PSI Real Estate Salesperson Exam with complete solutions

Real Estate Recovery Fund - Answer- The Real Estate Recovery Fund was established to provide a means for consumers who have obtained a final judgment in the court, but are unable to collect, a means to collect compensation through the Real Estate Commission. The Real Estate Commission has the authority to conduct a hearing in response to an alleged complaint. As a result of a hearing, the Commission may do all of the following except: - Answer- Maintain records, even if no disciplinary actions were taken against a licensee An authorized power of the Real Estate Commission is to: - Answer- Administer and enforce the laws that govern the conduct of licensees Real Estate Commission - Answer- The Real Estate Commission has the statutory authority to administer and enforce the laws governing the conduct of all licensees. The Department of State contracts the services of a third party testing service to create and administer the examination. The Real Estate Commission has not been granted any statutory authority to interview members of the public. It is the Department of State that issues all real estate licenses not the Real Estate Commission. License Law - Answer- A real estate license is required to perform a broker price opinion for another for a fee. An auctioneer, investor, or attorney-at-law would be exempt from obtaining a real estate license, per Pennsylvania licensing law. The real estate license of a salesperson must be: - Answer- Maintained in the employing broker's office According to Pennsylvania License Law, a salesperson may be employed by: - Answer- The broker designated on the salesperson's current license If, after changing employing brokers, the salesperson does not receive his new license within 30 days, the salesperson should: - Answer- accept the responsibility to notify the Commission that he has not received the license Licensed salespersons may receive compensation, bonus or commission from which of the following people? - Answer- Their employing broker The Pennsylvania Human Relations Commission allows a person to file a complaint of discrimination with HUD up to a maximum of how much time from the alleged act? - Answer- 1 year If the earnest money deposit is tendered by a buyer directly to the listing broker instead of the selling broker, which of the following is a correct statement? - Answer- The listing broker shall assume the escrow duty A broker acting as a transaction licensee would violate the license law by doing which of the following? - Answer- Disclosing that the buyer will agree to financing terms other than those offered The purpose of disclosing the Real Estate Recovery Fund is to - Answer- provide an injured party a way to collect a judgment awarded by the court When a broker enters into an exclusive right-to-sell listing agreement with a seller client, the agreement binds the broker to do which of the following? - Answer- Provide full fiduciary duties to the seller When a salesperson is working with a buyer client who enters into a contract to purchase a time-share interest in real estate, the salesperson should inform the buyer client that: - Answer- He/she has the right to cancel the contract within five days from the date the buyer and seller signed the contract After many months on the market, a salesperson successfully closes a listing. In appreciation for all that was done, the seller gives the salesperson a $1,500 bonus over the previously negotiated commission amount. The salesperson should: - Answer- Ask the seller to pay the bonus to the salesperson's broker In a co-brokerage transaction, a salesperson receives an earnest money deposit check from a purchaser along with an offer to purchase on a listed property. The salesperson is required to: - Answer- Submit the check to the appropriate broker in accordance with the terms of the agreement of sale A seller has listed his property for $350,000, indicating he wishes to sell as quickly as possible. The seller's broker encourages a prospective buyer to place a low offer, as the seller wishes to sell the property quickly. The buyer offers $310,000, which is accepted by the seller. In this situation, the broker: - Answer- breached the agency relationship with the seller In which of the following instances is a seller's property disclosure statement not required? - Answer- Sale of a single-office commercial property A loan officer told a broker about a couple that recently applied for a loan. The broker called the couple and subsequently sold them a house. At what point may the broker pay the loan officer a fee for referring the couple? - Answer- The broker may not pay the loan officer a referral fee The Pennsylvania Real Estate Commission must give how much notice to the broker of record when they inspect a real estate office? - Answer- Notice prior to the start of the actual inspection The authorization for the listing broker to cooperate with the selling broker is found in the - Answer- Listing agreement A salesperson who personally owns residential investment property is required by Pennsylvania License Law to: - Answer- Disclose his/her license status to a lessee prior to entering into a formal lease When a property is advertised for sale, which of the following must be included in the advertisement? - Answer- The broker's business name, as designated on his/her license A salesperson wishes to include his nickname in newspaper ads for his listings. Which of the following is true? - Answer- This is permitted if the salesperson included his nickname on his license applications or biennial renewal applications In order to avoid fines or loss of license, a broker is required to include specific terms or conditions in the listing agreement. All of the following terms or conditions must be included except: - Answer- A clause to protect the broker's commission A broker, while in the process of obtaining a listing agreement, is informed by the seller that the seller does not want to sell her property to anyone of Middle Eastern descent. In this instance, the broker: - Answer- May not list the property under those circumstances and is not obligated to follow the seller's directions How are the amount of the real estate brokerage fees determined? - Answer- They are the result of an agreement between the consumer and broker A salesperson was involved in activities that violated Pennsylvania License Law. It was determined that there was a series of violations over many months. The employing broker had been unaware of the series of violations committed by the salesperson. What impact will the salesperson's violations have on the employing broker's license? - Answer- The employing broker may be held liable for failing to supervise the conduct of their licensee A broker is hired to represent the seller as her agent and to sell the seller's property. This broker must: - Answer- Abide by the Pennsylvania agency law A map of a subdivision that is recorded at the county clerk's office is called a - Answer- recorded subdivision plat ABC Remodeling, Inc. buys a new warehouse for its trucks and excess building materials. How will it take title? - Answer- tenancy in severalty An investor buys two weeks of a timeshare in Miami. What has she purchased? - Answer- interval ownership in real property What lien attaches to a property to prevent the transfer of title when there is a pending lawsuit that may affect the title? - Answer- What lien attaches to a property to prevent the transfer of title when there is a pending lawsuit that may affect the title? The bundle of rights does NOT include the right of - Answer- encroachment An owner of a condominium wishes to sell her unit. When a bad storm hit earlier in the year several units sustained wind damage to the rooftops. The homeowners association levied an assessment of $1,000 per unit for the roof repairs. Which statement is TRUE? - Answer- Title cannot transfer unless the seller pays the assessment Roberta wishes to build her garage two feet from her side lot line. City code calls for all side setbacks to be at least five feet. In order to legally proceed, Roberta needs to get - Answer- a variance When a city creates ordinances that restrict and maintain building standards, they are called: - Answer- building codes What is market price? - Answer- A price a property actually sold for The rule that says a buyer will not pay more for a property than a comparable substitute is the rule of - Answer- substitution From an investment standpoint, it is usually the best idea, based on the theory of progression and recession, to buy the ________ house on the block. - Answer- Least expensive An appraiser has selected three comparable sales for the property she is appraising. After making adjustments, she has adjusted sale prices of $100,000, $107,000, and $110,000. How does she reconcile these three different numbers? - Answer- use a weighted average, giving the most weight to the most similar property Which term best describes value being attributed to a property because of its desirable location? - Answer- situs site - Answer- a piece of land that has been enhanced and is ready for a structure Situs - Answer- an area of preference, which can attribute value Assemblage - Answer- the joining of several parcels of land Plottage - Answer- when the property is joined to increase value. Which term best describes combining two or more parcels of land into one larger parcel to increase value? - Answer- plottage How many points will lower the rate of interest by one percent? - Answer- 8 Pledging a property as security on a loan without giving up possession of the property is known as - Answer- hypothecation Discounts or "points" on mortgages are - Answer- a charge by the lender to increase the yield on money invested The Closing Statement, required by RESPA, must be used in what instance? - Answer- residential transactions financed by federally related mortgage loans Discount points on a mortgage are computed as a percentage of the - Answer- amount financed A listing agreement is an agreement between - Answer- seller and broker A listing agent listed a property with an expiration date of six months from the beginning of the listing. Six months have now passed. How did the listing terminate? - Answer- expiration A salesperson has a direct fiduciary duty to the - Answer- broker A broker takes a listing and one of his non-management-level licensees represents a buyer who makes an offer acceptable to the seller. Which agent is the dual agent? - Answer- broker In title theory states, what clause is unique to the mortgage? - Answer- Defeasance What type of relationship best describes how a real estate broker represents her principal in the sale of the principal's single-family home? - Answer- special or specific agency Cindy Agent wishes to leave her company, ABC Real Estate, owned by Bob Broker. She currently has three sales pending and four active listings. What will happen to these? - Answer- the active listings belong to Bob, and Cindy will be paid for pending sales as per her contract with the office Upon arrival, the listing agent dealing with an elderly lady realizes she would be happy receiving an offer for much less than market value. The agent decides to make a cash offer for the list price the seller chose. The agent then sells the property for market value. What duty has the agent breached? - Answer- disclosure Which is the environmental program established to address abandoned hazardous waste sites? - Answer- Superfund What insulating material was pumped into houses until its ban in the 1970s? - Answer- urea-formaldehyde insulation Real estate agent Lori is showing a buyer client a house. The house is full of antique furniture, fixtures, and decorations. In the largest bedroom is a wall-sized wardrobe which covers the wall between the bedroom and the bathroom. A slow leak behind the bathtub has caused chronic moisture in the plaster of this wall. To which potential hazard should Lori alert the buyer? - Answer- potential toxic mold on the wall Which best describes a layer of clay or other impermeable material installed over the top of a closed landfill to prevent entry of rainwater and minimize leachate? - Answer- cap The listing agent is informed by the seller that the basement gets wet when it rains. The agent says nothing to the buyer. Who is liable for the failure to disclose the latent defect? - Answer- seller John, the buyer, signs a contract that would give the seller 48 hours to accept or reject the offer. The seller has had the offer for 24 hours, but no decision has been reached. Aware the offer has not yet been accepted, John instructs the real estate agent to withdraw the offer. Can this be done legally? - Answer- Yes, John can rescind the offer at any time prior to the seller's acceptance without any penalty whatsoever The agreement of sale should provide that if the property is damaged or destroyed by fire before the deal is consummated, the loss will fall upon the - Answer- the seller A broker who deposits clients' money in the same bank account as the brokerage's operating funds is guilty of - Answer- commingling The essential elements of a real estate contract include offer, acceptance, valuable consideration, and - Answer- contractual capacity An offer of purchase may be revoked when? - Answer- at any time prior to it being accepted. A counteroffer constitutes a - Answer- change to the original offer When a buyer agrees to purchase a new home on the condition that the salesperson sells his current home, the salesperson should - Answer- include a "subject to sale" clause in the agreement of sale for the new property A legatee is a person who receives - Answer- money as a gift through a will To inherit is to receive title - Answer- through a last will and testament If NOT given with the application, when must a lender give the required RESPA information to a buyer? - Answer- within three days The Real Estate Settlement Procedures Act was enacted to - Answer- protect consumers from abusive lending practices A woman inherited her grandmother's property. Which instrument would be used to convey title from the decedent to the devisee? - Answer- certificate of transfer A salesperson goes on a listing appointment where the owner informs the agent that he has missed a couple of mortgage payments. The property values have declined and now the owner owes more for the property than it's worth. In order for the owner to sell without needing to bring money to the closing table, the agent should suggest that the seller - Answer- negotiate a short sale with his bank Salesperson Chang was found guilty of steering. Which did Chang most likely do? - Answer- decided to show a Chinese couple homes in a Chinese neighborhood only The rule that says a buyer is expected to reasonably inspect the property, instead of relying on what she was told, is the Doctrine of - Answer- Caveat Emptor What law creates an automatic lien on a commercial property, subject to the listing agreement? - Answer- broker lien law The leasehold estate that has a specified termination date best describes a/an: - Answer- Estate for years When rented property is sold by the owner, the outstanding leases: - Answer- Remain binding upon the new owner What document is evidence of the relationship between property owner and property manager? - Answer- Property ma