PSI Services LLC Real Estate Broker — State
2026/2027 | Real Estate Broker State Exam Study
Guide & Practice Questions | PSI Broker Licensing
Exam Prep, State Real Estate Law, Brokerage,
Agency, Contracts, Disclosures & Regulations
Question 1: Under Illinois state law, a real estate broker's license is
issued and regulated by which of the following entities?
A. The Illinois Association of REALTORS®
B. The Illinois Department of Financial and Professional Regulation
(IDFPR)
C. The PSI Services LLC Board of Real Estate
D. The Illinois Attorney General's Office of Consumer Protection
CORRECT ANSWER: B. The Illinois Department of Financial and
Professional Regulation (IDFPR)
Rationale: The IDFPR is the state agency responsible for licensing and
regulating real estate brokers, salespersons, and managing brokers in
Illinois. PSI Services administers the examination but does not issue the
license.
Question 2: An Illinois real estate broker must activate their license
by associating with a sponsoring managing broker. What is the
primary purpose of this requirement?
A. To ensure the broker has adequate office space
B. To establish supervision and accountability under a managing broker
C. To verify the broker has paid all applicable taxes
D. To allow the broker to practice without any further oversight
CORRECT ANSWER: B. To establish supervision and accountability
under a managing broker
Rationale: All broker licensees in Illinois must work under the supervision
of a managing broker, who assumes responsibility for the professional
conduct of associated brokers and ensures compliance with license law.
Question 3: A broker in Illinois represents a seller under a listing
agreement. Which of the following fiduciary duties requires the
,broker to keep the seller's negotiating position confidential during
the transaction?
A. Obedience
B. Accounting
C. Loyalty
D. Disclosure
CORRECT ANSWER: C. Loyalty
Rationale: The duty of loyalty requires a broker to act in the client's best
interest, which includes maintaining confidentiality about the client's
motivations, negotiating strategy, and financial position.
Question 4: The Illinois Residential Real Property Disclosure Act
requires sellers to do which of the following?
A. Provide a warranty that the property has no defects
B. Complete a disclosure statement of known material defects
C. Hire a licensed home inspector before listing
D. Obtain a property condition certificate from the county
CORRECT ANSWER: B. Complete a disclosure statement of known
material defects
Rationale: The Illinois Residential Real Property Disclosure Act requires
sellers to deliver a written disclosure of known material defects in
residential property to prospective buyers before signing a contract.
Question 5: Which of the following best describes a "dual agency"
relationship under Illinois real estate license law?
A. A broker representing both the buyer and seller in the same transaction
with written consent from both parties
B. A broker representing two different sellers with no conflicts of interest
C. A managing broker supervising two different offices
D. A salesperson working for two different sponsoring brokers
CORRECT ANSWER: A. A broker representing both the buyer and
seller in the same transaction with written consent from both
parties
,Rationale: Dual agency occurs when a broker or their affiliated licensee
represents both parties in a transaction. Illinois law requires informed
written consent from both the buyer and seller before dual agency can be
established.
Question 6: In Illinois, how long must a broker retain transaction
records, including listing agreements, offers, and closing
statements?
A. One year from the date of the transaction
B. Two years from the date of the transaction
C. Three years from the date of the transaction
D. Five years from the date of the transaction
CORRECT ANSWER: C. Three years from the date of the
transaction
Rationale: Illinois license law requires brokers to maintain records of all real
estate transactions for a minimum of three years from the date of the
transaction.
Question 7: A managing broker discovers that one of their
sponsored brokers has committed a significant violation of license
law. What is the managing broker's obligation?
A. Immediately terminate the broker's employment without further action
B. Report the violation to IDFPR
C. Report the violation to the local association of REALTORS®
D. Document the violation and take no further action
CORRECT ANSWER: B. Report the violation to IDFPR
Rationale: Managing brokers must report known violations of the Real
Estate License Act by sponsored licensees to IDFPR. Failure to report may
subject the managing broker to disciplinary action.
Question 8: Which of the following activities requires an Illinois
real estate license?
, A. Selling one's own personal residence
B. Negotiating a commercial lease on behalf of a landlord for a fee
C. An attorney providing legal advice regarding a real estate contract
D. A homeowner managing their own property
CORRECT ANSWER: B. Negotiating a commercial lease on behalf of
a landlord for a fee
Rationale: Illinois license law requires a real estate license for any person
who, for compensation, negotiates leases or purchases of real estate on
behalf of another.
Question 9: Under Illinois law, an exclusive right-to-sell listing
agreement entitles the broker to a commission under which of the
following circumstances?
A. Only if the broker personally finds the buyer
B. If the property sells during the listing period, regardless of who finds the
buyer
C. If the seller sells the property without any broker assistance
D. Only if the property closes within 30 days of listing
CORRECT ANSWER: B. If the property sells during the listing
period, regardless of who finds the buyer
Rationale: An exclusive right-to-sell listing guarantees the broker a
commission if the property is sold by anyone during the listing period,
including the seller themselves.
Question 10: A broker is holding earnest money from a buyer in a
transaction that has been terminated due to the seller's default.
Under Illinois law, what should the broker do with the earnest
money?
A. Keep the earnest money as compensation for services rendered
B. Return the earnest money to the buyer immediately without consulting
the seller
C. Hold the earnest money until a written release is signed by both parties
or a court order is issued
D. Deposit the earnest money into the broker's general operating account
2026/2027 | Real Estate Broker State Exam Study
Guide & Practice Questions | PSI Broker Licensing
Exam Prep, State Real Estate Law, Brokerage,
Agency, Contracts, Disclosures & Regulations
Question 1: Under Illinois state law, a real estate broker's license is
issued and regulated by which of the following entities?
A. The Illinois Association of REALTORS®
B. The Illinois Department of Financial and Professional Regulation
(IDFPR)
C. The PSI Services LLC Board of Real Estate
D. The Illinois Attorney General's Office of Consumer Protection
CORRECT ANSWER: B. The Illinois Department of Financial and
Professional Regulation (IDFPR)
Rationale: The IDFPR is the state agency responsible for licensing and
regulating real estate brokers, salespersons, and managing brokers in
Illinois. PSI Services administers the examination but does not issue the
license.
Question 2: An Illinois real estate broker must activate their license
by associating with a sponsoring managing broker. What is the
primary purpose of this requirement?
A. To ensure the broker has adequate office space
B. To establish supervision and accountability under a managing broker
C. To verify the broker has paid all applicable taxes
D. To allow the broker to practice without any further oversight
CORRECT ANSWER: B. To establish supervision and accountability
under a managing broker
Rationale: All broker licensees in Illinois must work under the supervision
of a managing broker, who assumes responsibility for the professional
conduct of associated brokers and ensures compliance with license law.
Question 3: A broker in Illinois represents a seller under a listing
agreement. Which of the following fiduciary duties requires the
,broker to keep the seller's negotiating position confidential during
the transaction?
A. Obedience
B. Accounting
C. Loyalty
D. Disclosure
CORRECT ANSWER: C. Loyalty
Rationale: The duty of loyalty requires a broker to act in the client's best
interest, which includes maintaining confidentiality about the client's
motivations, negotiating strategy, and financial position.
Question 4: The Illinois Residential Real Property Disclosure Act
requires sellers to do which of the following?
A. Provide a warranty that the property has no defects
B. Complete a disclosure statement of known material defects
C. Hire a licensed home inspector before listing
D. Obtain a property condition certificate from the county
CORRECT ANSWER: B. Complete a disclosure statement of known
material defects
Rationale: The Illinois Residential Real Property Disclosure Act requires
sellers to deliver a written disclosure of known material defects in
residential property to prospective buyers before signing a contract.
Question 5: Which of the following best describes a "dual agency"
relationship under Illinois real estate license law?
A. A broker representing both the buyer and seller in the same transaction
with written consent from both parties
B. A broker representing two different sellers with no conflicts of interest
C. A managing broker supervising two different offices
D. A salesperson working for two different sponsoring brokers
CORRECT ANSWER: A. A broker representing both the buyer and
seller in the same transaction with written consent from both
parties
,Rationale: Dual agency occurs when a broker or their affiliated licensee
represents both parties in a transaction. Illinois law requires informed
written consent from both the buyer and seller before dual agency can be
established.
Question 6: In Illinois, how long must a broker retain transaction
records, including listing agreements, offers, and closing
statements?
A. One year from the date of the transaction
B. Two years from the date of the transaction
C. Three years from the date of the transaction
D. Five years from the date of the transaction
CORRECT ANSWER: C. Three years from the date of the
transaction
Rationale: Illinois license law requires brokers to maintain records of all real
estate transactions for a minimum of three years from the date of the
transaction.
Question 7: A managing broker discovers that one of their
sponsored brokers has committed a significant violation of license
law. What is the managing broker's obligation?
A. Immediately terminate the broker's employment without further action
B. Report the violation to IDFPR
C. Report the violation to the local association of REALTORS®
D. Document the violation and take no further action
CORRECT ANSWER: B. Report the violation to IDFPR
Rationale: Managing brokers must report known violations of the Real
Estate License Act by sponsored licensees to IDFPR. Failure to report may
subject the managing broker to disciplinary action.
Question 8: Which of the following activities requires an Illinois
real estate license?
, A. Selling one's own personal residence
B. Negotiating a commercial lease on behalf of a landlord for a fee
C. An attorney providing legal advice regarding a real estate contract
D. A homeowner managing their own property
CORRECT ANSWER: B. Negotiating a commercial lease on behalf of
a landlord for a fee
Rationale: Illinois license law requires a real estate license for any person
who, for compensation, negotiates leases or purchases of real estate on
behalf of another.
Question 9: Under Illinois law, an exclusive right-to-sell listing
agreement entitles the broker to a commission under which of the
following circumstances?
A. Only if the broker personally finds the buyer
B. If the property sells during the listing period, regardless of who finds the
buyer
C. If the seller sells the property without any broker assistance
D. Only if the property closes within 30 days of listing
CORRECT ANSWER: B. If the property sells during the listing
period, regardless of who finds the buyer
Rationale: An exclusive right-to-sell listing guarantees the broker a
commission if the property is sold by anyone during the listing period,
including the seller themselves.
Question 10: A broker is holding earnest money from a buyer in a
transaction that has been terminated due to the seller's default.
Under Illinois law, what should the broker do with the earnest
money?
A. Keep the earnest money as compensation for services rendered
B. Return the earnest money to the buyer immediately without consulting
the seller
C. Hold the earnest money until a written release is signed by both parties
or a court order is issued
D. Deposit the earnest money into the broker's general operating account
