REAL ESTATE U EXAM WITH IN-DEPTH QUESTIONS & MODEL ANSWERS (2026 LATEST UPDATE VERSION)

REAL ESTATE U EXAM WITH IN-DEPTH QUESTIONS & MODEL ANSWERS (2026 LATEST UPDATE VERSION) Amy is looking to obtain a loan to purchase a new house. Her monthly mortgage payment (PITI) will be $3,650 per month. Amy's gross monthly income (her salary) is $12,000 per month. The lender requires a front-end ratio of no more than 32%. Will Amy qualify for a loan? - CORRECT ANSThe answer is Yes because Amy's front-end ratio equals $3,650 / $12,000 = 0.304 or 30%. In other words, Amy's total monthly housing expense equals 30% of her gross monthly income, which is less than the lender's requirement of 32%. Lenders typically look for a borrower to have a maximum front-end ratio of 28-32%. John is applying for a new mortgage. After submitting all of his financials to the lender, the lender calculates that John's total monthly debt obligations (mortgage, car loan, and student loans) will equal $5,640 per month. John's gross monthly income (his salary) equals $13,000 per month. Assuming the lender requires a maximum debt-to-income ratio of 42%, will John qualify for the mortgage? - CORRECT ANSThe answer is No because John's debt-to- income ratio equals $5,640 / $13,000 = 0.439 or 43.9%. Since his debt-to-income ratio exceeds the lender's requirement of 42% John cannot qualify for the loan. Lenders typically look for a borrower to have a maximum back-end-ratio of 36-43%. CMA: The subject property has three bedrooms. Comp #2 has two bedrooms. Based on the broker's analysis, a bedroom in this neighborhood is worth $6,000. The subject property also has an attached garage, while Comp #2 has a detached garage. The attached garage adds $2,000 in value. Comp #2 has a pool, while the subject property does not. A pool is worth around $4,000. If Comp #2 sold for $280,000, what should be the value of the subject property? - CORRECT ANSTo find the answer, we need to adjust the sales price of Comp #2 based on the superior and inferior features of the subject property. You have to adjust the sales price of the comparable property up or down based on superior and/or inferior features of the subject property. If the subject property is superior, then add value to the sales price of the comp. If the subject property is inferior, then subtract value from the sales price of the comp. The subject property is more valuable than Comp #2 by $6,000 for the extra bedroom and $2,000 for the attached garage. However, the subject property is less valuable than Comp #2 by $4,000 for the pool. Therefore, the value of the subject property equals $280,000 + $6,000 + $2,000 - $4,000 = $284,000 A buyer makes a written offer to purchase a property and includes a $2,500 earnest money deposit. The seller makes a counteroffer for more money. The buyer verbally accepts. The listing agent deposits the money in the trust account at this point in time. When the buyer receives the seller's counteroffer, he refuses to sign even though he had verbally agreed earlier. The seller is angry and tells the buyer that he will not return the earnest deposit since the buyer has reneged on his word. In fact, the seller demands that the listing agent give him the deposit. What must the real estate agent do regarding the earnest money in this situation? - CORRECT ANSHe must retain the deposit in the trust account until he obtains written permission from the buyer and seller or await a court order. While a broker was inspecting a property for listing, the property owner told the broker the house contained 2,400 square feet of heated living area. Relying on this information, the broker listed the property and represented it to prospective buyers as containing 2,400 square feet. After purchasing the property, the buyer accurately determined that there were only 1,850 square feet and sued for damages for the difference in value between 2,400 square feet and 1,850 square feet. Which of the following is correct? - CORRECT ANSBoth the broker and the seller are liable. A provisional broker licensee on active status has just taken continuing education classes for the first time. These classes were taken before the deadline for completion. He took the BICUP course and one elective. What will be his license status as of July 1? - CORRECT ANS Inactive A broker licensee may be disciplined by the NC Real Estate Commission for which of the following actions? - CORRECT ANSDrafting a financing contingency addendum at the buyer's request In North Carolina, unpaid property taxes lawfully constitute a lien against the property as of what date? - CORRECT ANSJanuary 1 of the current tax year Which of the following is true regarding closing statements in North Carolina? - CORRECT ANSThe broker does not have to personally prepare the closing statement. According to the Statute of Frauds, which of the following leases must be in writing in order to be enforceable? - CORRECT ANSA lease for more than three years Betsy Buyer is in the market to purchase a new house. She has decided that she will not be represented by a licensed buyer's agent but wishes instead to be paid the buyer's agent commission on the house she is buying from Seller Sam. Does this require Betsy to be licensed? - CORRECT ANSNo The lowest concrete part of a house is the: - CORRECT ANSFooting Samantha is a newly licensed provisional broker in NC who passed the licensing exam on July 12, 2021. In order to have her license remain on "Active" status, when must she complete 8 hours of continuing education? - CORRECT ANSBy June 10 of 2023 Mary is a salaried assistant of Broker Bob. She makes $500 per week. Mary schedules and shows apartment units for rent to potential tenants in a building that Bob manages. Is Mary required to have a license? - CORRECT ANSNo Buyer Joe recently purchased a condominium unit. According to the Residential Square Footage Guidelines, how is the square footage of Buyer Joe's unit calculated? - CORRECT ANS All measurements should be taken from the interior of the walls. James has measured his new listing as containing a total of 3,200 square feet of area that matches the description of living area in NC. This contains 400 square feet of space in the 3 rd floor attic area that was finished by the sellers after they purchased without the proper permits obtained. What living area should James’s use to market the property? - CORRECT ANS 3,200 square feet If a buyer does not receive the mandatory Mineral, Oil and Gas Mandatory Disclosure Statement before signing a 2-T Offer to Purchase and Contract ...? - CORRECT ANS This contract is voidable at the whim of the buyer for three calendar days Tommy is a listing broker and states to a potential buyer that one of his listings has "no problems with the roofing". Later, the buyer finds out that the roof is actually leaking. What is Tommy guilty of? - CORRECT ANSMisrepresentation - Misrepresentation occurs when a licensee says something that turns out to be untrue about a material fact. A leaking roof is considered a material fact. David just purchased a home that was listed by Mark of ABC Realty. Mark's MLS listing mentions that the property is serviced by city water and sewer even though Mark has discussed with the seller that there is a well on the property which provides drinking water. This is an example of...? - CORRECT ANSWillful Misrepresentation Mr. Jones, a Realtor with XYZ Realty showed Mr. Smith's listing. Mr. Smith is with ABC Realty. Mr. Jones asked Mr. Smith to deliver a Residential Property and Owners' Association Disclosure. Mr. Smith told Mr. Jones that the seller refused to fill out the form. Two days later, the buyer notified Mr. Jones and Mr. Smith that he was backing out on the deal. He demanded a refund of his earnest money deposit and his due diligence fee. Which of the following is true? - CORRECT ANSAll money must be returned. The Residential Property and Owners' Association Disclosure form must be completed by the seller and delivered to the buyer. The failure to provide a buyer with this form may allow the buyer to cancel the contract by notifying the seller within 3 calendar days of contract acceptance. Susan, a real estate broker, accepted a cash deposit for earnest money with an offer from a buyer. When must this money be deposited in the bank? - CORRECT ANSTrust monies must be deposited into a trust account within 3 banking days of receipt. When performing a CMA or BPO a real estate broker...? - CORRECT ANSYou can report the suggested price as a range. A CMA is used to help establish a listing price. A broker can provide a range since it is ultimately up to the seller to determine the listing price. John and Mary Davis married in 1983. They bought a home for $42,000 later that same year. They lived in that home until 2017. They sold that home for $542,000. Compute the taxes due to the IRS if the Davis' are in a 25% tax bracket. - CORRECT ANSzero. Married couples are exempt from paying taxes on up to $500,000 in capital gains. Since the Davis family's capital gain is $500,000 ($542,000 - $42,000), they do not have to pay capital gains tax. Which of the following firm licenses is NOT required to have a Broker in Charge? - CORRECT ANSS Corporation The North Carolina Real Estate Commission has the authority to: - CORRECT ANS Fine a developer whose agent violates the North Carolina Time-Share Act. Larry Agent has reviewed the Working with Real Estate Agents brochure with his buyer. The buyer verbally agrees to have Larry show him some houses as a buyer agent. Larry has located a house listed with his firm that the buyer wants to purchase. At the same time the offer to purchase was prepared, Larry and his buyer also entered into a written buyer agency agreement allowing for both dual and designated agency. Which of the following is true? - CORRECT ANSLarry should have entered into a verbal Dual Agency Agreement before showing the listing to the buyer. After discussing with the buyer, including the preparation of the Working with Real Estate Agents’ brochure, the broker has agreed to serve in the capacity of a buyer agent. The agent must have the buyer sign a written Buyer Agency Agreement by what specific point in time? - CORRECT ANSat the time the broker will present an offer on the buyer's behalf John is a licensed real estate broker in NC who is managing an apartment complex. He wants to run a promotion to help attract new tenants. Which of the following would NOT be allowed? - CORRECT ANSA free month's rent given to any current tenants who recommend a friend that signs a one-year lease. Remember, you cannot receive any form of compensation from an owner if you perform a real estate service for someone else. A free month's rent given to new tenants involves a form of compensation; however, the tenant is not representing or helping someone else. The tenant is representing themselves. A $50 gift card is also a form of compensation; however, the tenant is not performing any real estate services for someone else (they are representing themselves again). The remaining answer choice involves compensation and real estate services for someone else; however, the person offering those services is licensed. This leaves "a free month's rent given to any current tenants who recommend a friend that signs a one-year lease" as the correct answer. The tenant is being compensated in the form of one month's free rent and performing real estate services for someone else (their friend in this case). Since they are being compensated and performing real estate services for someone else, a license is required. Joan finds out that her best friend is interested in purchasing a new home and puts her friend into contact with an active real estate broker named Paula who will represent the friend in the purchase. Upon closing, Paula sends Joan a $200 Amazon gift card. Is Joan required to have a license in order to receive the gift card? - CORRECT ANSYes Dan is a real estate broker in NC who is holding a $8,000 earnest money deposit for a sales transaction between Seller Sam and Buyer Bob. Buyer Bob has breached the sales contract, and the contract specifies that in the event of a breach, the earnest money should be released to the seller. Seller Sam wants the earnest money to be released to him, as per the terms of the contract. What should Dan do? - CORRECT ANSHold on to the earnest money until both Seller Sam and Buyer Bob agree to release the earnest money. Bob owns a building lot in Holly Springs that he and his wife purchased when they both attended graduate school in Raleigh. Although they paid only $10,000 for the lot many years ago, it has a current tax value of $18,000. Bob and his wife now realize they will not be moving back to NC so they decide to sell. They contact Arnold, who is a real estate broker, to list the property. Arnold tells Bob that he has a builder friend who might be interested in purchasing the lot quickly. Two days later Arnold emails Bob a copy of the listing contract for $20,000 and once it is signed, he immediately emails a contract to purchase from the builder friend for full asking price. Bob and his wife sign the contract and the property is closed. Three months later Bob learns from an old college friend, who still lives in the area, that these lots are very much in demand and that they are selling for close to $40,000. After some research - CORRECT ANS Arnold has likely violated his duties to Bob by not performing a CMA in order to determine the probable selling price of the lot. Funds paid to a time-share developer: - CORRECT ANSBelong to the buyer for 10 days from the date of contract. A broker licensee on provisional status has just been hired by a local lender to assist them in the preparation of a CMA/BPO. The lender is asking for this assistance in order to help them understand how much the property might be sold for so they can better set the limits for the equity line of credit the borrower is requesting to be set up. Which of the following best summarizes this situation? - CORRECT ANSA provisional broker is not allowed to complete the CMA that is being requested. A licensee is NOT allowed to prepare a CMA/BPO for any existing or potential lienholder or other third party where the CMA/BPO is to serve as the basis to determine the value of a property for the purpose of originating a mortgage loan. According to the NCAR/NCBA Offer to Purchase and Contract form, the final date for the buyer to undertake due diligence in the purchase of a home is best represented by which of the following? - CORRECT ANSThe closing date, but the buyer will not be entitled to a refund of his due diligence fee or his earnest money deposit. The maximum tenant security deposit that can lawfully be collected on a North Carolina residential lease that is for a nine-month fixed term but mandates the rent is to be paid monthly would be: - CORRECT ANS2 Months The area occupied by the stairway, in a two-story house, is calculated as a part of: - CORRECT ANSboth the first and second floor. Teddy is an on-site employee of Durham Builders who is paid $75,000 annually and routinely meets with potential buyers to show them homes, help them select floor plans, choose options, and prepare purchase agreements. Is Teddy required to have a real estate license? - CORRECT ANSNo. Since Teddy is a salaried employee of the owner (in this case the real estate developer). Remember, a salaried employee of an owner can perform ALL of the duties of their boss. The vertical masonry structures placed inside the foundation wall in order to support the subflooring are: - CORRECT ANSPiers