Real Estate Sales Exam Practice Questions 2 — Questions and Answers
Question 1: A buyer makes an offer on a home with a financing contingency. The lender denies the loan. What happens to the earnest money?
- It is forfeited to the seller
- It is returned to the buyer (Correct answer)
- It is split equally between buyer and seller
- It is held in escrow indefinitely
Correct answer: It is returned to the buyer
A valid financing contingency protects the buyer's earnest money if they cannot obtain the specified loan.
Question 2: Which type of listing agreement gives the broker the exclusive right to sell AND earn a commission regardless of who finds the buyer?
- Open listing
- Exclusive agency listing
- Exclusive right-to-sell listing (Correct answer)
- Net listing
Correct answer: Exclusive right-to-sell listing
An exclusive right-to-sell listing guarantees the broker a commission even if the seller finds the buyer independently.
Question 3: Under RESPA, a kickback arrangement between a title company and a real estate broker is:
- Permitted if disclosed to the buyer
- Legal only in commercial transactions
- Prohibited regardless of disclosure (Correct answer)
- Allowed if the fee is under $50
Correct answer: Prohibited regardless of disclosure
RESPA Section 8 prohibits kickbacks and unearned fee splitting in federally related mortgage transactions regardless of disclosure.
Question 4: A property is listed at $320,000. The seller agrees to accept $305,000. The buyer offers $298,000. At this point there is:
- A binding contract at $305,000
- A binding contract at $298,000
- No contract — the offer was rejected (Correct answer)
- A counteroffer that must be accepted within 24 hours
Correct answer: No contract — the offer was rejected
Because the buyer's offer did not match the seller's acceptable price, no contract exists and the seller is free to reject.
Question 5: The term 'procuring cause' in real estate refers to:
- The agent who lists the property
- The agent whose efforts directly resulted in the sale (Correct answer)
- The buyer's motivation to purchase
- The lender who funds the transaction
Correct answer: The agent whose efforts directly resulted in the sale
Procuring cause determines which broker is entitled to a commission by identifying whose continuous efforts led to the completed transaction.
Question 6: A seller's agent who learns that the buyer is willing to pay more than the offering price must:
- Share that information with the seller immediately (Correct answer)
- Keep it confidential from all parties
- Disclose it only if asked by the seller
- Report it to the state licensing board
Correct answer: Share that information with the seller immediately
A seller's agent has a fiduciary duty of disclosure to the seller, including material information about the buyer's motivation.
Question 7: Which document transfers title to real property from seller to buyer at closing?
- Mortgage note
- Title insurance commitment
- Deed (Correct answer)
- Purchase agreement
Correct answer: Deed
A deed is the legal instrument that conveys ownership (title) of real property from the grantor (seller) to the grantee (buyer).
Real Estate Sales Exam Practice Questions 2
A buyer makes an offer on a home with a financing contingency.
The lender denies the loan.
What happens to the earnest money?