PSI NATIONAL REAL ESTATE EXAM SCRIPT QUESTIONS
AND ANSWERS GRADED A+
✔✔When land is conveyed to a trustee, the trustee may - ✔✔do whatever is permitted
under the trust agreement
✔✔A prospective buyer made an offer to purchase a property. The owner responded
with a counteroffer. While the buyer
was reviewing the counteroffer, the owner received a better offer. The owner can accept
the second offer if - ✔✔the owner withdraws the counteroffer before it is accepted.
✔✔While an agent is showing a listed property, the seller and the buyer enter into an
oral agreement for the purchase of the home. If a dispute over the terms arises later,
the agreement may be unenforceable because - ✔✔the agreement does not comply
with the Statute of Frauds
✔✔Earnest money should be deposited into a trust account - ✔✔in a timely manner,
according to state laws
✔✔A deed restriction is applicable to the activities of - ✔✔all owners, present and future
✔✔An easement can be terminated by - ✔✔prescription
✔✔Depreciation is calculated based on the - ✔✔cost of the building only
✔✔Which of the following approaches MOST reliably estimates the sales price of a
single-family residence? - ✔✔Market data
✔✔A seller mentions to his agent that the previous owners of his property may have
dumped hazardous waste on the site. Under the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA), who is liable for damages from
the dumping prior to the sale of the property? - ✔✔Seller
✔✔The escrow officer or closing agent MUST give information regarding the sales price
and seller's social security number to - ✔✔IRS
✔✔A broker supplies the financing for a project to build condominiums with the
stipulation that he has the exclusive right to sell the completed condos. Which of the
following BEST describes this relationship? - ✔✔Agency coupled with an interest
✔✔If you own a building free and clear that is worth $115,000 and want an annual
return of 12%, what net income is needed each month? - ✔✔$1,150
,✔✔Usury laws were enacted to protect the - ✔✔borrower
✔✔At the time of listing, the seller tells the listing agent they are moving because the
neighbor has loud parties every weekend.
The agent should - ✔✔tell potential buyers about the parties
✔✔When one of the parties to an agreement fails to perform one of its conditions, that
contract is deemed to be - ✔✔breached
✔✔Which of the following is NOT a consideration in the definition of market value? -
✔✔Buyer and seller must agree to appraised value
✔✔One common method for controlling the problems created by conflict of interest in
dual representation is - ✔✔allowing a broker to designate separate salespeople within
the company as legal representatives of each of the clients.
✔✔Ownership of common stock in a corporation gives - ✔✔an interest that is classified
as personal property
✔✔At the closing on June 15, the buyer is assuming a mortgage presently on the
property, on which the monthly interest charge
is currently $600. The seller has made the payment due on June 1. Assuming a VA
mortgage, what is the adjustment
made at closing? - ✔✔Debit seller $300; credit buyer $300
✔✔Too much leverage may result in - ✔✔negative cash flow
✔✔A major reason for buying and owning a condominium rather than a detached
single-family home is that - ✔✔a condominium tends to be more affordable
✔✔An adjustable rate loan should include all of the following elements - ✔✔1. margin
2. life-of-the-loan cap
3. index
✔✔Regulation Z requires that the borrower be fully informed of all of the following -
✔✔1. loan fees.
2 .the origination fee.
3. the annual percentage rate
✔✔A couple signed a lease on an apartment for a period of 1 year. The lease does
NOT contain an automatic renewal clause. The couple plans to move out at the end of
the lease rather than renew it. How much notice MUST they give to comply with
the lease term? - ✔✔No notice is required
,✔✔The relationship in which the agent is placed in the position of trust and confidence
to the principal is known by the term - ✔✔fiduciary
✔✔A couple are moving to a new city. They have decided to rent temporarily before
buying a house to see which part of the city
they would like to live in. What type of lease would BEST suit the couple's needs? -
✔✔Month-to-month lease
✔✔A broker says, while showing a rural property, "This property has the world's purest
well water." This would be an example of - ✔✔an expression of opinion, or puffing,
which could lead to misrepresentation
✔✔A contract has been drawn which obliges the sellers to convey title to their land to
the buyers if the buyers come up with
$22,000 on or before December 31st. This is called - ✔✔an option contract
✔✔Errors and Omissions insurance covers the broker for - ✔✔unintentional
misrepresentations
✔✔The land description T3N, R4W Principal Meridian refers to what method of property
description? - ✔✔Rectangular survey.
✔✔All of the following are methods to calculate the reproduction or replacement cost of
a building EXCEPT - ✔✔straight-line method
✔✔The buyer is assuming a mortgage presently on the property in the amount of
$110,000. What is the adjustment made at closing? - ✔✔Credit buyer $110,000; debit
seller $110,000
✔✔A salesperson lists a property with a contract that allows for subagency and dual
agency. The salesperson is - ✔✔an agent to the broker and a subagent to the principal.
✔✔The amount of commission to be paid is - ✔✔agreed upon by the seller and agent
on the contract.
✔✔An appraiser MUST be licensed or certified to handle Federally related work on
residential property valued at more than - ✔✔$250,000
✔✔An odorless, radioactive gas that can cause cancer - ✔✔Radon
✔✔The document used in a real estate sale that establishes the legal rights of the buyer
and seller is the - ✔✔purchase contract
, ✔✔A prospective seller asks a salesperson to recommend a listing price for a property.
The salesperson should suggest - ✔✔a competitive market analysis to determine the
property's value.
✔✔Two lots of the same size are sold on a street. The lot on the corner sells for
$20,000 more than the lot in the middle of the street. Which of the following
characteristics MOST likely explains the price difference? - ✔✔Situs
✔✔An agency relationship between a property owner and a property manager is usually
created by - ✔✔management agreement
✔✔. On January 15, a seller paid $960 in annual property tax for the current calendar
year. A buyer is purchasing the house with the closing set for March 1. What will be the
seller's credit for the property taxes already paid if the buyer pays for the day of closing?
Use a 360-day year and a 30-day month. - ✔✔$800
✔✔Which of the following is NOT usually prorated at closing - ✔✔Special tax
assessments
✔✔Which of the following is usually prorated at closing? - ✔✔1. Homeowners
association fees.
2. Property taxes.
3. Transferred homeowner's insurance.
✔✔In MOST states, foreclosed property is sold through - ✔✔public auction
✔✔A commercial property lost value because a recently constructed highway moved
traffic away from the property. This is an example of - ✔✔economic or external
obsolescence
✔✔A managing broker can be held responsible for - ✔✔all real estate activities of
salespersons.
✔✔What is the term used for the person or organization who acts as an intermediary for
the purpose of obtaining
Financing? - ✔✔Mortgage broker
✔✔According to the Truth-in-Lending Act, if any "trigger terms" are used in an ad, all of
the following disclosures
MUST appear in the ad - ✔✔1. cash price or amount of the loan
2. amount of down payment required
3. number, amount, and frequency of payments
AND ANSWERS GRADED A+
✔✔When land is conveyed to a trustee, the trustee may - ✔✔do whatever is permitted
under the trust agreement
✔✔A prospective buyer made an offer to purchase a property. The owner responded
with a counteroffer. While the buyer
was reviewing the counteroffer, the owner received a better offer. The owner can accept
the second offer if - ✔✔the owner withdraws the counteroffer before it is accepted.
✔✔While an agent is showing a listed property, the seller and the buyer enter into an
oral agreement for the purchase of the home. If a dispute over the terms arises later,
the agreement may be unenforceable because - ✔✔the agreement does not comply
with the Statute of Frauds
✔✔Earnest money should be deposited into a trust account - ✔✔in a timely manner,
according to state laws
✔✔A deed restriction is applicable to the activities of - ✔✔all owners, present and future
✔✔An easement can be terminated by - ✔✔prescription
✔✔Depreciation is calculated based on the - ✔✔cost of the building only
✔✔Which of the following approaches MOST reliably estimates the sales price of a
single-family residence? - ✔✔Market data
✔✔A seller mentions to his agent that the previous owners of his property may have
dumped hazardous waste on the site. Under the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA), who is liable for damages from
the dumping prior to the sale of the property? - ✔✔Seller
✔✔The escrow officer or closing agent MUST give information regarding the sales price
and seller's social security number to - ✔✔IRS
✔✔A broker supplies the financing for a project to build condominiums with the
stipulation that he has the exclusive right to sell the completed condos. Which of the
following BEST describes this relationship? - ✔✔Agency coupled with an interest
✔✔If you own a building free and clear that is worth $115,000 and want an annual
return of 12%, what net income is needed each month? - ✔✔$1,150
,✔✔Usury laws were enacted to protect the - ✔✔borrower
✔✔At the time of listing, the seller tells the listing agent they are moving because the
neighbor has loud parties every weekend.
The agent should - ✔✔tell potential buyers about the parties
✔✔When one of the parties to an agreement fails to perform one of its conditions, that
contract is deemed to be - ✔✔breached
✔✔Which of the following is NOT a consideration in the definition of market value? -
✔✔Buyer and seller must agree to appraised value
✔✔One common method for controlling the problems created by conflict of interest in
dual representation is - ✔✔allowing a broker to designate separate salespeople within
the company as legal representatives of each of the clients.
✔✔Ownership of common stock in a corporation gives - ✔✔an interest that is classified
as personal property
✔✔At the closing on June 15, the buyer is assuming a mortgage presently on the
property, on which the monthly interest charge
is currently $600. The seller has made the payment due on June 1. Assuming a VA
mortgage, what is the adjustment
made at closing? - ✔✔Debit seller $300; credit buyer $300
✔✔Too much leverage may result in - ✔✔negative cash flow
✔✔A major reason for buying and owning a condominium rather than a detached
single-family home is that - ✔✔a condominium tends to be more affordable
✔✔An adjustable rate loan should include all of the following elements - ✔✔1. margin
2. life-of-the-loan cap
3. index
✔✔Regulation Z requires that the borrower be fully informed of all of the following -
✔✔1. loan fees.
2 .the origination fee.
3. the annual percentage rate
✔✔A couple signed a lease on an apartment for a period of 1 year. The lease does
NOT contain an automatic renewal clause. The couple plans to move out at the end of
the lease rather than renew it. How much notice MUST they give to comply with
the lease term? - ✔✔No notice is required
,✔✔The relationship in which the agent is placed in the position of trust and confidence
to the principal is known by the term - ✔✔fiduciary
✔✔A couple are moving to a new city. They have decided to rent temporarily before
buying a house to see which part of the city
they would like to live in. What type of lease would BEST suit the couple's needs? -
✔✔Month-to-month lease
✔✔A broker says, while showing a rural property, "This property has the world's purest
well water." This would be an example of - ✔✔an expression of opinion, or puffing,
which could lead to misrepresentation
✔✔A contract has been drawn which obliges the sellers to convey title to their land to
the buyers if the buyers come up with
$22,000 on or before December 31st. This is called - ✔✔an option contract
✔✔Errors and Omissions insurance covers the broker for - ✔✔unintentional
misrepresentations
✔✔The land description T3N, R4W Principal Meridian refers to what method of property
description? - ✔✔Rectangular survey.
✔✔All of the following are methods to calculate the reproduction or replacement cost of
a building EXCEPT - ✔✔straight-line method
✔✔The buyer is assuming a mortgage presently on the property in the amount of
$110,000. What is the adjustment made at closing? - ✔✔Credit buyer $110,000; debit
seller $110,000
✔✔A salesperson lists a property with a contract that allows for subagency and dual
agency. The salesperson is - ✔✔an agent to the broker and a subagent to the principal.
✔✔The amount of commission to be paid is - ✔✔agreed upon by the seller and agent
on the contract.
✔✔An appraiser MUST be licensed or certified to handle Federally related work on
residential property valued at more than - ✔✔$250,000
✔✔An odorless, radioactive gas that can cause cancer - ✔✔Radon
✔✔The document used in a real estate sale that establishes the legal rights of the buyer
and seller is the - ✔✔purchase contract
, ✔✔A prospective seller asks a salesperson to recommend a listing price for a property.
The salesperson should suggest - ✔✔a competitive market analysis to determine the
property's value.
✔✔Two lots of the same size are sold on a street. The lot on the corner sells for
$20,000 more than the lot in the middle of the street. Which of the following
characteristics MOST likely explains the price difference? - ✔✔Situs
✔✔An agency relationship between a property owner and a property manager is usually
created by - ✔✔management agreement
✔✔. On January 15, a seller paid $960 in annual property tax for the current calendar
year. A buyer is purchasing the house with the closing set for March 1. What will be the
seller's credit for the property taxes already paid if the buyer pays for the day of closing?
Use a 360-day year and a 30-day month. - ✔✔$800
✔✔Which of the following is NOT usually prorated at closing - ✔✔Special tax
assessments
✔✔Which of the following is usually prorated at closing? - ✔✔1. Homeowners
association fees.
2. Property taxes.
3. Transferred homeowner's insurance.
✔✔In MOST states, foreclosed property is sold through - ✔✔public auction
✔✔A commercial property lost value because a recently constructed highway moved
traffic away from the property. This is an example of - ✔✔economic or external
obsolescence
✔✔A managing broker can be held responsible for - ✔✔all real estate activities of
salespersons.
✔✔What is the term used for the person or organization who acts as an intermediary for
the purpose of obtaining
Financing? - ✔✔Mortgage broker
✔✔According to the Truth-in-Lending Act, if any "trigger terms" are used in an ad, all of
the following disclosures
MUST appear in the ad - ✔✔1. cash price or amount of the loan
2. amount of down payment required
3. number, amount, and frequency of payments
