Real Estate Practice : Lesson 223 - 06/30/09 10:06 PM
                                                     
A homeowner has without warning, and without knowing, constructed a fence in his backyard about 7 inches over the property line of his neighbor.
This would be considered an encroachment.
Is this fact true or false ?
Please take your time. The solution is posted below the wildlife photo.

A. True
An encroahment is a building or impovement to a property or any portion of it that extends beyond the legal property limit of the owner constructing the improvement or building.
An encroachment illegally intrudes on the land of the adjoining owner's property.
… (0 comments)

Real Estate Practice : Lesson 222 - 06/30/09 09:49 PM
                                                       
A lender charged a borrower 6% for the loan plus 6 discount points.
The yield to the lender for the loan is 6.25%.
Is this fact true or false ?
Take your time. The solution is posted below the wildlife photo.

A. False
Discountpoints are a percentage of the amount of the loan.
One point will equal 1 percent of the loan.
Discount points raise the yield to the lender.
Each point raises the yield by 1/8th of a percent.
1/8th is equal to .0125 of a percent.
6 points are 6 times .0125 which equal .75
The lender's … (0 comments)

Real Estate Practice : Lesson 221 - 06/30/09 09:37 PM
                                                           
A broker's obligation to a customer includes the duties of full disclosure and obedience.
Is this fact true or false ?
Please take your time. The solution is posted below the wildlife photo.

A. False
The duties of full disclosure and obedience are reserved for the principal, the broker's client.
The broker has the obligation of dealing fairly and honestly with a customer.
… (0 comments)

Real Estate Practice : Lesson 220 - 06/30/09 09:36 PM
                                                        
A developer subdivided and made some improvements to a 150 acre parcel of land.
The developer created several restrictions, which, by design, were placed in the deed to affect the subdivision.
These restrictions affect all of the owners and are not enforceable by law.
Is this fact true or false ?
Please take your time. The solution is posted below the wildlife photo.

A. False
The developer has created restrictive covenants and they are enforceable.
… (0 comments)

Real Estate Practice : Lesson 219 - 06/30/09 09:35 PM
                                                     
Once the underwriter has been able to verify the amount of a borrower's stable monthly income, the underwriter will then use a process which will employ gross multipliers to determine whether or not the income is adequate enough to repay the loan that the applicant is seeking.
Is this fact true or false ?
Remember to take your time. The solution is posted below the wildlife photo.

A. False
Once the income has been verified the underwriter will use debt to income ratios to make a determination as to whether or not the applicants income is sufficient to … (0 comments)

Real Estate Practice : Lesson 218 - 06/30/09 09:34 PM
                                                       
The quality of a loan applicant's income generally depends on whether or not it's taxable income in the decision making process for the underwriter, and not as much the dependability of the income.
Is this fact true or false ?
Please take your time. The solution is posted below the wildlife photo.

A. False
The dependability of the income will indicate to the underwriter that the source is reliable and secure.
Whether the income is taxable or not is not an issue when establishing the quality of the income.
… (0 comments)

Real Estate Practice : Lesson 217 - 06/30/09 09:33 PM
                                                       
Stacy is a college student that is buying her first home.
She doesn't have enough money for the closing table so her parents have graciously offered to give her 4000 dollars to close with as a gift.
In this situation the loan underwriter must reject the loan application by law because the gift may not be used by a first time home buyer.
Is this true or false ?
Please take your time. The solution is posted below the wildlife photo.

A. False
Stacy's parents are making a gift to their daughter to help her with her closing … (0 comments)

Real Estate Practice : Lesson 216 - 06/27/09 11:59 AM
                                                             
When the underwriter aquires the credit report of the applicant it will usually contain information pertaining to the applicants debt and payment history for the last ten years.
Is this fact true of false ?
Take your time. The solution is posted below the wildlife photo.

A. False
When information is obtained about a borrower from a credit report the information in the report usually only covers the last seven years, although certain items such as bankruptcies or foreclosures might remain longer.
If you see information that is incorrect in your credit file alert the credit reporting agency … (0 comments)

Real Estate Practice : Lesson 215 - 06/27/09 11:42 AM
                                                           
Frederick and Marlene Silverman have a monthly housing expenditure of 1500 dollars, their monthly credit card payments equal 200 dollars, and they have a car note of 225 dollars.
They have a monthly income of 5500 dollars.
What is their debt to income ratio ?
Please take your time. The solution is posted below the wildlife photo.
 
A. 35%
To find the debt to income ratio add the housing expenses to all of the other monthly debt expenses and then divide the total of the monthly expnses by the monthly income.
1500 housing+200 credit cards+225 car note=1925 total monthly … (0 comments)

Real Estate Practice : Lesson 214 - 06/27/09 11:23 AM
                                                           
A rule of thumb for a lender when considering a loan application is that the borrower should have been continuously employed on the same job for a  minimum of five years.
Is this true or false ?
Take your time. The solution is posted below the wildlife photo.

A. False
As a general rule the lending underwriter will prefer to see that the applicant has been on the same job for at least two years.
… (0 comments)

Real Estate Practice : Lesson 213 - 06/27/09 10:51 AM
                                                     
When a lender issues a letter stating the maximum loan amount that the lender will authorize this is know as preconclusion of process.
Is this fact true or false ?
Please take your time. The solution is posted below the wildlife photo.

A. False
When a lender issues a letter stating the maximum amount that the lender will authorize this is known as preapproval.
When the lender issues a letter or preapproval the lender agrees to loan the buyer the funds he or she needs up to a specified amount of money to purchas the home they intend … (0 comments)

Real Estate Practice : Lesson 212 - 06/27/09 10:50 AM
                                                         
When we talk about loan discount points we're talking about payment for costs which are typically associated with a loan origination fee.
Is this fact true or false ?
Take your time. The soultion is postd below the wildlife photo.

A. False
Discount points are associated with a lender's yield or the rate of return or profit on loan.
 
… (0 comments)

Real Estate Practice : Lesson 211 - 06/27/09 10:49 AM
                                                      
The charges which are payable to or by any parties to a real estate transaction always show up on the lender disclosure statement.
Is this fact true or false ?
Take your time. The solution is posted below the wildlife photo.

A. False
Charges which are payable to or by any party to a real estate transaction show up on the settlement statement which will be presented at closing and will reflect credits and charges applicable to the participants in the transaction.
… (0 comments)

Real Estate Practice : Lesson 210 - 06/27/09 10:49 AM
                                                          
Credit report fees, loan origination fees and appraisal fees are all costs that show up in the loan's APR.
Is this fact true or false ?
Take your time. The solution is posted below the wildlife photo.

A. False
Points paid by the loan borrower, mortgage insurance, interest on the loan, and the loan origination fees are regarded as portions of the total finance charges assessed the borrower.
Appraisal and credit report fees are not.
… (0 comments)

Real Estate Practice : Lesson 209 - 06/22/09 06:56 PM
                                                
When a portion of a borrower's monthly mortgage payment is held to be applied later towards property taxes and insurance the money will be held by a trustee.
Is this true or false ?
Take your time. The solution is posted below the wildlife photo.

A. False
Money held for property taxes and insurance are held in escrow established for that purpose by the lender and paid out of the account when property taxes and insurance are due and payable.
… (0 comments)

Real Estate Practice : Lesson 208 - 06/22/09 06:47 PM
                                                       
If the lender agrees to guarantee a specific interest rate for a specific period of time this is known as discounting the float.
Is this true or false ?
Please take your time. The solution is posted below the wildlife photo.

A. False
If the lender agrees to guarantee a specific interest rate for a specific or certian period of time this is know as a lock-in.
… (0 comments)

Real Estate Practice : Lesson 207 - 06/22/09 06:36 PM
                                                   
Fees that normally pay the overhead costs of a lender are the loan discount fees associated with the loan.
Is this fact true or false ?
Take your time. The soultion is posted below the wildlife photo.
 
A. False
Fees than pay the lender's overhead, or costs for administering the loan, are the origination fees.
 
… (0 comments)

Real Estate Practice : Lesson 205 - 06/21/09 11:24 PM
                                                               
When a lender takes a loan application the most important thing the lender is concerned with is the applicants employment history for the last 15 years.
The applicants current housing expenses are of little interest.
Is this true or false ?
Take your time. The solution is posted below the wildlife photo.

A. False
A lender will usually only want to know about the last two years of employment.
Between the two, the most important thing to the lender is the applicants current housing expenses.
… (0 comments)

Real Estate Practice : Lesson 204 - 06/21/09 11:07 PM
                                                        
One of the best ways available to compare loan costs is to use a formula that examines the lender's yield.
Is this fact true or false ?
Take your time. The solution is posted below the wildlife photo.

A. False
The best way to compare loan costs is comparing annual percentage rates.
… (0 comments)

Real Estate Practice : Lesson 203 - 06/20/09 05:20 PM
                                                        
When an item is prorated at closing the item is considered the type of item which will not have to be paid for.
Is this fact true or false ?
Please take your time. The solution is posted below the wildlife photo.

A. False
When an item is prorated the item will be calculated as an expense based on a certain time period and cost rendered according to a portion of an amount divided by the number of days or any specified time element representative of the original assessment and mutliplied as a fraction of the whole.
… (0 comments)

Real Estate Practice : Lesson 202 - 06/20/09 05:20 PM
                                                      
If there is a debit on the buyer side of a settlement statement this is a charge that has to be paid by the buyer at the closing table.
Is this fact true or false ?
Take your time. The solution is posted below the wildlife photo.

A. True
If there is a debit on the buyer's side of the settlement statement, this is a charge that has to be paid by the buyer.
A portion of property taxes paid in advance by the seller could be assessed at closing as a debit to the buyer.
… (0 comments)

Real Estate Practice : Lesson 201 - 06/20/09 05:20 PM
                                                      
 A real estate transaction is scheduled to close in the month of May on the 12th.
The seller paid the annual premium for his hazard insurance about six months ago.
The buyer decided not to take over the policy.
When the settlement statement is presented part of the hazard insurance premium will be listed as a debit to the seller.
Is this fact true or false ?
Take your time. The solution is posted below the wildlife photo.

A. False
If the seller paid the hazard insurance in advance it'll show up as a credit on the seller's … (0 comments)

Real Estate Practice : Lesson 200 - 06/20/09 05:19 PM
                                                        
Giving the permission and the right to someone to cross your property so they may come and go unhampered is known as granting equitable interest in the easement.
Is this true or false ?
Please take your time. The solution is posted below the wildlife photo.

A. False
Giving someone permission to cross your property, so they may come and go, is known as granting them a license.
A license is revocable and usually non assignable permission to use the property of another
… (0 comments)

Real Estate Practice : Lesson 199 - 06/20/09 05:19 PM
                                                    
When money is held prior to the acceptance of an offer to purchase real estate that money belongs to the seller and the buyer.
Is this true or false ?
Take your time the solution is posted below the wildlife photo.

A. False
If the offer hasn't been accepted the money belongs to the buyer only.
… (0 comments)

Real Estate Practice : Lesson 198 - 06/15/09 08:24 PM
                                                     
A home was constructed in 1955 in Texas that didn't include central heat or central air conditioning.
When an appraiser is considering cost depreciation he would classify the abscence of central heat and air conditioning as an incurable feature of the older home.
Is this fact true or false ?
Take your time. The solution is posted below the wildlife photo.

A. False
The abscence of central heat and air conditioning is curable, but for the purposes of considering cost depreciation the appraiser would consider the absence of central heat and air conditioning as a form of functional obsolescence.
… (0 comments)

Real Estate Practice : Lesson 197 - 06/15/09 06:18 PM
                                                      
A broker in BIrmingham, Alabama decided to leave town with a clients money and spend a couple of days in British Columbia golfing and disco dancing.
He's guilty of misrepresentation.
True or false ?
Take your time. The soultion is posted below the wildlife photo.

A. False
The scoundrel (ahem) broker is guilty of conversion which is the misappropriation of property and money belonging to another person.
Misrepresentation is when one makes a false statement to a client.
… (0 comments)

Real Estate Practice : Lesson 196 - 06/15/09 06:04 PM
                                                       
A broker is Washington State was sent to prison for felony elderly financial abuse and vehicular homicide.
His real estate license would be suspended until his prison term ends.
True of false ?
Take your time.
The soultion is posted below the wildlife photo.

A. False
The license of a felon would be revoked.
… (0 comments)

Real Estate Practice : Lesson 195 - 06/13/09 02:54 PM
                                                      
Sales commission to the listing agent is usually considered part of the buyer's closing costs.
Is this fact true or false ?
Take your time. The solution is posted below the wildlife photo.

A. False
Sales commission is usually the seller's responsibility.
In a buyer's agency agreement, however, the negotiation of commission may vary and could actually be seller paid or buyer paid.
Review the types of agency and commission agreements.
… (0 comments)

Real Estate Practice : Lesson 194 - 06/13/09 02:33 PM
                                                     
 A loan origination fee is always part of the seller's closing costs.
Is this fact true or false ?
Take your time. The solution is posted below the wildlife photo.

A. False
The loan origination fee is part of the buyer's setllement.
That's always the case unless there's some variation I'm unaware of.
Let me know if you know of a situation where the seller is assessed the loan origination fee.
 
… (0 comments)

Real Estate Practice : Lesson 193 - 06/13/09 02:33 PM
                                                        
Whenever a buyer assumes a mortgage the mortgage balance will appear as a credit to the seller and a debit to the buyer on the settlement statement.
Is this true or false ?
Take your time. The solution is posted below the wildlife photo.

A. False
Once again, the opposite is true in this case.
Whenever a buyer uses a loan to finance an assumption the loan is listed as a credit to the buyer.
Once the financing has been approved for the buyer and the seller's loan has been assumed the assumption will appear as a debit to the … (0 comments)

Real Estate Practice : Lesson 192 - 06/13/09 02:32 PM
                                                     
When a settlement statement has been prepared the purchase price of the property will always be shown as a a debit to the seller and a credit to the buyer.
Is this fact true or false ?
Please take your time. The solution is posted below the wildlife photo.

A. False
The opposite is true.
The purchase price of the property will be shown as a debit to the buyer and a credit to the seller on the settlement statement.
… (0 comments)

Real Estate Practice : Lesson 191 - 06/13/09 02:32 PM
                                                       
Security deposits are always prorated on the sale of rental  property when going to the closing table.
Is this fact true or false ?
Take your time. The soultion is posted below the wildlife photo.

A. False
Security deposits aren't prorated at closing. They're ususally transferred to the buiyer.
… (0 comments)

Real Estate Practice : Lesson 190 - 06/13/09 02:32 PM
                                                            
If the seller agrees to include the dishwasher in the sale of the home for 250 dollars the seller should include this item in the HUD-1 report.
Is this true or false ?
Please take your time solution is posted below the wildlife photo.

A. False
The seller should provide a bill of sale for the buyer.
… (0 comments)

Real Estate Practice : Lesson 189 - 06/13/09 02:31 PM
                                                       
When a residential appraiser starts looking for comparables and a sales comparison approach is used he's interested in homes that have been occupied for at least two out of the last three years.
Is this fact true or false ?
Please remember to take your time. The solution is posted below the wildlife photo.

A. False
When a residential appraisal is undertaken and the appraiser wants to use comparables the appraiser wants to include homes that were sold within six months of the appraisal.
When a sales comparison approach is used it considers the sales prices of homes sold … (0 comments)

Real Estate Practice : Lesson 188 - 06/05/09 06:30 PM
                                                        
A contract to build a new home is signed with a builder to build a luxury home costing 675 thousand dollars in a neighborhood of homes valued 150 thousand dollars and less.
The new new will lose value.
This loss of value is known as aversion.
Is this true or false ?
Take your time. The soution is posted below the wildlife photo.

A. False
The loss of value is known as regression.
Regression is defined as a that which reduces the value of a property because of the impact of the lower value properties adjacent to the more … (0 comments)

Real Estate Practice : Lesson 187 - 06/05/09 06:21 PM
                                                           
When we speak of an appraiser collecting data which is accumulated in a general manner the appraiser has conducted an analysis of the building as well as analyzed the site.
Is this true or false ?
Take your time. the solution is posted below the wildlife photo.

A. False
If the appraiser is collecting general data this is data that is collected outside of the subject property and the outside data accumulated is studied to consider the impact on the value of the subject property.
The analysis of the building and it's site involve specific data and is … (0 comments)

Real Estate Practice : Lesson 186 - 06/05/09 06:12 PM
                                                                       
An owner of a multi-family property thinks that a hot tub area with a shower would be a nice addition to the work-out area on the property.
He's asked an appraiser if the addition of the new hot tub and shower area would create value for the property.
 The appraiser is concerned with the principle of regression.
Is this true or false.
Take your time. The solution is posted below the wildlife photo.

A. False
The appraiser is concerned with the principle of contribution which determines whether or not the addition of the hot tub area would add … (0 comments)

Real Estate Practice : Lesson 185 - 06/05/09 06:01 PM
                                                
When a developer declares that he or she plans to build a mixed-use development, which includes a beautiful shopping mall, and this development will occur adjacent to your lot which is zoned commercial, property values start to increase because of the developers project.
When the property values increase because of the developers declaration this is a reflection of the highest and best use of the property.
Is this true or false ?
Please take your time. The soultion is posted below the wildlife photo.

A. False
If property values increase because of the developers declaration the principle of anticipation has … (0 comments)

Real Estate Practice : Lesson 184 - 06/05/09 06:01 PM
                                                          
When an appraiser is using an income approach to value mortgage payments are generally figured in as part of the property's operating expenses.
Is this fact true or false ?
Please take your time. The solution is posted below the wildlife photo.

A. False
Mortgage payments are not considered to be operating expenses by the appraiser when using the income approach to value.
Mortgage payments are the property's existing debt service.

 
 
… (0 comments)

Real Estate Practice : Lesson 183 - 06/05/09 06:00 PM
                                                        
When an appraiser considers the early phases of a property's life cycle they're referring to the phase which is commonly referred to as the phase of appreciation.
Is this fact true or false ?
Please take your time. The solution is posted below the wildlife photo.

A. False
The phase they're referring to which is the early part of the property's life cycle is referred to as the phase of integration.
Integration is the developmental period of the property, the earliest phase.

 
… (0 comments)

Real Estate Practice : Lesson 182 - 06/05/09 05:59 PM
                                                           
When we speak of the highest and best use of a property we're generally speaking of the best way that a property could benefit the community and satisfy the needs of the neighborhood.
is this fact true or false.
Please remember to take your time. The solution is posted below the wildlife photo.

A. False
A property's highest and best use is use that produces the greatest net return.
Other considerations include restrictions of use, regulation of zoning in effect and how they combinatively affect the highest and best use.
… (0 comments)

Real Estate Practice : Lesson 181 - 06/05/09 05:58 PM
                                                         
The Uniform Standards of Professional Appraisal Practice endorse the use of letter reports when communicating with a client.
Is this fact true or false ?
Remember to take your time. The solution is posted below the wildlife photo.

A. False
Letter reports are not acceptable to the USPAP.
Letter reports do not meet the requirements for the acceptable report formats conforming to USPAP standards which include form reports and narrative reports.
… (0 comments)

Real Estate Practice : Lesson 180 - 06/05/09 05:58 PM
                                                      
Appraisals are performed so that the seller and the broker can determine a fair sales price for the property.
Is this true or false ?
Take your time. the solution is posted below the wildlife photo.

A. False
Appraisals are usually performed in order to determine the market value of the property.
The market value is the most probable price that a property should bring in the open market faced with normal avenues of competition.
… (0 comments)

Real Estate Practice : Lesson 179 - 06/05/09 05:57 PM
                                                      
When a comparative market analysis is prepared it uses an approach much like the method used in the income approach to appraisal.
Is this fact true or false ?
Take your time. The solution is posted below the wildlife photo.

A. False
A comparative market analysis or cma most closely follows the sales comparison approach in an appraisal.
… (0 comments)

 
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David Saks

Broker

Memphis, TN

More about me…

The Real Estate Mart of Tennessee, Inc.

Address: 4040 North Watkins, Suite #4, Memphis, TN, 38127

Office Phone: (901) 357-4663

Cell Phone: (901) 217-4114

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Legal Disclaimer:

The information and notices contained in this blog are intended to summarize recent developments and news. The posts are presented as general research and information. These posts are not intended, nor should be regarded, as legal advice. Some blog posts concern allegations made in civil lawsuits and in criminal indictments in United States Courts. All persons are presumed innocent until convicted of a crime and proven guilty. Readers who have particular questions or who believe that they need legal counsel should seek the advice of a qualified attorney. It is neither the editor's or author's intention to create a confidential relationship or any broker-client relationship via communication from this site at any time. Please consult with your state real estate board if questions & answers in the education section conflict with the laws of your region or if you need clarification regarding their applicability or how they may govern the services that you provide.

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