Illinois Real Estate Practice Exam Verified Solution

Illinois Real Estate Practice Exam Verified Solution Objectives of Federal Reserve System ️To counteract inflationary and deflationary trends, to create a favorable economic climate, to maintain sound credit conditions but NOT to control the secondary mortgage market Remainder Interest ️A fee simple holder of a parcel of real estate grants a life estate to her daughter and stipulates that upon the daughters death, the property will pass to her grandson. The second estate is called A property buyer obtains a term loan to finance a home purchase. ️The entire loan principal is due at the end of the loan period Best evidence of marketable title ️Title Insurance Balloon Loan ️A borrower has a mortgage loan that requires monthly payments of $936.25 for 10 years and a final payment of $136,287. Type of loan? Commingling ️Brokers should deposit all earnest money checks they receive into an escrow account or trust account to prevent being accused. Conversion ️Fancy name for theft Puffing ️Exaggeration of a fact it is legal as long as it doesn't come in as a fraud In performing an appraisal of real estate, the appraiser: ️Estimates the property's market value Local zoning ordinances are used to regulate ️Allowable uses for buildings, building heights, population density NOT rules for the conducting open spaces After paying the brokers fee of 6%, a seller want to net $180,000 from the sale of his house. What must the property sell for to satisfy both the eh broker and the seller? ️100%-6%=94%=.94 180,000 / .94 = 191489 A property owner constructed a commercial building on the property. Three years later an ordinance was passed prohibiting commercial buildings in the owners area: ️The building is a nonconforming use Servient Tenement ️The owner of a parcel of land holds an easement right over an adjoining parcel of land. The parcel of land on which the easement runs is referred to as the: Dominant Tenement ️Benefits from the servient tenement What is the amount of real estate tax due on a property with a market value of $140,000 if it is assessed at 30% of market value, has an equalizer of 1.5, and a tax rate of $5.00 per $100.00 of assessed value? ️140,000 x .30 = 42,000 42,000 x 1.5 = 63,000 63,000 x .05 = 3150 Easements ️Are rights of way on someone else's land Easement By Necessity ️A property owner subdivided a piece of property, selling the front half and retaining the back half. The back half of the property retained by the owner does not have access to any roads. The type of easement the courts might grant in this situation is Easement In Gross ️Utilities Easement By Prescription ️Trespassers rights due for a period of time you earn 20 years Easement Appurtenant ️For adjacent properties it's a right Personal Easement In Gross ️Individual access to property not transferable only till alive Adverse Possession ️Squatter Rights 20 years to earn it License ️Personal privilege last for specific period of time A property manager defaulted on a mortgage and the lender foreclosed on the property. The property sold at the foreclosure sale for less than the loan balance. To recover the remainder of the money, the lender may: ️Obtain a deficiency judgement On Wednesday, Sam offers to sell his house to Beau for $220,000. On Sunday, Beau makes a counter offer of $210,000. On Friday, Beau withdraws the counter offer of $210,000 and accepts Sam's offer of $220,000. In this situation, there is: ️No valid agreement because Beau's counteroffer ended Sam's offer (Just change one aspect and you kill the contract) Graduated Payment Loan ️Amount goes up after period of time Package Loan ️A home buyer obtains a loan to finance the purchase of the house as well as personal property Blanket Loan ️One loan secures multiple properties Wraparound Loan ️New loan pays off old loan Granting Clause ️Is a requirement for a valid deed (Signature of grantor is needed in Illinois) An investor purchase an apartment building for $360,000 by paying 10% down and financing the rest of the purchase price. The lender charge two points as a loan origination fee. How much was the investor charge for the fee? ️360,000 x .90 = 324,000 324,000 x .02 = 6480 (Discount points are figured on loan & points are 1% of loan amount) A 55%/45% commission split is agreed to by a selling and listing brokerages. They then split their share of the commission evenly wit their salespeople. If a house sells for $190,000 and the commission rate is 6%, how much commission will the selling agent receive? ️190,000 x .06 = 11400 11400 x .55 = 6270 6270 x .50 = 3135 Using the income approach to value, what is the value of an apartment building if it has gross income of $60,000, operating expenses of $10,000 and a capitalization rate of 8%? ️60,000 - 10,000 = 50,000