Educating Homebuyers  / First Time Homebuyers A Niche To Grow On Class Questions Only

(ANSWERS will be revealed with subscription)

1 This chapter recommends that you get a list of service providers for your clients. How many service providers in each category were recommended?
A. One in each category – only the best!
B. At least 3 service providers in each category
C. List every local service provider you can find in each category
D. Do not recommend any service providers

2 Where can a person get a copy of their credit report?
A. Only creditors can see a person’s credit report
B. If anyone wants to see their credit report, they have to enroll in a credit monitoring service
C. A quick Google search will turn up a credit report on anyone
D. Congress enacted a law in 2003 that entitles everyone to one free credit report per year. They can get it from

3 How can a credit score impact a borrower’s mortgage loan?
A. The higher the credit score, the lower the interest rate, and thus the monthly payments on a given loan amount
B. Better credit scores mean a buyer can close on a property in a much shorter time
C. Credit scores have little to no impact on a mortgage loan
D. A lower credit score usually results in a larger loan amount

4 Which type of mortgage approval requires pulling a credit report?
A. Pre-Qualification
B. Pre-Approval
C. Conditional Acceptance
D. Contingent Qualification

5  The parents of your buyers want to give your buyers $25,000 to put toward purchasing a home.
A. Financial gifts toward down payments are strictly forbidden by federal law
B. Down payments are generally not required, so a gift does not make any difference
C. If a large financial gift shows up in a loan applicant’s bank statements, a lender may ask for a larger down payment to reduce their risk
D. More money is always helpful in purchasing property

6  What do online Financial Tracking Services offer?
A. They organize spending into nice categories
B. They allow users to set budgets for spending categories
C. They allow users to set financial goals
D. All of the answers listed are true

7  How many Days on Market (days until a property is under contract) is considered a balanced market?
A. DOM = 120
B. DOM = 7
C. DOM between 30 and 60
D. DOM < 90

8  What type of agency usually offers first-time homebuyer programs in their state? A. The bigger commercial banks B. First-time homebuyer programs were eliminated in 2017 C. State Housing Finance Authorities D. Smaller credit unions

9  Which of the following methods was used in this chapter to assess the market conditions? A. Months of Inventory B. Sale to List Price Ratio C. Average DOM D. All of the answers were used in this chapter

10 Is there a difference between being Pre-Qualified and Pre-Approved for a mortgage loan? A. No, these are the same thing B. Yes, being Pre-Qualified is stronger than being Pre-Approved C. Yes, being Pre-Approved in stronger than being Pre-Qualified D. Yes, different types of lenders offer different types of approvals

11. Which of the following is NOT a benefit offered as part of a first-time homebuyer program? A. Jumbo loans B. Lower interest rates C. Homebuyer education D. Grants to cover some closing costs

12. How many home buyers used the help of a real estate licensee to purchase their home in 2017? A. About half B. Almost 90% C. Less than 20% D. About 80%

13. Your buyer has small children and is understandably concerned about registered sex offenders in the neighborhood. What should you do? A. The registry of sex offenders is not available to the public B. The seller is required to disclose any registered sex offenders in the neighborhood C. Give your buyer a list of useful information, including the state website that lists registered sex offenders D. Check the state’s registered sex offender website for them

14. Which of the following has the biggest impact on a credit score? A. Mix of credit B. Timely Payments C. Average age of credit D. Employment history

15. What is a Credit Score? A. It is a way that credit bureaus measure a person’s credit worthiness B. It is a ratio of current debt to credit limit C. It is a grade of A, B, C, D, or F based on a person’s timely payment history

16. When might it be a good idea for a buyer to redirect their down payment savings to pay off other debt? A. When their other debt has high interest rates but could be paid off with plenty of down payment to spare B. When the other debt is long-term, such as student loans C. When their other debt is for purchases that do not appreciate, like car loans D. It is never a good idea to use down payment savings to pay off other debt

17. What types of special financing programs were mentioned in this chapter? A. VA and FHA loans B. 1031 Like-Kind Exchange lending C. Investment property lending D. 203(q) loans

18. What is the overall maximum debt to income ratio a lender will generally allow when approving a mortgage loan? A. 36% B. 20% C. 3.50% D. 50%

19. What is the ideal amount of down payment recommended in real estate pre-licensing classes? A. 3.50% B. 0% C. 20% D. 10%

20. Who is responsible for due diligence to research a property? A. The buyer’s agent B. The seller’s agent C. The buyer D. The seller

21. Which of the following is would be a sign of a sellers’ market? A. List to sale price ratio > 99%
B. List to sale price ratio < 95% C. List to sale price ratio > 75%
D. List to sale price ratio < 90%

22. Which of the following is the easiest way for a buyer to keep track of their spending?

A.    Buy a ledger book and write down everything

B.     Set up a spreadsheet on a computer and enter all the transactions

C.     Learn accounting software like QuickBooks

D.    Use an online financial tracking service offered for free from many banks and reputable websites

23. Which of the following would be considered an opportunity in a SWOT Analysis?

A.    Being able to hire a certified lead inspector to inspect an older home

B.     Having a pre-approval letter included with an offer

C.     Giving a large earnest money deposit with an offer

D.    Including a personal letter from the buyer with an offer

24. If the buyer wants to negotiate the lowest possible price, what is a strategy that usually works best?

A.    Start with a very low offer

B.     Offer full list price

C.     Offer a low price, and detail issues with the home to account for the low price

D.    Offer a price below list, but not low enough to insult the seller

25. What is the single most important part of a strong offer?

A.    A full price offer

B.     Including a pre-approval letter

C.     Having a quick closing date

D.    The seller may value any one of a number of factors as most important

26. What are some things the buyer can do to give their offer the best chance of being accepted?

A.    View the home many times with family, contractors, to take measurements, etc., the more the better

B.     Ask the seller to look up public documents

C.     Ask the seller to pay for a home inspection and engineering report

D.    Disturb the seller as little as possible, by not scheduling too many viewings, or asking the seller to do the buyers’ due diligence

27. Which of the following is a good piece of information to use when determining an offer price?

A.    Fair market value for the property

B.     Sale to List Price Ratio in the current market

C.     The seller’s situation

D.    All of the answers listed are useful when determining an offer price

28. What is a Rubric?

A.    A Rubric is a guide used to rate different parts of something that is being evaluated

B.     A Rubric is a unit of measure used to calculate square footage

C.     A Rubric is a way to estimate monthly costs of ownership

D.    A Rubric is a method used to estimate how long a home repair will take

29. What was the example used in this chapter for a SWOT Analysis?

A.    Deciding to make an offer on a home that may have lead paint

B.     Deciding whether it is worthwhile to make a full-price offer

C.     Deciding which of 5 properties would be the best fit for the buyers

D.    Deciding which properties to see first

30. What is a decision tree?

A.    It is a visual way to show buyers potential outcomes to different decisions

B.     It is a type of fir tree that helps make decisions if planted correctly

C.     It is a fake tree some agents set up during the holidays

D.    It is more of a shrub than a tree, and it doesn’t make any decisions

31. What does “SWOT” in SWOT Analysis stand for?

A.    The best angle to orient solar panels: South-West, On Top

B.     It is named after Arthur Swot, a mathematician

C.     Strengths, Weaknesses, Opportunities, and Threats

D.    They are types of investments: Securities, Worth funds, Options, and Trades

32. What does “Time is of the Essence” mean?

A.    A clock or watch is included in the sale of the property

B.     Anyone who is more than 5 minutes late for an appointment will be billed for the appointment

C.     Deadlines are strict, and missing one may mean a party loses a right, or a party is in breach of the contract

D.    The general essence of time is important, but the dates do not have to be exact within a few weeks

33. Why would a seller accept a lower priced offer when a higher priced offer is on the table?

A.    Sellers would never accept a lower price offer when there is a higher price offer on the table

B.     In the case of a like-kind exchange, the seller may be better off taking less money for the property they are selling

C.     The lower priced offer had better terms, such as an ideal closing date, more secure financing, no contingency to sell another home, etc.

D.    For tax purposes, the seller may prefer to sell their home for less money

34. What factors go into knowing whether to negotiate hard, or tread carefully?

A.    Market conditions and the seller’s situation

B.     Sales experience of the buyer

C.     Current interest rates

D.    How intimidating the seller’s agent is

35. Which of the following time-sensitive inspection events is commonly not planned for?

A.    Favorite home inspectors are booked out for weeks

B.     Home repair experts (plumbers, electricians, etc.) cannot get to the property before the home inspection deadline

C.     It takes time for certain tests to come back (water, radon, etc.)

D.    All of the events listed are commonly not planned for

36. Is it a good idea for the buyer to include a personal letter to the seller with their offer?

A.    No – most professionals believe that a letter can only hurt a buyer’s chances of securing a home

B.     Yes – if the letter is written in a way that flatters the seller

C.     Yes – if the buyer is offering less than list price, they should detail all the issues in the home to explain their lower offer

D.    Yes – the buyers can have the opportunity to tell the sellers all the changes they will make to the home

37. Which of the following tools could help a buyer so they can negotiate from an informed position?

A.    House Rating Rubric

B.     Decision trees and SWOT analysis

C.     Inventory Category worksheet

D.    Pre-Approval letter

38. Following Dr. Iyengar’s research findings, how can a buyers’ agent help buyers choose a suitable home in a market with a large inventory?

A.    The buyers’ agent should show their buyers every property on the market

B.     If the buyers’ agent organizes the properties into 3-5 categories, and shows only a few homes in each category, buyers have an easier time choosing

C.     The buyers’ agent should show the buyers the best property in their search area, and advise them to buy that one property

D.    The buyers’ agent should tell the buyers to look on their own, and contact the agent only when they have narrowed down their search to 2 properties

39. Dr. Sheena Iyengar, a Columbia University researcher, found buyers are more likely to buy and make better choices under what circumstances?

A.    When the choices are put into categories, or there are few choices

B.     When the choices are spread out, so they can all be seen at once

C.     When there is more choice, buyers have an easier time choosing

D.    When there is one clearly superior choice, buyers know to go for that one

40. As a real estate licensee, why should you do your buyers’ due diligence for them?

A.    Your buyer may not be as motivated as you to do the research

B.     You should NOT do your buyer’s due diligence

C.     Due diligence is generally a waste of time and no one needs to do it

D.    You know what to do better than your buyers, so you should do all the work

41. When would it be a good idea to share the Closing Disclosure with a past buyer?

A.    Real estate agents are not permitted to see a buyer’s Closing Disclosure, so we cannot share it with a buyer

B.     There is no need to share the Closing Disclosure with a buyer because they received it at closing

C.     Just before tax time, with a thoughtful “Happy New Year” card

D.    On the 10-year anniversary of the sale

42. Which of the following due diligence items is the buyer’s agent responsible for?

A.    Checking the quality of the school system

B.     Finding out the crime rates

C.     Reading and interpreting the restrictive covenants

D.    Agents are not responsible for any due diligence – this is the buyer’s responsibility

43. Are verbal promises binding in most real estate contracts?

A.    Yes – A person’s word is their bond

B.     No – Promises must usually be in writing to be enforceable

C.     Yes – Even implied promises are binding

D.    No – Virtually any promise, written or verbal is not binding

44. Are home inspections important?

A.    No – sellers are responsible for making sure a property is 100% perfect before listing

B.     No – sellers are responsible for repairing any issues that appear up to 5 years after the sale

C.     Yes -the home inspection is a good way to find if there are any significant issues with a home

D.    No – most buyers can see issues themselves

45. For tech-savvy buyers, what educational housewarming gift was recommended in this chapter?

A.    Educational apps that can be used on a smartphone or tablet like Home Improvement Ideas, DIY Projects, and Photo Cookbook

B.     A video drone to spy on neighbors

C.     A notepad and pen

D.    A houseplant

46. What are two things we can share with our buyers to educate them, so they make rational decisions after a home inspection?

A. 1. A list of common issues found in a home inspection 2. How to do a Benefit-Cost Analysis to see if the home is worth the costs

B. 1. The book containing the international building codes 2. The home inspection reports of all the homes sold in the area in the last 12 months

C. 1. Your real estate pre-licensing textbook 2. The book, Home Inspections for Dummies

D. 1. A list of rental properties they can rent if they can’t find a good home to buy 2. A few pints of ice cream to help them get over the loss of the sale

47. If a real estate client adds themselves to the Do Not Call Registry, can their agent call them?

A.    No – not ever

B.     Yes – during the transaction and up to 18 months after business has concluded

C.     Yes – anytime

D.    Yes – only if the agent has a specific real estate reason for calling

48. Which of the following items should a buyer pay to have inspected?

A.    Water quality

B.     General Home Inspection

C.     Septic system

D.    The buyer should inspect all the items listed as applicable

49. How can a real estate agent find out if their past and present clients are on the Do Not Call Registry?

A.    Real estate agents do not have access to this list

B.     It is the consumer’s responsibility to inform any business that they are on the Do Not Call List

C.     They must go to the local Do Not Call Registry Office and submit form GS612

D.    They may go to to look up their clients

50. In terms of getting the most out of a home inspection, what was recommended for your buyer to do during the home inspection?

A.    Buyers should not be present during the home inspection, they just get in the way

B.     Buyers should be at the home inspection, but they should stay in the kitchen, so the inspector can talk to them only if he or she has questions

C.     The buyer should make sure the seller is at the inspection so that the seller cannot deny what the inspector finds

D.    The buyers should stick to the inspector like glue during the inspection

51. Which of the following would be considered part of a buyer’s due diligence?

A.    Reading the property’s deed

B.     Having a home inspection done

C.     Reading restrictive covenants, if they exist

D.    All of the answers shown

52. What are some ways a real estate agent can continue to educate their buyers after the sale has ended?

A.    The agent can call their buyers once a week with weekly tips

B.     The agent can give a useful and educational housewarming gift, such as a home improvement book, membership in a gardening organization, certificate to a cooking class, etc.

C.     Real estate agents are required to provide their past clients with continuing education classes at least once a year

D.    Once a transaction is complete, real estate agents should not have any contact with their past clients

53. What is a consequence of ignoring the phrase “Time is of the Essence?”

A.    Losing the right to a contingency

B.     Being in breach of contract

C.     Loss of earnest money deposit

D.    All of the answers listed are correct

54. Which of the following is a recommended way to keep buyers on track with property purchase deadlines and tasks?

A.    Nothing, the buyer should know what to do and when

B.     Write down lists on scraps of paper

C.     Share electronic calendars with your buyers from sources like Contactually, Gmail, and Folio

D.    Keep telling your buyers to look at their purchase contract

55. What are some limitations to the home inspection?

A.    The inspector cannot see through walls, fly over roofs, or shrink down to fit into tight crawl spaces

B.     Most home inspectors are too lazy to do a thorough job

C.     Home inspectors are usually also specialty contractors and try to push their repair services, so they exaggerate issues

D.    Home inspectors rarely find any issues in homes, making them not worth the money

56. Which of the following is a free service to help agents send reminders to their clients?

A.    Folio

B.     Skyslope

C.     REThink

D.    Paperless Pipeline

57. What are some common contingencies listed in this chapter?

A.    Appraisal, buyer to sell their home, and seller to find suitable housing

B.     Appliance repair, window replacement, and septic system pumping

C.     Home to be thoroughly cleaned, shed to be removed, appliances replaced

D.    Seller to pay all buyer’s closing costs, seller financing, rent to own

58. How would an economist recommend buyers think about the results of a home inspection?

A.    Buyers should let their agent decide for them

B.     Buyers should look at the benefits and costs of the home with the uncovered defects to see if the home is worth it to them

C.     This is an emotional decision, so emotions play the most important part

D.    Buyers should go with their gut reaction

59. Who is responsible for setting up utility accounts in a newly purchased home?

A.    The buyer

B.     The seller

C.     The buyer’s agent

D.    The seller’s agent

60. Is it a good idea to give your buyer the webpage to look up the Sex Offender Registry?

A.    No – It is a violation of the offender’s rights

B.     No – The less your buyer knows about the registry, the better

C.     No – As the real estate licensee, you should look up this information for your buyer

D.    Yes – Not only does this give your buyer important information, but it empowers them to check the list periodically

61. A real estate market is clearly a buyers’ market when . . .

A.    Homes are typically selling for more than listing price

B.     Homes are typically selling for less than listing price

C.     Home are typically selling at or very near to listing price

D.    A buyer’s market is “in the eye of the beholder.”

62. Which lenders were recommended in this chapter?

A.    Local loan officers and mortgage brokers

B.     Big out of state banks that handle large volumes of loans

C.     Online lenders

D.    No specific type of lender was recommended

63. Is it a good idea for buyers to require sellers to repair issues that come up in a home inspection?

A.    Yes – sellers are required to repair any and all issues that come up in a home inspection

B.     Yes – what is there to lose

C.     Sometimes – as an agent, you can educate your buyer to the potential outcomes of making the request

D.    No – sellers can back out of the contract and keep the earnest money deposit if buyers make such a request

64. What is always the most important part of a purchase offer?

A.    The highest price possible

B.     The closing date

C.     The financing terms

D.    It can vary depending on the seller’s motivations

65. How can decision trees help buyers make choices?

A.    It shows them which choices produce fruit

B.     It shows them different outcomes and an estimate of how likely the outcomes are

C.     It shows which decisions will grow money

D.    It helps describe branches of their family

66. Is it a good idea to include a Pre-Approval letter with a purchase offer?

A.    No – it is none of the sellers’ business to know about the buyers’ financing

B.     No – it is unwise to let the seller know where the buyer has been approved for financing

C.     Yes – a Pre-Approval letter lets the seller know the buyers are serious and know what they can afford

D.    Yes -the sellers can call the lender and find out exactly how much the buyers are willing and able to pay

67. Which item appears on the REALTOR® Magazine’s 10 Most Common Home Inspection Problems?

A.    Doors need adjusting and servicing

B.     Ugly curtains

C.     Peeling wallpaper

D.    Decks that are too small

68. What are the benefits to the buyer of an appraisal contingency in a purchase contract?

A.    An appraisal contingency may protect them from low appraisals

B.     It makes their offer stronger

C.     Sellers like to see buyers have thought about the property seriously

D.    The longer the contract, the more likely the seller is to accept it

69. What is a risk associated with a buyer who does not know what to expect before having a home inspection?

A.    They may buy a home with serious issues because they think every home is in tear-down condition

B.     They may not understand what the term “defect” means

C.     They may sue the home inspector for telling them things they don’t want to hear

D.    They may walk away from a good home because they expect perfection

70. What did this chapter recommend about sharing a list of common issues with buyers before the home inspection?

A.    Buyers should not know about common issues because it is expected that the sellers make the home perfect before listing it

B.     Sharing a list of common issues with a buyer can help prepare them for what may be found in a home inspection

C.     There are no common issues, so sharing a list is a waste of time

D.    Home inspections are not recommended, so it is not necessary to share any sort of list

–          Final Q&A –

71. If a consumer is confronted with too many choices, what did Columbia University researcher, Dr. Iyengar, find in her research?

A.    Consumers make choices quickly

B.     Consumers make poor choices or choose nothing at all

C.     Consumers purchase more

D.    Consumers are more likely to get their friends and family to buy as well

72. Sometimes buyers get discouraged when there is very low inventory. What suggestion did this course make to educate them about the market cycles?

A.    Tell buyers to give up and direct them to a rental agent

B.     Tell buyers they must choose one of the few available properties before it gets snapped up

C.     Show the buyers the properties in their market that have closed in the last 12 months

D.    Tell buyers to expand their search to include a neighbor ring state

73. A Rubric is a ______________.

A.    federal loan program

B.     guide used to rate different parts of something that is being evaluated

C.     delicious snack food

D.    none of the above

74. Which of the following purchase offer term(s) may be important to a seller?

A.    Closing date

B.     Request for repairs

C.     Size of earnest money deposit

D.    All of the items listed may be important

75. Which of the following is a sign that the seller may be motivated to sell?

A.    A vacant property

B.     A new listing

C.     No outstanding mortgage on the property

D.    The listing agent told you the seller is firm on the price

76. What could including a Pre-Approval Letter with an offer do?

A.    Make the offer look more attractive to the seller

B.     Make the buyer look desperate

C.     Make the buyer seem less motivated

D.    Expose the seller to excessive risk

77. Which of the following should be included in a personal letter that accompanies a purchase offer?

A.    A long story about how the buyer has lost out on a number of homes

B.     An opening that flatters the seller and their home

C.     A detailed list of the visual issues with the home

D.    A description of how the buyer will change the home if they buy it

78. How can the buyers make themselves look better to the sellers?

A.    Ask to view the property many times

B.     Ask the seller to conduct the due diligence

C.     Be respectful of the seller by not disturbing them more than necessary

D.    Schedule inspections across many days

79. What information can help a buyer determine a good offer price?

A.    Fair market value

B.     Sale to List Price Ratio

C.     DOM of this property compared to the average

D.    All of the answers listed are true

80. Is it a good idea to include a personal letter with a purchase offer?

A.    No – real estate transactions should always stay completely professional

B.     Yes – if the letter is written to appeal to the seller

C.     Yes – if the buyers are able to convey that the sellers that the home has multiple issues and theirs is the best offer

D.    Yes – if the buyers include their phones numbers so the sellers can call them directly

81. What can enhance a Decision Tree?

A.    A list of local arborists

B.     Including impossible outcomes

C.     Showing Debt to Income Ratios of the sellers

D.    Adding the estimated probability of different outcomes

82. This course included 2 examples of using a decision tree. What were they?

A.    Asking the seller to make repairs and helping a buyer negotiate a low purchase price

B.     Getting the seller to abate lead paint, and asking for cash back at closing

C.     Requiring the seller to release an easement, and having them leave kitchen appliances

D.    Asking the seller to reduce the price and having them leave furnishings

83. What is the “S” short for in SWOT Analysis?

A.    Sellers

B.     Strengths

C.     Scores

D.    Selection

84. Which of the following would be considered an “Opportunity” in a SWOT Analysis?

A.    A program that can help defray the costs of Lead Paint Abatement

B.     The dangers of lead paint

C.     A required lead paint disclosure form

D.    The “Protect Your Family From Lead Paint” brochure

85. Which of the following was mentioned as an unexpected timing issue?

A.    The buyer schedules radon test early

B.     A plumber is available for an estimate while a home inspection is occurring

C.     Favorite home inspectors are booked weeks in advance

D.    The buyer and their agent know that water tests could take up to one week

86. What does “Time is of the Essence” mean to a lawyer?

A.    A date is flexible within 5 working days

B.     The term is not binding

C.     A 72-hour kick-out clause could be triggered

D.    A due date is strict

87. Which of the following financing issues are often not expected by buyers?

A.    An appraisal comes in lower than the purchase price

B.     A flood certificate shows that the property is in a flood zone

C.     A homeowners’ insurance company requires costly repairs

D.    All of the answers listed are true

88. Which of the following was recommended for buyers to finish their due diligence when under contract?

A.    Threats

B.     Checklists

C.     Legal Action

D.    Bribes

89. Which of the following is considered part of a buyer’s due diligence?

A.    Reading the deed for the property

B.     Completing the property disclosure form

C.     Arranging for childcare while they look at properties

D.    Asking the seller to leave appliances

90. What was the last item on the Due Diligence Checklist?

A.    Apply for a mortgage

B.     Change locks

C.     Purchase a housewarming gift

D.    Look at the tax bill

91. Which of the following is considered a common contingency in a purchase contract?

A.    Seller financing

B.     Buyer to terminate lease

C.     Seller to find suitable housing

D.    Pet deposits

92. What is an example of a lender’s contingency?

A.    Seller to find suitable housing

B.     Dual agency disclosure

C.     School rankings

D.    Borrower’s employment verification

93. Which of the following is a limitation of home inspectors?

A.    They cannot see into walls

B.     They cannot take a water sample

C.     They cannot test if faucets work

D.    They are not permitted to enter basements

94. Is a home inspection recommended for new construction?

A.    No – New construction is perfect

B.     Yes – Builders cut corners, and there may be issues like poor water quality or radon in the air

C.     Yes – Especially if home inspectors offer buyer agent rebates

D.    No – Home inspections are not permitted in new construction

95. Where should a buyer be during a home inspection?

A.    Off-site so the inspector can do his or her job

B.     On the property, but out of the inspector’s way

C.     Sticking with the inspector and asking questions

D.    With the seller’s agent to see if he or she looks nervous

96. Which of the following is on the REALTOR® Magazine’s list of Top 10 Common Issues Found in Home Inspections?

A.    Service panel deficiencies

B.     Inadequate garage space

C.     Poor floorplan

D.    Outdated paint colors

97. Is a good idea to share a list of common home inspection issues with your buyer before the inspection?

A.    No – it may make the buyers change their offer price

B.     Yes – it may help prepare them to understand that homes are generally not in perfect condition

C.     Yes – because it would save the buyers from doing their own home inspection

D.    No – they may blame you if something on the list does not occur in the home they wish to purchase

98. When is the best time in the purchase process to conduct a home inspection?

A.    The last day before the inspection deadline

B.     After closing

C.     Before presenting an offer

D.    As soon as possible in case certain tests are needed, or estimates are warranted

99. What tool was recommended for buyers to help them decide if they should walk away after a home inspection?

A.    Maxi-min

B.     Mini-max

C.     Benefit-Cost Analysis

D.    Cost-Outcome Analysis

100. Would an economist count the cost of the home inspection in a Benefit-Cost Analysis?

A.    No – the seller pays for the home inspection if there are issues

B.     Yes – it is a cost

C.     No – it is a sunk cost and economists make decisions based on where the decider stands

D.    Yes – it is a benefit

101. Which of the following is a tool suggested to help keep buyers on track in a home purchase?

A.    Contactually

B.     Folio

C.     All of the answers shown were suggested

D.    REThink

102. How could buyer education continue after the closing?

A.    Call the buyer weekly for the next year

B.     Host training seminars at the buyer’s home

C.     A thoughtful and educational housewarming gift such as a book, membership in a gardening club, or educational app

D.    Continue to show the buyer properties to show how great their purchase was

103. According to Columbia University researcher, Dr. Iyengar, what can help a consumer make a purchase if there are many choices?

A.    Present all the choices at once

B.     Organize the choices into 3-5 category groups

C.     Select only two choices and tell the consumer they must choose one

D.    There is virtually nothing anyone can do to help a consumer choose

104. According to Columbia University researcher, Dr. Iyengar, when do consumers find it easier to choose an item to purchase?

A.    When there are many choices

B.     When they are able to taste their choices

C.     When choices are spread out

D.    When there are fewer choices

105. Short sales and foreclosures may work well for which buyers?

A.    Buyers with small down payments

B.     Buyers who have a home to sell

C.     Buyers who can be flexible with timelines

D.    Buyers who need seller financing

106. What does DOM stand for?

A.    Demand on Management

B.     Due of Market

C.     Does Offer Marketing

D.    Days on Market

107. When looking at Sale to List Price Ratio, what is considered a Balanced Market?

A.    A Ratio of 75%

B.     A Ratio of 50%

C.     A Ratio of 25%

D.    A Ratio of 95%

108. How is Sale to List Price Ratio calculated?

A.    Sale Price ÷ List Price

B.     List Price x Sale Price

C.     List Price ÷ Sale Price

D.    Sale Price x List Price

109. Which of the following is a guide to figure out if it is a “Sellers’ Market” or a “Buyers’ Market?”

A.    Sale to List Price Ratio

B.     Average Days on Market

C.     All of the answers shown

D.    Months of Inventory

110. When calculating the Current Month’s Inventory, what is considered a “Balanced Market?”

A.    Having 6 months of inventory on the market

B.     Having 12 months of inventory on the market

C.     Having at least 100 properties for sale in the market

D.    Having 1 month of inventory on the market

111. Which party is responsible for looking at the Registry of Sex Offenders if the buyer is concerned about it?

A.    The buyer

B.     The seller

C.     The seller’s agent

D.    The buyer’s agent

112. According to the NAR® Annual Survey, how has buyer representation changed over the years?

A.    It has steadily decreased since 1981

B.     It has remained about the same

C.     Buyer agency did not exist until 1995

D.    It has increased from 82% in 1981 to almost 90% today

113. Who has the most responsibility to perform due diligence in a real estate purchase?

A.    The seller

B.     The seller’s agent

C.     The buyer

D.    The buyer’s agent

114. Why do homebuyers value real estate agents?

A.    All of the answers listed are true

B.     To help them keep track of deadlines

C.     To act as a buffer between the buyer and seller

D.    Because the process is complicated and full of risk

115. According to the NAR® annual survey, what percent of homebuyers use a real estate agent?

A.    Almost 90%

B.     Less than 10%

C.     About 50%

D.    100%

116. Which of the following special loan programs require rigorous inspections?

A.    Conventional mortgages

B.     Seller financing

C.     Jumbo loans

D.    FHA and VA loans

117. How many loan originators should you recommend to your buyers?

A.    Offer a list of every licensed loan originator in your state

B.     None – Let the buyers find their own lenders

C.     At least 3 reputable loan originators

D.    Choose only the one best loan originator you know

118. Which of the following states have First Time Homebuyer Programs?

A.    Only Florida and Texas

B.     All the states plus the District of Columbia offer First Time Homebuyer Programs

C.     Only Colorado and Washington

D.    Only New York and California

119. Which of the following is always preferred when applying for a mortgage?

A.    A local mortgage broker

B.     A local bank

C.     There is no single preferred loan originator, it depends on the borrower’s situation

D.    A local credit union

120. Which of the following is the MOST important component of a credit score?

A.    Number of children in the household

B.     Highest level of education attained

C.     Timely payments on debt

D.    Number of credit checks

Educating Homebuyers

— Class Summary —-

Educating Buyers

Summary of Chapter 1 Terminology:

Credit report: shows all the credit accounts a person has had in their life.

Credit score: is a number that allows lenders to see if a potential borrower is a low, medium, or high risk.

Days on Market (DOM): represents the number of days a property is listed before going under contract.

Fair and Accurate Credit Transactions Act (FACT): was enacted to allow consumers to access their free credit reports, once a year, with no strings attached.

Loan officer: for a bank or credit union originates loans that are offered through their lending institution.

Mortgage broker: can shop around at many lenders to match buyers with loans that works for them.

Pre-approval: means the lender has pulled a credit report, and a loan application has been conditionally approved by a loan underwriter; this is not a guarantee for lending, but it is a step further than pre-qualification.

Pre-qualification: involves a lender looking at your qualifications (income,

assets, reported debt, etc.); it is not a commitment by the lender, and it is not as strong as pre-approval.

Chapter Review:

Your job as a real estate agent includes helping buyers get their finances in order to purchase property. Ask your buyers to use an online financial tracking service to see how much money they have left over each month. Then ask them to adjust their budgets to include their new mortgage payment, taxes, utilities, maintenance, insurance, and any association dues. Many buyers (especially first­ time homebuyers or those newly divorced) do not have a good sense of what it will cost to own a home.


Your buyers may be in a buyer’s market or seller’s market. They may have a huge down payment or just enough to qualify for a  loan.  If  your  buyer  can  provide  a letter from a lender that shows they are able to purchase the property they

want, they will have a much stronger offer. Having either a pre-qualification or pre-approval letter to submit with any offer makes the offer stronger  than a similar one without this letter. In some cases, a letter from a lender can make a lower offer more attractive than a higher offer with no pre-qualification or pre­ approval letter. Working with a good lender means that they are willing to customize a letter to match an offer price, and not reveal how much a buyer is able to pay.

Federal programs can offer all sorts of attractive mortgage loans for those who qualify. These programs change frequently, so it is important to talk to  your favorite lenders, take continuing education, and read up on this constantly changing landscape. Popular loan products include Veterans Administration (VA) loans, Federal Housing Administration (FHA) loans, and rehab loans. These loans frequently have lower requirements for the people that qualify for them.

If you have been in this business long enough, you have seen how economic cycles affect the real estate market. Your buyers may be  getting advice from their friends and family about how to navigate the market, but their experience may come from completely different market conditions. It is up  to  you  to educate your buyers about the current market in their  price range and their search area.

The process of purchasing property is complicated.  Deadlines  are strict. The whole process is full of risk. The two parties in the transaction  often need buffers so they don’t get frustrated and walk away from the  deal.  You  are  the  person that orchestrates the transaction and often keeps it from falling apart.


Educating Buyers

Summary of Chapter 2 Terminology:

Decision Tree: is a graphic tool that shows decisions and their possible consequences, this can be useful in helping buyers to visually see the potential outcomes of their decisions.

Rubric: is a guide used to rate different parts of something that is being evaluated.

SWOT analysis: is useful to help buyers identify strengths, weaknesses, opportunities, and threats in difficult negotiating situations.

Time Is of the Essence: is a phrase used in real estate contracts that means action by one party at or within the period specified in the contract is necessary to enable that party to require performance by the other party.

Chapter Review:

Searching can be difficult if there is too much inventory, not enough inventory, or if your buyers are selecting homes for the wrong reasons. Your job is to employ various strategies to help guide your clients through each of these situations. In any of these situations, a rubric can help direct your buyers to their most important housing features, so they can make decisions based on facts and not so much on emotions.

Once your buyers have found a home, the next step is to negotiate a

price. Help your buyers structure their offer based on what the sellers want. It is not always a higher price. Your buyers may be able to include terms that don’t make a difference to them and make a huge difference to the sellers.

There is an art to structuring an offer. Buyers don’t usually have the knowledge and experience to structure an offer to maximize their chances of getting the best deal on their dream home. With a few tools, we can lay out the factors that go into a strong offer. The goal is for our buyers to make an educated offer to position themselves in the best light.

A good offer includes a strategic offer price, but there is so much more. Being able to read the sellers situation, including a pre-approval letter, and including a


well-worded personal letter can add strength. Making sure the buyers know their responsibilities and minimize the disturbance on the sellers can also help.

Finally, the price is vitally important, and an educated buyer is in a better position to offer a price that will result in the best terms for them.

Setting the buyers’ expectations is one of the best services we can offer. Remember that your buyers don’t have all the information you do when it comes to knowing the market.


Educating Buyers
Summary of Chapter 3 Terminology:

Benefit-Cost Analysis: takes into consideration an estimate of the benefit of the

good in question compared with a calculation of the cost (Net Benefit= Total Benefit – Total Cost).

Contingency Clause: gives a party the chance to back out of the contract under certain circumstances that must be negotiated between the buyer and seller.

Do Not Call Registry: is a list of phone numbers that cannot be called for solicitation. Real estate agents cannot cold call people who are on the Do Not Call Registry. You also cannot call previous clients once 18 months from the conclusion of business has passed.

Due Diligence: is the time in a real estate contract when the buyer should determine if the home meets their expectations. It can include inspections and possible further negotiations.

Home Inspectors: have specific training, licensing in most states, and specialized experience. They have their own checklists and systems for inspecting common issues in homes.

Sunk Costs: are costs that have already been paid and cannot be refunded. Chapter Review:

Your buyers need to do a lot of work after they are under contract. You can help your buyers by laying out the necessary steps in a single checklist. If they know what they have to do ahead of time,  your buyers won’t be surprised.  They will   be better able to plan their time and check off the boxes on their checklist.

Other than finding a good inspector, the keys to a good home inspection are knowing the limitations of the inspector and anticipating common issues. Buyers should be told to put their polite tendencies aside and follow the inspector closely, asking questions along the way. Finally, they should have a handle on the value of the property before they obtain estimates to repair any issues, so they can do an objective benefit-cost analysis.


Whenever a property goes under contract, highlight deadlines for your client. You can help them figure out the “effective date” of the contract and therefore the due date for any activity or contingency. You can add in reminders to inquire about certain things such as appraisals and inspections. Depending on your brokerage systems, budget, and time, you can find a digital aid to help keep your buyer aware of deadlines and to-do lists.

If you made it to closing, you likely did a great deal of homebuyer education. Your usefulness does not have to end there. If you give a housewarming gift of a how-to book, a membership in an educational gardening club, certificates for cooking classes, or useful apps, you can keep the education going indefinitely.

Providing a list of reputable contractors and the Closing Disclosure can also help to educate your buyer after the transaction has closed.

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