Determine your answer, then click the arrow to see the correct response.
What Does the Term "Escalation Clause" Refer to in Real Estate Contracts?
A) A clause allowing the tenant to renew the lease
B) A clause allowing the buyer to increase their offer if another higher offer is received
C) A clause requiring the seller to repair certain defects
D) A clause that specifies a fixed price for the property
Correct Answer: B) A clause allowing the buyer to increase their offer if another higher offer is received
Explanation: An escalation clause allows the buyer to automatically increase their offer to outbid other potential buyers.
In Real Estate, What Is a "Short Sale"?
A) Selling a property quickly within a short time frame
B) Selling a property for less than the outstanding mortgage balance with lender approval
C) Selling a property without listing it on the market
D) Selling a property for more than its appraised value
Correct Answer: B) Selling a property for less than the outstanding mortgage balance with lender approval
Explanation: A short sale occurs when a property is sold for less than the amount owed on the mortgage, and the lender agrees to accept the reduced payoff.
The Term "Capitalization Rate" Is Used in Real Estate To Determine:
A) The value of a property based on its rental income
B) The interest rate on a mortgage
C) The depreciation of a property
D) The market value of a property
Correct Answer: A) The value of a property based on its rental income
Explanation: The capitalization rate (cap rate) is used to estimate the value of an income-producing property by dividing the net operating income by the property’s current market value.
What Is a "Double Net Lease"?
A) A lease where the tenant pays rent plus property taxes and insurance
B) A lease where the tenant pays rent plus all operating expenses
C) A lease where the tenant pays a fixed rent amount only
D) A lease where the tenant pays rent plus utilities only
Correct Answer: A) A lease where the tenant pays rent plus property taxes and insurance
Explanation: In a double net lease, the tenant is responsible for paying rent, property taxes, and insurance premiums.
Which of the Following Is Required for a Real Estate Salesperson License Renewal in Montana?
A) Completion of continuing education hours
B) Passing a renewal exam
C) Submitting a new background check
D) Paying a late fee
Correct Answer: A) Completion of continuing education hours
Explanation: License renewal in Montana requires completion of the mandatory continuing education hours.
Which of the Following Actions Could Result in Disciplinary Action Against a Real Estate Licensee in Montana?
A) Failing to disclose dual agency
B) Misrepresenting property information
C) Commingling client funds with personal funds
D) All of the above
Correct Answer: D) All of the above
Explanation: Failing to disclose dual agency, misrepresenting property information, and commingling client funds with personal funds are all actions that could result in disciplinary action against a real estate licensee in Montana.
In Montana, a Real Estate Licensee Must Complete a Minimum Number of Continuing Education Hours on Specific Topics. Which of the Following Topics Is Required?
A) Environmental hazards
B) Legal updates
C) Marketing strategies
D) Home staging
Correct Answer: B) Legal updates
Explanation: Continuing education in legal updates is required for Montana real estate license renewal to ensure licensees are informed about changes in laws and regulations.
A Montana Real Estate Agent Is Representing a Buyer Who Is Interested in Purchasing a Property Listed by the Same Brokerage. What Must the Agent Disclose to the Buyer?
A) The agent's commission rate
B) The potential for dual agency and obtain written consent from both the buyer and the seller
C) The seller's bottom-line price
D) The buyer's pre-approval loan amount
Correct Answer: B) The potential for dual agency and obtain written consent from both the buyer and the seller
Explanation: The agent must disclose the potential for dual agency and obtain written consent from both the buyer and the seller.
A Buyer in Montana Includes an Appraisal Contingency in Their Purchase Agreement. The Appraisal Comes in Lower Than the Purchase Price. What Options Does the Buyer Have?
A) Terminate the contract and recover the earnest money deposit
B) Negotiate a lower purchase price with the seller
C) Pay the difference between the appraised value and the purchase price
D) All of the above
Correct Answer: D) All of the above
Explanation: The buyer can terminate the contract and recover their earnest money deposit, negotiate a lower purchase price with the seller, or choose to pay the difference between the appraised value and the purchase price.
A Montana Real Estate Broker Discovers That an Agent in Their Office Has Been Improperly Handling Earnest Money Deposits. What Steps Should the Broker Take To Address the Situation?
A) Ignore the issue and hope it resolves itself
B) Report the agent to the Montana Board of Realty Regulation
C) Conduct an internal investigation and ensure all deposits are properly handled
D) Both B and C
Correct Answer: D) Both B and C
Explanation: The broker should report the agent to the Montana Board of Realty Regulation and conduct an internal investigation to ensure compliance with proper handling of earnest money deposits.