COLORADO PRACTICE TEST FOR PSI WITH
ALL CORRECT & VERIFIED ANSWERS
The brokerage firm owns the listing contract and has designated a broker to represent the seller. In
this case, the designated broker:
A. performs the services and represents the seller.
B. is an employing broker, both represent the seller.
C. is not supervised by the employing broker.
D. will be an agent of the buyer. Correct answer-performs the services and represents the seller.
Only a designated broker has an agency relationship with the seller- the designated agency
relationship does not extend to the employing broker unless the employing broker is also designated.
Designated agents can only represent a client as a single agent or transaction agent. The employing
broker is still obligated to supervise the designated broker, but the designated broker isn't allowed to
share any knowledge with an employing broker who isn't also designated to that client.
If a broker wishes to be the only broker involved in a transaction, thereby "double ending" this sale,
she may
A. represent both parties as a transaction broker.
B. treat both parties as customers.
C. represent one party as an agent and the other as a transaction broker.
D. act as an agent to each party. Correct answer-represent both parties as a transaction broker.
Dual Agency in Colorado is not allowed. Dual agency occurs when real estate agents from the same
firm claim to represent both the buyer and the seller in the same transaction.
An inactive broker has been asked by a friend to list her house in six months. In this case, the broker
A. must pay her errors and omissions insurance, which will activate the license.
B. may activate her license prior to listing the home.
C. should list the house as a FSBO so the broker won't have to activate her license.
D. must refer the potential seller (friend) to an active licensee and receive a referral fee. Correct
answer-B. may activate her license prior to listing the home. The answer is may activate her license
prior to listing the home. In order to take the listing, the broker must activate her license by meeting
all requirements, including obtaining E&O insurance. Inactive brokers may not receive a referral fee.
Listing the home as a FSBO and acting as a broker is illegal.
A buyer is assuming a loan at a closing on October 25. The loan balance after the October 1 payment
is $125,000 and the interest rate is 10%. How will the interest proration appear on the buyer's closing
statement?
,A. $235.22 credit
B. $806.45 credit
C. $236.82 debit
D. $1041.67 debit Correct answer-B. $806.45 credit
The answer is $806.45 credit. To solve this problem, take the total amount times the
interest rate, then divide by 12 to find monthly interest:
$125,000 x .1 = $12,500 ÷ 12 = $1,041.67 monthly interest
Now, divide that answer by the number of days in October and multiply that by the number
of days the buyer must pay for:
$1,041.67 ÷ 31 X 24 = $806.45 prorated amount
Interest on assumed loans is always a buyer credit and seller debit because interest is
paid in arrears, and the buyer did not own the property at that time.
All of the following are true of the six-column worksheet EXCEPT
A. it is a tool for tracking who pays what.
B. it replaces the buyer and seller closing statements.
C. it is not given to parties.
D. the information on it is transferred to the buyer and seller closing statements. Correct answer-B.
it replaces the buyer and seller closing statements. The six-column worksheet does not replace the
buyer and seller closing statements.
All of the following are true of the brokerage firm's office policy requirements EXCEPT
A. it must include the license numbers and name of each broker associate.
B. if the Commission audits the firm, the employing broker must be able to produce the policy.
C. the only required element is a statement on designated brokerage.
D. each broker associate must read and sign a copy of the policy. Correct answer-A. it must include
the license numbers and name of each broker associate. The answer is it must include the license
numbers and name of each broker associate. A list of the brokerage firm's associate brokers would
not be included in the office policy.
A transaction broker is most likely a(n)
A. coach
B. agent
C. facilitator
D. advocate Correct answer-C. facilitator A transaction broker facilitates or coordinates the
transaction, in a neutral way, to completion. An agent has fiduciary obligations, as illustrated by a
coach or advocate.
, 8. Colorado law requires buyers to be notified of the source of water for residential properties, how
does the buyer receive this notice?
A. The buyer's listing contract
B. The water department sends a notice after closing
C. Contract to Buy and Sell or listing contract
D. Seller's Property Disclosure or Water Addendum Correct answer-D. Seller's Property Disclosure
or Water Addendum
The Contract to Buy and Sell gives the buyer notice to review the seller's property disclosure or
source of potable water addendum to verify the water supply is adequate prior to closing.
9. A general agent acting for a principal
A. has no authority to bind her principal
B. has limited authority to bind her principal.
C. has unlimited authority to bind her principal.
D. must have a power of attorney. Correct answer-B. has limited authority to bind her principal.
General agents are allowed to bind their principal based upon a signed agreement. Special agents
have no power to bind, and a universal agent has unlimited power to bind the principal.
10. The brokerage relationship between a seller and listing broker is created by the
A. disclosure to buyer or seller.
B. A listing contract
C. common law.
D. Contract to Buy and Sell. Correct answer-B. A listing contract Brokerage relationships, agency or
transaction-broker, are defined in the listing contract.
11. The purpose of Rule 6.15 regarding sign crossing is to protect whom?
A. Sellers and buyers
B. Brokers with expired listings
C. Brokers with active listings
D. Sellers Correct answer-C. Brokers with active listings The purpose of Chapter 4 of the Code of
Colorado Regulations, Section 725-1-6.15 regarding sign crossing is to protect brokers with active
listings from other brokerage firms trying to list the property. Part A of the rule reads "Brokers will
not negotiate a Listing Contract directly with a Consumer for compensation from said Consumer if
ALL CORRECT & VERIFIED ANSWERS
The brokerage firm owns the listing contract and has designated a broker to represent the seller. In
this case, the designated broker:
A. performs the services and represents the seller.
B. is an employing broker, both represent the seller.
C. is not supervised by the employing broker.
D. will be an agent of the buyer. Correct answer-performs the services and represents the seller.
Only a designated broker has an agency relationship with the seller- the designated agency
relationship does not extend to the employing broker unless the employing broker is also designated.
Designated agents can only represent a client as a single agent or transaction agent. The employing
broker is still obligated to supervise the designated broker, but the designated broker isn't allowed to
share any knowledge with an employing broker who isn't also designated to that client.
If a broker wishes to be the only broker involved in a transaction, thereby "double ending" this sale,
she may
A. represent both parties as a transaction broker.
B. treat both parties as customers.
C. represent one party as an agent and the other as a transaction broker.
D. act as an agent to each party. Correct answer-represent both parties as a transaction broker.
Dual Agency in Colorado is not allowed. Dual agency occurs when real estate agents from the same
firm claim to represent both the buyer and the seller in the same transaction.
An inactive broker has been asked by a friend to list her house in six months. In this case, the broker
A. must pay her errors and omissions insurance, which will activate the license.
B. may activate her license prior to listing the home.
C. should list the house as a FSBO so the broker won't have to activate her license.
D. must refer the potential seller (friend) to an active licensee and receive a referral fee. Correct
answer-B. may activate her license prior to listing the home. The answer is may activate her license
prior to listing the home. In order to take the listing, the broker must activate her license by meeting
all requirements, including obtaining E&O insurance. Inactive brokers may not receive a referral fee.
Listing the home as a FSBO and acting as a broker is illegal.
A buyer is assuming a loan at a closing on October 25. The loan balance after the October 1 payment
is $125,000 and the interest rate is 10%. How will the interest proration appear on the buyer's closing
statement?
,A. $235.22 credit
B. $806.45 credit
C. $236.82 debit
D. $1041.67 debit Correct answer-B. $806.45 credit
The answer is $806.45 credit. To solve this problem, take the total amount times the
interest rate, then divide by 12 to find monthly interest:
$125,000 x .1 = $12,500 ÷ 12 = $1,041.67 monthly interest
Now, divide that answer by the number of days in October and multiply that by the number
of days the buyer must pay for:
$1,041.67 ÷ 31 X 24 = $806.45 prorated amount
Interest on assumed loans is always a buyer credit and seller debit because interest is
paid in arrears, and the buyer did not own the property at that time.
All of the following are true of the six-column worksheet EXCEPT
A. it is a tool for tracking who pays what.
B. it replaces the buyer and seller closing statements.
C. it is not given to parties.
D. the information on it is transferred to the buyer and seller closing statements. Correct answer-B.
it replaces the buyer and seller closing statements. The six-column worksheet does not replace the
buyer and seller closing statements.
All of the following are true of the brokerage firm's office policy requirements EXCEPT
A. it must include the license numbers and name of each broker associate.
B. if the Commission audits the firm, the employing broker must be able to produce the policy.
C. the only required element is a statement on designated brokerage.
D. each broker associate must read and sign a copy of the policy. Correct answer-A. it must include
the license numbers and name of each broker associate. The answer is it must include the license
numbers and name of each broker associate. A list of the brokerage firm's associate brokers would
not be included in the office policy.
A transaction broker is most likely a(n)
A. coach
B. agent
C. facilitator
D. advocate Correct answer-C. facilitator A transaction broker facilitates or coordinates the
transaction, in a neutral way, to completion. An agent has fiduciary obligations, as illustrated by a
coach or advocate.
, 8. Colorado law requires buyers to be notified of the source of water for residential properties, how
does the buyer receive this notice?
A. The buyer's listing contract
B. The water department sends a notice after closing
C. Contract to Buy and Sell or listing contract
D. Seller's Property Disclosure or Water Addendum Correct answer-D. Seller's Property Disclosure
or Water Addendum
The Contract to Buy and Sell gives the buyer notice to review the seller's property disclosure or
source of potable water addendum to verify the water supply is adequate prior to closing.
9. A general agent acting for a principal
A. has no authority to bind her principal
B. has limited authority to bind her principal.
C. has unlimited authority to bind her principal.
D. must have a power of attorney. Correct answer-B. has limited authority to bind her principal.
General agents are allowed to bind their principal based upon a signed agreement. Special agents
have no power to bind, and a universal agent has unlimited power to bind the principal.
10. The brokerage relationship between a seller and listing broker is created by the
A. disclosure to buyer or seller.
B. A listing contract
C. common law.
D. Contract to Buy and Sell. Correct answer-B. A listing contract Brokerage relationships, agency or
transaction-broker, are defined in the listing contract.
11. The purpose of Rule 6.15 regarding sign crossing is to protect whom?
A. Sellers and buyers
B. Brokers with expired listings
C. Brokers with active listings
D. Sellers Correct answer-C. Brokers with active listings The purpose of Chapter 4 of the Code of
Colorado Regulations, Section 725-1-6.15 regarding sign crossing is to protect brokers with active
listings from other brokerage firms trying to list the property. Part A of the rule reads "Brokers will
not negotiate a Listing Contract directly with a Consumer for compensation from said Consumer if
