1. A home sells for $389,000. The seller pays a 5% commission, a $212,600 mortgage payoff, $1,200 attorney fee, $1,950 transfer tax and $600 in other costs. What are the seller's net proceeds?
Answer & explanation
Answer: D. Commission = $389,000 x 0.05 = $19,450. Total costs = $19,450 + $212,600 + $1,200 + $1,950 + $600 = $235,800. Net = $389,000 - $235,800 = $153,200.
2. Under an open listing, the seller owes a commission to:
Answer & explanation
Answer: C. Open listings are non-exclusive; only the procuring broker is paid, and the owner owes nothing for a self-sale.
3. A home with a fair market value of $280,000 is sold. Which price would make the sale rescindable for lesion?
Answer & explanation
Answer: C. Lesion applies when the price is less than one half of fair market value. Half of $280,000 is $140,000. Only $139,000 is below $140,000; $141,000 is just above.
4. A house is L-shaped: one section is 40 ft by 30 ft and the other is 20 ft by 15 ft. At $185 per square foot, what is the estimated cost to build?
Answer & explanation
Answer: C. Area = (40 x 30) + (20 x 15) = 1,200 + 300 = 1,500 sq ft; 1,500 x $185 = $277,500.
5. A seller wants to net $250,000 after paying a 6% commission and $6,000 in other closing costs. To the nearest dollar, what must the sale price be?
Answer & explanation
Answer: B. Net + other costs = $256,000, which equals 94% of the price (100% - 6%). Price = $256,000 / 0.94 = $272,340.43, about $272,340. Adding 6% to $256,000 ($271,360) understates the price.
6. Under the Code of Ethics, commission disputes between REALTORS associated with different firms are generally resolved through:
Answer & explanation
Answer: B. Article 17 requires REALTORS to mediate or arbitrate contractual and specific non-contractual disputes with other REALTORS through the association.
7. A buyer purchases a home for $425,000 with a loan of $361,250. What is the LTV?
Answer & explanation
Answer: B. LTV = loan / price = $361,250 / $425,000 = 0.85 = 85%. (15% is the down payment percentage.)
8. A home sells for $520,000 with a 5% commission. The listing broker pays 2.5% to the buyer's broker and splits the listing side 60/40 with the listing salesperson (salesperson gets 60%). How much does the listing salesperson earn?
Answer & explanation
Answer: C. Total = $520,000 x 0.05 = $26,000. Buyer broker gets 2.5% = $13,000, leaving $13,000 for the listing side. Salesperson = $13,000 x 0.60 = $7,800.
9. A borrower paid $3,150 in points on a $210,000 loan. How many points were paid?
Answer & explanation
Answer: A. Points = cost / loan = $3,150 / $210,000 = 0.015 = 1.5 points (1 point = 1% of the loan).
10. A broker earned a $15,750 commission on a $450,000 sale. What was the commission rate?
Answer & explanation
Answer: A. Rate = commission / sale price = $15,750 / $450,000 = 0.035 = 3.5%.
11. A broker received a 4.2% commission totaling $12,600. What was the sale price?
Answer & explanation
Answer: C. Sale price = commission / rate = $12,600 / 0.042 = $300,000.
12. An 8-unit building rents for $1,100 per unit per month with 5% vacancy. Annual operating expenses are $28,320 (excluding debt service). At an 8% capitalization rate, what is the value?
Answer & explanation
Answer: D. PGI = 8 x $1,100 x 12 = $105,600; less 5% vacancy = $100,320; NOI = $100,320 - $28,320 = $72,000; value = $72,000 / 0.08 = $900,000.
13. A buyer contracts to buy a home for $300,000, but it appraises at $290,000. The lender offers 75% LTV. What is the maximum loan?
Answer & explanation
Answer: B. LTV is applied to the LESSER of price or appraised value: $290,000 x 0.75 = $217,500. Using the $300,000 price ($225,000) is the common mistake.
14. A borrower pays $4,500 for 1.5 discount points. What is the loan amount?
Answer & explanation
Answer: C. Loan = cost of points / points as a percentage = $4,500 / 0.015 = $300,000.
15. A rectangular parcel measures 330 feet by 660 feet. How many acres does it contain?
Answer & explanation
Answer: D. Area = 330 x 660 = 217,800 sq ft; 217,800 / 43,560 = 5 acres.
16. A seller's listing broker pays part of the commission to the buyer's broker. Under R.S. 9:3896, this payment
Answer & explanation
Answer: B. R.S. 9:3896 provides that payment of compensation is not determinative of whether an agency relationship exists.
17. An investor buys a rental house for $350,000; the land is valued at $75,000. Using straight-line depreciation over 27.5 years, the annual depreciation deduction is:
Answer & explanation
Answer: C. Only the building depreciates: $350,000 - $75,000 = $275,000; $275,000 / 27.5 = $10,000. Using the full price gives $12,727 (wrong).
18. What is the term of an LREC commissioner, and how many consecutive terms may a member serve?
Answer & explanation
Answer: D. Commissioners serve four-year terms and may not serve more than two consecutive terms. Five years is a distractor drawn from the requirement that members have five years of experience as active brokers.
19. A salesperson closes a sale. From whom may the salesperson accept the commission?
Answer & explanation
Answer: B. R.S. 37:1446 says an active licensee may accept compensation only through the sponsoring or qualifying broker. Written agreement by the seller doesn't change that rule.
20. A licensee's misconduct in one sale produces two final judgments: buyer $15,000 actual damages, and a second claimant $10,000 actual damages. Both apply on time. What is the most the fund can pay in total for this transaction?
Answer & explanation
Answer: D. Combined claims are $15,000 + $10,000 = $25,000, but the per-transaction cap is $20,000, so the total payout cannot exceed $20,000. $50,000 is the per-licensee cap, which doesn't override the transaction cap.
21. How many members serve on the Louisiana Real Estate Commission?
Answer & explanation
Answer: A. R.S. 37:1432 provides for eleven members appointed by the governor and confirmed by the Senate. Seven is tempting because seven seats are tied to the supreme court districts, but that is only part of the total.
22. An active salesperson renews on November 20. The active salesperson renewal fee is $35. Using the statutory delinquent-fee schedule, what is the total due?
Answer & explanation
Answer: A. From November 16 through December 31 the delinquent fee for an active licensee is $200. $35 + $200 = $235. $85 would be correct only for a renewal between October 1 and November 15 ($35 + $50).
23. A sale was scheduled to close on August 20. The broker learned on August 5 that buyer and seller both claim the deposit. What is the last day for the broker to act under the escrow-dispute rule?
Answer & explanation
Answer: B. The 60 days run from the earlier date, August 5. Days left in August after the 5th: 26; through September 30 adds 30 = 56; 4 more days reaches October 4. October 19 is 60 days from the later closing date.
24. The Recovery Fund has already paid $38,000 on judgments against a salesperson from earlier transactions. A new, valid $20,000 claim from a different transaction is approved. How much can the fund pay on it?
Answer & explanation
Answer: C. The per-licensee lifetime cap is $50,000. $50,000 - $38,000 = $12,000 remains, which is less than the $20,000 per-claim cap.
25. A month-to-month tenant wants the lease to end on September 30. What is the latest date she may give notice under art. 2728?
Answer & explanation
Answer: A. Notice must be given at least ten calendar days before the end of the monthly period: September 30 minus 10 days = September 20.
Sources
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