PEARSON VUE REAL ESTATE EXAM QUESTIONS COMPLETE
WITH 100% VERIFIED ANSWERS
1. The fiduciary duty that requires a real estate agent to place the
client's interests above their own is best described as:
A. Disclosure
B. Confidentiality
C. Loyalty *
D. Accounting
Rationale: Loyalty is the prime obligation of an agent to a client. It
requires the agent to act solely in the best interest of the principal and
to put the principal's interests ahead of their own.
2. A salesperson with ABC Realty takes a listing and then moves to XYZ
Realty. The listing belongs to:
A. The salesperson
B. The seller
C. XYZ Realty
D. ABC Realty *
Rationale: A listing agreement is a contract between the seller and the
brokerage firm, not the individual salesperson. The listing and the
commission belong to the employing broker who holds the contract.
3. Which type of listing gives the broker the most protection and
guarantees a commission regardless of who finds the buyer?
A. Open listing
B. Exclusive agency listing
,C. Exclusive right-to-sell listing *
D. Net listing
Rationale: An exclusive right-to-sell listing guarantees the broker a
commission if the property sells during the listing period, regardless of
whether the seller, the listing broker, or another broker finds the buyer.
4. An appraiser is attempting to find the market value of a property.
Which of the following would be the LEAST relevant to this analysis?
A. The original cost of the property *
B. Recent sales of comparable properties
C. The property's income potential
D. The cost to replace the improvements
Rationale: Market value is a function of current market conditions and
what a buyer is willing to pay today. The original cost is historical and
does not reflect current market value.
5. The type of depreciation that originates from social sources and
supports the axiom 'more houses are torn down than fall down' is:
A. Physical deterioration
B. Functional obsolescence
C. Economic obsolescence *
D. Straight-line depreciation
Rationale: Economic obsolescence is a loss in value caused by factors
external to the property, such as changes in the neighborhood, zoning,
or local economy. These social forces can make a property less
desirable.
6. An appraiser recommends tearing down an existing home to build a
more profitable commercial building. This analysis is based on the
principle of:
,A. Substitution
B. Contribution
C. Change
D. Highest and best use *
Rationale: Highest and best use is the legal, physically possible, and
financially feasible use that results in the highest value for a property.
This often involves analyzing whether an existing improvement should
remain or be demolished.
7. In which employment arrangement does the employer have the
most control over the means and methods of the salesperson's work?
A. Independent contractor
B. Employee *
C. Neither arrangement
D. It depends on the state license law
Rationale: In an employer/employee relationship, the employer has
control over not only the results but also the means and methods by
which the work is performed.
8. ABC Realty has an exclusive agency listing and lists it on the MLS. A
salesperson from XYZ Realty brings a buyer, and the transaction
closes. The commission will be:
A. Kept entirely by ABC Realty
B. Kept entirely by XYZ Realty
C. Split between ABC and XYZ Realty per the MLS terms *
D. Negotiated by the seller and buyer after closing
Rationale: When a listing is placed in the MLS, it is an offer of
cooperation and compensation to other broker participants. The
commission is typically split between the listing broker and the selling
broker according to the MLS rules.
, 9. A licensee representing a property owner in a real estate
transaction is best described as:
A. A fiduciary *
B. A principal
C. A third-party beneficiary
D. An independent contractor
Rationale: A fiduciary is a person in a position of trust and confidence. A
real estate licensee, as an agent of the seller, has fiduciary duties to
their client, the property owner.
10. A new contract that substitutes for and terminates an existing
contract is known as:
A. Novation *
B. Assignment
C. Alteration
D. Rescission
Rationale: Novation replaces an old contract with a new one, and the
parties agree to release the original party from liability.
11. In a home sale contract, the seller's promise to sell and the buyer's
promise to buy represent the:
A. Novation
B. Legal purpose
C. Consideration *
D. Assignment
Rationale: Consideration is something of value exchanged between
parties. In a real estate contract, the mutual promises to buy and sell
are the consideration that makes the contract binding.
WITH 100% VERIFIED ANSWERS
1. The fiduciary duty that requires a real estate agent to place the
client's interests above their own is best described as:
A. Disclosure
B. Confidentiality
C. Loyalty *
D. Accounting
Rationale: Loyalty is the prime obligation of an agent to a client. It
requires the agent to act solely in the best interest of the principal and
to put the principal's interests ahead of their own.
2. A salesperson with ABC Realty takes a listing and then moves to XYZ
Realty. The listing belongs to:
A. The salesperson
B. The seller
C. XYZ Realty
D. ABC Realty *
Rationale: A listing agreement is a contract between the seller and the
brokerage firm, not the individual salesperson. The listing and the
commission belong to the employing broker who holds the contract.
3. Which type of listing gives the broker the most protection and
guarantees a commission regardless of who finds the buyer?
A. Open listing
B. Exclusive agency listing
,C. Exclusive right-to-sell listing *
D. Net listing
Rationale: An exclusive right-to-sell listing guarantees the broker a
commission if the property sells during the listing period, regardless of
whether the seller, the listing broker, or another broker finds the buyer.
4. An appraiser is attempting to find the market value of a property.
Which of the following would be the LEAST relevant to this analysis?
A. The original cost of the property *
B. Recent sales of comparable properties
C. The property's income potential
D. The cost to replace the improvements
Rationale: Market value is a function of current market conditions and
what a buyer is willing to pay today. The original cost is historical and
does not reflect current market value.
5. The type of depreciation that originates from social sources and
supports the axiom 'more houses are torn down than fall down' is:
A. Physical deterioration
B. Functional obsolescence
C. Economic obsolescence *
D. Straight-line depreciation
Rationale: Economic obsolescence is a loss in value caused by factors
external to the property, such as changes in the neighborhood, zoning,
or local economy. These social forces can make a property less
desirable.
6. An appraiser recommends tearing down an existing home to build a
more profitable commercial building. This analysis is based on the
principle of:
,A. Substitution
B. Contribution
C. Change
D. Highest and best use *
Rationale: Highest and best use is the legal, physically possible, and
financially feasible use that results in the highest value for a property.
This often involves analyzing whether an existing improvement should
remain or be demolished.
7. In which employment arrangement does the employer have the
most control over the means and methods of the salesperson's work?
A. Independent contractor
B. Employee *
C. Neither arrangement
D. It depends on the state license law
Rationale: In an employer/employee relationship, the employer has
control over not only the results but also the means and methods by
which the work is performed.
8. ABC Realty has an exclusive agency listing and lists it on the MLS. A
salesperson from XYZ Realty brings a buyer, and the transaction
closes. The commission will be:
A. Kept entirely by ABC Realty
B. Kept entirely by XYZ Realty
C. Split between ABC and XYZ Realty per the MLS terms *
D. Negotiated by the seller and buyer after closing
Rationale: When a listing is placed in the MLS, it is an offer of
cooperation and compensation to other broker participants. The
commission is typically split between the listing broker and the selling
broker according to the MLS rules.
, 9. A licensee representing a property owner in a real estate
transaction is best described as:
A. A fiduciary *
B. A principal
C. A third-party beneficiary
D. An independent contractor
Rationale: A fiduciary is a person in a position of trust and confidence. A
real estate licensee, as an agent of the seller, has fiduciary duties to
their client, the property owner.
10. A new contract that substitutes for and terminates an existing
contract is known as:
A. Novation *
B. Assignment
C. Alteration
D. Rescission
Rationale: Novation replaces an old contract with a new one, and the
parties agree to release the original party from liability.
11. In a home sale contract, the seller's promise to sell and the buyer's
promise to buy represent the:
A. Novation
B. Legal purpose
C. Consideration *
D. Assignment
Rationale: Consideration is something of value exchanged between
parties. In a real estate contract, the mutual promises to buy and sell
are the consideration that makes the contract binding.
