PSI Services LLC Real Estate Broker — State
2026/2027 | PSI State Real Estate Broker License
Exam Study Guide & Practice Questions | State-
Specific Broker Exam Prep, Real Estate License Law,
Broker Licensing Requirements, Agency &
Brokerage Relationships, Broker Supervision,
Advertising, Contracts, Disclosures, Commissions,
Trust Accounts, Recordkeeping, Fair Housing, State
Regulations, Real Estate Calculations & Detailed
Rationales
PSI Services LLC Real Estate Broker — State Exam: 200 Practice
Questions
Note on state-specific content: PSI administers broker exams for
multiple states (including Colorado, Texas, Washington, and others). State
portions vary by jurisdiction. The questions below draw from broker-level
content outlines including agency relationships, contracts, financing,
valuation, property management, and real estate calculations, with
emphasis on state-specific regulatory concepts where applicable.
Question 1: Under the doctrine of commingling, a real estate broker
who deposits personal funds into a trust account containing client
funds is guilty of:
A. Conversion
B. Commingling
C. Misappropriation
D. Embezzlement
CORRECT ANSWER: B. Commingling
Rationale: Commingling occurs when a broker mixes personal funds with
client funds in a trust account. While conversion involves unauthorized use
of client funds, and embezzlement involves theft, commingling is the
specific violation of mixing funds. Many states allow a small buffer of broker
funds to cover bank fees, but any amount beyond that constitutes
commingling.
Question 2: A broker who wishes to be compensated for
representing both the buyer and seller in the same transaction must
typically obtain:
,A. Written consent from the seller only
B. Written informed consent from both parties
C. Verbal consent from both parties
D. Approval from the state real estate commission
CORRECT ANSWER: B. Written informed consent from both parties
Rationale: Dual agency creates a conflict of interest because the broker
cannot provide undivided loyalty to both parties. Informed consent in
writing from both the buyer and seller is required before a broker may act
as a dual agent. Verbal consent alone is insufficient, and commission
approval is not required for individual transactions.
Question 3: A property is listed for sale at $450,000. The seller
agrees to pay the listing broker 6% commission, and the listing
broker agrees to split the commission equally with the buyer's
broker. How much will the buyer's broker receive?
A. $13,500
B. $27,000
C. $9,000
D. $18,000
CORRECT ANSWER: A. $13,500
Rationale: Total commission = $450,000 × 0.06 = $27,000. An equal split
means each broker receives $27,000 ÷ 2 = $13,500. The buyer's broker's
share is half of the total commission.
Question 4: Which of the following is NOT a fiduciary duty owed by
a real estate broker to a principal?
A. Loyalty
B. Obedience
C. Diligence
D. Profit maximization
CORRECT ANSWER: D. Profit maximization
Rationale: The fiduciary duties owed to a principal include loyalty,
obedience, disclosure, confidentiality, reasonable care and diligence, and
accounting. Profit maximization is not a fiduciary duty; while a broker
should work to obtain a favorable price, the duty is to act in the principal's
best interest, not to guarantee maximum profit.
,Question 5: A broker acting as a single agent for a seller discovers
that the buyer is willing to pay significantly more than the asking
price. Under the duty of loyalty, the broker should:
A. Tell the buyer to offer more than asking
B. Inform the seller of this information
C. Keep the information confidential from both parties
D. Advise the buyer that the property is underpriced
CORRECT ANSWER: B. Inform the seller of this information
Rationale: The fiduciary duty of loyalty and disclosure requires the broker
to inform the seller (the principal) of any information that could benefit the
seller's position, including the buyer's willingness to pay more. The broker
must not disclose this information to the buyer in a way that harms the
seller's negotiating position.
Question 6: Under most state license laws, a broker's trust account
records must be retained for a minimum of:
A. One year
B. Three years
C. Five years
D. Ten years
CORRECT ANSWER: B. Three years
Rationale: Most state real estate commissions require that trust account
records, including bank statements, check stubs, and ledgers, be retained
for a minimum of three years. Some states require longer retention periods,
but three years is the common minimum standard. Brokers should verify
their specific state's requirements.
Question 7: A buyer signs an exclusive buyer representation
agreement with a broker. During the term, the buyer purchases a
property that was introduced to them by a different broker. The
original broker is entitled to:
A. No commission because they did not find the property
B. A commission because of the exclusive agreement
C. Half of the commission paid to the other broker
D. A referral fee only
, CORRECT ANSWER: B. A commission because of the exclusive
agreement
Rationale: An exclusive buyer representation agreement entitles the broker
to a commission if the buyer purchases any property during the term of the
agreement, regardless of who introduced the property, unless the
agreement contains specific exclusions. This is the defining characteristic of
an exclusive agreement.
Question 8: The term "puffing" in real estate advertising refers to:
A. Exaggerated statements that are not literally true but not fraudulent
B. Making false statements about a property's condition
C. Discriminating in advertising based on protected class
D. Advertising a property without the seller's consent
CORRECT ANSWER: A. Exaggerated statements that are not
literally true but not fraudulent
Rationale: Puffing refers to statements of opinion or exaggeration that a
reasonable person would not take literally, such as "the best view in town."
Puffing is generally not actionable as fraud, unlike misrepresentation of
material facts. However, brokers should avoid puffery that could mislead
consumers.
Question 9: A broker who represents a seller in a transaction must
disclose to the buyer:
A. The seller's motivation for selling
B. The seller's bottom-line price
C. Material defects known to the broker
D. The seller's financial situation
CORRECT ANSWER: C. Material defects known to the broker
Rationale: While a seller's agent owes loyalty and confidentiality to the
seller, the broker must disclose material defects in the property that are
known to the broker. This duty to disclose latent defects overrides
confidentiality regarding property condition. The broker need not disclose
the seller's motivation or financial situation.
Question 10: An "exclusive right to sell" listing agreement differs
from an "exclusive agency" listing in that:
2026/2027 | PSI State Real Estate Broker License
Exam Study Guide & Practice Questions | State-
Specific Broker Exam Prep, Real Estate License Law,
Broker Licensing Requirements, Agency &
Brokerage Relationships, Broker Supervision,
Advertising, Contracts, Disclosures, Commissions,
Trust Accounts, Recordkeeping, Fair Housing, State
Regulations, Real Estate Calculations & Detailed
Rationales
PSI Services LLC Real Estate Broker — State Exam: 200 Practice
Questions
Note on state-specific content: PSI administers broker exams for
multiple states (including Colorado, Texas, Washington, and others). State
portions vary by jurisdiction. The questions below draw from broker-level
content outlines including agency relationships, contracts, financing,
valuation, property management, and real estate calculations, with
emphasis on state-specific regulatory concepts where applicable.
Question 1: Under the doctrine of commingling, a real estate broker
who deposits personal funds into a trust account containing client
funds is guilty of:
A. Conversion
B. Commingling
C. Misappropriation
D. Embezzlement
CORRECT ANSWER: B. Commingling
Rationale: Commingling occurs when a broker mixes personal funds with
client funds in a trust account. While conversion involves unauthorized use
of client funds, and embezzlement involves theft, commingling is the
specific violation of mixing funds. Many states allow a small buffer of broker
funds to cover bank fees, but any amount beyond that constitutes
commingling.
Question 2: A broker who wishes to be compensated for
representing both the buyer and seller in the same transaction must
typically obtain:
,A. Written consent from the seller only
B. Written informed consent from both parties
C. Verbal consent from both parties
D. Approval from the state real estate commission
CORRECT ANSWER: B. Written informed consent from both parties
Rationale: Dual agency creates a conflict of interest because the broker
cannot provide undivided loyalty to both parties. Informed consent in
writing from both the buyer and seller is required before a broker may act
as a dual agent. Verbal consent alone is insufficient, and commission
approval is not required for individual transactions.
Question 3: A property is listed for sale at $450,000. The seller
agrees to pay the listing broker 6% commission, and the listing
broker agrees to split the commission equally with the buyer's
broker. How much will the buyer's broker receive?
A. $13,500
B. $27,000
C. $9,000
D. $18,000
CORRECT ANSWER: A. $13,500
Rationale: Total commission = $450,000 × 0.06 = $27,000. An equal split
means each broker receives $27,000 ÷ 2 = $13,500. The buyer's broker's
share is half of the total commission.
Question 4: Which of the following is NOT a fiduciary duty owed by
a real estate broker to a principal?
A. Loyalty
B. Obedience
C. Diligence
D. Profit maximization
CORRECT ANSWER: D. Profit maximization
Rationale: The fiduciary duties owed to a principal include loyalty,
obedience, disclosure, confidentiality, reasonable care and diligence, and
accounting. Profit maximization is not a fiduciary duty; while a broker
should work to obtain a favorable price, the duty is to act in the principal's
best interest, not to guarantee maximum profit.
,Question 5: A broker acting as a single agent for a seller discovers
that the buyer is willing to pay significantly more than the asking
price. Under the duty of loyalty, the broker should:
A. Tell the buyer to offer more than asking
B. Inform the seller of this information
C. Keep the information confidential from both parties
D. Advise the buyer that the property is underpriced
CORRECT ANSWER: B. Inform the seller of this information
Rationale: The fiduciary duty of loyalty and disclosure requires the broker
to inform the seller (the principal) of any information that could benefit the
seller's position, including the buyer's willingness to pay more. The broker
must not disclose this information to the buyer in a way that harms the
seller's negotiating position.
Question 6: Under most state license laws, a broker's trust account
records must be retained for a minimum of:
A. One year
B. Three years
C. Five years
D. Ten years
CORRECT ANSWER: B. Three years
Rationale: Most state real estate commissions require that trust account
records, including bank statements, check stubs, and ledgers, be retained
for a minimum of three years. Some states require longer retention periods,
but three years is the common minimum standard. Brokers should verify
their specific state's requirements.
Question 7: A buyer signs an exclusive buyer representation
agreement with a broker. During the term, the buyer purchases a
property that was introduced to them by a different broker. The
original broker is entitled to:
A. No commission because they did not find the property
B. A commission because of the exclusive agreement
C. Half of the commission paid to the other broker
D. A referral fee only
, CORRECT ANSWER: B. A commission because of the exclusive
agreement
Rationale: An exclusive buyer representation agreement entitles the broker
to a commission if the buyer purchases any property during the term of the
agreement, regardless of who introduced the property, unless the
agreement contains specific exclusions. This is the defining characteristic of
an exclusive agreement.
Question 8: The term "puffing" in real estate advertising refers to:
A. Exaggerated statements that are not literally true but not fraudulent
B. Making false statements about a property's condition
C. Discriminating in advertising based on protected class
D. Advertising a property without the seller's consent
CORRECT ANSWER: A. Exaggerated statements that are not
literally true but not fraudulent
Rationale: Puffing refers to statements of opinion or exaggeration that a
reasonable person would not take literally, such as "the best view in town."
Puffing is generally not actionable as fraud, unlike misrepresentation of
material facts. However, brokers should avoid puffery that could mislead
consumers.
Question 9: A broker who represents a seller in a transaction must
disclose to the buyer:
A. The seller's motivation for selling
B. The seller's bottom-line price
C. Material defects known to the broker
D. The seller's financial situation
CORRECT ANSWER: C. Material defects known to the broker
Rationale: While a seller's agent owes loyalty and confidentiality to the
seller, the broker must disclose material defects in the property that are
known to the broker. This duty to disclose latent defects overrides
confidentiality regarding property condition. The broker need not disclose
the seller's motivation or financial situation.
Question 10: An "exclusive right to sell" listing agreement differs
from an "exclusive agency" listing in that:
