Real Estate Broker License Exam Listings, Contracts, and Transaction Management Flashcards

24 sample cards from the Listings, Contracts, and Transaction Management deck

Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.

1. What is a contract amendment versus an addendum?

   An amendment changes the terms of the existing contract; an addendum adds new provisions or attachments to the original contract.

2. Why is managing the transaction timeline and deadlines critical?

   Missing contingency, financing, inspection, or closing deadlines can cause loss of contractual rights, forfeiture of earnest money, or default, so dates must be tracked and met precisely.

3. What is the typical sequence of key deadlines after a purchase contract is signed?

   Earnest money deposit, inspection period, loan application/appraisal, contingency removals, title review, final walkthrough, then closing/settlement.

4. What is a title search?

   An examination of public records to trace the chain of ownership and reveal liens, encumbrances, easements, and defects affecting marketable title.

5. What is a cloud on title?

   Any claim, encumbrance, or defect revealed by a title search that impairs marketable title and must be cleared before conveyance.

6. What is title insurance and who does each policy protect?

   Insurance protecting against losses from title defects: the owner's policy protects the buyer/owner, and the lender's (mortgagee) policy protects the lender up to the loan amount.

7. How are title defects typically cleared before closing?

   By paying off liens, obtaining releases or satisfactions, correcting records, securing quitclaim deeds, or resolving claims through a quiet title action.

8. What happens at settlement (closing)?

   Funds and documents are exchanged: the buyer pays the price and costs, the seller delivers the deed, the loan funds, prorations are settled, and ownership transfers.

9. What are prorations at closing?

   The division of recurring costs (taxes, HOA dues, prepaid items) between buyer and seller based on the portion of the period each owns the property.

10. What is the purpose of recording the deed?

    Recording gives constructive (public) notice of ownership, establishes priority of interests, and protects the buyer's title against later claims.

11. What does possession mean in a closing context?

    The point at which the buyer gains the physical right to occupy the property, typically at closing unless the contract specifies a different date (e.g., a post-closing occupancy agreement).

12. What are typical post-closing obligations?

    Recording documents, disbursing funds, delivering keys, satisfying any seller repair or occupancy agreements, and providing final settlement statements to the parties.

13. What is a Comparative Market Analysis (CMA)?

    An estimate of a property's likely market value prepared by a real estate agent using recent sales of comparable properties; it is not a formal appraisal.

14. How does a CMA differ from an appraisal?

    A CMA is an informal opinion of value by an agent to guide pricing; an appraisal is a formal, unbiased value opinion by a licensed/certified appraiser following USPAP, often required by lenders.

15. What are the three approaches to value in appraisal?

    The sales comparison (market) approach, the cost approach, and the income (capitalization) approach.

16. When is the sales comparison approach most appropriate?

    For valuing residential and other properties with adequate recent comparable sales; the appraiser adjusts comparables for differences from the subject.

17. When is the cost approach most useful?

    For new, unique, or special-purpose properties (e.g., schools, churches); value = land value + cost to rebuild improvements − depreciation.

18. When is the income approach used and what is its basic formula?

    For income-producing properties; Value = Net Operating Income ÷ Capitalization Rate (V = NOI ÷ R).

19. What is the principle of substitution?

    A buyer will pay no more for a property than the cost of acquiring an equally desirable substitute; it underlies all three approaches to value.

20. What is the principle of supply and demand in valuation?

    Value rises when demand exceeds supply (scarcity) and falls when supply exceeds demand.

21. What is the principle of conformity?

    Maximum value is achieved when a property conforms to the use, size, and style of surrounding properties in the neighborhood.

22. What is the principle of highest and best use?

    The legally permissible, physically possible, financially feasible, and maximally productive use of a property, which produces its highest value.

23. What is USPAP?

    The Uniform Standards of Professional Appraisal Practice—the ethical and performance standards governing appraisers in the U.S., promoting impartial, objective, and independent appraisals.

24. What core obligations does USPAP impose on an appraiser?

    To remain independent, impartial, and objective; avoid bias or conflicts of interest; not accept a value-dependent fee; and develop and report appraisals competently and without misleading conclusions.

What this deck covers

Listings, Contracts, and Transaction Management flashcards FAQ