of how discount points are calculated in relation to the total mortgage amount.
Answer: D
The seller may not ignore the demand and sell the property to the second offeror.
Ignoring the demand for repairs and selling the property to the second offeror is not a viable option, as the seller is still legally bound by the first agreement until it is properly terminated.
A) agree to do the needed repairs and consummate the transaction with the first offeror.
This option is valid as the seller can choose to fulfill the first offeror's request for repairs. By agreeing to the repairs, the seller can proceed with the transaction under the terms of the accepted offer, thereby ensuring that the sale is completed.
B) refuse to do the repairs and still proceed with the sale in as is condition.
This option is also valid. The seller has the right to refuse the repairs and sell the property in its current condition as long as the first buyer accepts this condition. However, this would depend on the terms of the initial agreement and the willingness of the first offeror to proceed without the requested repairs.
C) terminate the first agreement in writing and sell to the second offeror.
This option is permissible. The seller can formally terminate the first agreement if they choose to do so, allowing them to accept the second offer. As long as the first offeror is informed of the termination, the seller is free to proceed with the second offer.
D) ignore the demand and sell the property to the second offeror.
This option is incorrect because the seller cannot simply ignore the first offeror's demand for repairs while still bound by the first contract. The seller must either negotiate a resolution with the first offeror or formally terminate the first agreement before considering the second offer.
Conclusion
The correct answer is that the seller cannot ignore the demand for repairs and proceed with the second offer, as this would violate the terms of the existing agreement with the first offeror. Options A, B, and C each represent valid actions the seller can take in response to the situation, whereas Option D fails to acknowledge the legal obligations stemming from the first accepted offer.
Answer: D
The borrower would prefer the mortgage rate of 11% for 25 years.
Choosing a mortgage with a longer term, such as 25 years, typically results in lower monthly payments, even if the interest rate is slightly higher. In this case, the borrower would benefit most from the 11% rate over 25 years.
A) 10% for 20 years
This option has a lower interest rate than the correct answer but a shorter term. While this will result in higher monthly payments compared to a longer term, it is less favorable for a borrower seeking to minimize monthly payments.
B) 10% for 25 years
Although this option has a lower interest rate, it is not the best choice for the borrower. The 25-year term would provide lower monthly payments compared to a shorter term, but the rate is still higher than the 11% option in the correct answer.
C) 11% for 20 years
This option offers a higher interest rate than the correct answer and a shorter term, which would lead to higher monthly payments. The combination of a 20-year term and an 11% rate makes this choice less attractive for someone looking to minimize monthly expenses.
D) 11% for 25 years
This option is ideal for the borrower as it offers the longest term combined with a manageable interest rate. The extended period allows the borrower to spread the loan amount over more payments, resulting in the lowest possible monthly payment.
Conclusion
The best choice for the borrower seeking the lowest monthly payments is the 11% rate for 25 years. This option balances a longer repayment period with a manageable interest rate, effectively reducing the monthly financial burden compared to all other options. Other choices either have a shorter term or higher interest rates, leading to higher monthly payments.
Answer: D
The listing belongs to the firm, ABC Realty, and the rights to a commission if the property sells during the listing will be determined by the policies of ABC Realty.
When a licensee changes brokerages, the listing agreement remains with the original firm, ABC Realty, which means the rights to any commission earned during the listing period are governed by the firm's policies.
A) The licensee cannot qualify for any part of the commission even after finding a buyer to purchase the listing during the listing period
This option is incorrect because while the licensee may not qualify for the commission if they leave the brokerage, the situation is more nuanced as it depends on the policies of ABC Realty regarding commission distribution and the contractual obligations of the listing agreement.
B) The licensee's listing and will automatically get the listing commission when the property sells regardless of the change of brokerage companies
This option is also incorrect. The licensee does not automatically earn the commission because the listing agreement is tied to ABC Realty, and the commission is subject to the brokerage's policies, which could negate entitlement upon leaving.
C) The licensee can inform both the seller and the principal broker of ABC Realty about moving the listing to QRS Realty and continue to market the property
This statement is misleading. While the licensee can inform parties of their move, they cannot legally transfer the listing to another brokerage without the consent of the original firm, which would typically require the listing to remain with ABC Realty until its expiration.
D) The listing belongs to the firm, ABC Realty, and the rights to a commission if the property sells during the listing will be determined by the policies of ABC Realty
This option is correct. The listing agreement is with ABC Realty, meaning the firm retains the rights to the listing and any commission earned, irrespective of the licensee's change of brokerage. The policies of ABC Realty will dictate any commission entitlement.
Conclusion
The correct answer, D, underscores the principle that real estate listings are owned by the brokerage, not the individual licensee. Consequently, moving to a different brokerage does not transfer the listing rights, and the commission status remains under the original firm's policies. All other options fail to recognize this essential aspect of real estate practice.
10. A Comparative Market Analysis performed by a real estate agent for a seller is a comparison of
Answer: D
A Comparative Market Analysis compares recently sold homes similar to the seller's property.
A Comparative Market Analysis (CMA) conducted by a real estate agent focuses on comparing recently sold homes that share similar characteristics with the seller's property to determine a fair market value.
A) past real estate appraisals.
Past real estate appraisals are not the primary focus of a CMA, as appraisals are formal evaluations conducted for specific properties at particular points in time. While they may provide some context, they do not directly inform the comparison with recent sales necessary for a CMA.
B) appraisal feasibility studies.
Appraisal feasibility studies assess whether a property can be appraised at a certain value based on various factors, but they do not involve comparing recently sold homes. Therefore, they do not align with the purpose of a CMA, which is to evaluate current market conditions against similar properties.
C) median property values in the seller's market.
Median property values can provide useful market insights but do not offer the specific comparisons needed for a CMA. A CMA requires an analysis of recently sold homes that closely match the seller's property, rather than general median values.
D) recently sold homes similar to the seller's property.
This option is correct as a CMA specifically involves analyzing recently sold homes that are comparable to the seller's property. This comparison allows the agent to determine a competitive market price that reflects current trends and conditions in the seller's local market.
Conclusion
The correct answer, D, highlights the essence of a Comparative Market Analysis, which is to assess properties recently sold that are similar to the seller's home. Options A, B, and C do not provide the necessary comparative data needed for a CMA, making them less relevant in determining the appropriate market value for the seller's property. Thus, D stands out as the definitive choice for this question.