CRES - Connecticut Real Estate Salesperson

Question 21: An appraiser must value a typical suburban house in a Danbury neighborhood where many similar homes have sold within the past few months. Given this abundance of recent, comparable transactions, which valuation approach will generally carry the greatest weight in the final opinion?

The sales comparison approach

The cost approach

The income approach

The gross income multiplier

Question 22: A Stamford buyer applies for a mortgage on a shoreline condo, and the lender orders an appraisal before approving the loan. Thinking about why the lender needs this valuation rather than accepting the contract price, which purpose does the appraisal chiefly serve?

Setting the buyer's final offer price

Guaranteeing the property has clear title

Inspecting the home for code defects

Confirming adequate collateral for the loan

Question 23: When applying the sales comparison approach to a Norwalk single-family home, an appraiser finds a comparable sale that has an extra bathroom the subject lacks. To account for that superior feature, which property's price does the appraiser adjust, and in which direction?

Adjust the comparable upward

Adjust the comparable downward

Adjust the subject downward

Adjust the subject upward

Question 24: A large mortgage lender needs a quick, low-cost value estimate for a routine refinance and uses a software system that pulls public records and recent sales data, then applies statistical models to generate a figure automatically. This tool is called which of the following?

An automated valuation model

A broker price opinion

A formal appraisal

A comparative market analysis

Question 25: During a single year when few homes are listed in Milford yet many qualified buyers compete for them, prices climb steadily across the shoreline market. Which appraisal principle explains how the relationship between available inventory and buyer demand drives value?

Highest and best use

Contribution

Regression

Supply and demand

Question 26: A Greenwich investor financed most of her purchase and now wants a return figure that reflects only the actual cash she invested against the yearly cash the property returns after debt service. Which measure BEST fits what she is seeking, not the cap rate?

The capitalization rate

The gross rent multiplier

The cash-on-cash return

The loan-to-value ratio

Question 27: When a listing broker's commission is computed for a completed sale, the percentage in the listing agreement is applied to a specific base before that amount is deducted from the seller's proceeds. To which figure is the commission rate normally applied?

The seller's net proceeds

The unpaid loan balance

The buyer's down payment

The gross sale price

Question 28: A borrower notices two percentage-based charges on his loan estimate: one lowers his interest rate in exchange for cash today, while the other simply pays the lender for creating the loan. Which statement BEST distinguishes the discount point from the origination fee?

Points buy rate; origination pays processing

Both charges lower the interest rate

Origination buys rate; points pay processing

Neither charge affects the interest rate

Question 29: A borrower reviewing her closing disclosure sees a charge, expressed as a percentage of the loan, that the lender says compensates it for the work of taking her application, underwriting, and funding the mortgage. Which fee covers that administrative service?

A discount point

The loan origination fee

A prepayment penalty

A private mortgage insurance premium

Question 30: When a borrower pays discount points at closing, the lender collects extra money up front while agreeing to a lower stated rate on the loan. From the lender's perspective, what effect do the points have on the loan's overall return?

They lower the lender's yield

They leave yield unchanged

They raise the lender's yield

They cancel the borrower's interest

Question 31: A conveyance tax owed when a home changes hands is not a flat amount; instead, it rises or falls with a particular figure from the transaction. On which figure is the amount of the transfer tax normally based?

The property's assessed value

The sale price or consideration

The buyer's loan amount

The seller's net proceeds

Question 32: In a PITI payment, the lender collects more than principal and interest each month, setting the extra amount aside so it can pay the annual tax bill and insurance premium when they come due. Where does that extra money go?

Into an escrow or impound account

Into the loan's principal balance

Toward the buyer's down payment

Into the broker's trust account

Question 33: A lender quotes a monthly housing payment that bundles four elements together: the loan's principal, the interest, the property taxes, and the hazard insurance premium. Which single acronym describes a monthly payment containing all four of these parts?

PMI

APR

LTV

PITI

Question 34: A lender tells a borrower that each unit of a particular closing charge equals one percent of the loan amount and, when paid up front, lowers the interest rate on the note the borrower will sign. Which charge is the lender describing?

An origination fee

An appraisal fee

A discount point

A prepayment penalty

Question 35: In most jurisdictions, the real property transfer or conveyance tax is customarily the responsibility of one particular party at the closing table, because that party is the one parting with title to the buyer. Which party normally pays this tax?

The buyer

The lender

The title insurer

The seller

Question 36: When a deed conveying a Fairfield County home is recorded, the state and town each collect a charge based on the property's sale price, imposed for the privilege of transferring ownership. Which term best names this type of charge?

A real property transfer tax

A recording fee

An ad valorem property tax

A documentary origination fee

Question 37: A loan officer explains that a mortgage covering a very large share of a property's value leaves only a thin cushion, so if the borrower defaults and the home must be sold, the lender risks not recovering the full balance. Which principle explains this concern?

Lower loan-to-value means higher risk

Higher loan-to-value means higher risk

Higher equity means higher lender risk

Larger down payments increase lender risk

Question 38: Before funding a mortgage, a lender wants a single ratio that shows how the amount a borrower wishes to borrow stacks up against the property's appraised value or sale price, whichever is lower, for that particular loan. Which ratio provides that comparison?

The capitalization rate

The debt-to-income ratio

The loan-to-value ratio

The gross rent multiplier

Question 39: At settlement, a recurring expense such as property taxes that covers a period spanning the closing date must be divided fairly so each party pays only for the days it actually owned the home. Which term describes this division?

Proration

Amortization

Capitalization

Reconciliation

Question 40: Before applying a capitalization rate, an analyst must first determine the income figure the rate works upon, found by taking the property's effective rental income and subtracting all operating expenses while excluding mortgage payments entirely. Which income figure is that?

Gross scheduled income

Before-tax cash flow

Gross rent multiplier

Net operating income

CRES Connecticut Real Estate Salesperson - Set 3 - Part 2