Idaho Real Estate Broker Exam — All Questions

An Idaho home closes on September 1. The annual property tax is $2,190 and the seller has paid none of it. Prorate on a 365-day year, with the day of closing belonging to the buyer. The seller's share is:

• a.$1,095
• b.$1,458✓
• c.$1,464
• d.$732

Work the daily rate first: $2,190 divided by 365 equals $6.00 per day. Because the day of closing belongs to the buyer, the seller owns January 1 through August 31 — 31 + 28 + 31 + 30 + 31 + 30 + 31 + 31 = 243 days. At $6.00 a day that is $1,458, and it appears on the settlement statement as a debit to the seller and a credit to the buyer, because Idaho property taxes for a calendar year are not paid until December 20 and June 20 under Idaho Code 63-903. $1,464 is 244 days, the figure you get by giving the seller the day of closing, which this question assigned to the buyer. $732 is the buyer's own share — the 122 days from September 1 through December 31. $1,095 is simply half the annual tax, which would be right only for a June 30 closing. The Pearson VUE handbook states that any proration item will tell you the day-count basis and who owns the closing day, so read for both.

An Idaho property sells for $412,000. The listing agreement sets a 6% commission, split equally between the listing and cooperating brokerages. The listing brokerage pays its sales associate 60% of its own share. The associate receives:

• a.$4,944
• b.$12,360
• c.$14,832
• d.$7,416✓

Three steps, in order. Total commission: 6% of $412,000 = $24,720. The listing brokerage's half: $12,360. The associate's 60% of that half: $7,416. $12,360 stops one step early and reports the brokerage's share rather than the associate's. $4,944 applies 40% instead of 60% — the brokerage's retained portion, not the associate's. $14,832 takes 60% of the whole $24,720 and forgets the cooperating brokerage entirely. Remember that under Idaho Code 54-2054(9) the associate takes this payment only from the broker with whom the associate is licensed, never from the cooperating brokerage or the closing agent, and under 54-2046(4) no part of any commission leaves the trust account until the buyer and seller have signed the closing statements and been paid what the statement shows they are due.

An Idaho home sells for $355,000. The seller pays a 5% brokerage fee, a $1,275 title policy, $340 in recording and closing fees, and pays off a loan balance of $198,600. Ignoring prorations, the seller nets:

• a.$137,035✓
• b.$137,375
• c.$138,310
• d.$154,785

Total the seller's charges, then subtract from the price. The brokerage fee is 5% of $355,000 = $17,750. Charges are $17,750 + $1,275 + $340 + $198,600 = $217,965. $355,000 - $217,965 = $137,035. Each distractor is one omission. $137,375 leaves out the $340 in recording and closing fees. $138,310 leaves out the $1,275 title policy. $154,785 leaves out the commission altogether, which is the largest single charge after the loan payoff. In practice the responsible broker is the one accountable for this arithmetic: Idaho Code 54-2048(1) requires the broker to "ensure the correctness and delivery of detailed closing statements that accurately reflect all receipts and disbursements" to both buyer and seller, even when a title company or escrow agent performs the closing.

An Idaho parcel measures 1,320 feet by 990 feet and is listed at $457,875. Using 43,560 square feet to the acre, the listing price per acre is:

• a.$7,631.25
• b.$10,175.00
• c.$15,262.50✓
• d.$30,525.00

Area first: 1,320 x 990 = 1,306,800 square feet. Divide by 43,560 square feet per acre and the parcel is exactly 30 acres. $457,875 divided by 30 = $15,262.50 per acre. $30,525.00 is the price per acre if you used 15 acres, the error you get by halving the area or by dividing the 1,320-foot side rather than multiplying. $10,175.00 assumes 45 acres and $7,631.25 assumes 60 acres, both of which come from mis-scaling the conversion. The Pearson VUE candidate handbook tells you that 43,560 square feet per acre and 5,280 feet per mile are not supplied at the test center and must be memorized, and it instructs candidates to round calculations to the nearest whole number where applicable.

An owner-occupied Idaho home has a market value for assessment purposes of $400,000 and qualifies for the homestead exemption. The combined levy rate is 0.9%. The annual property tax is:

• a.$1,800
• b.$2,475✓
• c.$2,250
• d.$3,600

Idaho Code 63-602G(1) exempts the lesser of the first $125,000 of the homestead's market value for assessment purposes or 50% of that value. Half of $400,000 is $200,000, so the lesser figure — and the exemption actually granted — is $125,000. Taxable value is $400,000 - $125,000 = $275,000, and $275,000 x 0.009 = $2,475. $3,600 ignores the exemption and taxes the full $400,000. $1,800 applies a flat 50% exemption and forgets that the statute takes whichever figure is lesser. $2,250 uses a $150,000 exemption, a figure the section does not contain. Note the qualifying conditions in 63-602G(2)(a): the homestead must be owner-occupied and used as the owner's primary dwelling place, and under subsection (4) the owner ordinarily applies only once so long as the same owner keeps occupying the same homestead.