2026/2027
PSI National Real Estate Exam
2026/2027 Comprehensive Study
Guide, Practice Questions, Test Bank
Review, and Licensing Exam
Preparation Manual
Question 1
Which of the following statements regarding discount points in a real estate loan
transaction is FALSE?
A. Discount points are prepaid interest paid to the lender.
B. One discount point equals 1% of the loan amount.
C. Discount points may help lower the interest rate on a mortgage loan.
D. Discount points are computed as a percentage of the selling price.
Correct Answer: D. Discount points are computed as a percentage of the selling
price.
Rationale: Discount points are calculated as a percentage of the loan amount, not the
selling price of the property. One point equals 1% of the mortgage loan and is
generally paid upfront to reduce the interest rate over the life of the loan. Option A is
correct because points are considered prepaid interest. Option B accurately defines a
discount point. Option C is also correct because paying points can lower the
borrower’s interest rate and monthly payments. Therefore, Option D is the false
statement.
Question 2
A borrower defaults on a mortgage loan that contains an acceleration clause. What
right does this clause give the lender?
A. The right to seize all of the borrower’s personal property
B. The right to demand immediate payment of the full outstanding loan balance
C. The right to report the borrower to the Federal Housing Administration
D. The right to immediately evict the borrower without foreclosure proceedings
Correct Answer: B. The right to demand immediate payment of the full
outstanding loan balance
,2026/2027
Rationale: An acceleration clause permits the lender to declare the entire unpaid loan
balance immediately due upon borrower default. This clause protects lenders by
allowing them to initiate foreclosure if the borrower fails to cure the default. Option A
is incorrect because lenders cannot automatically seize personal assets unrelated to the
collateral property. Option C is unrelated to the purpose of an acceleration clause.
Option D is also incorrect because legal foreclosure procedures are generally required
before eviction can occur.
Question 3
When a seller finances part of the buyer’s purchase price and secures the debt using a
deed of trust, what is a major advantage to the seller?
A. Deeds of trust are less expensive to prepare than mortgages
B. State law always requires the use of deeds of trust
C. Deeds of trust eliminate community property concerns
D. Foreclosure procedures are generally faster and simpler
Correct Answer: D. Foreclosure procedures are generally faster and simpler
Rationale: One of the major benefits of a deed of trust is the ability to use nonjudicial
foreclosure procedures in many states, making foreclosure faster and less expensive
than judicial foreclosure under a mortgage. Option A may occasionally be true but is
not the principal advantage. Option B is incorrect because laws vary by state. Option
C has no direct relationship to deeds of trust. Thus, Option D is the most accurate
answer.
Question 4
During a listing appointment, a seller informs the listing agent that the neighbors host
loud parties every weekend. What should the agent do with this information?
A. Recommend that the seller speak with the neighbors
B. Schedule property showings only during daytime hours
C. Inform prospective buyers about the recurring disturbance
D. Keep the information confidential and disclose it to no one
Correct Answer: C. Inform prospective buyers about the recurring disturbance
Rationale: Real estate agents have a duty to disclose known material facts that could
affect a buyer’s decision to purchase the property. Persistent loud disturbances from
neighbors may materially impact a property's desirability and enjoyment. Option A
may be reasonable advice but does not eliminate disclosure obligations. Option B
attempts to conceal the issue rather than address disclosure duties. Option D could
expose the agent and seller to claims of misrepresentation or nondisclosure. Therefore,
disclosure is the appropriate action.
,2026/2027
Question 5
A broker representing a seller receives an offer from a former college roommate. The
broker knows the buyer would increase the offer if necessary. What should the broker
do?
A. Inform the seller that the buyer is willing to pay more
B. Withhold the information to ensure fairness to both parties
C. Attempt to negotiate a compromise between the parties
D. Encourage the seller to delay accepting the offer
Correct Answer: A. Inform the seller that the buyer is willing to pay more
Rationale: A broker owes fiduciary duties to the seller, including loyalty and full
disclosure of relevant information that could benefit the seller. Knowing that the
buyer may pay more is material information the seller should receive before deciding
whether to accept the offer. Option B violates the broker’s fiduciary responsibility.
Option C improperly substitutes the broker’s judgment for the seller’s. Option D may
manipulate negotiations and is unethical. Therefore, the broker must disclose the
information.
Question 6
While showing a rural property, a broker states, “This property has the world’s purest
well water.” This statement is BEST classified as:
A. A verbal water quality certification
B. Confirmation that the property is not connected to public utilities
C. Puffing or opinion that may result in misrepresentation claims
D. A required property disclosure by the licensee
Correct Answer: C. Puffing or opinion that may result in misrepresentation
claims
Rationale: Puffing refers to exaggerated opinions or promotional statements not
intended as factual guarantees. However, statements about water purity could
potentially be interpreted as factual claims, creating risk for misrepresentation if
proven false. Option A is incorrect because no certified report was provided. Option B
misinterprets the statement. Option D is incorrect because such claims are not
mandatory disclosures. Therefore, the statement is considered puffing with possible
liability implications.
Question 7
Under the Truth-in-Lending Act, when “trigger terms” are used in advertising, which
disclosure is NOT required?
, 2026/2027
A. Cash price or amount of the loan
B. Required down payment amount
C. Number, amount, and frequency of payments
D. Prepayment penalties and rebates
Correct Answer: D. Prepayment penalties and rebates
Rationale: The Truth-in-Lending Act requires specific disclosures when trigger terms
such as monthly payment amounts or down payment amounts appear in
advertisements. Required disclosures include the loan amount, down payment,
repayment terms, and annual percentage rate. Prepayment penalties and rebates are
not among the mandatory disclosures triggered by advertising terms. Options A, B,
and C are required disclosures, making Option D the correct answer.
Question 8
At closing, the seller owns a 300-gallon fuel oil tank that is two-thirds full. Fuel oil
costs $2.53 per gallon. What credit should the seller receive?
A. $253
B. $506
C. $759
D. $1,012
Correct Answer: B. $506
Rationale: Two-thirds of a 300-gallon tank equals 200 gallons. Multiplying 200
gallons by $2.53 per gallon results in $506. The seller should receive this amount as a
credit because the buyer receives the remaining fuel after closing. Options A, C, and
D are mathematically incorrect based on the information provided.
Question 9
A homeowner permits a neighbor to temporarily park an RV on the property but does
not want to create a permanent right. Which legal arrangement is MOST appropriate?
A. Easement by necessity
B. Variance
C. License
D. Life estate
Correct Answer: C. License
Rationale: A license is a temporary, revocable personal privilege to use another
person’s property without granting ownership rights or permanent interests. Option A
is incorrect because easements create nonrevocable property rights. Option B relates
to zoning exceptions. Option D involves ownership interests for the duration of a
PSI National Real Estate Exam
2026/2027 Comprehensive Study
Guide, Practice Questions, Test Bank
Review, and Licensing Exam
Preparation Manual
Question 1
Which of the following statements regarding discount points in a real estate loan
transaction is FALSE?
A. Discount points are prepaid interest paid to the lender.
B. One discount point equals 1% of the loan amount.
C. Discount points may help lower the interest rate on a mortgage loan.
D. Discount points are computed as a percentage of the selling price.
Correct Answer: D. Discount points are computed as a percentage of the selling
price.
Rationale: Discount points are calculated as a percentage of the loan amount, not the
selling price of the property. One point equals 1% of the mortgage loan and is
generally paid upfront to reduce the interest rate over the life of the loan. Option A is
correct because points are considered prepaid interest. Option B accurately defines a
discount point. Option C is also correct because paying points can lower the
borrower’s interest rate and monthly payments. Therefore, Option D is the false
statement.
Question 2
A borrower defaults on a mortgage loan that contains an acceleration clause. What
right does this clause give the lender?
A. The right to seize all of the borrower’s personal property
B. The right to demand immediate payment of the full outstanding loan balance
C. The right to report the borrower to the Federal Housing Administration
D. The right to immediately evict the borrower without foreclosure proceedings
Correct Answer: B. The right to demand immediate payment of the full
outstanding loan balance
,2026/2027
Rationale: An acceleration clause permits the lender to declare the entire unpaid loan
balance immediately due upon borrower default. This clause protects lenders by
allowing them to initiate foreclosure if the borrower fails to cure the default. Option A
is incorrect because lenders cannot automatically seize personal assets unrelated to the
collateral property. Option C is unrelated to the purpose of an acceleration clause.
Option D is also incorrect because legal foreclosure procedures are generally required
before eviction can occur.
Question 3
When a seller finances part of the buyer’s purchase price and secures the debt using a
deed of trust, what is a major advantage to the seller?
A. Deeds of trust are less expensive to prepare than mortgages
B. State law always requires the use of deeds of trust
C. Deeds of trust eliminate community property concerns
D. Foreclosure procedures are generally faster and simpler
Correct Answer: D. Foreclosure procedures are generally faster and simpler
Rationale: One of the major benefits of a deed of trust is the ability to use nonjudicial
foreclosure procedures in many states, making foreclosure faster and less expensive
than judicial foreclosure under a mortgage. Option A may occasionally be true but is
not the principal advantage. Option B is incorrect because laws vary by state. Option
C has no direct relationship to deeds of trust. Thus, Option D is the most accurate
answer.
Question 4
During a listing appointment, a seller informs the listing agent that the neighbors host
loud parties every weekend. What should the agent do with this information?
A. Recommend that the seller speak with the neighbors
B. Schedule property showings only during daytime hours
C. Inform prospective buyers about the recurring disturbance
D. Keep the information confidential and disclose it to no one
Correct Answer: C. Inform prospective buyers about the recurring disturbance
Rationale: Real estate agents have a duty to disclose known material facts that could
affect a buyer’s decision to purchase the property. Persistent loud disturbances from
neighbors may materially impact a property's desirability and enjoyment. Option A
may be reasonable advice but does not eliminate disclosure obligations. Option B
attempts to conceal the issue rather than address disclosure duties. Option D could
expose the agent and seller to claims of misrepresentation or nondisclosure. Therefore,
disclosure is the appropriate action.
,2026/2027
Question 5
A broker representing a seller receives an offer from a former college roommate. The
broker knows the buyer would increase the offer if necessary. What should the broker
do?
A. Inform the seller that the buyer is willing to pay more
B. Withhold the information to ensure fairness to both parties
C. Attempt to negotiate a compromise between the parties
D. Encourage the seller to delay accepting the offer
Correct Answer: A. Inform the seller that the buyer is willing to pay more
Rationale: A broker owes fiduciary duties to the seller, including loyalty and full
disclosure of relevant information that could benefit the seller. Knowing that the
buyer may pay more is material information the seller should receive before deciding
whether to accept the offer. Option B violates the broker’s fiduciary responsibility.
Option C improperly substitutes the broker’s judgment for the seller’s. Option D may
manipulate negotiations and is unethical. Therefore, the broker must disclose the
information.
Question 6
While showing a rural property, a broker states, “This property has the world’s purest
well water.” This statement is BEST classified as:
A. A verbal water quality certification
B. Confirmation that the property is not connected to public utilities
C. Puffing or opinion that may result in misrepresentation claims
D. A required property disclosure by the licensee
Correct Answer: C. Puffing or opinion that may result in misrepresentation
claims
Rationale: Puffing refers to exaggerated opinions or promotional statements not
intended as factual guarantees. However, statements about water purity could
potentially be interpreted as factual claims, creating risk for misrepresentation if
proven false. Option A is incorrect because no certified report was provided. Option B
misinterprets the statement. Option D is incorrect because such claims are not
mandatory disclosures. Therefore, the statement is considered puffing with possible
liability implications.
Question 7
Under the Truth-in-Lending Act, when “trigger terms” are used in advertising, which
disclosure is NOT required?
, 2026/2027
A. Cash price or amount of the loan
B. Required down payment amount
C. Number, amount, and frequency of payments
D. Prepayment penalties and rebates
Correct Answer: D. Prepayment penalties and rebates
Rationale: The Truth-in-Lending Act requires specific disclosures when trigger terms
such as monthly payment amounts or down payment amounts appear in
advertisements. Required disclosures include the loan amount, down payment,
repayment terms, and annual percentage rate. Prepayment penalties and rebates are
not among the mandatory disclosures triggered by advertising terms. Options A, B,
and C are required disclosures, making Option D the correct answer.
Question 8
At closing, the seller owns a 300-gallon fuel oil tank that is two-thirds full. Fuel oil
costs $2.53 per gallon. What credit should the seller receive?
A. $253
B. $506
C. $759
D. $1,012
Correct Answer: B. $506
Rationale: Two-thirds of a 300-gallon tank equals 200 gallons. Multiplying 200
gallons by $2.53 per gallon results in $506. The seller should receive this amount as a
credit because the buyer receives the remaining fuel after closing. Options A, C, and
D are mathematically incorrect based on the information provided.
Question 9
A homeowner permits a neighbor to temporarily park an RV on the property but does
not want to create a permanent right. Which legal arrangement is MOST appropriate?
A. Easement by necessity
B. Variance
C. License
D. Life estate
Correct Answer: C. License
Rationale: A license is a temporary, revocable personal privilege to use another
person’s property without granting ownership rights or permanent interests. Option A
is incorrect because easements create nonrevocable property rights. Option B relates
to zoning exceptions. Option D involves ownership interests for the duration of a
