RE Salesperson Practice Exam.
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1. A student scored 68 percent on a full-length practice licensing exam that included the Contracts section. Relative to the commonly required passing standard, how did the student perform?
- A. The student passed, exceeding the required standard
- B. The student exactly met the required standard
- C. The student fell short of the required standard
- D. The result cannot be compared to any standard
Show answer & explanation
Answer: C
Because a passing score of 70% is commonly required, a score of 68% is below that threshold and therefore falls short. Comparing the reported score to the required percentage is straightforward reasoning over the passing standard.2. A candidate has registered for the exam and paid the testing fee but has not yet finished any coursework. Under the stated prerequisites, is the candidate eligible to take the exam covering Contracts?
- A. Yes, registration alone establishes eligibility
- B. Yes, provided the fee is paid
- C. No, the required pre-licensing education hours must be completed first
- D. No, but only because the Contracts section requires separate coursework
Show answer & explanation
Answer: C
Completion of pre-licensing education hours is required prior to sitting. Since the candidate has not finished that coursework, the eligibility condition is unmet, so the candidate cannot yet take the exam. Choice D misstates the reason by inventing a section-specific rule.3. A tutoring service advertises that its Contracts review will help students 'reach the score you need to pass.' A student asks what that target score is. Which response reflects the commonly required standard?
- A. Any score above zero passes
- B. 70 percent is commonly the required passing score
- C. 50 percent is sufficient for the Contracts section
- D. There is no defined passing score
Show answer & explanation
Answer: B
The commonly required passing score is 70%. The Contracts section is part of the exam to which that overall standard applies, so 70% is the appropriate target to cite.4. An applicant asks which of the following is a stated condition that must be satisfied before being allowed to sit for the exam covering Contracts. Which option is correct?
- A. Achieving a passing score before registering
- B. Completing the required pre-licensing education hours
- C. Holding a prior license in another profession
- D. Waiting a fixed number of years after registration
Show answer & explanation
Answer: B
Completion of pre-licensing education hours is required prior to sitting for the exam. The other options are not stated conditions; in particular, a passing score is an outcome of the exam, not a prerequisite to sitting for it.5. An examinee sitting for the real estate salesperson licensing exam answers 68% of the scored items correctly. Based on the commonly required passing standard, what is the most likely result?
- A. The examinee passes, because any score above 50% is a pass
- B. The examinee fails, because the commonly required passing score is 70%
- C. The examinee passes, because financing questions are weighted separately
- D. The result cannot be determined without knowing the raw item count
Show answer & explanation
Answer: B
A passing score of 70% is commonly required, so a 68% result falls below that threshold and would not pass.6. A candidate scores 72% overall on the salesperson exam, which includes financing content. Relative to the commonly required passing standard, how does this score compare?
- A. It is below the standard
- B. It exactly equals the standard
- C. It is above the standard
- D. It cannot be compared to the standard
Show answer & explanation
Answer: C
The commonly required passing score is 70%. A 72% result exceeds 70%, so it is above the standard.7. Which single value best represents the commonly required passing score for a real estate salesperson licensing exam?
- A. 60 percent
- B. 65 percent
- C. 70 percent
- D. 75 percent
Show answer & explanation
Answer: C
The commonly required passing score is 70 percent. The remaining choices are plausible-looking distractors not supported by the stated fact.8. Before a candidate may sit for the licensing exam that covers Contracts, which of the following must be completed?
- A. A post-license apprenticeship
- B. The required pre-licensing education hours
- C. A background-only clearance with no coursework
- D. A continuing-education renewal course
Show answer & explanation
Answer: B
Completion of pre-licensing education hours is required prior to sitting for the exam. This prerequisite must be satisfied regardless of which content area, including Contracts, is being tested.9. Which ordering of steps is consistent with the stated licensing requirements?
- A. Sit for the exam first, then complete pre-licensing education hours
- B. Complete pre-licensing education hours, then sit for the exam
- C. Sit for the exam and complete education hours simultaneously, in any order
- D. Complete continuing education, then complete pre-licensing hours
Show answer & explanation
Answer: B
The stated requirement is completion of pre-licensing education hours prior to sitting for the exam, so education comes before the exam. The other orderings conflict with that sequence.10. An applicant asks whether education can be deferred until after passing the salesperson exam. Based only on the stated facts, what is the correct response?
- A. Yes, education may be completed any time after the exam
- B. No, pre-licensing education hours must be completed before sitting for the exam
- C. Education is optional if the candidate scores above 70%
- D. Education is only required for broker candidates, not salespersons
Show answer & explanation
Answer: B
Completion of pre-licensing education hours is required prior to sitting for the exam, so it cannot be deferred until afterward. Options C and D introduce conditions not supported by the facts.11. Which statement most accurately describes the relationship between the pre-licensing education requirement and the passing-score requirement for the Contracts exam?
- A. Completing the education hours automatically satisfies the passing score
- B. They are separate requirements: education must be completed before sitting, and a 70% score is commonly needed to pass
- C. The passing score replaces the education requirement
- D. Neither requirement applies to the Contracts section
Show answer & explanation
Answer: B
The two requirements are distinct. Pre-licensing education hours must be completed before sitting, and a passing score of 70% is commonly required to pass. One does not substitute for the other, and both relate to the exam that includes Contracts.12. On a 100-item licensing exam that includes Contracts questions, a candidate answers 70 items correctly. Assuming each item is weighted equally, how does this outcome compare to the commonly required passing standard?
- A. It is below the required standard
- B. It exactly meets the required standard
- C. It is far above the required standard by a wide margin
- D. It cannot be evaluated against any standard
Show answer & explanation
Answer: B
With equally weighted items, 70 correct out of 100 equals 70%. Because a passing score of 70% is commonly required, the outcome exactly meets that standard. This is arithmetic reasoning over the stated passing percentage.13. Two candidates are comparing plans. Candidate X intends to complete the pre-licensing coursework, then schedule the exam. Candidate Y intends to schedule and take the exam first, then complete coursework afterward. Whose plan is consistent with the stated prerequisite for sitting?
- A. Only Candidate X's plan
- B. Only Candidate Y's plan
- C. Both plans are consistent
- D. Neither plan is consistent
Show answer & explanation
Answer: A
Because completion of pre-licensing education hours is required prior to sitting, only the plan that finishes coursework before the exam (Candidate X) is consistent with the prerequisite. Candidate Y reverses the required order.14. A candidate scored 72 percent overall on the licensing exam, which included the Contracts content area. With respect to the commonly required passing standard, what is the correct conclusion?
- A. The candidate failed, being below the required standard
- B. The candidate met or exceeded the required standard
- C. The score is irrelevant to passing
- D. The candidate must retake only the Contracts section
Show answer & explanation
Answer: B
A passing score of 70% is commonly required, and 72% is greater than 70%, so the candidate met or exceeded the standard. This follows directly from comparing the reported score to the required percentage.15. A student preparing for the financing portion of the salesperson exam wants to know what must be finished before they are permitted to sit for the examination. Which requirement applies?
- A. Completion of pre-licensing education is required prior to sitting for the exam
- B. A minimum of two years of mortgage lending employment
- C. Passing a separate financing-only pre-test
- D. Nothing is required before sitting for the exam
Show answer & explanation
Answer: A
Completion of pre-licensing education hours prior to sitting for the exam is a required condition, so that requirement must be satisfied first.16. A prospective licensee skipped their coursework and tried to register directly for the exam covering financing and other topics. Why would the registration be rejected?
- A. Financing questions are only released to enrolled students
- B. Pre-licensing education must be completed before sitting for the exam
- C. The exam is offered only once per year
- D. A financing internship is mandatory
Show answer & explanation
Answer: B
Because completion of pre-licensing education hours prior to sitting for the exam is required, a candidate who skipped that coursework has not met the precondition to register.17. On a scored financing exam, a candidate needs to reach the commonly required passing percentage. Which of the following correctly states that percentage?
- A. 60 percent
- B. 65 percent
- C. 70 percent
- D. 75 percent
Show answer & explanation
Answer: C
The commonly required passing score is 70 percent.18. A candidate misses the commonly required passing score on the financing exam by a small margin and asks whether pre-licensing coursework can now be substituted for the shortfall in points. What is the correct response?
- A. Yes, coursework hours can be converted into exam points
- B. No; pre-licensing education is a separate precondition and does not offset a score below 70%
- C. Yes, but only for the financing section
- D. No, because no passing score is required at all
Show answer & explanation
Answer: B
Pre-licensing education completion is a precondition to sitting for the exam, and the commonly required passing score is 70%. These are distinct requirements, so coursework does not offset a score below the passing threshold.19. On the licensing examination, a candidate's raw score converts to a percentage. According to the referenced standard, what is the minimum percentage a candidate must achieve to pass?
- A. 60 percent
- B. 65 percent
- C. 70 percent
- D. 75 percent
Show answer & explanation
Answer: C
The referenced standard notes that a passing score of 70% is commonly required, so a candidate must reach at least 70 percent to pass.20. A candidate answers 68 percent of the items correctly. Based on the referenced passing standard, what is the result?
- A. The candidate passes, because 68 percent exceeds the threshold
- B. The candidate fails, because the score is below the required 70 percent
- C. The candidate is granted a conditional pass
- D. The candidate must retake only the missed items
Show answer & explanation
Answer: B
Because the commonly required passing score is 70%, a score of 68 percent falls below the threshold and the candidate does not pass.21. Which of the following best describes the passing standard referenced for the salesperson examination?
- A. A fixed number of correct answers regardless of exam length
- B. A percentage-based threshold commonly set at 70%
- C. A percentile ranking against other candidates
- D. A pass/fail determination made by the proctor
Show answer & explanation
Answer: B
The referenced standard describes a percentage-based passing score that is commonly set at 70%, rather than a percentile ranking or a fixed count.22. When must a candidate complete the required pre-licensing education relative to the examination?
- A. Within thirty days after passing
- B. Prior to sitting for the examination
- C. At any point before the first license renewal
- D. Only if the candidate fails on the first attempt
Show answer & explanation
Answer: B
The referenced requirement specifies that pre-licensing education hours must be completed prior to sitting for the examination.23. Which pair correctly identifies two prerequisites addressed by the referenced standards for a salesperson candidate?
- A. A minimum passing score and completion of pre-licensing education
- B. A minimum age and a residency period
- C. A surety bond and continuing education
- D. A criminal expungement and an apprenticeship
Show answer & explanation
Answer: A
The referenced standards address a minimum passing score (commonly 70%) and completion of pre-licensing education prior to sitting; the other pairs are not supported.24. The referenced passing standard is expressed as a percentage rather than an absolute number of questions. What is the primary advantage of expressing the requirement this way?
- A. It guarantees every candidate answers the same questions
- B. It applies a consistent proportional standard regardless of the total number of items
- C. It eliminates the need for pre-licensing education
- D. It ranks candidates against one another
Show answer & explanation
Answer: B
Expressing the requirement as 70% applies a consistent proportional standard that scales with the total number of items, rather than fixing an absolute count; this is reasoning over the stated percentage-based standard.25. On a real estate salesperson licensing exam, a candidate answers 68% of the scored items correctly. Based only on the commonly required threshold, what is the most likely result?
- A. The candidate passes, because any score above 50% is sufficient
- B. The candidate fails, because the commonly required passing score is 70%
- C. The candidate's result is deferred pending a manual review
- D. The candidate automatically qualifies for a license without further steps
Show answer & explanation
Answer: B
A passing score of 70% is commonly required, so a 68% result falls below that threshold and would not pass. The other options invent thresholds or procedures not supported by the stated fact.26. A prospective licensee wants to sit for the salesperson exam. According to the commonly required expectation, what must be completed BEFORE the exam?
- A. A post-licensing continuing education course
- B. Pre-licensing education hours
- C. A probationary period as an unlicensed assistant
- D. A signed offer of employment from a broker
Show answer & explanation
Answer: B
Completion of pre-licensing education hours prior to sitting for the exam is required. The other options describe requirements not stated in the source facts.27. Two candidates report their exam results: one scored exactly 70% and the other scored 69%. Using only the commonly required passing score, which statement is best supported?
- A. Both candidates pass
- B. Neither candidate passes
- C. The 70% candidate meets the threshold while the 69% candidate does not
- D. The 69% candidate passes because scores round up
Show answer & explanation
Answer: C
The commonly required passing score is 70%. A score of exactly 70% meets that threshold, while 69% falls below it. Rounding rules are not supported by the stated fact.28. A study guide claims a candidate may register for the salesperson exam with no coursework whatsoever. Which fact most directly contradicts that claim?
- A. A passing score is commonly required
- B. Pre-licensing education hours must be completed before sitting for the exam
- C. Exams are administered on a fixed annual schedule
- D. Candidates must hold a bachelor's degree
Show answer & explanation
Answer: B
Because completion of pre-licensing education hours is required prior to sitting for the exam, the claim of "no coursework" is contradicted. Options C and D introduce requirements not present in the facts.29. A candidate completed the required pre-licensing education hours and then scored 72% on the salesperson exam. Based only on the stated facts, which conclusion is best supported?
- A. The candidate has satisfied both the education prerequisite and the passing-score threshold
- B. The candidate failed because 72% is below the required score
- C. The candidate must retake the pre-licensing education before results are valid
- D. The candidate's education hours do not count toward exam eligibility
Show answer & explanation
Answer: A
Pre-licensing education hours are required before sitting, and 72% meets or exceeds the commonly required 70% passing score, so both conditions are satisfied. The other options contradict the stated facts.30. A candidate scored 70% on the salesperson exam. Relative to the commonly required threshold, this score is best described as:
- A. Below the passing threshold
- B. Exactly at the passing threshold
- C. Well above the passing threshold
- D. Undeterminable from any stated standard
Show answer & explanation
Answer: B
Since the commonly required passing score is 70%, a 70% result sits exactly at the threshold. The other descriptions misstate the relationship to the stated standard.31. A candidate preparing for the Contracts portion of a real estate sales licensing exam wants to know the minimum overall score generally needed to pass. Based on the commonly required standard, what is that passing score?
- A. 60 percent
- B. 65 percent
- C. 70 percent
- D. 75 percent
Show answer & explanation
Answer: C
A passing score of 70% is commonly required on the exam. This threshold applies to the overall assessment, which includes the Contracts content area.32. A study advisor tells a financing-track student that finishing the required education is a precondition, not just a recommendation, for the exam. Which statement supports the advisor's point?
- A. Pre-licensing education is optional but encouraged
- B. Pre-licensing education hours must be completed prior to sitting for the exam
- C. Pre-licensing education can be completed after passing
- D. Pre-licensing education applies only to broker candidates
Show answer & explanation
Answer: B
The requirement is completion of pre-licensing education hours prior to sitting for the exam, which supports treating it as a precondition rather than optional.33. To be considered eligible to earn a passing result on the financing-inclusive salesperson exam, a candidate must satisfy which combination of conditions?
- A. Complete pre-licensing education beforehand and reach the commonly required 70% passing score
- B. Only reach a 70% score; no education is required
- C. Only complete education; no minimum score applies
- D. Neither education nor a minimum score is required
Show answer & explanation
Answer: A
Two grounded conditions apply: pre-licensing education hours must be completed prior to sitting, and the commonly required passing score is 70%. Both together describe eligibility to pass.34. A test-prep platform summarizes the salesperson exam rules for its financing module. Which pair of statements is fully supported?
- A. Passing requires 70%, and pre-licensing education must be completed before sitting
- B. Passing requires 80%, and no education is needed
- C. Passing requires 70%, and education may be completed afterward
- D. Passing requires 50%, and pre-licensing education is optional
Show answer & explanation
Answer: A
The commonly required passing score is 70%, and completion of pre-licensing education hours prior to sitting for the exam is required. Choice A states both correctly.35. Before a candidate is permitted to sit for the salesperson examination, what does the referenced requirement state must be completed?
- A. A background interview with the licensing board
- B. Pre-licensing education hours
- C. A probationary period as an assistant
- D. Payment of the first-year renewal fee
Show answer & explanation
Answer: B
The referenced requirement states that completion of pre-licensing education hours is required prior to sitting for the examination.36. A candidate registers for the examination but has not yet completed the required pre-licensing coursework. Based on the referenced requirement, what is the proper outcome?
- A. The candidate may sit and complete the coursework afterward
- B. The candidate is not eligible to sit until the pre-licensing education is completed
- C. The candidate may sit if a fee waiver is granted
- D. The candidate may sit but receives a reduced passing threshold
Show answer & explanation
Answer: B
Because completion of pre-licensing education hours is required prior to sitting, a candidate who has not finished the coursework is not yet eligible to take the exam.37. A candidate has completed all required pre-licensing education hours and scores 72 percent on the examination. Based on the referenced standards, what is the outcome?
- A. The candidate fails, because 72 percent is below the required score
- B. The candidate passes, having met both the education prerequisite and the passing score
- C. The candidate must retake the exam to confirm the score
- D. The candidate is ineligible because education must follow the exam
Show answer & explanation
Answer: B
The candidate satisfied the pre-licensing education prerequisite and scored 72 percent, which meets the commonly required 70% passing threshold, so the candidate passes.38. A candidate completes the required pre-licensing education but scores 69 percent on the examination. Based on the referenced standards, what is the result?
- A. The candidate passes, because the education requirement was met
- B. The candidate fails, because the score is below the required passing threshold
- C. The candidate passes, because 69 rounds up to 70
- D. The candidate receives a provisional license pending a retest
Show answer & explanation
Answer: B
Even though the education prerequisite was satisfied, a score of 69 percent is below the commonly required 70% passing threshold, so the candidate does not pass.39. A seller receives a written offer on her condominium. She signs it after crossing out the proposed closing date and writing in a date two weeks later. What is the legal effect of the seller's response?
- A. It is an acceptance, because the change is minor
- B. It is a counteroffer that rejects and terminates the original offer
- C. It is an acceptance conditioned on the buyer's silence
- D. It keeps the original offer open while the buyer considers the new date
Show answer & explanation
Answer: B
Any change to the terms of an offer — even a seemingly small one like moving the closing date — is a counteroffer. A counteroffer rejects and terminates the original offer, so no acceptance has occurred and the original offer is no longer available.40. Which type of deed gives the grantee the GREATEST protection against title defects?
- A. Quitclaim deed
- B. Special warranty deed
- C. General warranty deed
- D. Any deed, as long as it is recorded
Show answer & explanation
Answer: C
A general warranty deed offers the greatest protection because the grantor warrants against all title defects arising at any time, even before the grantor owned the property. A special warranty deed covers only the grantor's ownership period, and a quitclaim deed carries no warranties at all. Recording provides notice and priority but does not add warranties to a deed.41. After a divorce, an ex-spouse who may or may not hold a leftover interest in the family home agrees to sign over whatever interest he has so the title record is clean. Which deed is customarily used for this purpose?
- A. General warranty deed
- B. Special warranty deed
- C. Quitclaim deed
- D. A deed with covenants of seisin and quiet enjoyment
Show answer & explanation
Answer: C
A quitclaim deed conveys only whatever interest the grantor may have, with no warranties, and is commonly used to clear clouds on title — such as a possible lingering interest of an ex-spouse. Warranty deeds would obligate the grantor to defend the title, which is unnecessary and unwanted when the goal is simply to release a possible interest.42. What is the primary legal effect of recording a deed in the county land records?
- A. It converts a quitclaim deed into a warranty deed
- B. It gives constructive notice to the world of the grantee's interest and establishes priority
- C. It guarantees the title is free of all defects
- D. It substitutes for delivery and acceptance of the deed
Show answer & explanation
Answer: B
Recording a deed provides constructive notice to the world of the grantee's interest and establishes priority, generally protecting the first party to record. Recording does not change the type of deed, does not guarantee the title is defect-free, and does not replace the requirement that a deed be delivered to and accepted by the grantee.43. A seller wants a single brokerage to handle her sale but insists on paying nothing if she personally finds the buyer herself. Which listing arrangement matches her goals?
- A. Exclusive-right-to-sell listing
- B. Exclusive-agency listing
- C. Net listing
- D. Buyer-agency agreement
Show answer & explanation
Answer: B
Under an exclusive-agency listing, one broker represents the seller, but no commission is owed if the seller personally finds the buyer. An exclusive-right-to-sell listing would obligate her to pay the broker even on a sale she procured herself.44. Title that is free from reasonable doubt or serious defects, such that a prudent buyer would accept it, is called:
- A. Marketable title
- B. Constructive title
- C. Warranted title
- D. Insured title
Show answer & explanation
Answer: A
Marketable title is defined as title free from reasonable doubt or serious defects that a prudent buyer would accept. The other options are distractors: constructive notice describes the effect of recording, warranties come from the type of deed used, and insurance is a separate protection against covered defects.45. A buyer finances a home in a lien-theory state. While the mortgage loan is outstanding, who holds title to the property?
- A. The lender, until the debt is fully repaid
- B. A trustee, on behalf of the lender
- C. The borrower, with the lender holding a lien on the property
- D. The county, until the deed is recorded
Show answer & explanation
Answer: C
In lien-theory states the borrower retains title and the lender holds a lien; it is in title-theory states that legal title is held by the lender or a trustee until the debt is repaid. The county never takes title through recording — recording simply gives constructive notice and establishes priority.46. A grantor conveys the same parcel twice, first to Buyer X and later to Buyer Y. Buyer Y promptly records her deed; Buyer X never records. Under a recording system that protects the first party to record, whose interest is generally protected against later claims?
- A. Buyer X, because she received her deed first
- B. Buyer Y, because recording gave constructive notice and established her priority
- C. Neither buyer, because a double conveyance voids both deeds
- D. The grantor, because unrecorded deeds return title to the grantor
Show answer & explanation
Answer: B
Recording provides constructive notice to the world of the grantee's interest and establishes priority, generally protecting the first party to record. Because Buyer Y recorded and Buyer X did not, Buyer Y's recorded interest is the one the system generally protects. Merely receiving a deed earlier does not establish recording priority, and there is no rule that a double conveyance voids both deeds or returns title to the grantor.47. A buyer and a seller verbally agree on all terms for the purchase of a single-family home, shake hands, and part ways without signing anything. Which requirement for an enforceable real estate purchase contract has NOT been satisfied?
- A. Mutual assent between the parties
- B. A lawful object for the agreement
- C. A written and signed agreement as required by the Statute of Frauds
- D. Consideration exchanged between the parties
Show answer & explanation
Answer: C
A valid real estate contract requires competent parties, mutual assent, consideration, a lawful object, and — because real estate is involved — a written and signed agreement under the Statute of Frauds. The parties here reached mutual assent on lawful terms with consideration, but the oral agreement fails the writing requirement, so it is not enforceable.48. A buyer signs a promissory note to borrow money for a home purchase. Which instrument pledges the property itself as security for repayment of that note?
- A. A listing agreement
- B. A mortgage or deed of trust
- C. A quitclaim deed
- D. A title insurance policy
Show answer & explanation
Answer: B
Most real estate purchases are financed through a mortgage or deed of trust, which pledges the property as security for repayment of the promissory note. A listing agreement is an employment contract with a broker, a quitclaim deed conveys an interest in title, and title insurance protects against covered title defects — none of these secures the debt.49. In a state that follows lien theory, who holds legal title to mortgaged property while the loan is being repaid?
- A. The lender, until the final payment is made
- B. A neutral trustee named in the security instrument
- C. The borrower, with the lender holding a lien against the property
- D. The county recorder, as custodian of the land records
Show answer & explanation
Answer: C
In lien-theory states the borrower retains title and the lender merely holds a lien. It is in title-theory states that legal title is held by the lender or a trustee until the debt is repaid, which makes choices A and B descriptions of title theory, not lien theory.50. Which statement correctly distinguishes the major loan categories?
- A. Conventional loans are insured by the Federal Housing Administration
- B. FHA loans are guaranteed by the Department of Veterans Affairs
- C. VA loans are guaranteed by the Department of Veterans Affairs for eligible veterans
- D. VA loans are available to any borrower who pays an insurance premium
Show answer & explanation
Answer: C
A VA loan is guaranteed by the Department of Veterans Affairs for eligible veterans. A conventional loan is not insured or guaranteed by the federal government, and it is the FHA loan — not the conventional loan — that is insured by the Federal Housing Administration, so the other choices scramble these roles.51. A buyer obtaining a conventional loan wants to avoid paying private mortgage insurance. Under the general rule, what must the buyer do?
- A. Make a down payment of at least 20 percent of the purchase price
- B. Choose an adjustable-rate mortgage instead of a fixed-rate mortgage
- C. Have the loan insured by the Federal Housing Administration
- D. Record the mortgage before any other liens are recorded
Show answer & explanation
Answer: A
Private mortgage insurance is generally required on conventional loans when the down payment is less than 20 percent of the purchase price, so putting at least 20 percent down avoids the requirement. The rate structure of the loan and the timing of recording do not control PMI, and FHA insurance applies to FHA loans, not conventional ones.52. Three years into a 30-year amortized loan, a borrower is surprised that the loan balance has barely dropped even though every scheduled payment has been made. What best explains this?
- A. Early payments in an amortized loan are applied mostly to interest, with later payments applied mostly to principal
- B. The lender is required to hold all early payments in a trust account
- C. Amortized loans apply payments to principal first and interest last
- D. The rate must have adjusted upward based on an index plus a margin
Show answer & explanation
Answer: A
Amortization repays principal and interest through scheduled payments, with early payments applied mostly to interest and later payments mostly to principal — so the balance declines slowly at first. Choice C reverses the order, and nothing in the scenario indicates a rate adjustment or a trust-account arrangement.53. At closing, a borrower agrees to pay discount points to the lender. What is the borrower buying, and how is one point measured?
- A. Prepaid interest that lowers the note rate; one point equals one percent of the loan amount
- B. Title protection; one point equals one percent of the purchase price
- C. Mortgage insurance; one point equals one percent of the appraised value
- D. A refundable good-faith deposit; one point equals one percent of the down payment
Show answer & explanation
Answer: A
Discount points are prepaid interest paid at closing to lower the note rate, and one point equals one percent of the loan amount — not of the purchase price, appraised value, or down payment. Points are not title insurance, mortgage insurance, or a deposit.54. A buyer purchases a property for 300,000 dollars, which is also its appraised value, using a 240,000 dollar loan. What is the loan-to-value ratio?
- A. 60 percent
- B. 70 percent
- C. 80 percent
- D. 90 percent
Show answer & explanation
Answer: C
LTV is the loan amount divided by the lesser of the appraised value or purchase price. A 240,000 dollar loan on a 300,000 dollar property is an 80 percent LTV, with the down payment making up the remaining 20 percent.55. A salesperson is asked to represent both the buyer and the seller in the same transaction. Under what condition may the salesperson lawfully act as a dual agent?
- A. Only if the broker verbally notifies both parties before closing
- B. Only with the informed written consent of both parties
- C. Only if the salesperson advocates equally hard for each side
- D. Dual agency is never lawful under any circumstances
Show answer & explanation
Answer: B
Dual agency is legal only with the informed written consent of both parties. Even then, the dual agent cannot advocate for one party against the other, which is why choice C is wrong — the dual agent must remain neutral, not advocate for both sides.56. Three months after a listing agreement expired unsold, the former listing agent is chatting with a prospective buyer of the same property, now listed with another brokerage. The buyer asks what the seller's bottom-line price was. The agent should refuse because:
- A. The duty of confidentiality survives termination of the agency relationship
- B. The duty of obedience requires following the new brokerage's instructions
- C. Disclosing the price would violate the duty of accounting
- D. The agent may freely disclose it, since the agency has ended
Show answer & explanation
Answer: A
Confidentiality survives termination of the agency and specifically bars revealing information that would harm the principal's bargaining position, such as the seller's lowest acceptable price. Accounting concerns entrusted funds, and obedience runs to one's own principal — neither applies here.57. A seller signs a listing, then personally finds a buyer through a neighbor and closes the sale during the listing term. Under which listing arrangement would the seller owe NO commission to the listing broker?
- A. Exclusive-right-to-sell listing
- B. Exclusive-agency listing
- C. Net listing
- D. Any exclusive listing requires payment regardless of who finds the buyer
Show answer & explanation
Answer: B
Under an exclusive-agency listing, the broker earns no commission if the seller personally finds the buyer. By contrast, under an exclusive-right-to-sell listing the broker is paid if the property sells during the term regardless of who procures the buyer — including the seller.58. Why is a grantee well advised to record a deed promptly in the county land records?
- A. Recording is required for the deed to be valid between grantor and grantee
- B. Recording gives constructive notice to the world and generally protects the first party to record
- C. Recording substitutes for delivery and acceptance of the deed
- D. Recording guarantees the title is marketable
Show answer & explanation
Answer: B
Recording provides constructive notice to the world of the grantee's interest and establishes priority, generally protecting the first party to record. Title transfers upon delivery to and acceptance by the grantee — recording does not replace that step, and it does not by itself make title marketable.59. An agent canvasses a neighborhood telling homeowners they should sell quickly because families of a particular national origin are 'moving in and changing the area.' This conduct is best described as:
- A. Steering
- B. Redlining
- C. Blockbusting
- D. Permissible market commentary
Show answer & explanation
Answer: C
Blockbusting is inducing owners to sell by suggesting that people of a protected class are moving into the area. Steering is channeling buyers toward or away from neighborhoods based on a protected class, and redlining is denying loans or insurance in certain areas based on protected characteristics — neither matches these facts.60. The owner of an owner-occupied triplex rents the other two units herself without a licensee. Which statement about her ability to rely on the so-called Mrs. Murphy exemption is accurate?
- A. It allows her to refuse tenants on any basis, including race
- B. It never applies to racial discrimination and is lost if she uses discriminatory advertising or a licensee
- C. It applies only to buildings of five or more units
- D. It permits discriminatory advertising so long as the transaction itself is exempt
Show answer & explanation
Answer: B
The Mrs. Murphy exemption for owner-occupied buildings of four or fewer units never applies to race and cannot be used with discriminatory advertising or a real estate licensee. Moreover, the Civil Rights Act of 1866 separately prohibits all racial discrimination in property transactions with no exemptions, and advertising indicating a preference based on a protected class is illegal even when the underlying transaction would be exempt.61. A borrower taking out a conventional loan asks when private mortgage insurance will generally be required. The best answer is when the down payment is:
- A. Less than 20 percent of the purchase price
- B. Less than 10 percent of the appraised value
- C. Required on every conventional loan regardless of down payment
- D. Only required on FHA and VA loans
Show answer & explanation
Answer: A
Private mortgage insurance is generally required on conventional loans when the down payment is less than 20 percent of the purchase price. FHA loans are insured by the FHA and VA loans are guaranteed by the VA — those are government programs, distinct from PMI on conventional loans.62. When a buyer submits an earnest money deposit with a purchase offer, where must those funds be kept?
- A. In the listing broker's personal bank account
- B. In the broker's trust account
- C. With the seller until closing
- D. In the buyer's attorney's operating account
Show answer & explanation
Answer: B
Earnest money is a good-faith deposit that must be held in the broker's trust account. Placing it in a personal or operating account would improperly mix client funds with other money, which the duty of accounting prohibits.63. A purchase contract includes an appraisal contingency. The property fails to appraise at the level the contingency requires, and the buyer decides not to proceed. What is the buyer entitled to do?
- A. Cancel the contract and recover the earnest money deposit
- B. Cancel the contract but forfeit the deposit to the seller
- C. Proceed to closing only, since contingencies do not permit cancellation
- D. Demand that the seller pay the buyer's inspection costs
Show answer & explanation
Answer: A
Financing, inspection, and appraisal contingencies give the buyer the right to cancel and recover the deposit if the stated condition is not met. Because the appraisal condition failed, the buyer may cancel and take back the earnest money.64. An investor lists a rental property with three different brokerages at the same time under open listings. Broker Y produces the buyer who ultimately purchases the property. How is compensation handled?
- A. All three brokers split the commission equally
- B. Only Broker Y, who procured the buyer, is paid
- C. No broker is paid, because multiple listings void each other
- D. The first broker to have listed the property is paid
Show answer & explanation
Answer: B
An open listing is non-exclusive: the seller may list with multiple brokers, and only the broker who actually procures the buyer earns the commission. The other brokers receive nothing, and the simultaneous listings are valid.65. A purchase agreement states that "time is of the essence." The buyer fails to deliver the required documents by the deadline written in the contract, though he is ready to perform a few days later. How is the buyer's late performance treated?
- A. As substantial performance, which satisfies the contract
- B. As a breach, because the stated deadline is strictly enforceable
- C. As an automatic extension of all remaining deadlines
- D. As a counteroffer proposing a new performance date
Show answer & explanation
Answer: B
A time is of the essence clause makes the contract's stated deadlines strictly enforceable, and missing a deadline constitutes a breach. Being ready to perform shortly after the date does not cure the failure to perform on time.66. Which statement BEST describes the legal nature of a listing agreement?
- A. A conveyance transferring an interest in the property to the broker
- B. An employment contract authorizing a broker to market the property and find a ready, willing, and able buyer
- C. An option giving the broker the right to purchase the property
- D. A purchase contract between the seller and the eventual buyer
Show answer & explanation
Answer: B
A listing agreement is an employment contract between a seller and a broker. It authorizes the broker to market the property and to find a ready, willing, and able buyer; it conveys no ownership interest and is not itself a sale contract.67. A property sells for 300,000 dollars with a six percent commission payable to the brokers. What total commission does the sale generate?
- A. 6,000 dollars
- B. 12,000 dollars
- C. 18,000 dollars
- D. 24,000 dollars
Show answer & explanation
Answer: C
Commission equals the sale price multiplied by the commission rate. A 300,000 dollar sale at six percent yields an 18,000 dollar commission, which is then split between the listing and selling brokers per their agreement.68. A homeowner signs an exclusive-right-to-sell listing with a brokerage. During the listing period, the homeowner's coworker — with no broker involvement — agrees to buy the house. Is a commission owed?
- A. No, because the seller procured the buyer without the broker's help
- B. No, because the buyer was already known to the seller
- C. Yes, because under this listing type the broker earns a commission if the property sells during the term regardless of who procures the buyer
- D. Yes, but only half of the agreed commission
Show answer & explanation
Answer: C
Under an exclusive-right-to-sell listing, the broker earns the commission if the property sells during the listing period no matter who finds the buyer — including the seller personally. The seller locating the buyer does not defeat the broker's right to payment.69. A seller signs a document that transfers title to her cabin to a buyer. In this transaction, the document itself is best described as which of the following?
- A. A listing agreement between the seller and her broker
- B. A deed conveying title from the grantor to the grantee
- C. A promissory note evidencing a debt
- D. A title insurance policy protecting the buyer
Show answer & explanation
Answer: B
A deed is the written instrument that conveys title to real property from a grantor to a grantee. A listing agreement is an employment contract with a broker, a promissory note evidences debt, and title insurance is a policy against covered title defects — none of these actually convey title.70. A grantor is willing to warrant the title against problems that arose while she owned the property, but refuses to be responsible for anything that happened before she took ownership. Which deed matches her intent?
- A. General warranty deed
- B. Special warranty deed
- C. Quitclaim deed
- D. Deed of trust
Show answer & explanation
Answer: B
A special warranty deed warrants only against defects that arose during the grantor's period of ownership, which is exactly the limitation she wants. A general warranty deed would expose her to defects arising even before she owned the property, a quitclaim deed provides no warranties at all, and a deed of trust is a financing instrument that pledges property as security for a note, not a conveyance chosen for its warranties.71. An elderly owner signs a properly drafted deed naming his nephew as grantee, then locks it in his desk drawer without telling the nephew. The owner still holds the deed at his death. Did title pass to the nephew during the owner's lifetime?
- A. Yes, because the deed was signed by a competent grantor
- B. Yes, because a deed transfers title the moment it is drafted
- C. No, because the deed was never delivered to and accepted by the grantee
- D. No, because a deed must be signed by the grantee to be valid
Show answer & explanation
Answer: C
Even a deed with competent parties, words of conveyance, an adequate legal description, and the grantor's signature does not transfer title until it is delivered to and accepted by the grantee. Because the deed stayed in the drawer and the nephew never received or accepted it, no title passed. Validity requires the grantor's signature, not the grantee's.72. Two years after closing, a homeowner learns that a defect in the chain of title existed before her policy was issued, though no one knew about it at the time. Which product is designed to protect her against losses from this kind of problem?
- A. Private mortgage insurance
- B. Title insurance
- C. A time is of the essence clause
- D. An appraisal contingency
Show answer & explanation
Answer: B
Title insurance protects the insured against losses from covered title defects that existed but were unknown at the time the policy was issued — precisely this situation. Private mortgage insurance relates to low-down-payment conventional loans, a time is of the essence clause makes contract deadlines strictly enforceable, and an appraisal contingency lets a buyer cancel before closing, not recover for later-discovered title defects.73. A buyer offers to purchase a home on the seller's terms except for a longer inspection period. The seller responds in writing with the original inspection period restored plus a higher price. The buyer then tries to accept his own original offer's terms. Which analysis is correct?
- A. The buyer may revive his original offer at any time because he made it
- B. The seller's response was an acceptance, so a contract already exists on the buyer's terms
- C. The seller's response was a counteroffer that terminated the buyer's offer, so the buyer can only accept or reject the counteroffer's terms
- D. Both offers remain open simultaneously until one party withdraws
Show answer & explanation
Answer: C
Because the seller changed the terms, her response was a counteroffer, which rejects and terminates the buyer's original offer. Once terminated, the original offer cannot simply be accepted again; the buyer's options are to accept the counteroffer, reject it, or make a new offer.74. A borrower's mortgage interest rate changes periodically based on an index plus a margin. What kind of loan does the borrower have?
- A. A fixed-rate mortgage
- B. An adjustable-rate mortgage
- C. A loan guaranteed by the Department of Veterans Affairs
- D. A fully amortized loan that can never change its payment
Show answer & explanation
Answer: B
An adjustable-rate mortgage has a rate that changes periodically based on an index plus a margin, which is exactly what the question describes. A fixed-rate mortgage keeps the same interest rate for the entire term. Government backing (such as a VA guarantee) describes who stands behind the loan, not how its rate behaves.75. A buyer would like to take over the seller's existing low-rate mortgage rather than obtain a new loan. Which loan provision most directly prevents this without the lender's approval?
- A. A time is of the essence clause
- B. A due-on-sale clause
- C. An appraisal contingency
- D. A financing contingency
Show answer & explanation
Answer: B
A due-on-sale clause allows the lender to demand full repayment if the property is sold, which prevents a buyer from assuming the loan without lender approval. A time is of the essence clause concerns contract deadlines, and appraisal or financing contingencies are purchase-contract conditions that let a buyer cancel — none of them governs loan assumption.76. A purchase contract includes a financing contingency, and the buyer is unable to satisfy that condition. What is the buyer entitled to do?
- A. Cancel the contract and recover the earnest money deposit
- B. Cancel the contract but forfeit the earnest money deposit to the seller
- C. Force the lender to fund the loan anyway
- D. Transfer the contract to another buyer without the seller's involvement
Show answer & explanation
Answer: A
Contingencies such as financing, inspection, and appraisal give the buyer the right to cancel and recover the deposit if the condition is not met. The earnest money — a good-faith deposit held in the broker's trust account — is returned rather than forfeited, and a contingency gives no power to compel the lender to lend.77. A buyer offers to purchase a home on the seller's terms except that the buyer changes the closing date. What is the legal effect of the buyer's response?
- A. It is an acceptance with a minor amendment that binds the seller
- B. It is a counteroffer that rejects and terminates the original offer
- C. It keeps the original offer open while the seller considers the new date
- D. It is void because closing dates cannot be negotiated after an offer
Show answer & explanation
Answer: B
Any change to the terms of an offer is a counteroffer, which rejects and terminates the original offer. The original offer does not remain open, so choices A and C are incorrect.78. A divorcing spouse wants to remove any interest she may hold in the marital home so her ex-husband can resell it with clean title. She makes no promises about the quality of the title. Which deed best fits this purpose?
- A. General warranty deed
- B. Special warranty deed
- C. Quitclaim deed
- D. Trustee's deed
Show answer & explanation
Answer: C
A quitclaim deed conveys only whatever interest the grantor may have, with no warranties, and is commonly used to clear clouds on title. A general warranty deed warrants against all defects arising at any time, and a special warranty deed covers defects arising during the grantor's ownership — both make promises this grantor does not intend to give.