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93 Cards in this Set
- Front
- Back
- 3rd side (hint)
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1. Name the 3 areas of knowledge expected from real estate professionals. |
- Property Transfer, Market Conditions & Market Real Estate or Business. |
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2. What type of transactions require state-certified or licensed appraisers? |
Federally Related Transactions. |
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3. Describe the 3 categories of Florida real estate licenses. |
Sales Associate, Broker and Broker Associate. -Sales associate: Performs real estate For compensation under direction, control or management of a broker
-Broker: A person who, for another and for compensation or other consideration performs real estate services. -Broker Associate: Person who holds broker license but chooses to register or work in real estate under direction of another broker. |
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4. State the rules pertaining to nonresident licensees. |
-Must Notify commission within 60 days of out of state change of residency & comply with all nonresident requirements.
-Must Notify DBPR with 10 business days of change of address & keep the mailing address current.
-Must satisfactorily complete post licensing and continuing education required of all Florida real estate licenses.
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5. Relating to application for real estate license, who is considered a Florida resident? |
-Person who has resided in Florida for a period of 4 calendar months or within preceding year.
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6. What are the exemptions from the education requirements for a real estate license? |
-Attorneys who are active members of The Florida Bar. (Exempt from course 1 & cont education. Not exempt from course 2 or post education)
-Individuals who have received a 4 year degree or higher in real estate from accredited Institution or higher education. (Exempt from course 1, 2 and post education. Not exempt From continued education) |
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7. Be prepared to identify individuals who are exempt from licensure. |
Business Entities, Property Owners, Corporations, Partnerships, Trusts, Joint Ventures & Salaried Employees who are not paid commission.
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8. Who appoints and confirms the Secretary of the DBPR? |
The Governor, Subject to confirmation by The State Senate. |
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9. Know how the Division of Florida Condominiums, Timeshares and Mobile Homes assists HOAs. |
-Provides consumer protection through education, complaint resolution, mediation and arbitration and developer disclosure.
-Regulates condominiums, cooperatives, time shares and mobile home parks.
-Charged with providing arbitration program to handle recall and election disputes for homeowners associations (HOAs) |
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10. What benefit is given to a spouse of an active duty member of the military assigned to Florida? |
-Temp license to spouse if military member on active duty.
-Spouse must hold a valid real estate license in another state or foreign jurisdiction.
-Temp license expires 6 months after date of issue and is not renewable. |
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11. what is the purpose of a group license? |
-Sometimes issued to a sales associate or broker associate who are registered under a owner developer.
-Owner Developer may own properties in the names various entities.
-Group license entitles the licensee to work for the separate sales project owned by the owner developer. |
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12. The Choice of the appropriate type of brokerage relationship is made by whom? |
-The Broker. Some brokerage firms choose to operate as transaction brokers exclusively or only as single agents for buyers.
-Sales associate must consult with their employing broker regarding brokerage relationships. |
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13. Understand the circumstances requiring the disclosure of brokerage relationships. |
-Only residential real estate transactions.
Residential sale: -sale of improved residential property of 4 or fewer units.
The sale of unimproved property intended for use as 4 or fewer units.
-Sale of agricultural property of 10 or fewer acres.
-Does not apply to: Non residential transactions, auctions, appraisals, business enterprises or business opportunity. |
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14. What are the rules for retention of brokerage disclosure notices? |
-Must retain documents for 5 years 2 years after litigation for residential transactions that result in written contract to purchase and sell property.
-May be stored in digital form.
-Files on properties that failed to close must be retained.
-If transaction fails to close, licensee should retain brokerage relationship disclosure documents with purchase and sale contract and other documents associated with the property and place them in the dead (failed to close) file.
-Commission may discipline licensee for failure to abide by any provision in F.S. 475.278 including duties owned to customers and principals, disclosure requirements and record keeping requirements.
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15. Which residential brokerage disclosure form requires a signature? |
Consent To Transition from single agent to transaction broker.
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16. Understand the regulations regarding office entrance signs. |
-Must display official sign on either the exterior or interior of entrance to principal Office and Brand offices
-*Must contain Trade name ,Brokers name & the word "Licensed Real estate Broker or Lic. Real estate broker"
-Names Of sales associate and broker associate NOT required on sign. If associates names appeared on sign,names must be below the name of broker and appropriate license Type (Sales associate/Broker associate must appear next to each associates names) |
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17. Know the rules regarding Florida's telemarketing law |
-Administered through the Department of Agriculture and Consumer Services
-Florida Mantains "No solicitation calls" registry for consumers. Part of the National "Do Not call registry"
-Violators of Florida telemarketing act maybe fined $10,000 per call
- Calls restricted to 8:00 am - 9:00 pm |
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18. Understand immediately as it pertains to escrow deposits.
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-Florida Real estate law mandates time frame for deposit escrow funds.
-Sales associate who receives binder deposit from customer or client ,must deliver it to the broker/Employer no later than end of next business day
-Broker must place Trust funds into escrow account immediately ,which means no later than the end of the third business day ,after sales associate or employer has received it |
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19. Know the time frames applied when a broker receives conflicting demands for an escrow deposit. |
-Broker must notify FREC in writing within 15 business days of receiving the conflicting demands unless specifically exempted.
-Broker must Institute one of the 4 settlement procedures within 30 business days from the time broker has received the conflicting demands. |
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20. Understand the 2 prohibited activities under antitrust laws. |
Price Fixing & Market Allocations.
-Price Fixing: occurs when competing brokers conspire to establish standard commission rather than letting the rate be set by the open market. Even if price fix is lower, still a violation.
never make statement “ The going rate" or "Normal commission rate" to avoid impression of price fixing.
-Market Allocation: When brokers agree to split up competitive market areas amongst themselves and not compete in each other's areas. |
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21. Understand real estate brokerage limited partnerships. |
2 types:
Limited Partnership & General Partnership.
Limited partnership must register with DBPR under limited partnership name.
General Partners who deal with the public and perform of real estate must be licensed as active brokers.
At least one general partner must be licensed as active broker.
All other general partners must register with the DBPR for identification purposes.
Sales associates and broke associates may not be general partners in a real estate brokers limited partnership; however it may be limited partners.
General partners have to register with DBPR, limited partners do not. |
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22. What business entities may NOT register as a real estate brokerages? |
Joint Venture: As a temporary form of business arrangement often encounter in the real estate business. |
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23. Be familiar with the permissible activities of an unlicensed personal assistant. |
-All administrative duties. -Answer phone & forward calls. -Fill out & submit listings & changes to any multiple listing service. -Follow up on loan commitments after contracts has been negotiated & generally secure status |
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24. Define stipulation. |
An agreement as to the facts of the case and the penalty reached between the attorneys for the DRE and the licensee or licensees attorney. "Like a plea bargain"
Not final till approved by FREC. |
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25. Know the steps a licensee must take after receiving a citation. |
Have 30 days to except (pay the fine) or reject violation.
Licensees who do not dispute citation become effective (final order) and case closed.
If disputed must file a written objection.
Failure to pay fines in timely manner FREC will file administrative complaint.
Licensee allowed to state their case, based on merits, will be dismissed or Carried to formal hearing. |
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26. What violations constitute a third-degree felony and what is the penalty? |
Falsifying a license application and unlicensed practice of a profession.
Unlicensed activity includes providing real estate services for compensation without a real estate license.
Theft or reproduction of a license exam.
Penalty for third-degree felony is fine of, not more than $5000 and/or up to five years in jail. |
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27. Cite the purpose of the real estate recovery fund. |
Reimburses consumers who are financially injured by a licensee.
A broker who complies with an EDO and is sued may be reimbursed from the fund without penalty. |
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28. What is the penalty against the licensee when payment is made from the recovery fund for claims other then those resulting from an escrow disbursement order? |
Mandatory suspension: Mandatory on payment of any amount from the real estate recovery fund in settlement of claim to satisfy judgment against licensee described in F.S. 475.482(1)
Licensee automatically suspended on date of payment from recovery fund and will not be restored until licensee has repaid amount paid from the recovery fund in full, plus interest. |
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29. What may be awarded from the Real Estate Recovery Fund to a broker who has complied with an Escrow Disbursement Order? |
-Broker who complied with Escrow Disbursement Order is later required by court law to pay damages as a result of legal actions taken by the buyer or seller in the transaction.
FREC is authorized to order Reimbursement to broker for the amount of the judgment against the broker UP TO $50,000. Attorneys fee & court cost are reimbursable.
No disciplinary action taken against broker who previously requested escrow disbursement order (EDO) and followed instructions. |
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30. Name the protected classes under the federal fair housing act as amended. |
F Familial status R Race S Sex H Handicap Status
C Color R Religion N National Origin |
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31. Understand redlining. |
Denying loans or insurance coverage by a lender or insurer that present different terms or conditions for homes in certain neighborhoods. |
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32. Name and define the requirements of ILSA. |
Developer of 25 or more lots must provide buyers with property report prior to signing sales contract, sales contract may be canceled till midnight of the seventh day. Must state right to cancel. Purchasers who were not given the property report before signing the contract may bring action to revoke the contract anytime within two years from the date of signing.
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33. How are security deposits and advance rents handled by a landlord? |
Landlord is obligated to one of 3 ways:
Hold money in separate non-interest-bearing Florida bank account.
Hold money in separate interest-bearing Florida bank account, Pay at least 75% of annualized average interest or 5% per year simple interest.
Post surety bond with clerk of court.
Landlord must give tenants written notice of funds location for advanced rent or security deposit within 30 days of receipt.
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34. Know the responsibilities of a broker holding security deposits on behalf of a landlord. |
Broker must abide by chapter 475 with regard to handling the deposits or advance rents.
Deposits or advanced rent must be deposit into broker escrow account by end of 3rd business day.
Can commingle up to $5,000. Typically open separate escrow account, however not required. |
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35. What is a fixture? |
Item that was once personal property, but has permanently attached to or made part of real estate and is now legally considered real property.
I- intent of the parties R- relationship or agreement of the parties. M- methane or degree of attachment. A- adaption of the item. |
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36. Understand life estates |
Conventional Life Estates are created by the grantor who transfers the freehold estate to an individual for a period of time measured by a persons lifetime. Provides grantee (person receiving the life estate) to have use and title during the life of the holder or life of whomever the interest is based on.
-When Life Estate ends, the property reverts (returns) to the original grantor (previous owner) or goes to a third party, called Remainderman. If Life Estate reverts to original grantor, an Estate in Reversion (Reversion Estate) is created.
-If Life Estate is to go to Remainderman, the Remainderman owns a Remainder Estate while the Life Estate exists.
-Life Estate can also be created by law. Also known as Legal Life Estates. |
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37. What type of debt may not force the sale of a homestead property? |
Protected from debts owning to personal loans, credit card that, and so forth.
Does not prevent foreclosure for nonpayment of property taxes, special assessments, mortgages, vendor liens, or construction liens. |
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38. Understand leasehold estates. |
Leasehold the estates are measured in calendar time. Under a lease, the tenant possesses A leasehold estate and the landlord possesses a reversion estate. At the end of the lease hold estate, possession and use of the property reverts to the property owner.
3 types of leasehold Estates: Tenancy at will, estate for years & tenancy at sufferance.
Tenancy at will= lease agreement that has a beginning date but no fixed termination date.
Estate for years= specific start and end date.
Tenancy at sufferance= when tenant stays in possession of the property beyond the ending date without consent of landlord. |
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39. Know the characteristics of a tenancy in common. |
When 2 or more persons share ownership of a single property.
May acquire title on the same or different deeds at the same or different times with equal or unequal shares of ownership.
Each owns an "undivided interest" in the whole property undivided interests is in the entire property rather than ownership of particular part of property. |
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40. Identify estates that have the right of survivorship. |
Tenancy by the entireties is joint tenancy between husband & wife.
4 unities of joint tenancy with right of survivorship must exist, & the 2 co-owners must be married at the time they take title.
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41. Name the documents required to be delivered to a prospective purchaser of a resale condominium. |
If purchasing from private party (resale), buyer is entitled to a copy of declaration of condominium, the articles of incorporation of the association, the by laws, rules of association, the FAQ & copy of most recent year-end financial information, at seller expense.
Buyer must also receive copy of government form. Form is provided by Division of Florida Condominiums, Timeshares & Mobile Homes. |
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42. Identify the legal terms used in a will. |
Deceased creator of a will is a - Testator (Male), Testatrix (Female)
Property conveyed by will is a - Devise (Real Property), Bequest (Personal Property).
Recipient of property by will is a - Devisee (Real Property), Beneficiary (Personal Property).
Intestate - person who passed away without a will. |
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43. Understand the types of notice. |
Actual Notice and Constructive notice. Actual notice= Direct knowledge acquired in the course of transaction. (Verbally Disclosed)
Constructive notice (legal notice)= is accomplished by recording documents in public records. (written notice). |
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44. Know the purpose of the lenders title insurance policy. |
-Issued for the loan amount.
-Claim will pay up to current loan balance.
-Benefits mortgage lender.
-Transferable (assignable).
-Buyer typically pays this closing expense.
-One-time premium. |
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45. Identify what is contained in the premises section of a deed. |
Names of the Grantor and Grantee, Consideration & Words of Conveyance.
Name of grantor & grantee= The premises section of a deed names the parties to the deed (grantor & grantee), address of the grantor & grantee and the date of the deed. Date should be date of execution by grantor.
Consideration= The premises section also states the consideration that is given. Consideration is anything of value given in exchange for title. The entire amount of consideration need not be shown.
Words of conveyance = The premises section contains the Granting Clause (also called words of conveyance) stating the grantors intention to transfer title to the grantee. Necessary words used to convey the property are Grants, Bargains & Sells or similar words. |
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46. Differentiate the types of lease agreements. |
Gross lease, net lease, percent lease, variable lease and ground lease.
Gross lease - tenant pays fixed rent and landlord pays all expenses associated with property.
Net lease - tenant pays rent plus property costs such as maintenance and operation expenses (taxes, insurance and utilities are typically used in commercial properties).
Percent lease - tenant pays rent based on gross sales.
Variable lease= tenant rent to change/ increase at set future dates and tied to index.
Ground lease= tenant leases land only and erects a building on the land. Separate ownership of the land and the building.
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47. MATH! Calculate the rent owned for a variable lease. |
A variable lease features rent that changes at set times as specified in the lease agreement. Variable lease (Index Lease) provides for adjustments of rent according to changes in a price index.
EXAMPLE: Assume that a building rents for $12 per Sq. foot with an index of 1.5. The index increases to 1.8. What is the adjusted rental rate?
Step 1. Divide the new index by the original index. 1.8 ÷ 1.5 = 1.2
Step 2. Multiply the number from step 1 by the original rent. 1.2 x $12 = $14.40 new rental rate. |
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48. Be able to identify specific liens. |
Specific liens are made up 4 liens. property tax and special assessment lien, mortgage lien, vendors lien & construction lien.
Property tax and special assessment lien: Municipal governments have been delegated the authority to levy real property taxes and special tax assessments. Unlike other debts and liens property taxes and assessments become liens as soon as the assessment is complete.
Mortgage lien: |
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49. Understand directions in a metes and bounds description. |
Opposite direction with same # in the middle.
Example: what is the opposite of S45 W. - N45 E.
Example: what is the opposite of S15 W. - N15 E. |
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50. Locate sections within a township. |
Example. |
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51. Know the definition of a section. |
A section is a square 1 mile on each side. 1 Sq mile = 640 acres.
1 mile sq. 36 sections in township. |
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52. MATH! Be able to calculate the number of acres in a parcel based on its legal description. |
2 formulas:
1. Take 640 (Number of acres in section) and divide by the bottom (The Denominator) of each fraction in the legal description.
Example: SW1/4, NE1/4, SE1/4, NE1/4 of a certain section contains how many acres? 640 ÷ 4 ÷ 4 ÷ 4 ÷ 4 = 2.5 Acres
2. Multiply the denominators of each fraction together and then divide 640 by the result.
Example: SW1/4, NE1/4, SE1/4, NE1/4 of certain section contains how many acres?
4 x 4 x 4 x 4 = 256 640 ÷ 256 = 2.5 Acres |
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53. Understand Enforceable contract. |
- is a legally binding contract that the courts will recognize.
-State of frauds requires contracts conveying an interest in real property and contracts that are not to be performed within one year of the date created must be in writing & signed to be Enforceable. |
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54. Know the time limits relating to the Statue of Limitations. |
Written contracts = 5 years Oral (in parole) Contracts = 4 years |
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55. Name the elements of a valid and enforceable real estate contract. |
Colic:
C= competent parties. O= offer acceptance (meeting of the minds) L= legal purpose. I= in writing and signed (statue of frauds applies to real estate contracts) C= consideration (valuable or good) |
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56. Describe the effect of a unilateral contract. |
Obligates only one party in contract to an agreement.
When one party makes obligation to perform without receiving any promise of performance from the other party.
No obligation on the part of the other party involved. |
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57. What is in executory contract? |
Contract has been signed between parties, but something remains to be done by one or both parties to fulfill the conditions of the contract.
Not fully performed contract.
Contract, between the time of signing and the time of closing.
Contract signed by both parties but yet to close.
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58. Understand the remedies for breach of contract. |
There are 4 legal remedies for breach of contract: Specific Performance, Liquidated Damages, Rescission & Compensatory Damages.
Specific Performance: Court orders the other party to perform according to the terms of the contract.
Liquidated Damages: Amount of damages (usually the earnest money deposit) stipulated in the contract. If the buyer breaches the contract, typically the seller claims the earnest money deposit as liquidated damages.
Rescission: The contract is canceled and the parties are restored to their original positions.
Compensatory Damages: This involves a lawsuit to recover the actual amount of the monetary loss to either party (also called unliquidated damages). |
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59. Know the disclosure requirements for property built prior to 1978. |
Lead based paint disclosure.
Sellers & landlords disclose to prospective buyers & tenants the presence of known lead-based paint in property built before 1978.
An EPA pamphlet regarding danger of lead based paint be given to buyers & tenants before sale or lease of property built before 1978.
Sellers allow home buyers 10 day period to conduct inspection for presence of lead based paint. (Seller not required to pay for inspection) |
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60. Cite the required disclosure to a buyer purchasing property in a mandatory HOA. |
receiving and reading the homeowners disclosure summary before purchase.
If disclosure summary is not provided to buyer before executing the contract for sale or purchase, the contract is voidable.
To void contact, buyer must give seller or sellers agent written notice of buyers intention to cancel contact within 3 calendar days of receipt of disclosure summary or before closing, whichever occurs first. |
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61. Know the provisions of a promissory note. |
-(Or simply note) must accompany all mortgages in Florida.
-The Note is the evidence of a debt.
Promise to repay. Represents the borrowers promise to pay lender according to agreed-an upon terms.
-Is usually a separate legal instrument & must be signed by borrower.
-States amount of debt, interest rate, repayment method, and term or time period to repay.
-Note not recorded.
-New loan or assumed loan.
-Note tax = Loan amount/ 100 x .35 |
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62. Understand mortgage lien priority. |
-Priority of mortgage lien is normally determined by the order (dates) in which the liens are recorded.
Whether a recorded mortgage lien is 1st, 2nd or 3rd mortgage & so on, it has priority over all recorded mortgages, unless it's subordinate to subsequent liens. |
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63. Know the effect of the due-on-sale clause in the mortgage. |
-May require immediate payment, in full, if property is sold or transferred without lenders prior written consent.
-Prevents another party from assuming the mortgage and requires mortgage debt be paid in full when property is sold. |
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64. Be able to compute yield to the lender. |
Example |
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65. When would an assignment of mortgage be used? |
-An Assignment is When ownership of a mortgage is transferred or sold from one lender or individual to another. process is accomplished by executing assignment of mortgage.
-Assignment of mortgage is a legal instrument stating the mortgagee assigns (Transfers) the mortgage and promissory note to purchaser.
Assignment of mortgage is signed by the assignor (mortgagee) and delivered to assignee (investor).
-Assignee becomes new owner of the debt & security instrument. |
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66. Know how to amortize a loan. |
Example. |
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67. Define the components of an ARM. |
-interest rate that adjusts either up or down over the term of the loan.
-Calculated Interest Rate is arrived by adding the Index to the lenders margin.
-Formula: Index + Margain = Calculated Interest Rate. |
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68. Understand the Characteristics of a VA loan. |
Government guaranteed.
No down payment required (for loans that do not exceed $417,000).
No mortgage insurance (Funding Fee)
No established loan amount.
Assumable.
No prepayment penalty. |
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69. Describe the functions of Ginnie Mae. |
Ginnie Mae (Government National Mortgage Association, or GNMA) has always been a government-owned-and-financed corporation.
Is part of the Department of housing and urban development (HUD).
Provides a secondary market for VA & FHA loans.
Serves as Guarantor of mortgage-backed securities (MBSs). Ginnie Mae MBSs are often called Ginnie Mae pass- through securities.
Does not issue, sell, or buy mortgage-backed securities or purchases loans.
Allows mortgage lenders to obtain a better price for their mortgage loans in the secondary mortgage market.
Mortgage-backed securities are the only MBSs to carry the Full faith & Credit guarantee of the U.S. Government. |
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70. Name the protected classes under the ECOA. |
Law extending or making credit available by fairness & without discrimination on basis of Race, Color, Religion, National Origin, Sex, Martial Status, Age or Receipt of income from public assistance. |
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71. Understand "Trigger Terms" under the TILA. |
-TILA makes "bait & switch" advertising federal offense.
-Example: is subdivision advertises homes for sale with down payment of $1,000, seller must accept $1,000 as the complete down payment of be violating federal law.
-TILA also concerned consumers may be misled by being given truthful but inadequate information in advertising.
-Trigger Terms include: Amount or percentage of any down Payment, Number of payments, Period (term) of repayment, Amount of any payment, & Amount of any finance charge.
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72. The FED uses 3 "Tools" to carry out the monetary policy. Understand the effect of each. |
Simple description : Discount rate: interest rate changed to member banks to borrow money from the Fed. Discount rate increased: Fewer loans are made & money supply decreases. Discount rate decreased: More loans are made & money supply Increases.
Is the 2nd most commonly used.
Is the interest rate charged to member banks for borrowing money from the FED (do not confuse discount rate with discount points).
If discount rate is increased, member banks have to pay a higher interest rate for money borrowed from their district bank.
The higher interest rate is passed on in form of higher interest rates to consumers. This reduces the number of loans made because consumers become reluctant to borrow.
Because increasing or decreasing the discount rate has the greatest impact on the cost of short-term credit, the discount rate is considered the least effective economic tool for influencing the interest rates of long term real estate loans. |
Only one tool on the test. |
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73. Math! Calculate an sales associates commission from a sale. |
Example |
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75. How is interest on an assumed mortgage entered on the closing disclosure? |
Debit seller, credit buyer |
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77. Understand how to charge intangible tax. |
Example |
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78. How does the good faith deposit appear on the closing disclosure? |
-Credited to buyer. -Earnest money deposit (credited against purchase price). |
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79. Define Situs. |
-Refers to prospective buyers preference for certain area.
-Area preference, and therefore the property's location, is considered the most important economic characteristic of real estate.
- Top consideration of families with K-12 age children is school zones. |
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80. Know the variable influences associated with supply and demand for real estate. |
-Variables that influence supply (Seller), Variables that influence demand (Buyer).
-Variables that influence supply (Seller): Availability of skilled labor. Availability of construction loans & financing. Availability of land. Availability of materials.
-Variables that influence demand (Buyer): Price of real estate. Population numbers & household composition. Income of consumers. Availability of mortgage credit. Consumer taste or preferences. |
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81. Describe the characteristics of a federally-related transaction. |
Any FHA loan or VA loan. |
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82. Understand liquidation value. |
Foreclosure & auctions are examples. -is the value associated with a rapid sale. The dollar amount a property should bring in a foreclosure sale is an example of liquidation value. |
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83. Understand the adjustment process in CBS Vs CIA. |
Sales comparable (comp) approach process is:
CBS = If Comp is Better than subject property you will Subtract from comp.
CIA= If Comp is inferior to subject property you will add to the comp.
Never subtract from subject property.
EXAMPLE:
The subject property has 200 less Sq. ft of living area than a comp. The market area value of 200 Sq. ft is $20,000. Which adjustment should the appraiser make?
Answer: Subtract $20,000 from comp. |
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86. Understand the categories of depreciation and give examples of each. |
3 types of depreciation: Physical Deterioration, Functional Obsolescence & External Obsolescence.
Physical Deterioration: includes ordinary wear & tear caused by use, lack of maintenance, exposure & physical damage. (roof shingles or worn out central A/C are examples).
Functional Obsolescence: anything that is inferior because of operational inadequacies, poor design, or changing tastes & preferences. (Poor traffic pattern, too few bathrooms are examples).
External Obsolescence: Any loss in value due to influences originating outside the boundaries of the property, such as an expressway adjacent to a residential subdivision or deterioration of the neighborhood, is external obsolescence. Considered incurable since it's external and beyond control of property owner.
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87. Know the formula to calculate the EGI. |
Formula: Potential gross income (PGI) - vacancy & collection losses + other income = Effective gross income (EGI). |
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88. Understand positive & negative cash flow. |
Cash flow is the total amount of spendable income generated from an investment. Total amount of money remaining after all expenses are paid.
Expenses, for example, include property taxes, operating taxes, and Maintenance.
Example: A rental property has an annual income of $100,000 and operating expenses of $90,000. The property has positive cash flow of $10,000.
Example: A rental property has an annual income of $100,000 and operating expenses of $110,000. The property has a negative cash flow of $10,000. |
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89. Compare business brokerage with real estate brokerage. |
Similarities: -Sale of real property or assignment of a long-term lease. -Real estate license required.
Differences: -Assets include personal property & good will.
-Going concern value may differ from real estate value.
-Wider geographic market. |
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90. Name the steps in protesting a properties assessed value. |
ABC = Appraisal, Board & Court. Step 1. Go to county property Appraisers office. Result: Assessment Reduced or Assessment just & equitable.
Step 2. Go before value adjustment board. Result: Assessment Reduced or Assessment just & equitable.
Step 3. Go to court. Result: Reassessment ordered or Assessment just & equitable. |
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91. Give examples of properties immune from taxes. |
City, county, state & federal government properties. (Examples: County court houses & military facilities, schools, libraries).
Special properties also immune. (municipal airports that have been made immune by statue or ordinance).
Immune properties are not assessed and are not subject to taxation |
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93. MATH! Be able to calculate one owners special assessment for street paving. |
EXAMPLE: You live on an unpaved street. The city is petitioned to pave the street and agrees to do so. The paving cost $24 per square foot, and the city is to pay 30% of the cost. If your lot frontage on the street is 100 feet, what will your special assessment be four street paving? Don't forget that your streets has two sides and the property across the street must bear its fair share.
100 Front Feet x $24 Per Sq. Ft = $2,400
$2,400 x .70 (owners share cost is 100% -30%) = $1,680
$1,680 ÷ 2 (One half of the street paving cost) = 840 |
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94. Cite the tax advantages of homeownership.(Two Questions) |
Mortgage interest is the deductible, property taxes is deductible, IRA withdrawals for first time home buyer, exclusion of gain from the sale of principal residence, interest home equity loans & mortgage origination fees (points) are deductible.
Mortgage interest - interest paid on a mortgage loan on a principal and second home is deductible.
Property tax - The annual property taxes paid on principle and second homes.
IRA withdrawals for first time home buyer's. First time home buyers may make penalty free (but not tax free) withdraw up to $10,000 for their tax-deferred individual retirement funds (IRA) for a down payment. Different IRS rules apply to withdraw from Roth IRA's.
Exclusion of gain from the sale of a principal residence - up to $250,000 of gain ($500,000 for married couples filing A joint return) realize on the sale or exchange of a principal residence may be excluded.
Interest home equity loans - The interest paid is the ductile if the loan does not exceed $100,000.
Mortgage or origination fees (points). Points are deductible in the year they are paid, unless they are paid when refinancing a loan - in such cases, the points must be deducted over the life of the loan. |
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95. Know how the IRS annual depreciation deduction is computed. |
Formula: Straight-line method: -Total cost to acquire property - value of the land = depreciable basis.
-depreciable basis ÷ useful life (27.5 residential or 39 years non residential ) = annual IRS depreciation the deduction.
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96. Name the 3 areas of responsibility of a city planning commission. |
Subdivision plat approval, site plan approval and sign control.
Subdivision plat approval: A developer planning to create a subdivision must submit a subdivision plat to the planning commission for approval. A developer is not issued a building permit until final approval is granted by the planning commission when an approval is received the developer may proceed to record the plot in the public records and receive a building permit.
Site plan approval: Serves the same function that a subdivision plat service for a subdivision. It is a detailed plan of how the project is to be developed, how traffic and parking will be dealt with, and what impact on neighborhood properties may be expected.
Sign control: More and more cities are exercising control over signs. The primary aims of sign control are to minimize distraction to motorist into eliminate actual safety hazards created by signs and building corners, lighted signs that glare into the eyes of drivers at night, and the like.
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98. Who enforces the Florida building code? |
Local government.
- The process begins by issuing a building permit after review of the architectural and engineering drawings. Part of the building permit process is the energy code compliance certification. |
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99. Understand the criteria for a variance. |
1. The property owner must prove that a hardship exist but will be created by strict compliance with zoning requirements and that the owner did nothing to cause the hardship.
2. The zoning board of adjustment must use the same established criteria to judge the validity of all requests for a variance. |
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