NATIONAL REAL ESTATE EXAM PRACTICE TEST QUESTIONS WITH FULLY SOLVED ANSWERS

NATIONAL REAL ESTATE EXAM PRACTICE TEST QUESTIONS
WITH FULLY SOLVED ANSWERS


1) In most cases, broker compensation, as a percentage of home price, falls somewhere
t t t t t t t t t t t t t




between: -- Answer ✔✔ 5-7% t t t t




2) What does it mean when a contract says that time is of the essence? -- Answer ✔✔
t t t t t t t t t t t t t t t t t




Parties must perform their contractual duties by a specific date and time in order to
t t t t t t t t t t t t t t t




avoid a breach of contract.
t t t t




3) What type of permission allows an individual property to deviate from a specific
t t t t t t t t t t t t t




provision of a zoning ordinance? -- Answer ✔✔ variance
t t t t t t t t




4) In the sales comparison approach to property valuation, what does the principle of
t t t t t t t t t t t t t




substitution state? -- Answer ✔✔ The value of a property is only what a consumer t t t t t t t t t t t t t t t




would pay to acquire a comparable property.
t t t t t t




5) A property manager's PRIMARY responsibility to the owner is to: -- Answer ✔✔
t t t t t t t t t t t t t




realize the highest return possible and maximize the owner's return on that investment
t t t t t t t t t t t t




6) When a tenancy at sufferance occurs, the tenant is referred to as a: -- Answer ✔✔
t t t t t t t t t t t t t t t t




holdover tenant t




7) A married couple bought a home ten years ago for $400,000. Their neighborhood has
t t t t t t t t t t t t t t




rapidly grown in popularity, and they were able to sell their home this year for
t t t t t t t t t t t t t t t




$950,000. How much of that money will they be required to pay capital gains tax on? --
t t t t t t t t t t t t t t t t t




Answer ✔✔ $50,000 t t




8) How does errors and omissions insurance (E&O) affect the defendants in fair housing
t t t t t t t t t t t t t




cases?* -- Answer ✔✔ E&O may not cover any defense for a fair housing violation.
t t t t t t t t t t t t t t

,9) An agent should present all offers to their client UNLESS:* -- Answer ✔✔ the client
t t t t t t t t t t t t t t t




explicitly instructs the agent not to present any offers below a certain amount in
t t t t t t t t t t t t t t




writing

10) TILA does NOT apply to which of the following kinds of loans? -- Answer ✔✔ business
t t t t t t t t t t t t t t t t




loans

11) Allie cannot depreciate her investment property for a tax deduction. What kind of
t t t t t t t t t t t t t




property is it? -- Answer ✔✔ undeveloped land
t t t t t t t




12) An appraisal is required for all: -- Answer ✔✔ federally related loan programs
t t t t t t t t t t t t




13) Erin pays a flat fee every month to rent her apartment. Her landlord pays for the
t t t t t t t t t t t t t t t t




property's maintenance, security, taxes, utilities, and all other operating expenses.
t t t t t t t t t t




What kind of lease is this? -- Answer ✔✔ gross lease
t t t t t t t t t t




14) The purpose of the Truth-in-Lending Act (TILA) is to provide which of the following?* -
t t t t t t t t t t t t t t




- Answer ✔✔ meaningful disclosure of credit terms of the loan to the borrower
t t t t t t t t t t t t t




15) There are no exceptions for discrimination based on: -- Answer ✔✔ race
t t t t t t t t t t t




16) A valid sales contract stipulates that the seller must repair a hole in the roof before
t t t t t t t t t t t t t t t t




closing day. The seller failed to do so, which makes the seller guilty of: -- Answer ✔✔
t t t t t t t t t t t t t t t t t




breach of contract t t




17) What usually happens to earnest money at the successful closing of the sale? -- Answer
t t t t t t t t t t t t t t t




✔✔ It counts towards the buyer's closing costs.
t t t t t t t




18) Liability for others by mandate of law or by express agreement is called: -- Answer ✔✔
t t t t t t t t t t t t t t t t




vicarious liability t




19) Which type of listing agreement is most likely to cause a conflict of interest, and is
t t t t t t t t t t t t t t t t




therefore discouraged? -- Answer ✔✔ net listing t t t t t t

, 20) John submitted an offer to buy a condo, but he can only carry out the purchase if the
t t t t t t t t t t t t t t t t t t




bank approves his request for a loan. For this reason, the contract must contain a: --
t t t t t t t t t t t t t t t t




Answer ✔✔ contingency t t




21) If a buyer makes a 15% down payment and obtains a $120,000 mortgage, what is the
t t t t t t t t t t t t t t t t




sales price of the property? -- Answer ✔✔ $141,176
t t t t t t t t




22) What is eminent domain? -- Answer ✔✔ The power of the government to seize
t t t t t t t t t t t t t t




citizen's private property without the consent of the owner.
t t t t t t t t




23) The party responsible for paying the origination fee when obtaining conventional
t t t t t t t t t t t




financing is: -- Answer ✔✔ the borrower t t t t t t




24) What is attached to an original contract before it is signed? -- Answer ✔✔ addendum
t t t t t t t t t t t t t t




25) Arturo is buying a house for $400,000. He will be making a down payment of 5%. He
t t t t t t t t t t t t t t t t t




already submitted a check for $2,000 as earnest money, which will be applied to the
t t t t t t t t t t t t t t t




purchase. How much will Arturo need to pay on closing day? -- Answer ✔✔ $18,000
t t t t t t t t t t t t t t




26) A Christian organization owns a fourplex. It wants to rent to only Christian tenants.
t t t t t t t t t t t t t t




Under the federal Fair Housing Act, is this legal? -- Answer ✔✔ Yes. Religious
t t t t t t t t t t t t t t




organizations which rent to tenants for residential purposes are exempt from the Fair
t t t t t t t t t t t t t




Housing Act t




27) What happens to trade fixtures after a business moves out of a leased property? --
t t t t t t t t t t t t t t t




Answer ✔✔ The tenant removes their trade fixtures and takes them upon moving out.
t t t t t t t t t t t t t




28) Suppose that a borrower has a gross monthly income of $3,000 and wants to qualify for
t t t t t t t t t t t t t t t




ta conforming loan (total debt service ratio of 36%) with a monthly PITI payment of
t t t t t t t t t t t t t t t




$800. What is the maximum amount of additional long-term obligations this borrower
t t t t t t t t t t t t




may have after PITI? -- Answer ✔✔ $280
t t t t t t t




29) A square bedroom measures 10 feet by 10 feet. What is the area of the room? --
t t t t t t t t t t t t t t t t t




Answer ✔✔ 100 square feet t t t t