1. 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.
2. When a broker appoints designated sales agents in a dual agency transaction, the broker:
Answer & explanation
Answer: B. Designated sales agents exist only within a consented dual agency. The broker continues as a dual agent. Each designated agent advocates for an assigned party, but even they cannot provide full undivided loyalty.
3. The seller of a rental property collected $1,800 rent for the month on the 1st. Closing is on the 10th, and the seller owns the day of closing (30-day month). What is the rent proration?
Answer & explanation
Answer: C. Daily rent = $1,800 / 30 = $60. Buyer owns days 11-30 = 20 days. 20 x $60 = $1,200, credited to the buyer because the seller collected rent for days the buyer will own.
4. 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.
5. A new highway interchange built next to a residential subdivision lowers home values. This is:
Answer & explanation
Answer: D. Loss in value caused by factors outside the property boundaries is external obsolescence.
6. A Brooklyn condo buyer takes a $400,000 mortgage. Using an effective NYC MRT rate of 1.8% for loans under $500,000, how much MRT will the buyer pay?
Answer & explanation
Answer: A. 400,000 × 0.018 = $7,200. The $7,700 distractor uses the 1.925% rate that applies to loans of $500,000 or more. The $1,600 distractor applies the 0.4% transfer tax rate.
7. New York's mortgage recording tax is calculated on:
Answer & explanation
Answer: D. The MRT applies to the principal debt secured by a mortgage when it is recorded.
8. A buyer purchases a $300,000 home with a $60,000 down payment. What is the loan-to-value (LTV) ratio?
Answer & explanation
Answer: B. Loan = $300,000 - $60,000 = $240,000; $240,000 / $300,000 = 80% LTV. (20% is the down payment percentage.)
9. A buyer purchases a $275,000 home with an 80% LTV loan and pays 2.5 discount points. What do the points cost?
Answer & explanation
Answer: A. Loan = $275,000 x 0.80 = $220,000; points = $220,000 x 0.025 = $5,500. ($6,875 wrongly applies points to the price.)
10. 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.
11. 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.
12. A Rochester house sells for $310,000. What New York State transfer tax will the seller pay?
Answer & explanation
Answer: C. 310,000 ÷ 500 = 620 units, and 620 × $2 = $1,240. The $620 distractor forgets to multiply by $2.
13. Monthly rent is $750 and the tenant pays 10 days late. What is the maximum late fee?
Answer & explanation
Answer: D. 5% of $750 = $37.50, which is less than $50, so $37.50 is the maximum.
14. 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).
15. One discount point equals what percentage of the loan amount?
Answer & explanation
Answer: B. One point = 1% of the loan amount (not the purchase price), paid to lower the interest rate.
16. An investment property with NOI of $63,000 sells for $900,000. What is the capitalization rate?
Answer & explanation
Answer: C. Cap rate = NOI / value = $63,000 / $900,000 = 0.07 = 7%.
17. On the $20,000 commission above, the listing broker keeps 50% and pays 50% to the buyer's broker. How much does the buyer's broker receive?
Answer & explanation
Answer: D. $20,000 x 0.50 = $10,000 to the buyer's broker.
18. 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.
19. 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.
20. On a $250,000 loan, how much is 2 discount points?
Answer & explanation
Answer: A. 1 point = 1% of the loan. 2 points = 0.02 x $250,000 = $5,000.
21. Under RPL §442-d, a person suing to collect a real estate commission must allege and prove that:
Answer & explanation
Answer: A. RPL §442-d bars an action for brokerage compensation unless the plaintiff proves licensure on the date the claim arose. That is why unlicensed 'finders' cannot sue for commissions.
22. A Queens condo sells for $800,000. What is the NYC Real Property Transfer Tax?
Answer & explanation
Answer: A. For residential conveyances over $500,000, the RPTT is 1.425% of the entire price: 800,000 × 0.01425 = $11,400. The $8,000 distractor wrongly applies the 1% rate. The $4,275 distractor taxes only the amount above $500,000.
23. A salesperson commits misconduct without the broker's knowledge, and the broker returns the commission as soon as she learns of it. Under RPL §442-c, the broker's license:
Answer & explanation
Answer: B. RPL §442-c provides that a salesperson's violation is not grounds to revoke or suspend the broker's license unless the broker had actual knowledge or kept the benefits after notice. Neither is true here. Brokers still have a duty to supervise under §175.21.
24. Monthly rent is $1,800 and rent is paid 8 days late. What is the maximum late fee under New York law?
Answer & explanation
Answer: B. The cap is the lesser of $50 or 5% of monthly rent. 5% of $1,800 = $90, so the lesser figure is $50. A late fee is allowed because the rent is more than 5 days late.
25. What is the New York State real estate transfer tax on a $425,000 sale?
Answer & explanation
Answer: A. The tax is $2 per $500 of consideration. 425,000 ÷ 500 = 850 units, and 850 × $2 = $1,700. The $850 distractor counts the units without multiplying by $2.
Sources
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