Real Estate Sales Exam Real Estate Sales Real Estate Contracts Questions and Answers 2 — Questions and Answers
Question 1: A buyer submits an offer that changes the price in the seller's original offer. Under contract law, this is considered which of the following?
- An acceptance
- A counteroffer (Correct answer)
- A novation
- An assignment
Correct answer: A counteroffer
Changing any term of the original offer creates a counteroffer, which terminates the original offer.
Question 2: Which clause in a real estate contract allows the buyer to cancel if they cannot obtain financing by a specified date?
- Acceleration clause
- Due-on-sale clause
- Financing contingency clause (Correct answer)
- Subordination clause
Correct answer: Financing contingency clause
A financing contingency clause lets the buyer exit the contract without penalty if they fail to secure a loan by the deadline.
Question 3: In a bilateral contract for the sale of real estate, which of the following best describes the obligations of the parties?
- Only the seller is bound to perform
- Only the buyer is bound to perform
- Both parties exchange binding promises to perform (Correct answer)
- A third party guarantees performance
Correct answer: Both parties exchange binding promises to perform
A bilateral contract involves mutual promises where both the buyer and seller are obligated to perform.
Question 4: When a seller accepts an offer but adds a requirement that closing must occur 10 days earlier than proposed, what has the seller created?
- A valid acceptance
- A counteroffer (Correct answer)
- A void contract
- An option agreement
Correct answer: A counteroffer
Adding or changing any term in the acceptance converts it into a counteroffer rather than an acceptance.
Question 5: A real estate purchase contract states that 'time is of the essence.' What does this phrase mean?
- The contract must be recorded immediately
- Deadlines in the contract are strictly enforceable (Correct answer)
- The property must be appraised within 24 hours
- The buyer must move in on the closing date
Correct answer: Deadlines in the contract are strictly enforceable
'Time is of the essence' means all dates and deadlines in the contract are firm and failure to meet them may constitute a breach.
Question 6: Which of the following is required for a real estate sales contract to be enforceable under the Statute of Frauds?
- Verbal agreement witnessed by two people
- A written agreement signed by the party to be charged (Correct answer)
- A notarized oral promise
- An email confirmation without signatures
Correct answer: A written agreement signed by the party to be charged
The Statute of Frauds requires real estate contracts to be in writing and signed by the party against whom enforcement is sought.
Real Estate Sales Exam Real Estate Sales Real Estate Contracts Questions and Answers 2
A buyer submits an offer that changes the price in the seller's original offer.
Under contract law, this is considered which of the following?