Categories of 40% to 80% General and State

Need practice and review on!

GENERAL

Category 1 - Rectangular Survey Acreage Calculation

1 acre - 43,560 sq ft

1 section - 640 acres

1 township - 36 sections

½ of 640 - 320

¼ of 640 - 160

¼ of ¼ of 640 - 40

½ of ¼ of 640 - 80

A buyer purchases the NE ½ of the SW ¼ of Section 12. How many acres does the buyer own?

A. 320

B. 160

C. 40

D. 80

Category 2 - Types Of Deeds

Quit Claim Deed

Special Warranty Deed

General Warranty Deed

Bargain And Sale Deed Without Covenants

A buyer is purchasing a property from a seller who agrees to guarantee that they have not personally created any title defects during their period of ownership.

However, the seller does NOT agree to protect the buyer against title defects that existed before the seller acquired the property.

Which type of deed would BEST meet these conditions?

A. General Warranty Deed

B. Quit Claim Deed

C. Special Warranty Deed

D. Bargain And Sale Deed Without Covenants

Special Warranty Deed

only provides warranties against title problems arising during the seller’s ownership.

General Warranty Deed

provides broader protection, including against title problems before the seller owned the property.

Quit Claim Deed

A legal document that transfers whatever ownership interest a person has in a property, without guaranteeing clear title or ownership.

Bargain And Sale Deed Without Covenants

A deed that implies the grantor owns the property and transfers title, but provides no warranties against title defects or encumbrances.

Category 3 - Sales Comparison Approach

A valuation method that estimates property value by comparing a property with similar properties that recently sold.

Comparable Sales Adjustments - How do you adjust a comparable property’s sales price?`

Comparable is superior - SUBTRACT, If comparable is inferior - ADD

Subject Property: 3 bedrooms, 2 bathrooms

Comparable Property: 3 bedrooms, 3 bathrooms

Comparable sold for: $310,000

Extra Bathroom Value: $12,000

EXTRA BATHROOM = SUPERIOR

$310,000 - $12,000 = 298,000

If comparable has one fewer bathroom, and subject has one more bedroom = INFERIOR

$310,000 + $12,000 = #322,000

Highest And Best Use

The reasonably probable use of a property that is:

• legally permissible

• physically impossible

• financially feasible

• maximally productive

Category 4 - Agency And Fiduciary Duties: Loyalty And Disclosure

What must a seller’s agent do if a buyer reveals they are willing to pay $15,000 more?

Generally, inform the seller because the agent owes the seller loyalty and disclosure of material information, unless the information is protected by a confidentiality obligation.

Disclosure Of Material Defects: A seller tells their agent not to disclose known basement flooding. What should the agent do?

The agent must not conceal or misrepresent a known material defect. The seller’s instructions do not override legally required disclosures.

Category 5 - Fair Housing And Religious Steering

Directing buyers toward or away from neighborhoods based on religion. This violates the Fair Housing Act, even when the buyer requests it.

Sherman Anti-Trust Act

Anti-competitive agreements, including competing brokerages agreeing to charge the same commission rate.

Category 6 - Environmental Site Assessment Phase I and Phase II

I - an initial investigation of a property’s environmental history and conditions to identify potential contamination concerns. Generally does not involve soil or groundwater sampling.

II - a follow-up investigation that uses soil, groundwater, or other sampling and laboratory testing to evaluate suspected contamination.

Category 8 - Property Tax Proration

Divide annual property taxes by 365 to find the daily tax, then multiply by the number of days the seller owes.

Annual Taxes/365 x seller’s days

Discount Points

One discount point equals to 1% of the LOAN amount, NOT the PURCHASE PRICE.

Example: Loan: $260,000

Discount points: 2

$260,000 × 0.02 = $5200

Income Capitalization Approach

Divide the property’s annual net operating income (NOI) by the capitalization rate.

Value = NOI/ Cap Rate

Example: Annual NOI: $48,000

Capitalization Rate: 8%

$48,000 / 0.08 = $600,000

STATE

Category 1 - Commission Membership

12 members ( 10 brokers and 2 lay members)

Commission Leadership

Commission members elect the Chairperson and Vice-Chairperson.

Category 4 - Licensing

Expired Broker License: what are the reinstatement requirements for an Indiana broker license expired for four years? -

Generally, 36 hours of continuing education and retaking the Indiana State Exam portion.

Economic Appreciation

An increase in a property’s value due to external economic factors, such as population growth, increased demand, or neighborhood development.

Cost Approach

Construction costs, replacement cost, land value, depreciation

External Obsolescence

A loss in property value caused by outside factors, such as nearby highways, pollution, or declining neighborhoods.

Physical Deterioration

A loss in property value caused by wear and tear, aging, damage, or lack of maintenance.