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Question 1

The market in the small rural town of Centerville has been very hot. Values are leveling off but single family residences remain scarce. A potential buyer asks about the advisability of buying some farmland outside of town to develop into single family lots for sale to builders. She has noticed several builders already getting ready for new subdivisions by preparing new lots. How might a broker best advise this potential buyer?

A – He should suggest to this potential buyer that her timing is perfect. The slowing residential market will give her a chance to get the lots ready and she can probably pre-sell some to builders to raise some cash. Since strong markets usually last a decade or more, she should line up her financing and get started.

B – In a cycle like the one described, builders always know what is going on, so playing “follow the leader” is a smart move. The builders obviously feel that all of their new homes will sell quickly, so a broker should encourage this potential buyer to go ahead with her plan so she can be ready to profit by providing the next round of lots.

C – He should advise that the current shortage will likely continue to drive prices up and make this potential buyer’s plan feasible. As the town prices rise, the price of surrounding land will fall because of the encroachment of suburban neighborhoods. Land is much cheaper than developed lots, so there is plenty of room for profit. The broker may even encourage the buyer to select a farm property and offer to join in her venture by contributing his commission to the project.

D – He should advise this potential buyer that development of raw land is risky and complex. It will take time and considerable money to produce satisfactory finished lots with zoning, utilities and other amenities. The market shows signs of slowing, so the time to market is a risk. This buyer may be better served by exploring other investment opportunities in real estate.

Question 2

Which of the following is NOT a good reason to recommend the seller provide a home warranty?

A – The National Association of Realtors statistics show homes with a warranty sell 15% faster.

B – Purchasing a home warranty is a good method of risk reduction for a seller to consider.

C – The fee the home warranty company pays will increase the cash flow for the brokerage.

D – Sixty-eight percent of used homes will have a major system failure the very first year purchased.

 
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Question 1

When buyers move into their new house, they see that the ceiling fan in the dining room is gone and bare wires are hanging from the hole. The ceiling fan was NOT mentioned in the offer to purchase. Did the sellers have the right to take the ceiling fan?

A – No, because it was a fixture in the house.

B – No, because it was chattel.

C – Yes, because it was the sellers’ personal property,.

D – Yes, because it was not referenced in the contract.

Question 2

A seller is unhappy with the effort being put forth by the listing broker and wishes to terminate the listing and relist the property with a different broker. How shall the second broker advise the seller?

A – Tell the seller to send certified notice to the listing broker terminating their relationship. A listing is a unilateral contract which may be terminated at any time by the principal.

B – Tell the seller to ask the listing broker to agree to terminate the listing. Agency is a bilateral relationship which may be terminated by mutual agreement of the parties.

C – Advise the seller to record a notice of termination at the registrar of deeds, thereby severing all connections with the listing broker and permitting the seller lo enter into a new listing agreement.

D – The seller may withdraw the listing from the local MLS and enter into a listing agreement with a new broker at anytime, as a listing is a service contract and may be terminated whenever the service being rendered is unsatisfactory.

 
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The Linear Programming problem will use the following instructions. Prior to beginning the exam, use these to create a model (“Living Spreadsheet”) for this problem using all three steps. Once your model is created, remember to test it thoroughly before beginning the exam.

Relax-and-Enjoy Lake Development Corp. is developing a lakeside community at a privately owned lake. The primary market are middle and upper income families. An experienced advertising firm has been engaged that has recommended that only five media outlets be used initially.

Media
Daytime TV Evening TV Newspaper Sunday Paper Radio
# Potential Cust per ad 1,000 2,000 1,500 2,500 300
Cost per ad $1,500 $3,000 $400 $1,000 $100
Exposure Quality * 65 90 40 60 20

* Exposure Quality is a relative measure of demographics, image, and more
used to represent the potential customer’s responsiveness to the ad.

However, there are limitations on the number of times each month these media can be used. Radio has the greatest availability with 30 spots open. The Sunday newspaper has the least with only 4. The daily newspaper has 25 spots, daytime TV has 15, and evening TV has 10.

The corporation obtained additional financing. This campaign now has a $55,000 budget to reach at least 65,000 customers. Because of this additional funding, the TV station has reduced the cost of an evening TV spot to $2,500. Therefore management has increased the limit on TV spending to $24,000.

1) How many total TV ads are placed?

2)How many potential customers would be reached in this campaign?

3)How much money is spent on this campaign

4)How many radio ads will be placed?

 
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Question 1

A salesperson declined to write an offer because she felt the buyers, who are a mixed race couple, would not be able to afford the house. They were offended and filed a discrimination complaint in federal court against the broker. Could the salesperson’s broker be held liable in this situation?

A – Yes; the broker may be liable for the actions of her agent.

B – Yes; the broker may be liable, but the errors and omissions insurance will cover it.

C – No; the broker may not be held liable for her agent’s actions.

D – No; as an independent contractor the salesperson incurs the sole liability.

Question 2

A tenant with a disability may reasonably make reversible changes in the physical structure of an apartment to accommodate the tenant’s disability if the

A – owner is aware of it and gives permission.

B – tenant pays for the modifications.

C – other tenants are also permitted to make modifications.

D – apartment is in a building with 4 or more units.

 
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