Real Estate Agent License Exam — Questions and Answers

Question 1: Tenancy by the entirety is

equal or unequal undivided ownership between two or more people
ownership which requires the four unities: Interest, Possession, Time, and Title.
Ownership that's available only to married couples, tenancy by the entirety means that property may not be sold without the agreement of both parties. (Correct answer)

Correct answer: Ownership that's available only to married couples, tenancy by the entirety means that property may not be sold without the agreement of both parties.

Tenancy by the entirety is a special form of co-ownership exclusively available to married couples in some states. It is characterized by the right of survivorship, meaning the surviving spouse automatically inherits the deceased spouse's interest. Crucially, neither spouse can sell, mortgage, or otherwise encumber their interest in the property without the consent and signature of the other spouse, providing strong protection against unilateral actions.

Question 2: Exclusive agency listing is when

the agent gets paid no matter who sells the property, regardless of whether it's the agent or the seller.
agents get paid only if they sell the property. No fee is earned if the owner alone sells the property. (Correct answer)
sellers have the right to use as many brokers as they want. The seller is not, however, obligated to pay any of them if he or she sells the property without the broker's help.
the agent gets to keep everything he can get that's more than the sale price the owner wants.

Correct answer: agents get paid only if they sell the property. No fee is earned if the owner alone sells the property.

An exclusive agency listing agreement grants one broker the exclusive right to sell the property, and they earn a commission if they or any other broker finds a buyer. However, a key characteristic is that the seller retains the right to sell the property themselves without owing any commission to the listing broker. This differs from an exclusive right-to-sell listing, where the broker earns a commission regardless of who sells the property.

Question 3: You are trying to price a property. Five years ago it was sold for $145,000, but property value in this particular neighborhood have decreased by an average of 5 percent since then. What is the rough value of this property?

$72,500
$130,000
$137,750 (Correct answer)
$140,000
$145,000

Correct answer: $137,750

To find the current value, first calculate the amount of the decrease: $145,000 * 0.05 = $7,250. Then, subtract this decrease from the original value: $145,000 - $7,250 = $137,750. This calculation shows the property's value after a 5% depreciation.

Question 4: Which types of the following discrimination are prohibited by the Fair Housing Act of 1968? Please select all that apply

Number of Children (Correct answer)
Age
Religion (Correct answer)
Behavior
National Origin (Correct answer)

Correct answer: Number of Children

The Fair Housing Act of 1968, as amended, prohibits discrimination in housing based on several protected characteristics. These include race, color, religion, national origin, sex, familial status (which includes the number of children), and disability. Therefore, discrimination based on religion, national origin, and the number of children (familial status) is prohibited.

Question 5: A valid real estate contract must contain which of the following elements? Please select all that apply:

Competency (Correct answer)
Selection of a title company
An offer and an acceptance (Correct answer)
A "legal object", i.e., a property (Correct answer)
Agent's information

Correct answer: Competency

For a real estate contract to be legally valid and enforceable, it must contain several essential elements. These include competent parties (meaning they are of legal age and sound mind), a mutual agreement demonstrated by an offer and acceptance, and a legal object (the purpose of the contract must be legal, such as the sale of a property). While other factors like agent information or title company selection are relevant to a transaction, they are not fundamental requirements for the contract's validity itself.

Question 6: The total commission paid a brokerage firm was $23,000. The firm was paid 6% on the first $200,000, 4% on the next 200,000 and 2% on the remainder. What was the sale price of the property?

$400,000
$450,000
$500,000
$550,000 (Correct answer)
$600,000

Correct answer: $550,000

First, calculate commission for the first two tiers: ($200,000 * 0.06) + ($200,000 * 0.04) = $12,000 + $8,000 = $20,000. The remaining commission is $23,000 - $20,000 = $3,000. Since this remaining commission is at a 2% rate, the sale amount for that tier is $3,000 / 0.02 = $150,000. Therefore, the total sale price is $200,000 + $200,000 + $150,000 = $550,000.

Question 7: As an agent you received $1,312.50 as commission for a referral fee. The listing agent paid 25% of her commission for the referral. The total commission paid was 6%, which was split equally between the listing and selling brokerage firms. If the listing agent was paid 50% of her firm's commission, what was the sale price of the property?

$200,000
$250,000
$300,000
$350,000 (Correct answer)
$400,000

Correct answer: $350,000

Start by finding the listing agent's full commission: $1,312.50 (referral fee) / 0.25 (25%) = $5,250. This $5,250 represents 50% of the listing firm's commission, so the listing firm's total commission was $5,250 / 0.50 = $10,500. Since the total 6% commission was split equally, the total commission paid was $10,500 * 2 = $21,000. Finally, divide the total commission by the commission rate to find the sale price: $21,000 / 0.06 = $350,000.

Question 8: A mother is deeding her mortgage-free house to her son. Is the deed required to show "good consideration" to be valid in the case?

No, because the house does not have a mortgage and there is no lien holder involved.
No, because family transfers are exempt from the law.
Yes, because all deeds must show good consideration to be valid.
Yes, unless she is deeding it to him in her will. (Correct answer)

Correct answer: Yes, unless she is deeding it to him in her will.

For a deed to be valid and legally transfer property during the grantor's lifetime, it generally requires "good consideration," which can be monetary or "love and affection." While a deed between family members might state "love and affection" as consideration, some form of consideration is typically necessary to demonstrate the grantor's intent and prevent future challenges. However, if the transfer occurs through a will (devise) after death, the will itself serves as the instrument of transfer, and separate consideration is not required for the will's validity.

Question 9: Select all that apply: If a deed is valid it must be:

Signed (Correct answer)
Recorded
Identify the property and parties involved (Correct answer)
Witnessed (Correct answer)

Correct answer: Signed

For a deed to be valid and effectively transfer title, it must be signed by the grantor, clearly identify both the grantor and grantee, and accurately describe the property being conveyed. While recording a deed is crucial for providing public notice and protecting the grantee's interest, it is not a requirement for the deed's validity between the parties. Witnessing requirements vary by state, but it is often a necessary element for proper execution and recordability.

Question 10: Select all that apply: Of the many expenses involved with owning a house, which of the following are tax-deductible?

Real estate taxes (Correct answer)
Insurance
Mortgage interest (Correct answer)
General home improvement and repairs

Correct answer: Real estate taxes

Homeowners can typically deduct certain expenses from their federal income taxes. The two primary deductions are real estate taxes paid to local governments and the interest paid on their mortgage loan. General home improvements and repairs are usually not deductible in the year they are incurred, though they can add to the property's cost basis, which affects capital gains calculations upon sale. Homeowner's insurance premiums are also generally not tax-deductible.

Question 11: A lot measures 420' x 670' sold for $633,150. What was the cost per square foot?

$1.50
$1.75
$2.00
$2.25 (Correct answer)
$2.50

Correct answer: $2.25

First, calculate the total square footage of the lot: 420 feet * 670 feet = 281,400 square feet. Then, divide the total sale price by the total square footage to find the cost per square foot: $633,150 / 281,400 sq ft = $2.25 per square foot.

Question 12: A buyer purchase a home for $225,000. They have acquired a 30 year loan at 6.5% with 20 % down. How much interest will the buyers pay over the life of the loan?

$134,925.10
$186,475.50
$229,580.08 (Correct answer)
$321,125.30
$343,180.70

Correct answer: $229,580.08

First, calculate the loan amount: $225,000 (purchase price) * 0.80 (80% down) = $180,000. Using a loan amortization calculator or formula for a 30-year (360 months) loan at 6.5% interest, the monthly payment is approximately $1,137.72. The total payments over the life of the loan would be $1,137.72 * 360 months = $409,579.20. Finally, subtract the principal loan amount from the total payments to find the total interest paid: $409,579.20 - $180,000 = $229,579.20 (closest to $229,580.08).

Question 13: A person died testate. After an extensive search, no additional heirs found. The person's real property would transfer by

descent and distribution.
escheat to the state.
devise. (Correct answer)
demise.

Correct answer: devise.

When a person dies "testate," it means they left a valid will. The transfer of real property through a will is known as a "devise." Even if no additional heirs are found, the will dictates how the property is distributed to the named beneficiaries (devisees). Escheat to the state occurs only if a person dies intestate and without any legal heirs.

Question 14: The zoning laws in your town require an apartment building to provide two an a half parking spaces for every 1,000 square feet of inhabited space.A local apartment building has 40,000 square feet of apartments. How many parking spaces should it have?

40
80
100 (Correct answer)
120

Correct answer: 100

To determine the required number of parking spaces, divide the total inhabited space by 1,000 square feet to find the number of units of space: 40,000 sq ft / 1,000 sq ft = 40 units. Then, multiply this by the required parking spaces per unit: 40 units * 2.5 spaces/unit = 100 parking spaces. This calculation ensures compliance with the zoning regulations.

Question 15: The presence of lead paint in a home must only be disclosed if the home is being purchased using an FHA loan.

True
False (Correct answer)

Correct answer: False

Lead paint in a home must always be disclosed.

Question 16: How much time must the parties to a real estate closing be given to review the HUD statement?

3 hours
12 hours
24 hours (Correct answer)
3 days
1 week

Correct answer: 24 hours

The Real Estate Settlement Procedures Act (RESPA) requires lenders to provide borrowers with a Closing Disclosure, which details all closing costs, at least three business days before the closing date. While the HUD-1 statement is an older term, the question refers to the final settlement statement. Historically, and as a common practice for reviewing final figures, parties were often given 24 hours to review the HUD statement before closing, making this the most appropriate answer among the choices provided for a pre-closing review of the settlement figures.

Question 17: Your client buys a house for $195,000. The contract calls for you to equally share a 6% commission with the seller's broker.What is your portion of the commission?

$4,750
$5,850 (Correct answer)
$6,200
$11,700

Correct answer: $5,850

First, calculate the total commission by multiplying the house price by the commission rate: $195,000 * 0.06 = $11,700. The contract states that this 6% commission is to be equally shared with the seller's broker. Therefore, your portion of the commission is half of the total commission: $11,700 / 2 = $5,850.

Question 18: Select all that apply: A transaction broker is known as a/an

intermediary (Correct answer)
fiduciary
nonagent (Correct answer)
facilitator (Correct answer)
agent

Correct answer: intermediary

A transaction broker acts as a neutral third party, assisting both the buyer and seller in a real estate transaction without representing either party exclusively. This role is often referred to as an intermediary or a facilitator. Because a transaction broker does not owe fiduciary duties (like loyalty or confidentiality) to either party, they are considered a non-agent, distinguishing them from traditional agents who represent one party.

Question 19: You referred a client to a lender. In return they sent you note with a $50 gift card to a local restaurant. Which law makes this kickback illegal?

ECOA
Fair Housing Act of 1968
CRA
RESPA (Correct answer)
Regulation Z

Correct answer: RESPA

The Real Estate Settlement Procedures Act (RESPA) prohibits kickbacks from service providers.

Question 20: John and Leslie are business partners and they decided to list their apartment complex for sale. John met with Susan, an agent, and told him that he and his partner would give her the listing. John met with Susan on Monday afternoon and signed the listing agreement. Leslie was, scheduled to meet with Susan on Tuesday morning but was called into a emergency meeting in another state. Leslie decide to send her friend, Daniella to meet with Susan instead. Daniella signed the listing agreement for Leslie.Susan had no idea that Daniella was not an owner of the property. The status of the listing agreement is:

valid
void. (Correct answer)
unenforceable
voidable

Correct answer: void.

The listing must be signed by the parties who have the authority to sell.

Question 21: Adverse possession is:

the sudden loss of land by an act of nature like a landslide.
a legal proceeding to divide property owned by two or more people.
giving up property voluntarily to the governmen
When someone uses your property for a period of time and you lose the property or have your rights to the property restricted. (Correct answer)

Correct answer: When someone uses your property for a period of time and you lose the property or have your rights to the property restricted.

Adverse possession is a legal doctrine that allows a person to acquire ownership of land by openly, continuously, exclusively, actually, and notoriously occupying it for a statutory period, even if they do not have legal title. Essentially, if a property owner fails to remove a trespasser or assert their rights for a specified duration, they may lose their property or have their rights restricted to the person who has been using it adversely.

Question 22: Fiduciary Duties of a Real Estate Agent include:

Confidentiality
Accounting
Loyalty
All of the above (Correct answer)
None of the above

Correct answer: All of the above

Real estate agents owe their clients several fiduciary duties, which are legal obligations to act in the client's best interest. These duties commonly include Loyalty (acting solely in the client's best interest), Confidentiality (protecting client information), and Accounting (properly handling funds and documents). Other fiduciary duties typically include Obedience, Disclosure, and Reasonable Care, making 'All of the above' the correct choice.

Question 23: When Leonard bought his property he had a 20% down payment and secured a 30 year loan at 7% interest. If his first month's interest was $1,120.00, how much did he pay for the property?

$190,000
$210,000
$240,000 (Correct answer)
$260,000
$290,000

Correct answer: $240,000

$1,120 x 12 = $13,440. $13,440 ÷ 7% = $192,000. $192,000 ÷ 80% = $240,000

Question 24: Amy, Betty and Charlie are siblings and own a property as joint tenants. Charlie decide to sell his share to Larry for a reduced amount. Upon closing, Larry is a

tenant in common with Amy and Betty. (Correct answer)
tenant by the entirety with Amy and Betty.
joint tenant with Amy and Betty.
tenant at will with Amy and Betty.

Correct answer: tenant in common with Amy and Betty.

Joint tenancy requires the unities of time, title, interest and possession. When Jayne sells her property to Maggie, the unity of time and title is breached. Agnes and Zelma are still joint tenants, but Maggie would be a tenant in common with them.

Real Estate Agent License Exam

Tenancy by the entirety is