THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, January 21, 1995 TAG: 9501200426
SECTION: REAL ESTATE WEEKLY PAGE: 24 EDITION: FINAL
COLUMN: About the Outer Banks
SOURCE: Chris Kidder
LENGTH: Medium: 95 lines
If you're living on the Outer Banks or contemplating a move here, then you'd be in a minority if you haven't considered a career in real estate.
But working as a real estate agent requires a license and getting the license requires passing a state exam. Most applicants for a North Carolina real estate salesman license qualify for the exam by completing a pre-licensing education program.
Locally, the basic course is taught at College of the Albemarle (22 three-hour sessions over 11 weeks, $84.50 plus textbook) and through the privately-owned N.C. Academy of Real Estate (ten 4 1/2-hour sessions over 3 1/2 weeks, $275 including text).
Course content is prescribed by law and the schools approved by the North Carolina Real Estate Commission, but all education programs aren't equal.
Most private schools focus on preparing students to pass the exam. The courses are fast and, like all-night cram sessions for college finals, can sometimes be effective.
State schools like College of the Albemarle want students to pass the exam but they are also charged with providing a broader educational experience. Students at COA will learn more, although not necessarily be better equipped to pass the exam.
COA uses the new fourth edition of the state textbook ``North Carolina Real Estate for Salesmen and Brokers'' by Hetrick and Outlaw (Prentice-Hall, 1994, $38.95).
Barbara Crites, owner of N.C. Academy prefers ``Modern Real Estate Practices in North Carolina'' by Galaty, Allway and Kyle (Dearborn Financial Publishers, 1994, $38.95). ``This book is a better book for beginners,'' says Crites. ``The Outlaw book is too much like a legal textbook.''
Whichever course you take, passing the exam is no sure thing, as 32 percent of the 5,006 applicants taking the test in the 1993-94 fiscal year found out. One thing in their favor, private schools often ``guarantee'' a passing score, providing free remedial tutoring for students who fail.
Even with all that help, not to mention the time and money real estate wannabes invest, the drop-out rate (from those who start the educational process to those who actually attain a license) is over 50 percent.
Why do applicants fail the state exam? ``What causes trouble fluctuates from year to year,'' says Mel Black, education officer with the North Carolina Real Estate Commission in Raleigh. ``But math is definitely in the bottom one or two categories.''
Basic calculators can be used during the exam. The test requires only a seventh or eighth grade math education, Black says, but ``math anxiety'' coupled with remembering how to figure origination fees and discount points, prorate taxes, and pre-qualify buyers takes its toll.
Take out your pencils for an idea of how well you'd fare with the state's 110 question, four hour licensing exam in front of you:
Sam Seller agrees to sell his residence to Bob Buyer. The closing date is set for May 15. The tax rate is not available yet, so the parties have agreed to prorate based on the previous year's tax bill of $1,080. What is the correct closing statement entry based upon the 360-day ``banker's year'' method of proration?
The seller is debited $405 and the buyer gets a credit for $405.
The example raises other questions you might see on the exam.
Tax liens for the state's ad valorem property tax are effective on Jan. 1 of any given year, but when are the rates actually set and the tax bills issued?
State law requires that the rate be set no later than July 1, the mandatory beginning of county and municipal fiscal years. Tax bills are issued between July 1 and Sept. 1 and become due on Sept. 1. While legally due Sept. 1, taxes can be paid as late as the following January without interest penalties.
For the purpose of proration, does the buyer or seller own the property on the day of closing?
The seller does.
Which methods of proration may be used in North Carolina to calculate closing costs?
A. 360-day year (also called the ``Statutory Method'' or ``banker's method.'' B. 365-day year. C. Actual days in the month (also called the ``Uniform Method''). D. Any method agreed upon by the seller and buyer.
All of the above. The 365-day method is preferred because it is the most accurate.
Real estate agents are expected to know which expenses typically belong to the seller and which should be paid by the buyer.
Which party pays each of the following typical closing expenses? A. revenue stamps; B. deed recordation fee; C. property survey fee; D. title insurance premium; E. deed preparation fee; F. loan origination fee?
The seller pays A (because it's a tax on the money the seller receives) and E. The buyer pays all the rest. Note that this division of costs is tradition not law. Sellers and buyers can make whatever arrangements they want. When a lender requires a wood-destroying insect inspection and report as a condition for loan approval, who pays for it?
The buyer.
Most of the questions listed above are based on examples and self-study questions from the textbook ``North Carolina Real Estate for Salesmen and Brokers'' by Patrick Hetrick and Larry Outlaw. by CNB