Michigan Real Estate Exam Questions with Answers
Uniform State Anti-trust Act - Answer-the idea is we are going to free an open market
Price Fixing - Answer-saying commission fees are normal for everyone-- should say my comissions what my broker has chosen to charge me
Boycotting or concert...
Michigan Real Estate Exam
Questions with Answers
Uniform State Anti-trust Act - Answer-the idea is we are going to free an open market
Price Fixing - Answer-saying commission fees are normal for everyone-- should say my
comissions what my broker has chosen to charge me
Boycotting or concerted refusals to deal - Answer-brokers getting together to say they
will not show listings to clients of a different broker
territorial or custom allocation - Answer-you stay in your area and we will stay in ours--
example is up north vs down state-- not across state lines since I am not able to
practice out of MI
Tying agreements - Answer-if we have different aspects such as a Title Company -
having client sign something that makes that client use an affiliated company. You must
disclose affiliate companies (disclosure statement) but does not mean they have to use
the affiliated company
- tying = obligation to use= illegal
Agency - Answer-when one person empowers another to act on behalf of them
Principal (seller) - Answer-the person or entity empowering an agent to act in their best
interest
Agent (broker) - Answer-the person the entity empowered to act on behalf of the
principal. the agent owes fiduciary duties to the principal
Sub-Agent (salesperson) - Answer-the person empowered by the agent to the principal.
You are an agent to the broker but you are a subagent to anyone who enters into a
contract with the broker
Expressed agency - Answer-either oral or written and states as a fact- you have
expressed your intentions to a client ex: " I will find you the perfect home in the next 4
weeks"
Implied - Answer-when you lead someone to believe that you represent them by your
actions
,Ostensible - Answer-an implied agency involving 3rd party. homeowner has contractor
leave the key with neighbor did not know about it - they become involved just because
they accept the key
Fiduciary Duties - Answer-C-confidentiality- whatever we told stays between us and the
client
L- loyality
O-obedience
T- Trust (fidelity)
D- Due Diligence/ due care
A- accountability
D-disclosure
Universal Agency - Answer--when the agent is empowered do to almost everything on
behalf of the principal
ex: durable power of attorney- giving someone the right to make all the decisions in
your life for you best interest.
Does not happen in real estate
General Agency - Answer-when agent is empowered to act in an area of trade or
business. Property management. Broker and salesperson- being empowered by the
broker to act in the industry of real estate
Special agency - Answer-aka specific agency. When the agent is empowered to
perform a specific act on behalf of the principal. One time, one thing, one contract
scenario. Example: listing contract. ex: buyer and broker contract
Duties to 3rd parties - Answer-must be honest and fair
customers - Answer-third party- there is no agency- do not have a contract with.
Customer you are working with (client you are working for)
clients - Answer-someone we do have a contract with. Client you are working for
(customer you work with)
agency disclosure laws - Answer-- it is a michigan law requirement that all licensees
explain the different client relationships can exist prior to confidential information is
disclosed
- must be in writing
- we must disclose and describe and explain the different types of agency relationships
that can exist
- must have client sign agency disclosure before they sign anything else- must be
presented to any possible client at the earliest possible time
single agency - Answer-when you represent one side of a transaction only
, Dual agency - Answer-when you represent both sides of the same transaction
non-agency - Answer-do not represent either party in the transaction
designated agent - Answer-office policy that a broker may have to minimize dual agency
conflicts on the in house deals
Conventional Mortgages - Answer-neither insured nor guaranteed. Typically requires
20%-25% down payment.
Conventional with PMI - Answer-(Private mortgage insurance) A conventional loan with
insurance on it- up to 20%. The law passes in 1998 made it mandatory for the lenders
to drop the PMI when the loan balance reaches 78% of the original value of the
property. Borrower can request the lender to drop the PMI, when the balance reaches
80% of the value of the property. FNMA and FHLMC encourages lenders to allow the
borrower to drop the PMI, when the property has 80% loan to value, if the borrow
request this to be dropped.
Adjustable Rate Mortgage (ARM) - Answer-the interest on the loan can go up or down
but must be tied to some known index (libor or cofi)
Reverse Mortgage - Answer-62 years of age or older, periodic payments are made to
the borrower. Does not have to be paid back until they die or sell or move out of the
property as a personal residence
Package Mortgage - Answer-includes real and personal property
Blanket Mortgage - Answer-covers more than one parcel of real estate.
Partial Release Clause - Answer-with this clause parcels can be released when a
certain dollar amount has been paid
Construction Loan - Answer-dispersed in draws as construction takes place. it is paid
back once the construction is complete
A Take Mortgage - Answer-Permanent financing that replaces the construction loan.
Equity Loan - Answer-anytime someone borrows money on equity
Wraparound Mortgage - Answer-second mortgage that includes the amount of the first
note. Buyer makes one payment to the second lender
Purchase Money Mortgage( PMM) - Answer-Anytime you have a purchase agreement
that is subject to a mortgage (most common mortgage people have) see it also when a
seller takes back a mortgage as part of a purchase price.
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