REAL ESTATE SALESPERSON LICENSING EXAM
(2026 EDITION)
1. A property is currently valued at $450,000. Its value has been appreciating at a rate of 3% per year for
the last 4 years. What was its value 4 years ago (rounded to the nearest thousand)?
A) $400,000
B) $399,000
C) $405,000
D) $410,000
ANSWERA) $400,000
Rationale for A: Correct. To find past value, divide current value by (1 + appreciation rate)^number of
years: $450,000 / (1.03^4) = $450,.1255 = $399,800 ≈ $400,000.
Rationale for B: $399,000 is slightly low; rounding rules point to $400,000.
Rationale for C: $405,000 would be the result of using 2 years instead of 4.
Rationale for D: $410,000 incorrectly uses simple interest rather than compound.
2. A salesperson takes a listing that expires on June 30. The seller then lists with another brokerage on
July 15. On August 1, the original salesperson’s cousin buys the property. Is the original salesperson
entitled to a commission?
,A) Yes, if the cousin was a client during the original listing.
B) Yes, under the concept of procuring cause.
C) No, because the listing expired before the sale.
D) No, because the cousin is a family member.
ANSWERC) No, because the listing expired before the sale.
Rationale for A: Incorrect. Even if the cousin was a client, the listing agreement had terminated.
Rationale for B: Incorrect. Procuring cause typically applies during an active listing or protective period,
but here the sale occurred after the expiration and after a new listing.
Rationale for C: Correct. Once a listing expires, the broker’s right to commission ends unless a safety
clause applies—but the sale was not to a prospect introduced during the term.
Rationale for D: Incorrect. Family relationship does not automatically negate commission rights.
3. Which of the following is considered a government-supported enterprise (GSE) that buys mortgages
on the secondary market?
A) FHA
B) VA
C) Fannie Mae
,D) HUD
ANSWERC) Fannie Mae
Rationale for A: Incorrect. FHA insures loans, it does not buy them.
Rationale for B: Incorrect. VA guarantees loans for veterans.
Rationale for C: Correct. Fannie Mae and Freddie Mac are GSEs that purchase mortgages to provide
liquidity.
Rationale for D: Incorrect. HUD oversees FHA and other housing programs but does not buy loans
directly.
4. A buyer makes an offer of $300,000 with a $6,000 earnest money deposit. The seller counteroffers at
$310,000. The buyer crosses out $310,000, writes $305,000, and initials it. Which statement is true?
A) The buyer has accepted the counteroffer.
B) The seller is bound to sell at $305,000.
C) The buyer has made a counter-counteroffer.
D) The original offer is still valid.
ANSWERC) The buyer has made a counter-counteroffer.
Rationale for A: Incorrect. Changing terms rejects the counteroffer.
Rationale for B: Incorrect. Seller must accept the new $305,000 proposal for it to be binding.
, Rationale for C: Correct. Any change to a counteroffer creates a new offer.
Rationale for D: Incorrect. The original offer was rejected by the counteroffer.
5. A property has a gross annual income of $120,000 and operating expenses of $45,000. If the cap rate
is 8%, what is the value using income capitalization?
A) $937,500
B) $1,500,000
C) $562,500
D) $1,000,000
ANSWERA) $937,500
Rationale for A: Correct. Net operating income (NOI) = $120,000 - $45,000 = $75,000. Value = NOI / Cap
Rate = $75,.08 = $937,500.
Rationale for B: $1,500,000 incorrectly uses gross income instead of NOI.
Rationale for C: $562,500 uses a 13.33% cap rate or subtracts expenses incorrectly.
Rationale for D: $1,000,000 uses a 7.5% cap rate.
6. Which of the following is NOT a required element of a valid contract?
(2026 EDITION)
1. A property is currently valued at $450,000. Its value has been appreciating at a rate of 3% per year for
the last 4 years. What was its value 4 years ago (rounded to the nearest thousand)?
A) $400,000
B) $399,000
C) $405,000
D) $410,000
ANSWERA) $400,000
Rationale for A: Correct. To find past value, divide current value by (1 + appreciation rate)^number of
years: $450,000 / (1.03^4) = $450,.1255 = $399,800 ≈ $400,000.
Rationale for B: $399,000 is slightly low; rounding rules point to $400,000.
Rationale for C: $405,000 would be the result of using 2 years instead of 4.
Rationale for D: $410,000 incorrectly uses simple interest rather than compound.
2. A salesperson takes a listing that expires on June 30. The seller then lists with another brokerage on
July 15. On August 1, the original salesperson’s cousin buys the property. Is the original salesperson
entitled to a commission?
,A) Yes, if the cousin was a client during the original listing.
B) Yes, under the concept of procuring cause.
C) No, because the listing expired before the sale.
D) No, because the cousin is a family member.
ANSWERC) No, because the listing expired before the sale.
Rationale for A: Incorrect. Even if the cousin was a client, the listing agreement had terminated.
Rationale for B: Incorrect. Procuring cause typically applies during an active listing or protective period,
but here the sale occurred after the expiration and after a new listing.
Rationale for C: Correct. Once a listing expires, the broker’s right to commission ends unless a safety
clause applies—but the sale was not to a prospect introduced during the term.
Rationale for D: Incorrect. Family relationship does not automatically negate commission rights.
3. Which of the following is considered a government-supported enterprise (GSE) that buys mortgages
on the secondary market?
A) FHA
B) VA
C) Fannie Mae
,D) HUD
ANSWERC) Fannie Mae
Rationale for A: Incorrect. FHA insures loans, it does not buy them.
Rationale for B: Incorrect. VA guarantees loans for veterans.
Rationale for C: Correct. Fannie Mae and Freddie Mac are GSEs that purchase mortgages to provide
liquidity.
Rationale for D: Incorrect. HUD oversees FHA and other housing programs but does not buy loans
directly.
4. A buyer makes an offer of $300,000 with a $6,000 earnest money deposit. The seller counteroffers at
$310,000. The buyer crosses out $310,000, writes $305,000, and initials it. Which statement is true?
A) The buyer has accepted the counteroffer.
B) The seller is bound to sell at $305,000.
C) The buyer has made a counter-counteroffer.
D) The original offer is still valid.
ANSWERC) The buyer has made a counter-counteroffer.
Rationale for A: Incorrect. Changing terms rejects the counteroffer.
Rationale for B: Incorrect. Seller must accept the new $305,000 proposal for it to be binding.
, Rationale for C: Correct. Any change to a counteroffer creates a new offer.
Rationale for D: Incorrect. The original offer was rejected by the counteroffer.
5. A property has a gross annual income of $120,000 and operating expenses of $45,000. If the cap rate
is 8%, what is the value using income capitalization?
A) $937,500
B) $1,500,000
C) $562,500
D) $1,000,000
ANSWERA) $937,500
Rationale for A: Correct. Net operating income (NOI) = $120,000 - $45,000 = $75,000. Value = NOI / Cap
Rate = $75,.08 = $937,500.
Rationale for B: $1,500,000 incorrectly uses gross income instead of NOI.
Rationale for C: $562,500 uses a 13.33% cap rate or subtracts expenses incorrectly.
Rationale for D: $1,000,000 uses a 7.5% cap rate.
6. Which of the following is NOT a required element of a valid contract?
