When people go into real estate, they often think about the end game: the big commission for selling a house! In reality, there is a lot more that goes into working in realty, which you will determine once you sign up for a real estate exam class. It is an intense time, and the exam is no joke!
Do you know what the Fair Housing Act states and what rules you have to follow because of it? Do you know what a mixed-use property is? Do you know when an agency has been created with a prospective seller? Do you know the difference between a broker and a salesperson?
That is just the tip of the iceberg, as there are so many details to learn when prepping for the real estate exam. Add in the fact that the exam is different for each state, as states have different rules and regulations to follow. If you are licensed in one state, that doesn't mean you will be licensed to sell in another state. That means going through the exam process all over again!
So, do you think you are ready and can pass this exam? Give it a go!
Ginnie Mae, or GNMA, was solely created to promote low-income housing.
An agent is someone who transacts business or manages the tasks of another person. That person would be the principal (Tony), which is the party the agent represents and acts on behalf of.
For mortgage interest deductions purposes, a qualified home is considered the primary or main home of the taxpayer.
Fixing something that is already malfunctioning is called corrective maintenance. Inspecting equipment and making repairs when necessary is called preventative maintenance.
The certificate of occupancy is the document showing that the premises is approved and safe for occupancy. A CO is required if any building additions are done.
The grocery store was in compliance before the new code was established, so it can continue to operate under its present owners. If the store is ever sold, then the new owners must comply with the new zoning ordinance.
Real estate developers often use a commercial mortgage called a blanket mortgage to finance a project. For these types of mortgages, at least two parcels of property would be needed as collateral.
An executory contract is a contract that has terms that will be completed at a later date, like a mortgage. An executed contract is a contract that has been fully performed.
Profits from real estate are called capital gains. Profits on those assets that were owned for more than 12 months are called long-term capital gains.
Since this is an open listing, whoever sells the warehouse gets the commission. That means Broker A gets the commission.
Depreciation is when a building loses value due to any cause, like deterioration, damage and normal wear and tear.
There is economic obsolescence when factors come into play that are unrelated to the property itself and the owner has no control over it happening, and these factors diminish the property value.
If you are paying biweekly, that means you are making 26 payments in a 52-week year. Every two payments equals one monthly payment, so if you divide 26 by 2, it equals 13 monthly payments you would make in a 52-week period compared to 12 monthly payments in a year.
The 1988 Amendment added protected classes to the Fair Housing Act, like families and people with mental and physical disabilities. Elderly people were not added to the law, but senior citizen housing is exempt from the Fair Housing Act if it complies.
An agency by estoppel is an implied agency, which is formed based on the words or actions of the agent and principal that show an intent to form the agency. Since Tina, the principal, didn't stop Tyler, the agent, from representing her interests, the agency was formed.
There are 43, 560 square feet in 1 acre. This is one of those fun "standard" measurements that makes real estate and surveying so challenging.
The loan-to-value ratio is the ratio of the loan balance to the property value. To find this, you would divide the loan balance by the market value, so $266,000 / $760,000, which equals 0.35. That gives you a loan-to-value ratio of 35%.
Truth in lending helps do away with any deceptive financing tactics. It's also known as Regulation Z.
Mixed-use property is any type of property that combines different uses together, whether it be commercial, residential, cultural, entertainment and so on. The shopping mall with furniture and clothing stores have similar commercial uses, so no mixed use exists.
Warehousing happens when banks and other lenders give out mortgage loans to consumers knowing they will quickly turn around and sell those loans on the secondary market.
For it to be considered realty, it has to be the land or anything attached to it. The growing tree is something that can be removed from the property, so it isn't considered realty.
Eminent domain is the government power allowing it to obtain private property for public use. When the property is actually taken, that is condemnation.
A real estate appraiser is the only one who can prepare an official property appraisal. An agent and broker can prepare a Comparative Market Analysis (CMA) or Broker's Opinion of Value (BOV).
The bundle of rights contains all the rights one obtains with the ownership of real property. These rights would include the right to enter, lease, use, sell and give away the real estate or the right to do none of these things.
Closing is not one of the three c's, as capacity is the cash reserve and debt ratio of borrower, collateral is the down payment and property type and credit is the credit check of the borrower.
An estate is an interest in property that gives you the right to possess the land. A freehold estate is ownership of that property for an undetermined length of time and nonfreehold or leasehold estates have a determinable end.
Mortgage lenders call this process underwriting. During this time, they look at the potential borrower's salary, credit history and other things to assess the risk of making the loan.
Even in apartment complexes that do not allow dogs, the Fair Housing laws allow handicapped individuals who need a service dog to have one. If the dog causes any damage to the apartment, the dog owner is responsible for those costs.
A commitment is a document from the mortgage lender stating they will be loaning the money to the borrower. The promissory note is her promise to pay back the mortgage, and the letter of approval is a pre-approval.
Every state has adverse possession laws, which have been on the books for a very long time. Basically, if a land owner shows no interest in the land and someone else has been using it as their own for a long period of time (7 to 40 years, depending on the state), then the person using the land has rights to the land.
The seller only pays commission to the agent that sells the property. Since it is an open listing, the seller can use as many agents as they would like, so the agent could put in work and lose the sale (and commission) to another agent.
Freehold estates have an undeterminable end, which a life estate would have. The others all have a determinable ending.
Marshes, swamps and bogs are examples of wetlands, which are protected areas. They may serve as protection for storm and flood water, help control erosion and pollution and serve as sanctuaries for wildlife.
Easement is a right to cross or otherwise use someone else's land for a specified purpose. This is considered nonpossessory interest in someone else's land.
A property manager oversees the property on behalf of the owner. They typically would oversee employees and the maintenance of the property.