ALABAMA REAL ESTATE LICENSE EXAM – QUESTIONS AND ANSWERS | VERIFIED AND WELL DETAILED ANSWERS
| PLUS RATIONALES | GUARANTEED PASS | LATEST EXAM UPDATE
Core Domains
- Property Ownership and Land Use Controls
- Laws of Agency and Fiduciary Duties
- Real Estate Contracts (Sales, Leases, Options)
- Financing and Mortgage Instruments
- Transfer of Title and Title Records
- Valuation and Market Analysis
- Fair Housing, Ethics, and Civil Rights Laws
- Alabama-Specific License Law and Regulations
- Practice, Disclosure, and Closing Procedures
Introduction
This comprehensive assessment is designed to evaluate candidate readiness for the Alabama Real Estate Exam. It
measures foundational theory, applied professional knowledge, regulatory compliance, ethical judgment, and critical
decision-making in realistic scenarios. The exam consists of 200 multiple-choice questions divided into two sections,
each requiring application of state and federal real estate principles. Emphasis is placed on interpreting legal
,obligations, executing fiduciary duties, navigating disclosure requirements, and solving transactional problems. This
format mirrors actual exam conditions to build confidence and competence for immediate licensure readiness.
SECTION ONE: QUESTIONS 1–100
Question 1
A licensee lists a residential property. The seller discloses a past termite infestation that was treated five years ago
with no recurrence. The buyer asks directly if there are any material defects. What is the licensee’s BEST course of
action?
A. State that the infestation was treated and no longer active
B. Advise the buyer to order a new termite inspection
C. Remain silent because the issue was resolved years ago
D. Disclose only if the buyer signs a waiver
🟢A
🔴 Explanation: Licensees must disclose known material facts, even if resolved. The treated infestation remains a
material fact that could affect the buyer’s decision. Advising the buyer to get an inspection is prudent, but does not
relieve the licensee of their duty to disclose known material information.
Question 2
Under Alabama law, when does an agency relationship typically terminate?
A. When the listing agreement expires in writing
B. When the property is sold by another broker
C. When the licensee moves to a different brokerage
D. When the seller verbally requests termination
,🟢A
🔴 Explanation: An agency relationship is a contractual one. The relationship terminates according to the terms of
the written agreement, such as its expiration date. The listing agreement is between the seller and the brokerage, so
it remains with the original brokerage .
Question 3
A buyer makes an offer to purchase real estate. The seller counteroffers. Which of the following is true regarding the
buyer’s original offer?
A. It remains valid until the buyer revokes it
B. It is automatically terminated by the counteroffer
C. It must be formally withdrawn in writing by the buyer
D. It becomes an option contract
🟢B
🔴 Explanation: A counteroffer is a rejection of the original offer, which terminates it and creates a new offer that
the original buyer is now free to accept or reject.
Question 4
A real estate licensee accepts an earnest money deposit from a buyer. The licensee must:
A. Place it in the broker's operating account
B. Give it to the seller immediately
C. Place it in a trust or escrow account
D. Spend it to pay for marketing costs
🟢C
, 🔴 Explanation: Commingling occurs when client funds are mixed with broker operating funds. Alabama law
requires earnest money be placed in a designated trust or escrow account until the transaction closes or is otherwise
resolved .
Question 5
A property has a market value of $250,000. The county assesses at 20% of market value. The millage rate is 40 mills.
What is the annual property tax?
A. $2,000
B. $2,500
C. $5,000
D. $10,000
🟢A
🔴 Explanation: Assessed value = $250,000 × 0.20 = $50,000. Tax = $50,000 × (40/1,000) = $2,000.
Question 6
A seller accepts an offer but later receives a higher offer before the buyer is notified. The seller wants to accept the
higher offer. The listing broker should advise the seller:
A. The first offer is legally binding once accepted
B. The seller may accept the higher offer if no earnest money was paid
C. The seller may revoke acceptance as long as no deed has transferred
D. The seller must wait until the first offer’s contingency period expires
🟢A
| PLUS RATIONALES | GUARANTEED PASS | LATEST EXAM UPDATE
Core Domains
- Property Ownership and Land Use Controls
- Laws of Agency and Fiduciary Duties
- Real Estate Contracts (Sales, Leases, Options)
- Financing and Mortgage Instruments
- Transfer of Title and Title Records
- Valuation and Market Analysis
- Fair Housing, Ethics, and Civil Rights Laws
- Alabama-Specific License Law and Regulations
- Practice, Disclosure, and Closing Procedures
Introduction
This comprehensive assessment is designed to evaluate candidate readiness for the Alabama Real Estate Exam. It
measures foundational theory, applied professional knowledge, regulatory compliance, ethical judgment, and critical
decision-making in realistic scenarios. The exam consists of 200 multiple-choice questions divided into two sections,
each requiring application of state and federal real estate principles. Emphasis is placed on interpreting legal
,obligations, executing fiduciary duties, navigating disclosure requirements, and solving transactional problems. This
format mirrors actual exam conditions to build confidence and competence for immediate licensure readiness.
SECTION ONE: QUESTIONS 1–100
Question 1
A licensee lists a residential property. The seller discloses a past termite infestation that was treated five years ago
with no recurrence. The buyer asks directly if there are any material defects. What is the licensee’s BEST course of
action?
A. State that the infestation was treated and no longer active
B. Advise the buyer to order a new termite inspection
C. Remain silent because the issue was resolved years ago
D. Disclose only if the buyer signs a waiver
🟢A
🔴 Explanation: Licensees must disclose known material facts, even if resolved. The treated infestation remains a
material fact that could affect the buyer’s decision. Advising the buyer to get an inspection is prudent, but does not
relieve the licensee of their duty to disclose known material information.
Question 2
Under Alabama law, when does an agency relationship typically terminate?
A. When the listing agreement expires in writing
B. When the property is sold by another broker
C. When the licensee moves to a different brokerage
D. When the seller verbally requests termination
,🟢A
🔴 Explanation: An agency relationship is a contractual one. The relationship terminates according to the terms of
the written agreement, such as its expiration date. The listing agreement is between the seller and the brokerage, so
it remains with the original brokerage .
Question 3
A buyer makes an offer to purchase real estate. The seller counteroffers. Which of the following is true regarding the
buyer’s original offer?
A. It remains valid until the buyer revokes it
B. It is automatically terminated by the counteroffer
C. It must be formally withdrawn in writing by the buyer
D. It becomes an option contract
🟢B
🔴 Explanation: A counteroffer is a rejection of the original offer, which terminates it and creates a new offer that
the original buyer is now free to accept or reject.
Question 4
A real estate licensee accepts an earnest money deposit from a buyer. The licensee must:
A. Place it in the broker's operating account
B. Give it to the seller immediately
C. Place it in a trust or escrow account
D. Spend it to pay for marketing costs
🟢C
, 🔴 Explanation: Commingling occurs when client funds are mixed with broker operating funds. Alabama law
requires earnest money be placed in a designated trust or escrow account until the transaction closes or is otherwise
resolved .
Question 5
A property has a market value of $250,000. The county assesses at 20% of market value. The millage rate is 40 mills.
What is the annual property tax?
A. $2,000
B. $2,500
C. $5,000
D. $10,000
🟢A
🔴 Explanation: Assessed value = $250,000 × 0.20 = $50,000. Tax = $50,000 × (40/1,000) = $2,000.
Question 6
A seller accepts an offer but later receives a higher offer before the buyer is notified. The seller wants to accept the
higher offer. The listing broker should advise the seller:
A. The first offer is legally binding once accepted
B. The seller may accept the higher offer if no earnest money was paid
C. The seller may revoke acceptance as long as no deed has transferred
D. The seller must wait until the first offer’s contingency period expires
🟢A
