Appendix B: Answer Keys

Transcription

1 Appendix B: Answer Keys SECTION I Chapter 1: The Nature of Real Property 1. F 2. B 3. E 4. C 5. A 6. D 7. H 8. G 1. b 2. c 3. b 4. c 5. c (in any order) 1. airspace above land 2. surface of land 3. subsurface of land (mineral rights) 4. improvements 5. fixtures 6. fructus naturales 7. water rights 8. appurtenances 9. easements 10. interests, benefits, and ownership rights 1. F It includes the enjoyment of improvements and growing crops as well. 2. T 3. T 4. F Littoral rights applies to land which borders the shore of a sea or ocean. It is often affected by tides and currents. 5. T Chapter 2: Physical and Economic Characteristics of Land 1. C 2. A 3. F 4. B 5. E 6. D 1. a 2. a 3. d 4. c 5. b (in any order) 1. scarcity

2 2. situs 3. permanence 4. production 5. assemblage 1. T 2. F The supply of land is fixed and can never be increased, particularly in the most desirable areas. 3. F Combining two or more contiguous parcels of real estate into a single parcel is known as assemblage, not plottage. 4. F An increase in value resulting from assemblage is known as plottage value.(the question states the opposite of this concept.) 5. F Because each parcel of land is unique and has distinctive characteristics, no parcel is like any other and thus the real estate market is unlike any other commodity market. Chapter 3: The Nature of Personal Property 1. D 2. C 3. A 4. E 5. B 1. c 2. a 3. d 4. b 5. d 1. fructus industriales or emblements 2. personal 3. terminate 4. reenter 5. harvest 1. F Personal property is movable. 2. T 3. T 4. F Trade fixtures are removable from leased premises. 5. T Chapter 4: The Real Estate Business 1. E 2. A 3. C 4. B 5. F 6. D 1. b 2. b 3. c 4. b

3 5. c 1. economic 2. produce 3. distribute 4. services 5. land 6. labor 7. capital investment 8. entrepreneurial 1. T 2. F In an ideal market, the forces of supply and demand remain in balance, with stable prices. 3. F Our free enterprise system has many governmental economic controls. 4. T 5. F Supply and demand determines the price of land. Chapter 5: Types of Real Estate 1. B 2. D 3. E 4. C 5. A 1. d 2. c 3. a 4. a 5. a (in any order) 1. residential 2. commercial 3. industrial 4. agricultural 5. recreational 6. special purpose 7. public property 1. F Public property is government owned property. 2. F A mushroom farm is agricultural property. 3. T 4. F A hospital is a special purpose property. 5. F An industrial park is industrial property. Chapter 6: Land Descriptions 1. C 2. D 3. A 4. B 1. b 2. a

4 1. 5, , street 4. place 1. F An assessor's parcel number is not an adequate legal description. 2. T 3. F Land can be described by referring to other recorded documents, if the documents contain an adequate legal description. 4. T 5. T 6. T Introduction to Real Estate Section Quiz 1. B 2. A 3. D 4. B 5. A 6. C 7. A 8. D 9. D 10. C SECTION II Chapter 1: Title and Ownership 1. F 2. H 3. C 4. E 5. B 6. I 7. J 8. G 9. A 10. D 1. c 2. b 3. c 4. c 5. b 6. b 7. a 8. a 1. possession 2. occupancy 3. use 4. enjoyment 5. disposition 6. individually 7. jointly

5 8. trust 9. corporation 10. partnership 1. T 2. F Constructive notice means that information has been made available to the public. 3. T 4. F Alienation refers to any change of ownership, not just by a deed. 5. T 6. F An acknowledgement is a formal declaration made by a person who has signed a document before an authorized officer, usually a notary. 7. T 8. F Surveys measure the boundaries of a land area, locate improvements, and determine the existence of easements, encroachments, and setback requirements. Chapter 2: Government Limitations on Title 1. E 2. B 3. C 4. G 5. H 6. F 7. A 8. D 1. a 2. b 3. d 4. c 5. b 6. a 1. allodial 2. individuals 3. feudal 4. king 5. sovereign 6. eminent domain 7. police power 8. taxation 9. escheat 10. no 1. F Police power is the uncompensated regulation of property; eminent domain is a compensated taking. 2. F Government and owners either agree to the price, or a court decides. 3. T 4. T 5. F Taxes become liens when they are assessed. 6. F You could only make a claim against your insurance company. Chapter 3: Private Limitations on Title 1. D

6 2. E 3. B 4. F 5. G 6. A 7. C 1. d 2. b 3. c 4. a 5. d 1. Encroachments 2. physical 3. trespass 4. fence 5. driveway 6. nuisance 7. airspace 8. tree branch 9. survey 10. encroachment 1. T 2. F Most title insurance companies will not insure against an encroachment. 3. T 4. F An easement is the legal right to enter onto another's land, usually in order to cross the land. 5. F Restrictive covenants are private agreements that constitute encumbrances. Chapter 4: Estates in Property 1. B 2. F 3. C 4. A 5. D 6. G 7. E 8. H 1. a 2. b 3. b 4. a 5. b 1. F A fee estate would include the right of possession, but leasehold estates also include the right of possession but they are not fee estates. 2. T 3. T 4. F A life tenant may not commit waste, must maintain the premises in good repair, and pay the mortgage, taxes, and insurance. 5. T

7 6. T Chapter 5: Sole Ownership, Joint Ownership, and Trusts 1. B 2. F 3. E 4. G 5. D 6. A 7. H 8. C 1. d 2. d 3. b 4. c 5. c 6. c 1. ownership 2. one 3. title 4. time 5. interest 6. possession 7. consent 8. sale 9. a tenant-in-common 10. probate 1. T 2. T 3. F In a tenancy by the entireties, each spouse owns the entire estate. 4. F The purchaser of a joint tenant's interest will become a tenant-in-common with the remaining joint owners. 5. T 6. T Chapter 6: Liens and Easements 1. SSI 2. GSI 3. SEI 4. SEV 5. SSI 6. SEI 7. GSI 8. SSI 9. SSI 1. c 2. c 3. b 4. d 5. c

8 6. b 7. a 8. d 9. d 10. c 11. d 12. b 1. use 2 specific 3. writing 4. statute 5. ownership 6. attach 7. people 8. subject 9. license 10. personal 1. T 2. F A writ of attachment is created by a court action and is therefore not a statutory lien (as is a property tax lien, for instance). 3. F Suppliers can obtain a mechanic's lien based on either an express or implied contract. 4. T 5. F Easements by implication arise from the acts or conduct of the parties. 6. T 7. F The party wall becomes an appurtenance that would stay with the property when either property is sold. It does not relate to a person, but to the properties. 8. T 9. T 10. T Chapter 7: Land- Use Regulation 1. E 2. C 3. F 4. H 5. J 6. G 7. I 8. B 9. D 10. A 1. a 2. b 3. b 4. b 5. c 6. d 7. c 8. a 9. d 10. b

9 1. building 2. inspections 3. construction 4. final 5. certificate of occupancy 6. residential 7. commercial 8. industrial 9. agricultural 10. public 1. T 2. F Government restrictions on land use must be nondiscriminatory and promote the general welfare. 3. F Zoning decisions may be appealed to a Zoning Appeals Board and the courts. 4. T 5. F Bulk zoning controls density. 6. T 7. T 8. T Chapter 8: Cooperatives, Condominiums, Timeshares, and PUDs 1. B 2. C 3. E 4. G 5. J 6. I 7. H 8. F 9. D 10. A 1. b 2. c 3. b 4. d 5. c 6. b 7. d 8. c 1. cooperatives 2. condominiums 3. time-shares 4. PUDs 5. fee simple 6. individual 7. separate 8. mortgage/sell 1. F Cooperative unit owners have a proprietary lease; ownership is held by a corporation, partnership, or land trust. 2. T

10 3. F Density zoning restricts the number of houses per acre. 4. T 5. T 6. F Unit owners must also comply with the condominium instruments. Chapter 9: Alienation, Wills, and Deeds 1. B 2. D 3. F 4. H 5. I 6. J 7. G 8. E 9. C 10. A 1. d 2. a 3. c 4. c 5. d 6. a 7. a 8. a (1-8 in any order) 1. grantor 2. grantee 3. consideration 4. words of conveyance 5. legal description 6. signature 7. delivery 8. acceptance 9. codicil 10. holographic 1. F A nuncupative will is an oral will. 2. F Some states do not recognize holographic or nuncupative wills. 3. T 4. F The person who makes a will is a testator. 5. F A deed must be delivered in order to pass title. 6. F A deed restriction limits some use of the property. 7. T 8. F Descent and distribution is by operation of law and is involuntary. 9. T Real Estate Title and Ownership Section Quiz 1. B 2. D 3. C 4. C 5. D 6. C 7. A

11 8. B 9. A 10. B 11. A 12. A 13. B 14. C 15. D 16. A 17. B 18. C 19. D 20. D SECTION III Chapter 1: Real Estate Contract Law 1. D 2. B 3. E 4. H 5. A 6. J 7. F 8. I 9. L 10. C 11. G 12. K 1. c 2. d 3. d 4. a 5. a 6. d 7. b 8. c 9. a 10. c 1. enforceable 2. necessities 3. food 4. shelter 5. valid 6. void 7. void 8. voidable 9. acceptance 10. counteroffer 1. T 2. F A real estate sales contract survives the death of either party. A listing contract would not survive the death of either party.

12 3. F An open listing is a unilateral contract. The seller promises to pay upon performance, but the broker does NOT promise to do anything. 4. F The question states that both parties make promises, so this is a bilateral contract. 5. F An assignor remains secondarily liable on the contract unless released by the original party. 6. F When the phrase "time is of the essence" is used, it means that the contract must be performed within the specified time limit when time is of the essence. 7. T 8. F Rescission does not require proof of damages. 9. T 10. T Chapter 2: Real Estate Agency and Escrow 1. E 2. I 3. F 4. G 5. H 6. L 7. B 8. K 9. J 10. D 11. A 12. C 1. b 2. c 3. d 4. a 5. b 6. b 7. a 8. c 1. availability 2. information 3. compensation 4. indemnification 5. consent 6. parties 7. disclosure 8. parties 9. separate 10. federally 1. T 2. F A salesperson may only receive compensation from his or her broker. 3. T 4. F A salesperson must disclose all offers to the seller-client. 5. T 6. F The delivery of a deed into escrow relates back to the date of delivery. 7. F The escrow account must be in the name of the brokerage firm. 8. F Escrow records must be kept for a period years (which varies by state).

13 9. T 10. T Chapter 3: The Real Estate Brokerage Business 1. G 2. B 3. H 4. C 5. A 6. D 7. L 8. J 9. E 10. K 11. F 12. I 1. b 2. c 3. a 4. a 5. c 6. c 7. d 8. d 9. c 10. c 11. d 12. d 1. selling 2. buying 3. exchanging 4. leasing 5. renting 6. negotiating 7. ready 8. willing 9. able 10. buyer 1. T 2. F Net listings are usually illegal in most states. 3. F Real estate commissions are negotiable and not set by state law. 4. F Money paid at contract signing is an earnest money deposit. 5. F A counteroffer works as a rejection of the original offer. 6. T 7. F The seller and broker named in the open listing may attempt to sell the property. Chapter 4: Leases and Property Management 1. B 2. C 3. H

14 4. K 5. F 6. D 7. A 8. E 9. G 10. J 11. I 12. L 1. a 2. d 3. a 4. b 5. d 6. b 7. a 8. c 9. c 10. d 11. b 12. a 1. competent parties 2. offer and acceptance 3. consideration 4. legal description 5. legal objective 6. legal 7. reversionary 8. proprietary 9. corporation 10. stockholder 1. F A tenancy for years is a lease for a definite period of time. It would be negotiated between the lessor and lessee and is not created by adverse possession. (Adverse possession is the acquiring of the ownership of property by open, notorious and hostile use of the property.) 2. T 3. T 4. F Ouster of a lessee for breach of lease is known as eviction. 5. F Leases are bilateral contracts that survive the death of the parties. 6. T 7. T 8. T Chapter 5: Federal Fair Housing Laws 1. E 2. I 3. C 4. B 5. A 6. K 7. L 8. F

15 9. H 10. J 11. D 12. G 1. c 2. d 3. d 4. c 5. c 6. d 7. a 8. b 9. c 1. Office of Equal Opportunity (OEO) 2. Department of Housing and Urban Development (HUD) 3. one 4. two 5. complainant 6. HUD Equal Opportunity poster 7. all places of business and model homes 8. slogan 9. statement 10. logo 1. T 2. T 3. F The law applies to multiple family dwellings with four or more units. 4. T 5. T 6. F Transvestites are not among the protected classes listed in the text. (Some states and municipalities have laws that add them to the various protected classes, but not the federal laws.) 7. T 8. F Local laws can reasonably limit the number of occupants. Real Estate Contracts and Agency Quiz 1. A 2. C 3. C 4. C 5. D 6. B 7. B 8. D 9. D 10. C 11. B 12. C 13. C 14. B 15. C 16. B 17. A 18. B

16 19. D 20. A SECTION IV Chapter 1: Mortgages, Deeds of Trust, and Foreclosure 1. D 2. B 3. E 4. F 5. C 6. A 7. I 8. J 9. H 10. L 11. K 12. G 1. c 2. c 3. a 4. c 5. a 6. b 7. b 8. a 9. b 10. d 11. d 12. c 13. a 14. c 15. c 1. mortgage 2. lien 3. two 4. lender 5. deed of trust 6. surrenders 7. bare naked title 8. trustee 9. bare 10. title 1. T 2. F The trustor (the borrower) is the owner of the property and is responsible for the property taxes and insurance. 3. F This won't happen without a subordination clause or agreement. 4. T 5. T 6. F Some notes may call for a prepayment penalty. 7. F Satisfaction of lien papers must be recorded in the land records. 8. T

17 Chapter 2: Real Estate Finance 1. A 2. F 3. B 4. D 5. C 6. K 7. J 8. L 9. H 10. I 11. E 12. G 1. c 2. b 3. d 4. b 5. a 6. a 7. d 8. b 9. d 10. a 11. c 12. d 1. cash 2. down payment 3. prepayment 4. annual percentage rate 5. payments 6. four 7. construction 8. $25, four 10. compare 1. F The ECOA does not list sexual orientation as a protected class, although some states and municipalities have added sexual orientation as such. 2. T 3. F Redlining means to deny or limit the number of loans in a particular area. 4. F The annual percentage rate includes all finance charges, not just the interest. 5. T 6. F The right of rescission applies to refinanced loans. 7. T 8. T 9. F Graduated payment mortgages refer to those whose payments increase on a scheduled basis, not those whose interest rates fluctuate (Adjustable Rate Mortgages). 10. T

18 Chapter 3: Real Estate Appraisal and Valuation 1. K 2. D 3. L 4. H 5. I 6. G 7. J 8. B 9. F 10. C 11. E 12. A 1. d 2. b 3. a 4. d 5. b 6. c 7. c 8. c 9. d 10. c 1. demand 2. utility 3. scarcity 4. transferability 5. location 6. comparables 7. adjustment 8. reconciliation 9. reproduction 10. replacement 1. F Reproduction applies only to improved real estate. 2. F Depreciation for appraisal purposes is entirely different from depreciation for tax purposes. 3. T 4. F It is illegal to base the fee on the appraised value. 5. F Appraising is an art, not a science. 6. F Under the principles of progression and regression, the average price in the neighborhood will be more controlling. 7. T 8. T 9. F Not all improvements will increase the value of real estate. 10. T Chapter 4: Real Estate Taxes & Investment 1. C 2. H 3. A 4. D

19 5. F 6. B 1. a 2. b 3. c 4. b 5. b 6. a 7. d True False 1. F Special Assessment taxes are used for local improvements such as sidewalks, parks, and sewers 2. T 3. F Long-term gains (or losses) apply to investments or properties held for more than one year. All other gains or losses are short-term. 4. F Property must be inhabited for 2 of prior 5 years; and the tax exempt limit is up to $250,000 for a single resident and $500,000 for married couples filing jointly. Chapter 5: Real Estate Closings 1. G 2. I 3. F 4. H 5. A 6. B 7. K 8. C 9. D 10. E 11. J 1. a 2. a 3. d 4. d 5. d 6. a 7. a 1. information booklet 2. costs 3. debits 4. credits 5. agreement 6. custom 1. F RESPA prohibits all kickbacks. 2. F RESPA was designed to disclose closing costs. 3. T 4. T 5. F The escrow agent is neutral and acts for the benefit of all parties. 6. T 7. T

20 8. T 9. T 10. F RESPA is limited to owner-occupied residential property consisting of no more than four family units. Real Estate Finance & Valuation Section Quiz 1. D 2. B 3. A 4. B 5. D 6. B 7. B 8. B 9. D 10. C 11. B 12. D 13. D 14. A 15. A 16. B 17. D 18. C 19. C 20. C

21 SECTION V: REAL ESTATE MATH PRACTICE TEST SOLUTIONS 1. Solution: Area = Length X Width Area = 164' X 120' = 19,680 sq. ft. Read your calculator carefully 2. Solution: Area = Length X Width Lot 1: 43,560 (sq. ft. in acre) X 25 acres = 1,089,000 sq. ft. We know that 1,089,000 sq. ft. = Width X 1,350' (length) Therefore 1,089,000 / 1,350 = Width or The problem told us that the lots were the same width. Lot 2: Area = ' (width) x 900' (length) = 726,000 sq. ft. Therefore: 726,000 (area) ) 43,560 = acres 3. Solution: If 1.5% (.015) X Total value = $33,000 then $33,000 /.015 = Total Value Total value handled = $2,200, Solution: Commission earned on 1st $10,000 = $ ($10,000 X.06) Total commission $ = $ commission on remainder $ /.035 = $9,900 + $10,000 = $19,900 sale price 5. Solution: I / V = R $4,800 / $60,000 =.08 or 8% 6. Solution: $102 X 10 apartments X 12 months = $12,240 annual gross income $12,240 1,440 annual expenses = $10,800 net income $10,800 net income /.10 rate of return = $108,000 value 7. Solution: $84,500 (sales price) X 6% = $5,070 total commission $5,070 X 50%= $2,535 to selling broker $2,535 X 40% = $1,014 to salesperson 8. Solution: $360 semi- annual interest X 2 = $720 annual interest $720 annual interest /.09 = $8,000 invested 9. Solution: $80 per quarter X 4 = $320 annual interest $320 / $8,000=.04 or 4% annual interest rate 10. Solution: Lot cost $28,000 X 3% = $840 profit on lot House cost $250,000 X 30% = $75,000 profit on house Total cost of lot and house = $278,000 $840 + $75,000 + $278,000 = $353,840 selling price 11. Solution: $140,000 X 45% = $63,000 assessed value $63,000 X $3.20 / $1,000 = $ or $202 tax 12. Solution: Draw a time line. 1/1 9/15 (seller refund) 12/30 (3 months, 16 days = 106 days) $1,260 / 360 days = $3.50 per day * 106 days = $ refund to seller 13. Solution: 250' x ' = 152,460 sq. ft. / 43,560 (sq. ft. per acre) = 3.5 acre 3.5 acre X $5,000 per acre = $17, Solution: $1,500 X 8 units X 12 months = $144,000 Gross Income $144,00 $96,000 Expenses = $48,000 Net Income $48,000 / $340,000 = 14.12% Rate of Return or 14% 15. Solution: 28' X 140" = 3,920 sq. ft. of construction 3,920 X $11.25 (per sq. ft.) = $44,100 total cost 16. Solution: Start by adding the items the seller needs to pay. $28,000 + $1,500 = $29,500 (net to seller + expenses) If the selling price is 100% & the commission is 6%, the seller pay- outs are 94%. The selling price X 94% will equal the seller pay- outs Therefore $29,500 (seller pay- outs) / 94% (.94) will equal the selling price. $29,500 /.94 = $31, or $31,383 sales price

22 17. Solution: $750 desired income $200 salary = $550 earned in commissions $550 /.03 = $18, Solution: Commission Paid... $7,275 ($145,500 X 5%) Closing Costs... $3,490 Total Paid out... $10,765 Seller received cash... $31,400 Sales price ($145,500) less pay- outs ($10,765) and cash received ($31,400) = $103,335 required to pay off existing loan. 19. Solution: The area to be carpeted is 16.5' X 15' or sq. ft. There are 9 sq. ft. in one sq. yard sq. ft. / 9 = 27.5 sq. yds. of carpet and pad 27.5 sq. yds. X $24.95 (carpet $ pad $5.00) = $ Solution: $47,000 x.90 = $42,300 loan amount $47,000 42,300 = $ 4,700 down payment $2,500 deposit = $2,200 Subtract the deposit because that has already been paid. $2,200 + $225 attorney fee = $2, Solution: Start with seller pay- outs $32,500 + $65,500 + $ = $98, % (sell price) 5% (commission) = 95% (to be paid out) $98, /.95 = $103,603 sales price 22. Solution: Tax = Assessed Value X Tax Rate $80,000 X.70 = $56,000 Assessed Value $56,000 X $4 / 100 = $2,240 Taxes 23. Solution: We know that the monthly income X 25% cannot exceed $1,000 Therefore $1,000 / 25% (.25) will equal monthly income $1,000 /.25 = $4, Solution: $47,000 X.90 = $42,300 loan X.04 = $1,692 points $47,000 X.01 = $470 attorney fees $47,000 X.10 = $4,700 down payment $1,692 + $470 + $4,700 = $6,862 - $2,500 deposit - $ 400 credit of tax = $3,962 cash needed 25. Solution: Remember the outstanding loan balance changes with each $600 payment. $2,400 X 8% / 2 = $96. Interest 1st six months. $1,800 X 8% / 2 = $72 Interest 2nd six months. $1,200 X 8% / 2 = $48. Interest 3rd six months. $ 600 X 8% / 2 = $24 Interest 4th six months. Total Interest = $ Solution: All computations must be converted to an annual basis $92 X 12 = $1,104 utilities, annually Annual management fees $700 + $1,104 (utilities) = $1,804 annual expense $10,000 (annual income) $1,804 (annual expense) = $8,196 net annual income $8,196 (net income) / 80,000 (value) = = 10.25% rate of return 27. Solution: $30,000 + $6,000 + $472 = $36,472 (net + expenses) 100% 6% = 94% $36,472 /.94 = $38,800 sale price 28. Solution: $40,625 X.80 = $32,500 loan $32,500 X.09 / 12 = $ interest, 1st payment $325 $ = $81.25 principal, 1st payment $32,500 $81.25 = $32, loan balance after 1st payment $32, X.09 / 12 = $ interest, 2nd payment $325 $ = $81.86 principal, 2nd payment $32, $81.86 = $32, balance, after 2nd payment

23 29. Solution: The loan amount is $151,000 ($165,000 less $14,000) Follow the chart where the 10% interest line intersects the 30- year term. This is $8.78 per $1,000 of loan. $151,000 X $8.78 / $1,000 = $1, Solution: Follow the chart along the row for 9.5%. Then multiply the rate shown under each amount column by the loan amount ($120,000). $120,000 X / $1,000 = $1,254 per month. The buyer cannot afford this. $120,000 X 9.33 / $1,000 = $1,119 per month. The buyer can afford this. Therefore the shortest term loan, within their budget, is 20 years. 31. Solution: Set up problem B1 + B2 / 2 X H = Area / 2 = X 145 = 14,500 square feet 32. Solution: Lot 1: 40 X 43,560 = 1,742,400 square feet 1,742,400 / 1250 (1st frontage) = 1, (depth of both lots) Lot 2: 2,000 (front) X 1, (depth) = 2,787,840 square feet 2,787,840 / 43,560 = 64 acres. 33. Solution: When the tax bill comes in June, the buyer will have to pay it. There were 2 months and 14 days that buyer did not own the property (day of closing is the buyer's), so he is entitled to a credit for that period, and the seller will be charged (debited). Closing is on March 15, so at closing the taxes have not been paid. Annual taxes of $2,340 / 360 days (30 days * 12) = $6.50 per day $6.50 * 74 days (Jan. 1- March 14) = $ credit to buyer 34. Solution: Taxes are based on assessed value not sales price or appraised value. $39,500 assessed value * $.92 per $100 = $ annual taxes The question asks for the semi- annual taxes $ / 2 = $ Solution: Income / value = % return $37,500 / $495,000 = or 7.6% 36. Solution: The tract of land contains 3,550,000 sq. ft. (2,000' by 1,775') 20% must be dedicated 710,000 sq. ft. Available to develop 2,840,000 Each lot will require 87,120 sq. ft. (43,560 x 2) 2,840,000 / 87,120 = or 32 building lots You must round down to 32, otherwise each lot will be less than 2 acres. 37. Solution: $225 rent per apartment x 16 (# of apartments) = $3,600 weekly income $3,600 weekly rent x 52 weeks = $187,200 annual income $3,120 monthly expenses x 12 months = $37,440 annual expense $187,200 gross income $37,440 expenses = $149,760 net income $149,760 / $1,200,000 =.1248 or 12.5% 38. Solution: (total of front & rear setbacks) = 50 deep (total of side setbacks) = 75 wide 50 x 75 (maximum structure) = 3,750 sq. feet 39. Solution: The formula is GRM = value / rent In this problem the GRM is 116 and the rent is $990. Therefore the value = $990 x 116 = $114,840 value 40. Solution: Sales price = commission + (net to seller and expenses) Sales price (100%) = 6% + 94% 100% = 6% + $140,023 + $4,220 ($144,243) $144,243 (94%) = sell price 6% commission $144,243 /.94 = $153,450 sell price

24 41. Solution: $2,100 / $3.50 x 100 = $60,000 assessed value and is 40% of market value Therefore $60,000 /.40 = $150,000 market value 42. Solution: Using the table, 20- year loans at 9.5% require $9.33 per $1,000 $1,200 (monthly) / $9.33 x $1,000 = $128,617 loan amount. $128,617 loan + $10,000 down = $138,617 purchase price, which would be rounded down to $138, Solution: 9% loans for 15 years require $10.15 per $1,000 or $1, per month 10% loans for 30 years require $8.78 per $1,000 or $1, per month Difference = $ Solution: The amortization table indicates a monthly payment of $8.40 per $1,000 $110,000 x $8.40 = $924 per month $924 x 300 (25 years at 12 payments per year) = $277,200 $277,200 is the total you would pay, but $110,000 of it is for principal. $277,200 $110,000 = $167,200 total interest paid. 45. Solution: $200,000 x.60 = $120,000 assessed value $120,000 x 2.40 / 100 = $2,880 annual taxes $2,880 / 12 = $240 monthly tax 46. Solution: $ * 12 = $1, annual interest $1, / $15,625 (loan amount) = of 8.67% interest 47. Solution: $1, x 12 = $18,375 annual interest $18,375 /.0875 = $210,000 loan balance 48. Solution: Selling price = $150,000 $30,000 down payment = $120,000 loan Loan amount $120,000 x 3% = $3,600 for points Remember, a point is 1% of the loan amount. 49. Solution: $1,290 annual taxes / 360 days (30 day months) = $3.58 per day The seller is entitled to a credit from closing to the end of the year. June 10 to June 30 = 21 days July to Dec 6 months x 30 days = 180 days + 21 days = 201 days $3.58 x 201 days = $ credit to seller. 50. Solution: Base rent = $1,350 per mo. x 12 = $16,200. Total rent = $22,000 - $16,200 = $5,800 for excess sales. $5,800 /.02 = $290,000 in sales over $80,000. $80,000 + $290,000 = $370,000 annual gross sales. 51. Solution: $200,000 x.115 = $23,000 annual interest expense $45,000 (income) - $23,000 (expense) = $22,000 net income $225,000 (value) - $200,000 (debt) = $25,000 equity $22,000 (income) / $25,000 equity = 0.88 or 88% return on equity 52. Solution: Before After Units 20 2 Occupancy rate 100% 95% Units rented Rent $750 $ Units rented x 20 x 19 $15,000 $14, $15,000 - $14,962 = $37.50 net change $37.50 / $15,000 =.0025 or.25% 53. Solution: On a ruler there would be 4' to each inch 8.5" x 4 = 34 feet 6.75" x 4 = 27 feet 34' x 27' = 918 square feet 918 / 9 sq. ft. per yd. = 102 square yards

25 102 x $2.70 = = $ Solution: Year 1 115,000 x 1.08 = 124, Year 2 124,200 x 1.08 = 134, Year 3 134,136 x 1.08 = 144, Year 4 144, x 1.08 = 156, Year 5 156, x 1.08 = 168, Present Value = $168, Solution: $88,000 / 100 x $3.05 = $2, x.001 x $88,000 = $2, x $88,000 = $2,684 $88,000 / 1,000 x $31.48 = $2, Solution: $100,000 x.095 / 12 = $ paid to interest 1st payment $ $ = $49.21 paid to principal 1st payment $100,000 - $49.21 = $99, loan balance after 1st payment $99, x.095 / 12 = $ paid to interest 2nd payment $ $ = $49.60 paid to principal 2nd payment $99, $49.60 = $ loan balance after 2nd payment $99, x.095 / 12 = $ paid to interest 3rd payment $ $ = $49.99 paid to principal 3rd payment $99, $49.99 = $99, loan balance after 3rd payment 57. Solution: Annual taxes have been paid, therefore the seller gets a credit. $2,160 annual taxes / 360 days = $6.00 per day Aug 15 to Aug 30 = 16 days days (4 months) = 136 days $6.00 x 136 days = $816 credit to the seller 58. Solution: 100' + 100' + 144' + 144' = 488' 144' is used instead of 150' because there is a 3' overlap at each end of two sides. 488' x 3' = 1,464 square feet 1,464 sq. ft. x.333 (4" is 1/3 of a foot) = cubic feet / 27 = cubic yards x $24 = $ Solution: 100' + 100' + 156' + 156' = 512' 156' is used instead of 150' because there is a 3' extension at each end of two sides 512' x 3' = 1,536 square feet 1,536 sq. ft. x.333' (4" = 1/3 ft.) = cubic feet / 27 = cubic yards x $24 = $ Solution: $125,000 x.40 = $50,000 last year's assessment $50,000 x 1.10 = $55,000 this year's assessment $55,000 x $2.85 / 100 = $1,567.50