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Real Estate Practice Test 1

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Question 1 of 20

1. Question
The contract of sale states that the earnest money deposit is to be placed in an interest-bearing account with any interest earned to be given to the buyer.

This is:
- a. Illegal
- b. Not okay, and the broker should resign the listing
- c. Okay, because the buyer and seller have agreed to this
- d. Commingling
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Question 2 of 20

2. Question
If a buyer’s earnest money check is returned for insufficient funds after being deposited into the broker’s trust account, the broker should:
- a. Resign the agency
- b. Cover the bad check personally
- c. Tell the seller or cooperating broker that the check bounced
- d. File a police report
Correct

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Question 3 of 20

3. Question
Which option best describes an exclusive-right-to sell listing?
- a. The listing agent will be paid a commission only if he/she procures the buyer.
- b. The agent who procures the buyer will be compensated.
- c. The listing agent only receives commission if the property sells for a certain amount.
- d. The listing agent will be paid the commission no matter who procures the buyer.
Correct

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Question 4 of 20

4. Question
Sandy, a 16-year old, enters into a contract to buy a condo from Sue, an adult. Which statement is TRUE?
- a. Sandy can void any portion of the contract any time before the transaction is closed.
- b. Sandy or Sue can void the entire contract any time before the transaction is closed.
- c. Sandy can void the entire contract any time before the transaction is closed.
- d. The contract is considered void because Sandy is not permitted to enter into a real estate contract.
Correct

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Question 5 of 20

5. Question
A listing agreement between a principal and broker is a(n)
- a. implied contract.
- b. breach of contract.
- c. express contract.
- d. discharge of contract.
Correct

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Question 6 of 20

6. Question
Which statement regarding a Veterans Affairs (VA) mortgage is FALSE?
- a. It does not have minimum property requirements
- b. It does not require mortgage insurance
- c. It does not require a down payment
- d. It does not have a maximum debt ratio
Correct

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Question 7 of 20

7. Question
A Department of Veterans Affairs (VA) mortgage is
- a. Always a recourse loan.
- b. Guaranteed.
- c. Conventional.
- d. Pre-paid.
Correct

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Question 8 of 20

8. Question
Garrett sold his primary residence for $595,000, which was a capital gain of $315,000. How much may Garrett exclude on his income tax as a single individual?
- a. $315,000
- b. $100,000
- c. $476,000
- d. $250,000
Correct

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Question 9 of 20

9. Question
A parcel of land is 140 feet by 75 feet and the seller is asking $130 per square foot. What is the asking price?
- a. $1,050,000
- b. $1,365,000
- c. $1,470,000
- d. $1,650,000
Correct

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Question 10 of 20

10. Question
For this question, disregard selling costs, taxes, etc. and choose the closest answer.

A parcel of land is sold for $163,000. If it appreciates at 14% compounded per year and the seller keeps it for seven years, how much will the seller pay for it?
- a. $72,000
- b. $70,500
- c. $65,000
- d. $55,000
Correct

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Question 11 of 20

11. Question
The Johnsons sold their house and will close on July 1. The Johnsons paid their full annual town taxes in January. Which statement BEST describes what will occur at closing?
- a. The buyers will owe the Johnsons the unused tax for the balance of the year.
- b. The Johnsons will owe the buyers the tax due.
- c. Nothing will happen.
- d. The Johnsons will owe the buyers half of the tax due.
Correct

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Question 12 of 20

12. Question
Jesse signs a deed to Maryam as grantee, has it acknowledged, and receives payment from her. Jesse arranges to meet Maryam the next afternoon to give the deed to her.

Which of the following best describes when Maryam will own the property?
- a. immediately because she has paid for it.
- b. the next afternoon when she receives the deed.
- c. when she records the deed.
- d. as soon as she signs the deed.
Correct

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Question 13 of 20

13. Question
The Federal Housing Administration’s (FHA) Section 8 program helps low- and moderate-income people by
- a. paying their mortgage loans.
- b. insuring their mortgage loans.
- c. paying the maintenance on a purchased home.
- d. paying part of their rent.
Correct

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Question 14 of 20

14. Question
What percentage of a building’s replacement value must be covered by fire insurance according to typical coinsurance clauses?
- a. a. 50 percent
- b. 60 percent
- c. 70 percent
- d. 80 percent
Correct

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Question 15 of 20

15. Question
The metes and bounds and monuments of a property can be found in what clause in a deed?
- a. Demising
- b. Defense
- c. Description
- d. Habendum
Correct

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Question 16 of 20

16. Question
A deed is valid only when it is
- a. delivered and accepted.
- b. recorded.
- c. signed.
- d. notarized.
Correct

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Question 17 of 20

17. Question
Malcolm just received his salesperson’s license and has joined a firm. He will MOST likely be hired for tax purposes as a(n)
- a. associate broker.
- b. salaried employee.
- c. independent contractor.
- d. realtor
Correct

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Question 18 of 20

18. Question
Real estate license laws are designed to
- a. raise tax and operating revenue for state and local governments.
- b. limit the number of brokers and salespersons on the market.
- c. match the federal government's requirements.
- d. protect the public and maintain high standards.
Correct

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Question 19 of 20

19. Question
When a broker is retained by the buyer, the broker owes the prospective seller
- a. obedience to lawful instructions.
- b. confidentiality about the seller's financial situation.
- c. honest, straightforward treatment.
- d. undivided loyalty.
Correct

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Question 20 of 20

20. Question
A seller’s broker must disclose to a prospective buyer that the
- a. heating system doesn’t work.
- b. last owner was murdered there.
- c. seller has AIDS.
- d. house is haunted.
Correct

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Real Estate Practice Test 1

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