Question 1

Real estate brokers are paid on a

Accepted Answer

Real estate brokers are typically paid a commission, which is a percentage of the sale price of the property.

Question 2

The commission charged by real estate brokers commonly ranges from

Accepted Answer

The typical commission charged by real estate brokers is usually between 5 to 7 percent of the property's selling price.

Question 3

The ______ of a house is the most important determinant to its value.

Accepted Answer

Location is often considered the most important factor in determining a house's value because it affects accessibility, neighborhood desirability, school districts, and proximity to amenities.

Question 4

An account held by the lender used to pay closing costs and prepayments of property taxes and insurance is known as a(n)

Accepted Answer

An escrow account is used by lenders to pay property taxes and insurance on behalf of the borrower, covering closing costs and prepayments.

Question 5

Actual closing costs are _____ to the buyer ____ the actual date of closing.

Accepted Answer

The answer of Actual closing costs are _____ to the...

Question 6

The purpose of a title search is to

Accepted Answer

A title search is conducted to verify the seller's legal ownership and ensure there are no claims or liens that could affect the buyer's future ownership.

Question 7

An account held by the mortgage lender and used to cover property taxes and homeowner's insurance is known as a(n)

Accepted Answer

An escrow account is held by the mortgage lender and used to cover property taxes and homeowner's insurance.

Question 8

Among other factors, the price a buyer is willing to pay for a house is a function of

Accepted Answer

The price a buyer is willing to pay for a house is influenced by mortgage interest rates and the condition of the real estate market, as these factors affect affordability and investment potential.

Question 9

Housing prices are influenced by all of the following factors except

Accepted Answer

Sales tax does not directly influence housing prices, whereas maintenance, location, and construction quality do.

Question 10

If a home is well maintained, but the neighbors do not clean their yards, the price of the well-maintained home will

Accepted Answer

The price of the well-maintained home will likely decline because potential buyers may be deterred by the neglected yards of neighboring properties, which can negatively impact the overall appeal and perceived value of the area.

Question 11

A home in a good location will generally

Accepted Answer

A home in a good location typically sells for more, appreciates faster, and is easier to sell due to higher demand and desirability.

Question 12

When a buyer selects a broker, it is important that the buyer understands that

Accepted Answer

Typically, the seller pays the broker's commission, which is usually split between the seller's and buyer's agents.

Question 13

Elaine is going to hire a listing broker to sell her house, with an estimated price of $200,000. She believes she will be able to negotiate a 5 percent commission. Based on real estate conventions,

Accepted Answer

The listing broker's firm will receive 5 percent of the selling price, which is $10,000. The cooperating broker's firm will receive half of that, or $5,000.

Question 14

Harry wants to buy a new home but only after he has sold his existing home. He has looked at other properties and likes one that is close to his work and gym. While the asking price seems to be fair, Harry thinks he could negotiate the price down a little. The real estate market is currently picking up steam. In order for the potential seller to accept Harry's conditional offer contingent upon the sale of his own home, Harry

Accepted Answer

In a competitive market, offering a slightly higher price can make a conditional offer more attractive to the seller, increasing the chances of acceptance.

Question 15

Jennifer is putting in an offer on a home that she likes for many reasons. Some of the things she likes about the house are the kitchen, the large bathrooms, and the state-of-the-art washer and dryer in the laundry room. In order to get the house as she likes it, Jennifer

Accepted Answer

Jennifer needs to have it in the contract that the washer and dryer stay with the house to ensure they are included in the sale.

Question 16

Gary has applied for a mortgage on a house that he is buying for a purchase price of $200,000. He will put 20% down. Gary is concerned that the interest rates may rise by the time the transaction closes in 45 to 60 days. In order to lock in the current low mortgage rate, his lender requires a 0.75% fee. In order to lock in the current interest rate, Gary will have to pay the lender

Accepted Answer

The answer of Gary has applied for a mortgage on...

Question 17

Timothy's statement of expenses for his new home purchase to be paid at the time of closing is summarized next
Mortgage-related costs: $1,250
Home inspection fee: $300
Escrows: $3,500
Title search: $450
Title insurance: $1,300
Real estate commission: $10,500
Attorney's fee: $450 (seller) and $550 (buyer)
Closing charge: $200 (buyer and seller each)
What amount will Timothy have to pay at the time of closing?

Accepted Answer

The answer of Timothy's statement of expenses for his new...

Question 18

Tina and Tony have successfully negotiated a house price and have been approved for a loan at an attractive rate. They are going to pay 20% down on the house and borrow the rest. However, they were shocked to see the good faith estimate of closing costs provided to them by the lender. The house value is $250,000 and the closing cost estimate, excluding escrows, represented approximately 3% of the loan amount. If the escrow for taxes and insurance are $3,800, how much money do Tina and Tony have to come up with at the time of closing (excluding the down payment)?

Accepted Answer

The closing costs, excluding escrows, are approximately 3% of the loan amount. The loan amount is 80% of the house value, which is $200,000. Therefore, the closing costs, excluding escrows, are approximately $6,000. Adding the escrow for taxes and insurance of $3,800, the total closing costs are $9,800.

Question 19

George is comparing two homes in the same neighborhood. The first is priced at $375,000 for an area of 2,700 sq. ft. and the second is priced at $350,000 for an area of 2,300 sq. ft. Which house is more expensive?

Accepted Answer

The answer of George is comparing two homes in the...

Question 20

A real estate agent who works exclusively for the buyer and owes no legal duty to the seller is a

Accepted Answer

A buyer broker is a real estate agent who represents the buyer's interests exclusively and owes no legal duty to the seller.

Quiz 6: Making Automobile and Housing Decisions