Modern Real Estate Practice in North Carolina Ninth Edition. Math FAQs Quiz

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1 Math FAQs Quiz 1. In 1992, a family purchased their house for $126,500. They made no major improvements during the time they owned the property. Recently, they sold the property for $162,275. What was their percentage of gross profit? a. 28.3% b. 49.7% c % d % 2. A custom home containing 4,320 square feet was recently constructed on a lot valued at $145,000. Construction costs were $80.25 per square foot, and other fees and costs totaled $12,785. What was the total acquisition cost of the property? a. $145,000 b. $346,680 c. $359,465 d. $504, A small office building sold for $949,000. The listing broker received a commission of $54,990. What was the broker's commission rate? a. 5.8% b. 6.2% c. 7% d. 11.3% 4. A 40-acre tract was sold for $2,200 per acre. The seller realized a 14.5% profit from the sale. What was the original cost of the tract? a. $75, b. $76, c. $100, d. $102, A total commission of $4,410 was earned from a sale. The listing broker retained 25% of the total commission and paid 5% of the total commission to the multiple listing service. Of the balance of the commission, the co-brokering firm retained 45% with the balance going to the selling agent. How much commission did the selling agent receive? a. $1, b. $1, c. $1, d. $2,425.50

2 6. A property owner wishes to net $56,500 from the sale of her small building. The seller must pay the listing firm a 7% commission and a marketing allowance of $160. Rounded to the nearest dollar, what is the minimum selling price required under these facts? a. $60,455 b. $60,626 c. $60,753 d. $60, A home valued at $168,500 just had a 70% mortgage loan placed on it. The interest rate is 11.25%. The monthly payment is $1, including principal and interest. What will the principal balance of the mortgage loan be after the next monthly payment is made? a. $117, b. $117, c. $117, d. $117, A buyer paid $126,280 for a 20% interest in a commercial property. What was the total value of the property? a. $25,256 b. $132,850 c. $631,400 d. $2,525, A house was listed for sale at $84,900. The seller received $71,424 after paying the broker a 7% commission. What was the selling price of the property? a. $76, b. $76, c. $78, d. $79, A land owner is planning a building that will contain 103,000 square feet. Construction costs are estimated to be $62.00 per square foot. Ninety-five percent financing is available for the structure. How much money will be required by the owner to complete the construction? a. $319,300 b. $638,600 c. $5,747,400 d. $6,066, The effective gross income from an office building is $73,500 with annual operating expenses total $52,300. If the owner expects to receive an 11% return on the investment, what is the value of the building? a. $125,800 b. $192,727 c. $475,454 d. $668,181

3 12. An appraiser estimated the replacement cost of a building at $560,000. The building has an estimated economic life of 40 years and an estimated remaining life of 30 years. If the appraiser uses the straight-line depreciation method, what will be the indicated current value of the building? a. $140,000 b. $392,000 c. $420,000 d. $560, A buyer deposited 10% of the sales price with the broker as earnest money for purchase of a lot. The lender agreed to loan at 80% of the sales price. Principal amount of the loan will be $51,000. How much additional funding must be provided by the buyer in order to complete this transaction? a. $5,100 b. $5,500 c. $6,125 d. $6, A parcel of vacant land has an assessed value of $274,550. If the assessment is 85% of market value, what is the market value? a. $315, b. $320, c. $323, d. $1,830, A seller has collected the September rent from all five tenants: two paying $345 per month each and three paying $425 per month each. How much rent will be credited to the buyer at a September 19 settlement? a. $ b. $ c. $1, d. $1, A store owner pays 2% of his total gross sales volume as rent, with a minimum base rental of $1,000 per month. In the past year, his sales totaled $435,000. How much rent did he pay in total for the year? a. $8,460 b. $8,700 c. $12,000 d. $20,700

4 17. A lease provides that a retail tenant pays $760 minimum rent per month plus 4% of the gross sales in excess of $150,000 per year. If the tenant paid a total rent of $20,520 last year, what was the gross sales volume? a. $150,000 b. $285,000 c. $435,000 d. $513, A residence is valued at $87,500 and its assessment ratio is 50% of market value. If the tax rate is $7.80 per $100 of assessed value, the annual taxes are a. $3, b. $3, c. $5, d. $6, A real estate licensee leased a building for 10 years at an annual rent of $48,000. The licensee will receive a commission based on rent: 7.5% for the first five years, 5% for the next three years, and 3.5% for the final years. How much will be earned in total commission over the life of the lease? a. $18,000 b. $25,200 c. $28,560 d. $30, Property purchased five years ago was assessed for tax purposes at 50% of market value. The tax rate has remained at $4.90 per $100 of assessed value. The current taxes have increased by $637 in the last five years. How much has the market value of the property increased? a. $3, b. $6, c. $13, d. $26, A lender requires the buyer to pay $1,875 in discount points for a $75,000 loan. Using the general rule of thumb, how many discount points are being charged? a. 2 b. 2.5 c. 4.5 d. 5

5 22. What is the cost of constructing a fence 6 feet 6 inches high around a rectangular lot measuring 90' x 175', if the cost of erecting the fence is $1.25 per linear foot and the cost of material is $0.825 per square foot of fence? a. $1, b. $2, c. $2, d. $3, Assume that the listing and selling brokers split the commission evenly. What is the sales price of a house if the listing broker receives $2, and the total commission rate is 6½%? a. $39,900 b. $76,200 c. $79,800 d. $88, A vacant lot that measures 100 feet wide by 125 feet deep is listed at a price of $250 per front foot. The broker will collect an 8% commission on the sale. If the lot sells for the full asking price, how much is the broker's fee? a. $1,250 b. $1,500 c. $2,000 d. $2, If a mortgage lender intends to yield 10 3/8% on a 30-year loan and charges 9¾% interest, how many points should the lender charge? a. 4 points b. 5 points c. 7 point d. 8 points 26. If the borrower paid $ interest last month on a $136,500 loan, what is the interest rate? a. 4½% b. 4¾% c. 5% d. 5¼% 27. A building is valued at $100,000 using a capitalization rate of 8%. If an investor demands a capitalization rate of 10%, the value of the building will a. increase by 20 % or less. b. increase by more than 20%. c. decrease less than $10,000. d. decrease more than $10,000.

6 28. If the annual net income from certain commercial property is $22,000 and the capitalization rate is 8%, what is the value of the property using the income approach? a. $176,000 b. $183,000 c. $200,000 d. $275, The taxes for the current year are $1, and have not been paid. If the North Carolina sale is to close on August 12, what is the amount that will be charged to the seller for the taxes based on a 360-day year? a. $ b. $1, c. $1, d. $1, A broker listed a rectangular parcel of vacant land that measures 195 feet by 425 feet. If the owner wants to sell the land for $35,000 per acre, what is the list price? a. $66,500 b. $68,250 c. $82,875 d. $85, A buyer purchased a North Carolina vacation home for $475,250. The seller allowed the buyer to assume his small first mortgage with a loan balance of $110,500. How much excise tax was paid on the transaction? a. $ b. $ c. $ d. $ A couple has applied for a 6½% conventional fixed-rate, level-payment mortgage loan to finance the purchase of a house with a sales price of $295,000. They wish to obtain an 80% LTV loan, and the lender is using qualifying ratios of 28 and 36. The couple has the following monthly obligations: a $335 car payment, a $125 student loan payment, and a $250 credit card payment. What is the minimum annual income needed to qualify if the loan factor is 6.32 and there is a required monthly escrow deposit of $263? a. $63,922 b. $75,194 c. $82,151 d. $91,174

7 33. What is the maximum loan amount for which a buyer client can qualify if the lender is using qualifying ratios of 28 and 36? The buyer has an annual salary of $64,200 and the following monthly obligations: a $249 car payment and a $175 credit card payment. The buyer wishes to obtain an 80% LTV loan with a 5¼% annual interest rate. The loan factor is 5.53 per $1,000 borrowed and there is a required monthly escrow deposit of $225. a. $230,199 b. $230,922 c. $270,886 d. $307, How much interest will be paid over the life of a 7% 30-year, fixed-rate, level-payment loan if the original loan amount was $136,000 and the monthly debt service payment was $904.40? a. $149,600 b. $189,584 c. $285,600 d. $325, If settlement is scheduled for April 28 and the annual owner association dues of $500 will be paid by the buyer later in the year, how would the dues be reflected on the settlement statement if a 30-day month, 360-day year is used? a. $ seller debit/buyer credit b. $ seller debit c. $ seller debit/$ buyer debit d. $ seller credit/$ buyer debit 36. Current year North Carolina real property taxes will be prorated at the June 26 settlement. How would the $5,645 tax bill proration be reflected on the settlement statement if a 30- day month, 360-day year is used? a. $2, seller debit/buyer credit b. $5, seller debit c. $2, seller debit/$2, buyer debit d. $2, seller credit/$2, buyer debit 37. Current year North Carolina real property taxes have been paid and will be prorated at the November 29 settlement. How would the $4,788 annual tax bill proration be reflected on the settlement statement if a 30-day month, 360-day year is used? a. $4, seller debit/buyer credit b. $4, seller debit c. $4, seller debit/$ buyer debit d. $ seller credit/$ buyer debit

8 38. Current year North Carolina real property taxes have NOT been paid and will be prorated and paid at the September 24 settlement. How would the $7,238 annual tax bill proration be reflected on the settlement statement if a 30-day month, 360-day year is used? a. $5, seller debit/buyer credit b. $7, seller debit c. $5, seller debit/$1, buyer debit d. $1, seller credit/$1, buyer debit 39. The settlement for the purchase of a rental house is scheduled for June 18. The June rent of $1,100 was collected by the seller at the first of the month. The seller is also holding the tenant security deposit of $2,200. How would the rent and tenant security deposit be reflected on the settlement statement if a 30-day month, 360-day year is used? a. $440 seller debit/buyer credit for rent; $880 seller debit/buyer credit for tenant security deposit b. $1,100 seller debit/buyer credit for rent; $2,200 seller debit/buyer credit for tenant security deposit c. $440 seller debit/buyer credit for rent; no entry for tenant security deposit d. $440 seller debit/buyer credit for rent; $2,200 seller debit/buyer credit for tenant security deposit 40. The buyer has obtained a new fixed-rate, level-payment conventional loan with an annual interest rate of 6¾%. The original loan amount is $285,000. If settlement is scheduled for April 28 and the first mortgage payment will be due on June 1, how much interim interest will be charged to the buyer on the settlement statement if a 30-day month, 360-day year is used? a. $ b. $ c. $1, d. $1, The 1.25-acre subject property contains a ten-year-old house with 1,845 square feet of heated living space. Comparable land is valued at $40,000 per acre and cost of replacement for the residence is estimated to be $96 per square foot. If the life expectancy of improvements is estimated to be fifty years, what is the appraised value of the property using the cost approach? a. $177,526 b. $181,696 c. $191,696 d. $212,544

9 42. An investor projects that a potential investment property will generate net operating income of $225,000 and debt service of $140,000. He wants to make a down payment of $400,000. If his projections are correct, his equity dividend rate should be a %. b. 35%. c %. d. 56.2%. 43. A married couple purchased a home in 1988 for $310,000. In 1991, they spent $50,000 to add a sunroom and a screened porch. In 2001, they paid $9,000 to repaint the interior of the house. The couple sold their home for $610,000 in They paid $38,000 in commissions and settlement expenses. The couple is in the 33% tax bracket, and they file a joint tax return. If long-term capital gain is taxed at 15%, how much federal income tax will they owe for the sale of their principle residence? a. None b. $30,450 c. $31,800 d. $69,960