The Florida Broker exam has changed significantly

07/04/2011 6:25pm
Author: admin

The Florida Broker exam has changed significantly. For many years, the broker exam consisted of a composite closing statement problem that candidates had to complete and answer five questions counting 2 points each. Beginning on July 1, 2011, the composite closing statement will no longer be tested.

The new closing statement questions consist of a case study using the HUD-1 Settlement Statement. The candidate must answer what page of the HUD-1 Settlement Statement certain items are found. The candidate must also make prorations correctly. This change was made to better reflect the function of a real estate professional. A practitioner does not prepare the closing statement, but is responsible for the review of the HUD-1 form before closing.


NEW State Broker Examination at a Glance
Effective July 1, 2011

Total test questions — 100
’ Each question worth one point
’ All test questions are multiple-choice
’ Candidates will not have to complete closing statement worksheet
’ Candidates will have to be familiar with HUD-1 settlement statement
’ Candidates will have to read cases relating to real estate transactions
’ Candidates will have to answer questions based on these cases
’ Questions related to the cases require candidates to perform basic calculations and know on which page the figures appear on HUD-1
’ Time allotted to complete the examination — 3 ½ hours
What was done to the exam:
’ Item Bank Review — Items reviewed for relevancy, accuracy, clarity & correct reference by Subject Matter Experts (SMEs)
’ Created a new classification scheme for the items
’ Reclassified all items to the new classification scheme
’ Identified areas considered most important
’ Identified areas that needed test items & wrote new items
’ Revised closing statement exercise
’ Greater emphasis on brokerage business
’ No closing statement worksheet
’ Familiarity with HUD-1 settlement statement
’ Cases relating to actual real estate transactions
’ Answer questions based on the cases
’ Points related to cases — eight (8)
’ Time allotted to complete the examination — 3 ½ hours
’ Implementation Date — July 1, 2011

Areas of Focus
Management & Supervision of Agents/Broker's liability
Florida Statute 475.25 (1) (u)
Escrow Funds 61J2-14.008 (b)
Broker held vs. attorney / title company held
Broker Price Opinion (BPO)
Real Estate Settlement Procedures Act (RESPA)“Kickbacks”
Commercial Real Estate Commission Lien Law
Familiarity with HUD-1 settlement statement
HUD-1 Settlement Statement
Students need to be familiar, particularly pages 1 & 2
Student should be able to read a case, interpret and perform basic calculations
Students should know where the figures would appear
’ Sales Price
’ Binder Deposit
’ Third Party Financing
’ Purchase Money Mortgage (Seller Financing)
’ Prorations
’ Expenses

HUD-1 Settlement Statement Important Areas & Calculations
Prorations:
Rent
Association / Maintenance Fees
Taxes
Calculation of Government Recording & Transfer Charges
Transfer Taxes
Doc tax/stamps
Intangible Tax


Areas of Emphasis on the New Exam:
(43%) Real Estate Brokerage Business
(12%) Closing Transactions
(11%) Contracts
(9%) Valuing Real Property
(6%) Listing and Selling Real Property
(5%) Federal Income Tax Laws
(4%) Financing
(4%) Investment
(3%) The Real Estate Market
(1%) Zoning and Planning
(1%) Environmental Issues
(1%) Property Management

Broker Examination Content Outline
Effective July 1, 2011

I. Real Estate Brokerage Business (43%)
A. Licensure Requirements
1. Application Process
2. Mutual Recognition
3. Experience Requirements
4. Education Requirements
5. Examination
6. Continuing Education Requirements
7. Sales Person License Requirements
8. Renewal
9. Brokerage Entities Registration vs. Licensure
10. Multiple Licenses vs. Group License
11. Change of Address
12. Exemptions
B. Brokerage Entities
1. Registered
a. Sole Proprietorship
b. General Partnership
c. Limited Partnership
d. Registered Limited Liability Partnership
e. Corporation
2. Non-Registered
3. Trade Names
4. Office Requirements
a. Principal Office
b. Branch Office
c. Entrance Signs
d. ADA
5. Advertising
a. Requirements
1. Broker/Agent
2. False/Misleading
b. Blind Ads
c. Fair Housing
d. Telephone Solicitation
e. Rental Lists
C. Brokerage Ownership, Management, and Supervision
1. Capital and Start-up Costs
2. Projecting Income and Expenses
a. Projections
b. Income Sources
c. Projecting Operating Expenses
3. Tax Considerations
a. Cash vs. Accrual Method
b. IRS Concerns Regarding Employees vs. Independent Contractors
4. Personnel Issues
a. Unlicensed Activities
b. Licensed Activities
5. Recruitment
6. Application Process
a. Forms
b. Licensure Verification
7. Employment Arrangements and Agreements
8. Compensation of Sales Associates
9. Policy and Procedures Manual
10. Broker/Sales Manager Responsibilities
a. Training and Supervision of Sales Associate
b. Sales Meetings
D. Escrow Management
1. Establishing
2. Overall Rules
3. Conversion of Funds
4. Commingling
5. Earnest Money
6. Broker Held
7. Record Keeping Requirements
8. Disputes (EDO, Arbitration, Mediation, Litigation)
9. Title Company and Attorney Held
10. Brokers Commission
a. Antitrust Laws
b. Liens
11. Property Management Deposits and Advance Rent
12. Condominiums
E. Florida Law and FREC Rules
1. Inspections
2. Office Audits
a. Records, Documentation, and Compliance
b. Escrow
3. Investigator Authorities
4. Compliance Process
a. Filing Complaint
b. Investigation
c. Probable Cause Panel
d. Formal Compliant
e. Final Order
5. Violations and Penalties
a. Grounds for Denial
b. Grounds for Suspension
c. Grounds for Revocation
d. Types of Penalties
1. Administrative
2. Civil
3. Criminal
4. Unlicensed Activity
6. Disciplinary Guidelines
7. Recovery Fund

II. Valuing Real Property (9%)
A. Appraisal
1. Appraisal vs. CMA Defined
a. USPAP
b. Basic Appraisal Concepts
2. Approaches
a. Sales Comparison
b. Cost-Depreciation
c. Income Capitalization
3. Comparative Market Analysis
a. Broker Price Opinion
4. Business Valuation

III. Listing and Selling Real Property (6%)
A. Concept of Agency
1. Broker Duties
B. Disclosure Requirements at First Contact
1. Residential Sales
2. Exemptions
C. Transaction Broker Relationship
D. Single Agent to Transaction Broker Transition
E. No Brokerage Relationship
F. Single Agent Relationship
G. Designated Salesperson
H. Terminating Broker Relationship
I. Legal — Titles, Deeds, etc.

IV. Contracts (11%)
A. Listing Agreements
B. Entitlement to Commission
1. Referral Fees
2. Commercial Lien Law
C. Purchase and Sale Contract
1. Unauthorized Practice
2. Statute of Frauds
D. Documents for Listing Contract
E. Real Estate Contracts
F. Disclosures
G. Other Contracts

V. Financing (4%)
A. Mortgage Concepts and Practices
B. Mortgage Loans
1. Conventional
2. Governmental, Insured, or Guaranteed
3. Other Mortgage Types
C. Other Techniques
D. Federal Consumer Protection Legislation
E. Broker's Role
1. Mortgage Fraud
F. Finance Math

VI. Closing Transactions (12%)
A. Broker's Role
B. Closing Steps
1. Deeds
2. Titles
C. Understanding Closing Statements
D. Prorating Procedures

VII. Federal Income Tax Laws (5%)
A. Principal Residence
B. Sale of Principal Residence
C. Investment Operations
D. Sale of Investment
E. Deferring Taxes Upon Disposition
F. Overview

VIII. Investment (4%)
A. Investment Properties and Investor Needs
B. Leases
C. Mortgages
D. Property Expenses
E. Investment Analysis
F. Investment Math

IX. Zoning and Planning (1%)
A. Zoning
B. Subdividing and Development of Land
C. Wetlands and Ecological Issues


X. Environmental Issues (1%)
A. CERCLA
B. Hazards

XI. Property Management (1%)
A. Introduction
B. Markets
C. Skills
D. Rental Process
E. Owner-Manager Relationship
F. Residential Landlord/Tenant Act
G. Federal and State Laws
XII. The Real Estate Market (3%)
A. Characteristics
B. Basic Math


2011 Broker Examination
Sample Closing Statement Case & Questions
Effective July 1, 2011

Seller has agreed to sell a duplex to Buyer for $170,000. Broker, who had listed Seller's property under an exclusive right of sale agreement, is to receive a commission of 7% of the sales price.

Broker agreed to act as escrow agent for the parties and deposit Buyer's $3,000 binder deposit in her escrow account. Closing is to occur on July 3 and the closing day belongs to the buyer. Buyer will be getting a new 80% LTV mortgage.

A hazard insurance policy was issued to Buyer with an annual premium of $800. Buyer is to pay the policy premium at closing. The taxes on the property for this year will be $3,400.
Broker examined the duplex unit leases and found that Unit A rents for $800 per month, payable in advance on the first of each month. Unit B rents for $850 per month, payable in advance on the 16th of each month. Seller had not collected any type of deposit from the tenants.

Buyer had asked for a pest inspection and for a new survey, both conducted at Seller's expense. Broker located a pest inspector who charged $150 and a surveyor who charged $500. Seller agreed to purchase a title insurance policy for the buyer at a cost of $1,500. Buyer decided to have his attorney participate in the closing at a cost to him of $750. Broker was advised that an $18.50 fee would be charged to record the deed. Seller is to pay this expense.
All prorations will be based upon a 365-day year.

SAMPLE QUESTIONS
1. How much are the government transfer taxes for Buyer and Seller and where is this information placed on the HUD-1?
A. Seller $952; Buyer $204; Page Two
B. Seller $952; Buyer $748; Page One
C. Seller $1,190; Buyer $748; Page Two
D. Seller $1,190; Buyer $748; Page One
ANSWER: C

2. How much is the Buyer's new mortgage and where is this information placed on the settlement statement?
A. $136,000 Credit to Buyer; Page One
B. $136,000 Debit to Buyer; Page Two
C. $158,100 Credit to Buyer; Page Two
D. $158,100 Credit to Seller; Page One
ANSWER: A


3. The binder deposit on the HUD-1 is
A. $11,900 Debit to Seller; Page One.
B. $11,900 Credit to Buyer; Page Two.
C. $ 3,000 Debit to Buyer; Page Two.
D. $ 3,000 Credit to Buyer; Page One.
ANSWER: D

4. Where is the sales price placed on the settlement statement?
A. Page One, Debit to Seller only
B. Page One, Credit to Seller, Debit to Buyer
C. Page One, Debit to Seller, Credit to Buyer
D. Page Two, Credit to Seller only
ANSWER: B