Valuation and Financing Practice Question
Question
A first-time buyer asks for exam-focused clarification involving loan-to-value ratio. The parties need a practical answer before moving forward. Which answer best applies the rule? (Item 48)
Answer choices
- A. It shifts all responsibility to escrow and eliminates the broker’s duties.
- B. It makes oral promises enforceable in every real estate transaction.
- C. It is optional whenever both parties verbally agree to proceed.
- D. Calculate or interpret the relationship between loan amount and property value.
Correct Answer
D. Calculate or interpret the relationship between loan amount and property value.
Explanation
The correct answer is D because loan-to-value ratio requires candidates to calculate or interpret the relationship between loan amount and property value. The other options overstate the effect of custom, oral agreement, escrow, or independent salesperson action and do not reflect safe California exam practice.
Question details
- Difficulty: medium
- Domain: Valuation and Financing
- Objective: loan-to-value ratio