PSI National Exam for Real Estate
A written agreement in which a purchaser agrees to buy and a seller agrees to sell is
called - correct answer a contract
Antitrust laws prohibit competing brokers from all of the following - correct answer 1.
boycotting other brokers in the marketplace.
2. dividing the market to restrict competition.
3. agreeing to set sales commissions and management rates.
When a sewer line is installed down a rural road, the cost will probably be shared by -
correct answer all current owners of real estate fronting on that road
State laws differ on whether a buyer is entitled to know about - correct answer a
suicide that occurred in the house last year.
A lawsuit for inverse condemnation may be brought by - correct answer a homeowner
When is racial discrimination in the rental of rooms or apartments permitted? - correct
answer Under no circumstances
The real estate broker who is listing a house for sale should personally verify - correct
answer the number of square feet in the building
Real property can be converted to personal property by - correct answer Severance
Prospective buyers made an offer on a property. The seller did NOT accept, but made a
counteroffer. The
prospective buyers signed the counteroffer and the real estate agent delivered their
acceptance to the seller.
In the interim, the same buyers had found another house that they liked better and
made an offer on it, which was accepted. Which of the following is TRUE? - correct
answer Both contracts are valid
Although states make specific laws governing water rights and the rights in land that
borders water, most states
generally follow one of two basic doctrines regarding water rights. In many states, the
common law doctrine of riparian and littoral rights dictates that water rights are
automatically conveyed with property. In others, all water rights are controlled by the
state under the doctrine of - correct answer prior appropriation
The purpose of requiring an earnest money deposit in a real estate sales contract is to -
correct answer provide evidence of the buyer's intention to carry out the contract.
,A buyer is getting a fully amortized loan for $220,000. The bank will give the buyer the
loan for 15 years at 5 1/2%
or for 30 years at 6 1/2%. To the nearest cent, what is the difference between the
monthly payments for these two loans?
(BE SURE TO USE THE AMORTIZATION TABLE.) - correct answer $409.20.
A borrower has defaulted on the mortgage. The mortgage contains an acceleration
clause. This permits the lender to - correct answer demand immediate payment of the
entire note
The FHA functions MOST like - correct answer an insurance company
1. They are used to buy down interest rate.
2. They are a function of the marketplace.
3. They are paid by either the buyer or the seller. - correct answer discount points
When land is conveyed to a trustee, the trustee may - correct answer do whatever is
permitted under the trust agreement
A prospective buyer made an offer to purchase a property. The owner responded with a
counteroffer. While the buyer
was reviewing the counteroffer, the owner received a better offer. The owner can accept
the second offer if - correct answer the owner withdraws the counteroffer before it is
accepted.
While an agent is showing a listed property, the seller and the buyer enter into an oral
agreement for the purchase of the home. If a dispute over the terms arises later, the
agreement may be unenforceable because - correct answer the agreement does not
comply with the Statute of Frauds
Earnest money should be deposited into a trust account - correct answer in a timely
manner, according to state laws
A deed restriction is applicable to the activities of - correct answer all owners, present
and future
An easement can be terminated by - correct answer prescription
Depreciation is calculated based on the - correct answer cost of the building only
Which of the following approaches MOST reliably estimates the sales price of a single-
family residence? - correct answer Market data
A seller mentions to his agent that the previous owners of his property may have
dumped hazardous waste on the site. Under the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA), who is liable for damages from
,the dumping prior to the sale of the property? - correct answer Seller
The escrow officer or closing agent MUST give information regarding the sales price
and seller's social security number to - correct answer IRS
A broker supplies the financing for a project to build condominiums with the stipulation
that he has the exclusive right to sell the completed condos. Which of the following
BEST describes this relationship? - correct answer Agency coupled with an interest
If you own a building free and clear that is worth $115,000 and want an annual return of
12%, what net income is needed each month? - correct answer $1,150
Usury laws were enacted to protect the - correct answer borrower
At the time of listing, the seller tells the listing agent they are moving because the
neighbor has loud parties every weekend.
The agent should - correct answer tell potential buyers about the parties
When one of the parties to an agreement fails to perform one of its conditions, that
contract is deemed to be - correct answer breached
Which of the following is NOT a consideration in the definition of market value? - correct
answer Buyer and seller must agree to appraised value
One common method for controlling the problems created by conflict of interest in dual
representation is - correct answer allowing a broker to designate separate
salespeople within the company as legal representatives of each of the clients.
Ownership of common stock in a corporation gives - correct answer an interest that is
classified as personal property
At the closing on June 15, the buyer is assuming a mortgage presently on the property,
on which the monthly interest charge
is currently $600. The seller has made the payment due on June 1. Assuming a VA
mortgage, what is the adjustment
made at closing? - correct answer Debit seller $300; credit buyer $300
Too much leverage may result in - correct answer negative cash flow
A major reason for buying and owning a condominium rather than a detached single-
family home is that - correct answer a condominium tends to be more affordable
An adjustable rate loan should include all of the following elements - correct answer 1.
margin
2. life-of-the-loan cap
3. index
, Regulation Z requires that the borrower be fully informed of all of the following - correct
answer 1. loan fees.
2 .the origination fee.
3. the annual percentage rate
A couple signed a lease on an apartment for a period of 1 year. The lease does NOT
contain an automatic renewal clause. The couple plans to move out at the end of the
lease rather than renew it. How much notice MUST they give to comply with
the lease term? - correct answer No notice is required
The relationship in which the agent is placed in the position of trust and confidence to
the principal is known by the term - correct answer fiduciary
A couple are moving to a new city. They have decided to rent temporarily before buying
a house to see which part of the city
they would like to live in. What type of lease would BEST suit the couple's needs? -
correct answer Month-to-month lease
A broker says, while showing a rural property, "This property has the world's purest well
water." This would be an example of - correct answer an expression of opinion, or
puffing, which could lead to misrepresentation
A contract has been drawn which obliges the sellers to convey title to their land to the
buyers if the buyers come up with
$22,000 on or before December 31st. This is called - correct answer an option
contract
Errors and Omissions insurance covers the broker for - correct answer unintentional
misrepresentations
The land description T3N, R4W Principal Meridian refers to what method of property
description? - correct answer Rectangular survey.
All of the following are methods to calculate the reproduction or replacement cost of a
building EXCEPT - correct answer straight-line method
The buyer is assuming a mortgage presently on the property in the amount of $110,000.
What is the adjustment made at closing? - correct answer Credit buyer $110,000;
debit seller $110,000
A salesperson lists a property with a contract that allows for subagency and dual
agency. The salesperson is - correct answer an agent to the broker and a subagent to
the principal.
A written agreement in which a purchaser agrees to buy and a seller agrees to sell is
called - correct answer a contract
Antitrust laws prohibit competing brokers from all of the following - correct answer 1.
boycotting other brokers in the marketplace.
2. dividing the market to restrict competition.
3. agreeing to set sales commissions and management rates.
When a sewer line is installed down a rural road, the cost will probably be shared by -
correct answer all current owners of real estate fronting on that road
State laws differ on whether a buyer is entitled to know about - correct answer a
suicide that occurred in the house last year.
A lawsuit for inverse condemnation may be brought by - correct answer a homeowner
When is racial discrimination in the rental of rooms or apartments permitted? - correct
answer Under no circumstances
The real estate broker who is listing a house for sale should personally verify - correct
answer the number of square feet in the building
Real property can be converted to personal property by - correct answer Severance
Prospective buyers made an offer on a property. The seller did NOT accept, but made a
counteroffer. The
prospective buyers signed the counteroffer and the real estate agent delivered their
acceptance to the seller.
In the interim, the same buyers had found another house that they liked better and
made an offer on it, which was accepted. Which of the following is TRUE? - correct
answer Both contracts are valid
Although states make specific laws governing water rights and the rights in land that
borders water, most states
generally follow one of two basic doctrines regarding water rights. In many states, the
common law doctrine of riparian and littoral rights dictates that water rights are
automatically conveyed with property. In others, all water rights are controlled by the
state under the doctrine of - correct answer prior appropriation
The purpose of requiring an earnest money deposit in a real estate sales contract is to -
correct answer provide evidence of the buyer's intention to carry out the contract.
,A buyer is getting a fully amortized loan for $220,000. The bank will give the buyer the
loan for 15 years at 5 1/2%
or for 30 years at 6 1/2%. To the nearest cent, what is the difference between the
monthly payments for these two loans?
(BE SURE TO USE THE AMORTIZATION TABLE.) - correct answer $409.20.
A borrower has defaulted on the mortgage. The mortgage contains an acceleration
clause. This permits the lender to - correct answer demand immediate payment of the
entire note
The FHA functions MOST like - correct answer an insurance company
1. They are used to buy down interest rate.
2. They are a function of the marketplace.
3. They are paid by either the buyer or the seller. - correct answer discount points
When land is conveyed to a trustee, the trustee may - correct answer do whatever is
permitted under the trust agreement
A prospective buyer made an offer to purchase a property. The owner responded with a
counteroffer. While the buyer
was reviewing the counteroffer, the owner received a better offer. The owner can accept
the second offer if - correct answer the owner withdraws the counteroffer before it is
accepted.
While an agent is showing a listed property, the seller and the buyer enter into an oral
agreement for the purchase of the home. If a dispute over the terms arises later, the
agreement may be unenforceable because - correct answer the agreement does not
comply with the Statute of Frauds
Earnest money should be deposited into a trust account - correct answer in a timely
manner, according to state laws
A deed restriction is applicable to the activities of - correct answer all owners, present
and future
An easement can be terminated by - correct answer prescription
Depreciation is calculated based on the - correct answer cost of the building only
Which of the following approaches MOST reliably estimates the sales price of a single-
family residence? - correct answer Market data
A seller mentions to his agent that the previous owners of his property may have
dumped hazardous waste on the site. Under the Comprehensive Environmental
Response, Compensation, and Liability Act (CERCLA), who is liable for damages from
,the dumping prior to the sale of the property? - correct answer Seller
The escrow officer or closing agent MUST give information regarding the sales price
and seller's social security number to - correct answer IRS
A broker supplies the financing for a project to build condominiums with the stipulation
that he has the exclusive right to sell the completed condos. Which of the following
BEST describes this relationship? - correct answer Agency coupled with an interest
If you own a building free and clear that is worth $115,000 and want an annual return of
12%, what net income is needed each month? - correct answer $1,150
Usury laws were enacted to protect the - correct answer borrower
At the time of listing, the seller tells the listing agent they are moving because the
neighbor has loud parties every weekend.
The agent should - correct answer tell potential buyers about the parties
When one of the parties to an agreement fails to perform one of its conditions, that
contract is deemed to be - correct answer breached
Which of the following is NOT a consideration in the definition of market value? - correct
answer Buyer and seller must agree to appraised value
One common method for controlling the problems created by conflict of interest in dual
representation is - correct answer allowing a broker to designate separate
salespeople within the company as legal representatives of each of the clients.
Ownership of common stock in a corporation gives - correct answer an interest that is
classified as personal property
At the closing on June 15, the buyer is assuming a mortgage presently on the property,
on which the monthly interest charge
is currently $600. The seller has made the payment due on June 1. Assuming a VA
mortgage, what is the adjustment
made at closing? - correct answer Debit seller $300; credit buyer $300
Too much leverage may result in - correct answer negative cash flow
A major reason for buying and owning a condominium rather than a detached single-
family home is that - correct answer a condominium tends to be more affordable
An adjustable rate loan should include all of the following elements - correct answer 1.
margin
2. life-of-the-loan cap
3. index
, Regulation Z requires that the borrower be fully informed of all of the following - correct
answer 1. loan fees.
2 .the origination fee.
3. the annual percentage rate
A couple signed a lease on an apartment for a period of 1 year. The lease does NOT
contain an automatic renewal clause. The couple plans to move out at the end of the
lease rather than renew it. How much notice MUST they give to comply with
the lease term? - correct answer No notice is required
The relationship in which the agent is placed in the position of trust and confidence to
the principal is known by the term - correct answer fiduciary
A couple are moving to a new city. They have decided to rent temporarily before buying
a house to see which part of the city
they would like to live in. What type of lease would BEST suit the couple's needs? -
correct answer Month-to-month lease
A broker says, while showing a rural property, "This property has the world's purest well
water." This would be an example of - correct answer an expression of opinion, or
puffing, which could lead to misrepresentation
A contract has been drawn which obliges the sellers to convey title to their land to the
buyers if the buyers come up with
$22,000 on or before December 31st. This is called - correct answer an option
contract
Errors and Omissions insurance covers the broker for - correct answer unintentional
misrepresentations
The land description T3N, R4W Principal Meridian refers to what method of property
description? - correct answer Rectangular survey.
All of the following are methods to calculate the reproduction or replacement cost of a
building EXCEPT - correct answer straight-line method
The buyer is assuming a mortgage presently on the property in the amount of $110,000.
What is the adjustment made at closing? - correct answer Credit buyer $110,000;
debit seller $110,000
A salesperson lists a property with a contract that allows for subagency and dual
agency. The salesperson is - correct answer an agent to the broker and a subagent to
the principal.
