California Department of Real Estate (DRE) Exam Practice Questions
30 Multiple-Choice Questions with Answers and Explanations
Question 1: Agency Relationships
A real estate salesperson is representing a seller in the sale of a residential property. The
salesperson owes the seller which of the following fiduciary duties?
A. Confidentiality only
B. Loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care
C. Fairness only
D. Honesty only
Answer: B
Explanation: A real estate agent owes full fiduciary duties to their client, including loyalty,
obedience, disclosure, confidentiality, accounting, and reasonable care and diligence.
Question 2: Listing Agreements
An exclusive-right-to-sell listing provides that:
A. The owner receives the commission if they find the buyer.
B. No commission is owed if another broker sells the property.
C. The listing broker earns a commission regardless of who procures the buyer during the listing
period.
D. The listing automatically renews upon expiration.
Answer: C
Explanation: Under an exclusive-right-to-sell listing, the broker is entitled to the agreed
commission if the property sells during the listing term, regardless of who finds the buyer.
Question 3: Fair Housing
Which federal law prohibits discrimination in housing based on race, color, religion, sex,
national origin, disability, and familial status?
A. Sherman Antitrust Act
B. Fair Housing Act
C. Truth in Lending Act
D. Real Estate Settlement Procedures Act
, Answer: B
Explanation: The Fair Housing Act prohibits housing discrimination based on protected classes
established under federal law.
Question 4: Escrow
The primary purpose of an escrow is to:
A. Increase property taxes.
B. Hold documents and funds until all conditions of the transaction have been satisfied.
C. Transfer ownership immediately after an offer is accepted.
D. Determine the market value of the property.
Answer: B
Explanation: Escrow serves as a neutral process in which documents and funds are held until all
contractual obligations have been fulfilled.
Question 5: Property Ownership
Two siblings own property with equal interests and a right of survivorship. They most likely hold
title as:
A. Community property
B. Tenants in common
C. Joint tenants
D. Sole ownership
Answer: C
Explanation: Joint tenancy includes the right of survivorship, meaning the deceased owner's
interest passes automatically to the surviving joint tenant.
Question 6: Financing
Which loan generally offers the lowest initial monthly payment because it has an adjustable
interest rate?
A. Fixed-rate mortgage
B. Adjustable-rate mortgage (ARM)
C. Balloon mortgage
30 Multiple-Choice Questions with Answers and Explanations
Question 1: Agency Relationships
A real estate salesperson is representing a seller in the sale of a residential property. The
salesperson owes the seller which of the following fiduciary duties?
A. Confidentiality only
B. Loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care
C. Fairness only
D. Honesty only
Answer: B
Explanation: A real estate agent owes full fiduciary duties to their client, including loyalty,
obedience, disclosure, confidentiality, accounting, and reasonable care and diligence.
Question 2: Listing Agreements
An exclusive-right-to-sell listing provides that:
A. The owner receives the commission if they find the buyer.
B. No commission is owed if another broker sells the property.
C. The listing broker earns a commission regardless of who procures the buyer during the listing
period.
D. The listing automatically renews upon expiration.
Answer: C
Explanation: Under an exclusive-right-to-sell listing, the broker is entitled to the agreed
commission if the property sells during the listing term, regardless of who finds the buyer.
Question 3: Fair Housing
Which federal law prohibits discrimination in housing based on race, color, religion, sex,
national origin, disability, and familial status?
A. Sherman Antitrust Act
B. Fair Housing Act
C. Truth in Lending Act
D. Real Estate Settlement Procedures Act
, Answer: B
Explanation: The Fair Housing Act prohibits housing discrimination based on protected classes
established under federal law.
Question 4: Escrow
The primary purpose of an escrow is to:
A. Increase property taxes.
B. Hold documents and funds until all conditions of the transaction have been satisfied.
C. Transfer ownership immediately after an offer is accepted.
D. Determine the market value of the property.
Answer: B
Explanation: Escrow serves as a neutral process in which documents and funds are held until all
contractual obligations have been fulfilled.
Question 5: Property Ownership
Two siblings own property with equal interests and a right of survivorship. They most likely hold
title as:
A. Community property
B. Tenants in common
C. Joint tenants
D. Sole ownership
Answer: C
Explanation: Joint tenancy includes the right of survivorship, meaning the deceased owner's
interest passes automatically to the surviving joint tenant.
Question 6: Financing
Which loan generally offers the lowest initial monthly payment because it has an adjustable
interest rate?
A. Fixed-rate mortgage
B. Adjustable-rate mortgage (ARM)
C. Balloon mortgage
