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NATIONAL REAL ESTATE EXAM PRACTICE QUESTIONS WITH CORRECT SOLUTIONS
“A property owner has decided to do some landscaping work on his yard. He has planted a tree
surrounded by some flowering shrubs. The tree and shrubs are an example of... - CORRECT
ANSWER improvements"
"P, Q and R are joint tenants. P wants to sell the property, but Q and R do not. What can P do? -
CORRECT ANSWER file a suit for partition"
"A, B and C are joint tenants. C dies. B sells his share to D. What type of ownership do A and D
have? - CORRECT ANSWER tenants in common"
"Under what right can the government change property use from commercial to residential only?
- CORRECT ANSWER police power"
"Ownership of the common areas of condominiums is most likely to be: - CORRECT ANSWER
tenancy in common"
"What should a buyer do to ensure that his is getting the best title to real property? - CORRECT
ANSWER get a general warranty deed"
"A signed sales contract that has not yet gone to closing is... - CORRECT ANSWER executory"
"When does an offer become a contract? - CORRECT ANSWER When the offeree gives the
offeror notice of the acceptance" "Which of the following statements is true about the duties of an agent according to the common
law of agency? - CORRECT ANSWER an agent must treat both clients and customers with
honesty and fairness" "A property manager is hired and signs a management agreement with the owner. At this time,
the property manager is... - CORRECT ANSWER a general agent"
"A seller must keep a copy of the lead paint disclosure he provided to the buyer for - CORRECT
ANSWER 3 years"
"It has been found that mold can develop due to - CORRECT ANSWER air tight windows and
doors found in newer construction"
"General liability insurance will - CORRECT ANSWER protect a company's assets if someone
is injured on company property"
"A condo owner's policy will most likely cover the owner if - CORRECT ANSWER a guest slips
in the kitchen"
"Which of the following would be most likely to hire a property manager? - CORRECT
ANSWER an association"
"How is earnest money recorded on the closing disclosure a. debit to the seller b. debit to the buyer c. credit to the seller
d. credit to the buyer - CORRECT ANSWER Credit to the buyer"
"What type of mortgage loan would allow the property owner to borrow additional funds at
future dates - CORRECT ANSWER an HELOC"
"A seller has received $225,000 for the sale of his home. This represents a 20% profit. What did he
pay for the house when he purchased it? - CORRECT ANSWER $187,500"
"A seller wants to net $185,000 on the sale of his property. He must pay a loan balance of $180, and closing costs at $10,000. The commission to the listing broker will be 6%. What is the lowest
price the property can sell for to accomplish this? - CORRECT ANSWER $399,500"
"If an appraiser uses the cost approach to determine the value of a two story building 128 x 97 at
$120/sq. ft, with $10,000 in depreciation and a $27,500 lot, what is the value of the property? -
CORRECT ANSWER $2,997,340"
"Mark purchased a home for $150,000 He had an 80% LTV. He has paid off $42,000 of his
purchase mortgage. He is selling the house for $179,000. How much equity does he have? -
CORRECT ANSWER $101,000"
"Maria is planning to buy a house for $200,000. The lender has indicated that he will charge 3 points plus an origination point. Maria is considering the difference between an 80% LTV and a
75% LTV. How much will she save on points if she chooses the 75% LTV? - CORRECT
ANSWER $400"
"A property owner receives a notice that his land is in an improvement district. What does this
mean? - CORRECT ANSWER He will receive an additional tax bill"
"A property owner has installed a chain link fence on his property. He has received on official
notice requiring the removal of this type of fence. This fence is most likely a violation of... -
CORRECT ANSWER Deed restrictions or deed covenants"
"A single property is regulated by building codes, zoning and deed restrictions. The rules are in
conflict with one another. Which must the property owner obey? - CORRECT ANSWER The
property owner must obey whichever rules are the strictest or most limiting"
"Which of the following conveys title to real property and insure good title? - CORRECT
ANSWER A general warranty deed"
"A buyer has discovered a defect in title and has suffered a loss due to the defect. The title company has compensated the buyer for the loss. Subsequently, the buyer is awarded a judgement against the seller. The title company is entitled to a portion of the judgment as
reimbursement for the claim it paid. This describes... - CORRECT ANSWER Subrogation"
"A landowner wants to sell his property. A title search uncovers a cloud on the title. There is no
one available to sign a quit claim deed to clear up the cloud. What can the owner do? - CORRECT
ANSWER Pursue an action to quiet title in court"
"Appraisers are most often asked to determine: - CORRECT ANSWER market value"
"A builder is using inferior siding and paint in an effort to construct affordable housing. This
would be an example of... - CORRECT ANSWER functional obsolescence"
"A builder is very successful and active in a new subdivision. Homes in the subdivision are selling well, and the builder is making a good profit on the sales. Two new builders arrive and begin to sell in the same subdivision. All experience a lower level of profit. This demonstrates which
principle of appraisal. - CORRECT ANSWER The principle of competition"
"When measuring gross area the appraiser measures the - CORRECT ANSWER under roof"
"Which of the following is the best definition of market value? - CORRECT ANSWER most
probable price" "In preparing an appraisal, which of the following would have the least impact on the appraiser's
estimate of value? - CORRECT ANSWER physical deterioration"
"An appraiser has been hired to value a commercial office building that is fully leased. What
approach to appraisal will he use to determine his opinion of value? - CORRECT ANSWER
Income approach"
"What is the least important factor for a license holder preparing a CMA - CORRECT ANSWER
The information from expired listings of unsold property in the area" "An appraiser is using the Market Data Approach to determine the value of a residential property.
What is FALSE? - CORRECT ANSWER His comparables should not be more than one year old"
"What expenses of home ownership can a buyer deduct on his income taxes? - CORRECT
ANSWER taxes and interest on his mortgage"
"Mark has an option to purchase Bob's property. The option expires at the end of the month and
Mark would like to extend the option. What would he need to do? - CORRECT ANSWER pay
an additional option fee" "A buyer has signed an agreement to purchase a property from a seller. He has met all the terms and conditions of the listing. The listing broker has taken the agreement to the seller. The seller
has changed his mind about selling and refuses to sign the agreement. What is true? - CORRECT
ANSWER The seller does not have sell, but he owes the listing broker a commission"
"Mark has an Open Listing on a seller's property. He had shown the property three times to the same potential buyers. Each time, he notified the sellers of the showing by phone. He heard from the sellers that he should no longer show the property as it was sold. Several weeks later, he learned that it was sold to the buyers he brought to the property. What are Mark's rights with
respect to a commission from the sellers? - CORRECT ANSWER Mark is not entitled to any
commission as he did not bring the offer to the sellers"
"The best description of a counteroffer is - CORRECT ANSWER a rejection of an offer"
"Which of the following contracts would be voidable? - CORRECT ANSWER A contract with a
minor" "A buyer and his agent visit a listed property. The buyer loves the property and wants to purchase it. He speaks with the seller, who is at home at the time, and they come to an agreement regarding price and terms. They shake hands on the agreement and the buyer happily leaves the property.
His agent should: - CORRECT ANSWER Warn the buyer that the verbal sales contract is
unenforceable"
"Which of the following properties would be the least desirable neighbor? - CORRECT
ANSWER Brownfields"
"How long must a seller or landlord keep a copy of the lead paint disclosure? - CORRECT
ANSWER 3 years"
"All of the following are hazardous substances that a license holder should be aware of except -
CORRECT ANSWER Acrylic paint"
"Which of the following is the best example of puffing - CORRECT ANSWER I think this is the
best floor plan available from this builder" "A buyer's agent has helped a buyer to find a home. The buyer has expressed concern about the
possible presence of radon. What should the buyer's agent do in this case? - CORRECT
ANSWER Recommend an inspection for hazardous materials"
"A chemical manufacturing company purchases a plant. After closing they discover that the previous owners had spilled hazardous materials on the land. According to CERCLA, who is liable
for the cost of the cleanup? - CORRECT ANSWER both the new owners and the previous
owners"
"Who is responsible for providing a lead paint disclosure? - CORRECT ANSWER The seller"
"A property has lead paint in the interior and on the exterior. Which of the following statements
is true? - CORRECT ANSWER The seller has no duty to remediate lead, simply to disclose it"
"A license holder has just taken a class on networking and marketing through social media. She is very excited about the possibilties and hes established Facebook, Twitter, Linkedln and Pinterest acocunts. She is also writing a blog. She has decided to market a new listing on these sites. The property has been built to resemble an Antebellum mansion. How can she advertise the propert?
CORRECT ANSWER Antebellum style mansion"
"Which claim for damages would most likely be covered by a homeowner warranty policy? -
CORRECT ANSWER A furnace that breaks down a few weeks after the buyer move in"
"Under a new construction Home Owner Warranty policy, which of the following would not be
covered? - CORRECT ANSWER The air conditioning unit"
"Which of the following statements about flood insurance is FALSE - CORRECT ANSWER
Flood insurance is not necessary if a property owner has a comprehensive homeowner's property" "After several years of selling residential property a license holder wishes to begin working on
industrial sales. He should - CORRECT ANSWER align himself with a broker or sales license
holder who has experience in industrial property in order to learn about and become proficient in industrial sales" "A property has foundation problems. The seller has painted over them to hide them. He lists his property for sale "as is", and does not disclose the problem. The listing broker views the property but does not detect any defects. A buyer purchases the property and after closing discovers the
problems. Which of the following statements is true? - CORRECT ANSWER The broker will
be protected by his E&O insurance because the problem was not able to be detected by visual inspection and the seller misrepresented the property"
"E signature or electronic signature - CORRECT ANSWER are valid for parties that have
agreed to their use with the consent of the other parties" "In senior housing communities, at least one person over the age of 55 must be living in what
percent of the units? - CORRECT ANSWER 80%"
"A practice of trying to induce homeowners to sell by convincing them that a minority group is
moving into the area causing property values to drop is - CORRECT ANSWER blockbusting"
"The main goal of the ADA is the removal of barriers. All of the following are required under ADA
except: - CORRECT ANSWER levered door handles"
"According to Regulation Z, which of the following is not a trigger term? - CORRECT ANSWER
APR"
"Which of the following is false regarding the Civil Rights Act of 1968 - CORRECT ANSWER A
FSBO who owns no more than four homes can discriminate when selling a home"
"Which of the following loans would not have a 3 day right of recession? - CORRECT ANSWER
A loan to purchase a vacation property" "What form replacing the HUD-1 must be provided to the consumer and when must it be
provided? - CORRECT ANSWER The CD at least three days before closing"
"Who would use the remedy of Forcible Entry and Detainer? - CORRECT ANSWER the
landlord" "The landlord pays the expenses of the property. The tenants pay rent plus utilities. What type of
lease is this? - CORRECT ANSWER net lease"
"When a landlord allows the property condition to deteriorate so much that the tenants are
forced to leave it is called: - CORRECT ANSWER constructive eviction"
"A couple is moving to a new city and they would like time to learn the city before they purchase a
home. What type of lease should their agent recommend? - CORRECT ANSWER a periodic
tenancy" "A young couple leases an apartment in an apartment complex for one year. During the year, they become concerned about crime in the area and ask for permission to install an alarm system in the apartment. The landlord grants permission. When the lease is up, what happens to the alarm
system? - CORRECT ANSWER the system stays as it is now a fixture"
"What type of verbal lease agreement would be enforceable? - CORRECT ANSWER a lease for
one year or less" "John has a three year lease on office space. In the second year the landlord dies. His heirs inherit the property. They do not want it and they sell it. The new owner wants John to move out. Does
John have to leave? - CORRECT ANSWER No, because he has a lease"
"What type of business entity is owned by shareholders, but avoids "double taxation"? -
CORRECT ANSWER An S corporation"
"What is the difference between a general partner and a limited partner? - CORRECT
ANSWER a general partner has full liability and a limited partner has limited liability"
"A one on one relationship between a broker and a client is called - CORRECT ANSWER
agency"
"A license holder sponsored by a broker must have a written agreement - CORRECT ANSWER
to work as an independent contractor"
"A broker has a trust account set up to hold client funds. He has earnest money deposits from
several clients in the account at the same time. This is: - CORRECT ANSWER acceptable as
long as he has written records" "Which of the following actions of a broker could jeopardize the independent contractor status of
the license holders he sponsors? - CORRECT ANSWER Requiring his license holders to work
scheduled hours" "A buyer's agent is working with a buyer to purchase a property. The buyer is concerned about
the location of the fence as it appears to be encroaching. What should the buyer's agent do? -
CORRECT ANSWER Recommend a survey"
"A couple is purchasing a home and ask their agent how they should take title so that if one spouse dies, immediately the surviving spouse will be the sole owner of the property. The license
holder should: - CORRECT ANSWER Tell them to talk to an attorney, because the license
holder is not permitted to give advice on how to take title" "A license holder is representing a young couple purchasing their first home. She shows them many properties and finally they find one to buy. They have some concerns about the contract
and ask to speak an attorney. the agent should... - CORRECT ANSWER Send the clients to an
attorney of their choice before they sign" "A license holder advertises a listed property as having the most beautiful landscaping in the
neighborhood. This is an example of... - CORRECT ANSWER Puffing"
"A license holder is showing her own listing to a buyer customer. While showing the property she
notices that there is a serious slope to the porch floor. What should she do? - CORRECT
ANSWER She must point it out to the buyer"
"Which of the following is false about a property manager? - CORRECT ANSWER He is a
universal agent to the owner" "A leased property is not for sale at this time. The tenant has a four year lease on the space. The tenant also has the right to match or better any offer before the property will be sold to anyone
else. What agreement between the landlord and tenant gave the tenant that right? - CORRECT
ANSWER a lease with a Right of First Refusal"
"Which of the following statements about the difference between a license holder who is an
employee and a license holder who is an independent contractor would be true? - CORRECT
"A property owner has a waterfront lot on a stream. He has the right to use the water from the
stream. What is this right called? - CORRECT ANSWER riparian"
"A tenant is aware that his lease will expire at the end of the month. He has begun to disassemble
his display cabinets and shelves. Which of the following statements about this is true -
CORRECT ANSWER the tenant can take these as they are trade fixtures"
"A seller is attending the closing on his property. The title company has discovered an unsatisfied
M&M lien on the property. Which of the following is the most likely reason for the lien? -
CORRECT ANSWER plumbing work that was completed but never paid for"
"A listing agent went to inspect a seller's property hoping to list it for sale. The seller told the listing agent that his neighbor's satellite dish trespasses on his property. This is an example of...
CORRECT ANSWER encroachment"
"A father gives his son a life estate on a property. The son leases the property. The tenant dies.
What happens to the property? - CORRECT ANSWER it goes back to the son until he dies"
"A man leaves his second wife a life estate in their home after which the property goes to his
children from his first marriage. The children... - CORRECT ANSWER are remaindermen"
"Which of the following statements about an easement is true? - CORRECT ANSWER an
easement is a benefit to the dominant property owner" "Which covenant in a deed guarantees that the owners will not suffer or be disturbed by any
claims on the property? - CORRECT ANSWER the covenant of quiet enjoyment"
"Excess money at a foreclosure sale goes to... - CORRECT ANSWER the borrower"
"After defaulting on a real estate loan, a borrower is able to pay off the loan prior to the
foreclosure sale. This is called: - CORRECT ANSWER right of redemption"
"The required distance between buildings and a federally protected endangered species wetlands
is an example of... - CORRECT ANSWER a buffer zone"
"A couple purchased a condominium. The complex has an exercise room for all residents. The couple does not use the exercise room and does not want to pay the monthly fee for the use of the
facility. What can they do to avoid this fee? - CORRECT ANSWER they must pay the fee as
they have a tenancy in common interest in all common areas"
"Which of the following is personal property? - CORRECT ANSWER a lease"
"A landlord leased space in his new retail property to an inexperienced business person. Based on location and the type of business, the landlord believes it will be a great success. What type of lease can he enter into with the tenant that will allow the landlord to benefit from the tenant's
success? - CORRECT ANSWER a percentage lease"
"A buyer has purchased a property and after closing the seller will continue to occupy the
property. This is an example of... - CORRECT ANSWER sale and leaseback"
"Your client will be able to qualify for a property they wish to purchase in about 6 months, after they had an opportunity to reduce their consumer debt. They have found a property that they would like to purchase now. What type of agreement can they enter into with a seller that will
allow them to occupy the property now and purchase it within the 6 months? - CORRECT
ANSWER lease with an option to buy"
"Tenants have signed a 3 year lease on a property. In the second year the owner dies and his heirs
inherit the property. They give the tenants notice to vacate. What is true? - CORRECT
ANSWER the tenants can stay until the end of the lease"
"A developer decides to build a commercial property in the middle of a residential subdivision.
What is required? - CORRECT ANSWER a variance"
"A zoning ordinance would affect which of the following? - CORRECT ANSWER the
concentration of housing in a residential area"
"If a person dies without a will, who receives their estate? - CORRECT ANSWER spouse and
children"
"What are the requirements/ criteria for real estate to have values? - CORRECT ANSWER
demand, utility, scarcity, transferability"
"What principle of value defines the most important factor for appraisal? - CORRECT
ANSWER highest and best use"
"What approach would an appraiser most likely use to value a residential rent house in
neighborhood where a majority of the homes are leased? - CORRECT ANSWER income
approach"
"An underage college student signs a lease, then discloses his age to the landlord. What is true? -
CORRECT ANSWER the contract is voidable at the minor's option"
"A seller comes into the office to sign a contract. The seller is stumbling and smells of alcohol.
How do you proceed? - CORRECT ANSWER tell the seller to leave and return another time"
"A high rise condominium property is advertised as having the "Most beautiful view of the city".
This ad is best described as - CORRECT ANSWER puffing"
"Which of the following facts about listed property must be disclosed - CORRECT ANSWER
death due to structural defects"
"A lead paint disclosure is required for all properties built before - CORRECT ANSWER 1978"
"Which of the following statements about lead is NOT true? - CORRECT ANSWER the
property owner must remediate the presence of lead"
"CERCLA is under the administration of: - CORRECT ANSWER EPA"
"Which of the following used in 1978 is both extremely hazardous and friable? - CORRECT
ANSWER asbestos"
"Which of the following properties would be the least desirable neighborhood? - CORRECT
ANSWER brownfields"
"A condo complex has liability complex has liability insurance. This is least likely to cover -
CORRECT ANSWER a units owner's carpet damaged by a broken water pipe"
"Accurate record keeping is the responsibility of all the brokers. If a broker's computers are
stolen what steps could have been taken to protect records? - CORRECT ANSWER offsite or
cloud storage" "A license holder has just attended a training seminar about technology in real estate and is excited about using social media with her clients. Which of the following statements about social
media in real estate is NOT true? - CORRECT ANSWER an agent with permission to advertise
a property on social media does not have to worry about protecting confidential information about the client"
"A sales agent is showing a property. He trips in the house causes major damage to property of the
owner. What type of insurance will cover this accident? - CORRECT ANSWER liability
insurance"
"Prior to its amendments, the Civil Rights Act of 1968 prohibited discrimination based on... -
CORRECT ANSWER national origin"
"An agent working with immigrant buyers must be careful - CORRECT ANSWER not to steer
the buyers to a neighborhood based on the language they speak"
"An agent is accused of discrimination. What will HUD do... - CORRECT ANSWER try
mediation followed by a lawsuit if mediation fails" "A mobility impaired tenant has leased an apartment in a complex with unassigned parking. He
has requested an assigned reserved space near to his unit. What is true? - CORRECT ANSWER
the landlord must provide an assigned reserved space for the tenant near to the tenant's unit" "An investor has 15 rent houses. He has hired an agent to lease the houses. Which of the following
actions by the agent would NOT be in violation of fair housing laws. - CORRECT ANSWER
refusing to show the houses to anyone over 75 years old" "Which of the following would NOT be an operating expense included in the property manager's
operating budget - CORRECT ANSWER mortgage payments"
"A broker is running short of funds to meet this month's monthly operating expenses. He places a client's earnest money deposit in his business account and uses it to pay is rent. After his next
closing, he replaces the client's deposit in his trust account. The broker... - CORRECT
ANSWER is guilty of conversion"
"Which of the following is NOT an example of due diligence in a sales contract? - CORRECT
ANSWER a broker completes a CMA for a buyer client prior to the buyer making an offer"
"A sales agent just obtained a listing. The seller told the agent that she needs to sell the property
because she is going through a divorce. What must the salesperson do - CORRECT ANSWER
obtain the signatures of all owners on the listing agreement"
"Wetlands typically contain which of the following? - CORRECT ANSWER navigable waters"
"What is the max amount of time allowed for a victim to file a Fair Housing complaint? -
CORRECT ANSWER 24 months"
"In rental properties, increased demand can be the result of - CORRECT ANSWER high
mortgage interest rates"
"Which of the following would not be eligible for a VA loan - CORRECT ANSWER a parent or
sibling of a veteran"
"What is required of a loan servicer before foreclosing on a VA loan - CORRECT ANSWER the
VA must be notified before the foreclosure"
"Who must be notified to take money out of the trust account in a real estate transaction? -
CORRECT ANSWER both buyer and seller"
"An office building has a potential gross rent of $20,000.per month. It has a vacancy rate of 15%. Yearly expenses for the property toatl $115,000. If the owner is earning a 10% rate of return, what
is the value of the building? - CORRECT ANSWER $890,000"
"What monthly income will your buyers need to qualify for a $200,000 loan at 6% for 30 years if lenders are qualifying at 28%? (The loan factors is $6.00). Monthly taxes and insurance will be
$900. - CORRECT ANSWER $7,500"
"A seller is closing on the sale of his home on April 23rd. The property taxes have not been paid for this year. The annual tax bill is $2,008. Using a 360-day year, how much will the seller owe for
taxes at closing? - CORRECT ANSWER $630"
"An owner sold his house for $250,000 with a $50,000 take back. (A take back is seller financing. The seller receives a note for this amount at closing and will collect this amount over the agreed- upon term of the loan). He paid off his loan of $138,500 and ha paid a 5% commission. He had closing costs of $10,000.
How much did the seller net at closing? - CORRECT ANSWER $39,000"
"John is purchasing a lot 125 feet wide and 127 feet deep for $5.65 a square foot plus $15 a front foot. (A front foot refers to frontage and is the width of the lot.) How much will he pay for the lot?
CORRECT ANSWER $91,568.75"
"A sale is closing on June 15th and the annual property tax bill has not been paid. The house is assessed at $350,000 and the tax rate is $2.50 per $100. Using a 360-day year, how much will the
seller owe for the taxes at closing (to the nearest dollar) and how will this be shown on the CD? -
CORRECT ANSWER $4010 debit the seller/ credit the buyer"
"The fact that an individual must go to the land described which of the physical characteristics of
land? - CORRECT ANSWER Immobility"
"John and Mary are co-owners of a property. John has 60% interest in the property and Mary has
a 40% interest. What type of freehold estate do they have? - CORRECT ANSWER Tenancy in
common" "A property is surveyed to determine a legal description. The surveyor works from a point of beginning, and measures terminal points and angles. What method of land description is he
using? - CORRECT ANSWER Metes and bounds"
"Unnecessary delay - CORRECT ANSWER "Laches" deals with which of the following?
a. Mechanic's lien b. Construction c. Unnecessary delay d. Tax evasion"
"an affirmation. - CORRECT ANSWER A solemn declaration by a person whose religious
beliefs forbid the taking of an oath is: a. an affidavit. b. an acknowledgment. c. an affirmation. d. none of the above"
"net lease. - CORRECT ANSWER A lease that specifies that the lessee is to pay the real estate
property taxes and the insurance cost, as well as the rent, is called: a. specific lease. b. sandwich lease. c. net lease. d. percentage lease."
"read contract forms thoroughly to ensure no minute detail is overlooked. - CORRECT
ANSWER Licensees should:
a. not read contract forms, because they contain confidential information. b. not read contract forms, because their brokers will review the forms on their behalf.
