PSI NJ REAL ESTATE PRACTICE TEST QUESTIONS WITH FULLY
SOLVED ANSWERS.
1) Water Rights -- Answer ✔✔ The terms "littoral," "riparian," and "appropriative" refer
t t t t t t t t t t t t
to
2) A salesperson lists a property with a contract that allows for subagency and dual
t t t t t t t t t t t t t t
agency. The salesperson is -- Answer ✔✔ an agent to the broker and a subagent to the
t t t t t t t t t t t t t t t t t
principal.
3) Depreciation is calculated based on the -- Answer ✔✔ Cost of the building only. t t t t t t t t t t t t t
4) When a property owner uses his home as collateral for a loan and creates a lien in
t t t t t t t t t t t t t t t t t
favor of the lender, title is held by the -- Answer ✔✔ mortgagor
t t t t t t t t t t t t
5) A competitive market analysis is MOST often used for -- Answer ✔✔ setting a listing
t t t t t t t t t t t t t t t
price
6) A seller tells the listing agent that her home was treated for termites 10 years ago, so
t t t t t t t t t t t t t t t t t
there are no termites now. Before listing the property, the agent should -- Answer ✔✔
t t t t t t t t t t t t t t
tell the seller not to disclose, because the statute of limitations has run out.
t t t t t t t t t t t t t t
7) All of the following are methods to calculate the reproduction or replacement cost of a
t t t t t t t t t t t t t t
building EXCEPT the -- Answer ✔✔ straight-line method
t t t t t t t t
8) The buyer is assuming a mortgage presently on the property in the amount of
t t t t t t t t t t t t t t
$110,000. What is the adjustment made at closing? -- Answer ✔✔ Credit buyer
t t t t t t t t t t t t t
$110,000; debit seller $110,000. t t t
9) If conditions for purchase are included in a deed and these conditions are violated,
t t t t t t t t t t t t t t
what is the penalty? -- Answer ✔✔ Return of the property to the original owner.
t t t t t t t t t t t t t t
,10) The purpose of requiring an earnest money deposit in a real estate sales contract is to -
t t t t t t t t t t t t t t t t
- Answer ✔✔ provide evidence of the buyer's intention to carry out the contract.
t t t t t t t t t t t t t
11) A judgment has been properly recorded. Any subsequent purchasers, whether they
t t t t t t t t t t t
have actually examined the record or not, have been given -- Answer ✔✔ constructive
t t t t t t t t t t t t t t
notice
12) What type of map is MOST useful for describing the terrain of a very hilly lot? --
t t t t t t t t t t t t t t t t t
Answer ✔✔ contour map t t t
13) The Department of Housing and Urban Development estimates that most private
t t t t t t t t t t t
homes built before 1978 contain potentially dangerous levels of lead. Because of this,
t t t t t t t t t t t t t
some Federal agencies, such as FHA, -- Answer ✔✔ Require the buyer to acknowledge
t t t t t t t t t t t t t t
disclosure of the presence of any known lead paint. t t t t t t t t
14) At the time of listing, the seller tells the listing agent they are moving because the
t t t t t t t t t t t t t t t t
neighbor has loud parties every weekend. The agent should -- Answer ✔✔ tell
t t t t t t t t t t t t t
potential buyers about the parties. (Any social information expressed to an agent can
t t t t t t t t t t t t t
be shared) t
15) A major reason for buying and owning a condominium rather than a detached single-
t t t t t t t t t t t t t
family home is that -- Answer ✔✔ a condominium tends to be more affordable.
t t t t t t t t t t t t t
16) A buyer was negotiating the purchase of a house for himself. During a conversation
t t t t t t t t t t t t t t
with the seller, the seller agreed to include all kitchen appliances in the sale, and this
t t t t t t t t t t t t t t t t
fact was included in the sales contract. In this situation, if the seller takes the appliances
t t t t t t t t t t t t t t t t
with him, what recourse does the buyer have? -- Answer ✔✔ The buyer may sue the
t t t t t t t t t t t t t t t t
seller for specific performance.
t t t
17) A loan which requires the borrower to pay interest only until the maturity date (or due
t t t t t t t t t t t t t t t
tdate), and then to pay the entire principal on the maturity date, is called a -- Answer
t t t t t t t t t t t t t t t t t
✔✔ straight (term) loan (AKA term loan)
t t t t t t
, 18) The real estate contract for a specific property for use as an unlicensed whiskey sales
t t t t t t t t t t t t t t t
operation was forced to terminate. The termination was the result of -- Answer ✔✔
t t t t t t t t t t t t t t
Impossibility of performance. - - (Key word: *Unlicensed* whiskey sales operation).
t t t t t t t t t t
19) A broker lists a property, with a listing contract allowing subagency and dual agency.
t t t t t t t t t t t t t t
One of the broker's salespersons shows the property. The salesperson would be
t t t t t t t t t t t t
classified as -- Answer ✔✔ a subagent of the seller. — (Think - brokerage is the
t t t t t t t t t t t t t t t t
AGENCY, salesperson is working under the agency) t t t t t t
20) The relationship in which the agent is placed in the position of trust and confidence to
t t t t t t t t t t t t t t t t
the principal is known by the term -- Answer ✔✔ fiduciary
t t t t t t t t t t
21) An agreement to purchase that has NOT yet closed is -- Answer ✔✔ an executory
t t t t t t t t t t t t t t t
contract.
22) When compiling a competitive market analysis, a broker would look for comparable
t t t t t t t t t t t t
properties that -- Answer ✔✔ were located near the property being listed.
t t t t t t t t t t t
23) The power vested in the government to establish legislation to preserve order, protect
t t t t t t t t t t t t
tthe public health and safety, and promote the general welfare is known as -- Answer
t t t t t t t t t t t t t t t
✔✔ police power t t
24) If a borrower can afford to make monthly principal and interest payments of $1,000
t t t t t t t t t t t t t t
and the lender will make a 30-year loan at 8-1/2%, how large a loan (rounded to the
t t t t t t t t t t t t t t t t t
nearest $100) can this buyer afford? (BE SURE TO USE THE AMORTIZATION
t t t t t t t t t t t t
TABLE.) -- Answer ✔✔ $130,000 t t t t
25) An Environmental Impact Statement (EIS) -- Answer ✔✔ projects the impact on the
t t t t t t t t t t t t t
environment of a proposed project. t t t t
26) In an exclusive right-to-sell listing, an owner lists the property for sale with how many
t t t t t t t t t t t t t t t
brokers? -- Answer ✔✔ One t t t t
27) A prospective buyer made an offer to purchase a property. The owner responded with
t t t t t t t t t t t t t t
a counteroffer. While the buyer was reviewing the counteroffer, the owner received a
t t t t t t t t t t t t t
SOLVED ANSWERS.
1) Water Rights -- Answer ✔✔ The terms "littoral," "riparian," and "appropriative" refer
t t t t t t t t t t t t
to
2) A salesperson lists a property with a contract that allows for subagency and dual
t t t t t t t t t t t t t t
agency. The salesperson is -- Answer ✔✔ an agent to the broker and a subagent to the
t t t t t t t t t t t t t t t t t
principal.
3) Depreciation is calculated based on the -- Answer ✔✔ Cost of the building only. t t t t t t t t t t t t t
4) When a property owner uses his home as collateral for a loan and creates a lien in
t t t t t t t t t t t t t t t t t
favor of the lender, title is held by the -- Answer ✔✔ mortgagor
t t t t t t t t t t t t
5) A competitive market analysis is MOST often used for -- Answer ✔✔ setting a listing
t t t t t t t t t t t t t t t
price
6) A seller tells the listing agent that her home was treated for termites 10 years ago, so
t t t t t t t t t t t t t t t t t
there are no termites now. Before listing the property, the agent should -- Answer ✔✔
t t t t t t t t t t t t t t
tell the seller not to disclose, because the statute of limitations has run out.
t t t t t t t t t t t t t t
7) All of the following are methods to calculate the reproduction or replacement cost of a
t t t t t t t t t t t t t t
building EXCEPT the -- Answer ✔✔ straight-line method
t t t t t t t t
8) The buyer is assuming a mortgage presently on the property in the amount of
t t t t t t t t t t t t t t
$110,000. What is the adjustment made at closing? -- Answer ✔✔ Credit buyer
t t t t t t t t t t t t t
$110,000; debit seller $110,000. t t t
9) If conditions for purchase are included in a deed and these conditions are violated,
t t t t t t t t t t t t t t
what is the penalty? -- Answer ✔✔ Return of the property to the original owner.
t t t t t t t t t t t t t t
,10) The purpose of requiring an earnest money deposit in a real estate sales contract is to -
t t t t t t t t t t t t t t t t
- Answer ✔✔ provide evidence of the buyer's intention to carry out the contract.
t t t t t t t t t t t t t
11) A judgment has been properly recorded. Any subsequent purchasers, whether they
t t t t t t t t t t t
have actually examined the record or not, have been given -- Answer ✔✔ constructive
t t t t t t t t t t t t t t
notice
12) What type of map is MOST useful for describing the terrain of a very hilly lot? --
t t t t t t t t t t t t t t t t t
Answer ✔✔ contour map t t t
13) The Department of Housing and Urban Development estimates that most private
t t t t t t t t t t t
homes built before 1978 contain potentially dangerous levels of lead. Because of this,
t t t t t t t t t t t t t
some Federal agencies, such as FHA, -- Answer ✔✔ Require the buyer to acknowledge
t t t t t t t t t t t t t t
disclosure of the presence of any known lead paint. t t t t t t t t
14) At the time of listing, the seller tells the listing agent they are moving because the
t t t t t t t t t t t t t t t t
neighbor has loud parties every weekend. The agent should -- Answer ✔✔ tell
t t t t t t t t t t t t t
potential buyers about the parties. (Any social information expressed to an agent can
t t t t t t t t t t t t t
be shared) t
15) A major reason for buying and owning a condominium rather than a detached single-
t t t t t t t t t t t t t
family home is that -- Answer ✔✔ a condominium tends to be more affordable.
t t t t t t t t t t t t t
16) A buyer was negotiating the purchase of a house for himself. During a conversation
t t t t t t t t t t t t t t
with the seller, the seller agreed to include all kitchen appliances in the sale, and this
t t t t t t t t t t t t t t t t
fact was included in the sales contract. In this situation, if the seller takes the appliances
t t t t t t t t t t t t t t t t
with him, what recourse does the buyer have? -- Answer ✔✔ The buyer may sue the
t t t t t t t t t t t t t t t t
seller for specific performance.
t t t
17) A loan which requires the borrower to pay interest only until the maturity date (or due
t t t t t t t t t t t t t t t
tdate), and then to pay the entire principal on the maturity date, is called a -- Answer
t t t t t t t t t t t t t t t t t
✔✔ straight (term) loan (AKA term loan)
t t t t t t
, 18) The real estate contract for a specific property for use as an unlicensed whiskey sales
t t t t t t t t t t t t t t t
operation was forced to terminate. The termination was the result of -- Answer ✔✔
t t t t t t t t t t t t t t
Impossibility of performance. - - (Key word: *Unlicensed* whiskey sales operation).
t t t t t t t t t t
19) A broker lists a property, with a listing contract allowing subagency and dual agency.
t t t t t t t t t t t t t t
One of the broker's salespersons shows the property. The salesperson would be
t t t t t t t t t t t t
classified as -- Answer ✔✔ a subagent of the seller. — (Think - brokerage is the
t t t t t t t t t t t t t t t t
AGENCY, salesperson is working under the agency) t t t t t t
20) The relationship in which the agent is placed in the position of trust and confidence to
t t t t t t t t t t t t t t t t
the principal is known by the term -- Answer ✔✔ fiduciary
t t t t t t t t t t
21) An agreement to purchase that has NOT yet closed is -- Answer ✔✔ an executory
t t t t t t t t t t t t t t t
contract.
22) When compiling a competitive market analysis, a broker would look for comparable
t t t t t t t t t t t t
properties that -- Answer ✔✔ were located near the property being listed.
t t t t t t t t t t t
23) The power vested in the government to establish legislation to preserve order, protect
t t t t t t t t t t t t
tthe public health and safety, and promote the general welfare is known as -- Answer
t t t t t t t t t t t t t t t
✔✔ police power t t
24) If a borrower can afford to make monthly principal and interest payments of $1,000
t t t t t t t t t t t t t t
and the lender will make a 30-year loan at 8-1/2%, how large a loan (rounded to the
t t t t t t t t t t t t t t t t t
nearest $100) can this buyer afford? (BE SURE TO USE THE AMORTIZATION
t t t t t t t t t t t t
TABLE.) -- Answer ✔✔ $130,000 t t t t
25) An Environmental Impact Statement (EIS) -- Answer ✔✔ projects the impact on the
t t t t t t t t t t t t t
environment of a proposed project. t t t t
26) In an exclusive right-to-sell listing, an owner lists the property for sale with how many
t t t t t t t t t t t t t t t
brokers? -- Answer ✔✔ One t t t t
27) A prospective buyer made an offer to purchase a property. The owner responded with
t t t t t t t t t t t t t t
a counteroffer. While the buyer was reviewing the counteroffer, the owner received a
t t t t t t t t t t t t t
