Cram

OHIO REAL ESTATE EXAM MASTER CRAM SHEET

AGENCY RELATIONSHIPS

The exam loves agency questions because they test whether you understand who owes duties to whom.

CLIENT VS CUSTOMER

Client:
A person who is represented by a real estate licensee.

Customer:
A person who is not represented by the licensee.

Key Exam Point:
You owe fiduciary duties to clients.
You do NOT owe fiduciary duties to customers.

You still owe customers:

  • Honesty

  • Fair dealing

  • Disclosure of material facts

FIDUCIARY DUTIES (OLD CAR)

Obedience

  • Follow lawful instructions from your client.

Loyalty

  • Put the client's interests ahead of your own.

  • Never secretly profit from a transaction.

Disclosure

  • Inform your client of material information that could affect decisions.

Confidentiality

  • Protect client secrets even after the transaction closes.

Accounting

  • Properly handle all money and property entrusted to you.

Reasonable Care

  • Perform duties competently and professionally.

Dual Agency

Occurs when a brokerage represents both buyer and seller.

Requires:

  • Full disclosure

  • Informed consent of all parties

Without consent, disciplinary action can occur.

Material Facts

A material fact is something that could influence a buyer's decision.

Examples:

  • Roof leaks

  • Water intrusion

  • Mold

  • Structural defects

  • Foundation issues

  • Flooding

Not Material:

  • Personal opinions

  • Rumors

  • Future market predictions

If you know a material defect exists, disclose it.

OHIO LICENSE LAW

Purpose of Ohio License Law:
PROTECT THE PUBLIC

Whenever you see an answer involving:

  • Consumer protection

  • Public protection

  • Protecting buyers and sellers

It is frequently the correct answer.

Ohio Real Estate Commission

Can:

  • Suspend licenses

  • Revoke licenses

  • Investigate complaints

  • Discipline licensees

Broker Responsibilities

A broker supervises:

  • Salespersons

  • Trust accounts

  • Advertising

  • Transaction records

Salespersons work under brokers.
They cannot independently operate.

TRUST ACCOUNTS

This is one of the highest-frequency Ohio topics.

Trust Account

Used to hold:

  • Earnest money deposits

  • Security deposits

  • Escrow funds

The money belongs to the client, not the broker.

Commingling

Definition:
Mixing client funds with personal or business funds.

Example:
Broker deposits earnest money into their business checking account.

Illegal.

Conversion

Definition:
Using client money without authorization.

Example:
Broker uses buyer's earnest money to pay office rent.

Think:
Commingling = Mixing
Conversion = Taking/Using

The exam frequently asks you to distinguish these two terms.

OWNERSHIP ESTATES

Fee Simple Absolute

Highest ownership interest available.

Owner has:

  • Possession

  • Control

  • Enjoyment

  • Exclusion

  • Disposition

Most residential ownership is fee simple absolute.

Joint Tenancy

Two or more owners.

Main Feature:
Right of Survivorship

When one owner dies, their share automatically transfers to surviving owners.

Tenancy in Common

Most common co-ownership form.

Features:

  • No survivorship

  • Ownership shares may be unequal

  • Owners can sell their share independently

Severalty

Ownership by one person only.

Life Estate

Ownership lasts for the lifetime of a specific person.

Ends when the measuring life dies.

Example:
A parent grants a life estate to a child.
When the child dies, ownership transfers according to the remainder interest.

Escheat

When someone dies without:

  • A will

  • Heirs

Property goes to the state.

DEEDS AND TITLE

Title

Title is ownership rights.

Deed

The document used to transfer ownership.

Title Passes When:

  1. Deed is delivered

  2. Deed is accepted

Important:
Recording is NOT required for title transfer.

Recording

Purpose:
Provides constructive notice to the public.

Constructive Notice

The law assumes everyone knows what is in public records.

General Warranty Deed

Provides greatest protection.

Grantor guarantees:

  • Good title

  • No undisclosed encumbrances

  • Right to transfer ownership

Quitclaim Deed

Provides least protection.

Grantor simply transfers whatever interest they have.

No guarantees.

FINANCING

Mortgagor vs Mortgagee

Mortgagor = Borrower

Mortgagee = Lender

This appears constantly on exams.

FHA Loan

Federal Housing Administration

Features:

  • Government insured

  • Lower down payment options

  • Popular with first-time buyers

VA Loan

For eligible veterans.

Benefits:

  • Often no down payment

  • Government guaranteed

Conventional Loan

Not government insured.

Often requires:

  • Stronger credit

  • Larger down payments

PMI

Private Mortgage Insurance

Usually required when:

  • Conventional loan

  • Less than 20% down payment

Purpose:
Protects lender, not borrower.

Equity

Formula:

Equity = Property Value - Debt

Example:

Value = $300,000
Mortgage = $240,000

Equity = $60,000

VALUATION

Market Value

The most probable price a property will bring under normal market conditions.

Not:

  • Highest possible price

  • Assessed value

  • Listing price

CMA

Comparative Market Analysis

Prepared by:
Real estate licensees

Used to estimate market value.

Appraisal

Prepared by:
Licensed appraisers

Often required by lenders.

Three Approaches to Value

Sales Comparison Approach

Used most often for:

  • Single-family homes

Compares similar recently sold properties.

Cost Approach

Formula:

Replacement Cost

  • Depreciation

  • Land Value

Commonly used for:

  • New construction

  • Unique properties

Income Approach

Used for:

  • Apartments

  • Commercial properties

  • Investment properties

Based on income produced.

Types of Depreciation

Physical Deterioration

  • Wear and tear

  • Aging roof

  • Worn carpet

Functional Obsolescence

  • Problem inside the property

  • Bad floor plan

  • Outdated design

Economic Obsolescence

  • Problem outside the property

  • Airport nearby

  • Factory next door

  • Heavy traffic

FAIR HOUSING

Protected Classes

Race
Color
Religion
Sex
Familial Status
Disability
National Origin

Illegal Activities

Steering

Directing buyers toward or away from neighborhoods because of protected characteristics.

Blockbusting

Encouraging owners to sell by suggesting certain groups are moving into the neighborhood.

Redlining

Refusing loans or services based on neighborhood demographics.

All are illegal.

CONTRACTS

Valid Contract Requirements

  1. Competent parties

  2. Mutual consent

  3. Consideration

  4. Legal purpose

Earnest Money

Shows good faith.

Not required by law but commonly used.

Counteroffer

Rejects original offer.

Creates a new offer.

Statute of Frauds

Most real estate contracts must be in writing to be enforceable.

Executed Contract

Fully performed by all parties.

MATH FORMULAS

Commission

Commission = Sales Price × Commission Rate

Example:

$360,000 × 5%

= $18,000

Down Payment

Purchase Price - Loan Amount

Example:

$300,000 - $240,000

= $60,000

Equity

Value - Debt

Example:

$300,000 - $240,000

= $60,000

Percent of List Price

Sale Price ÷ List Price

Example:

$240,000 ÷ $250,000

= 96%

20 FACTS TO MEMORIZE WORD FOR WORD

  1. Mortgagor = borrower

  2. Mortgagee = lender

  3. FHA insures loans

  4. VA loans are for eligible veterans

  5. Conventional loans are not government insured

  6. PMI protects the lender

  7. Fee simple absolute is highest ownership

  8. Joint tenancy includes survivorship

  9. Severalty means one owner

  10. Life estate ends at death

  11. Escheat means property goes to the state

  12. Title transfers upon delivery and acceptance

  13. Recording provides constructive notice

  14. General warranty deed provides greatest protection

  15. CMA is prepared by a licensee

  16. Appraisal is prepared by an appraiser

  17. Commingling means mixing funds

  18. Conversion means unauthorized use of funds

  19. Ohio license law protects the public

  20. Ohio Real Estate Commission disciplines licensees