Real Estate Practice PSI Exam EXAM 2025 |
ACTUAL REAL EXAM ACCURATE QUESTIONS
AND ANSWERS WITH RATIONALES |
VERIFIED AND LATEST UPDATED |
GUARANTEED PASS
1. A broker, acting as agent for the seller, presents an offer to buy from the broker's former college
roommate. The broker knows that the buyer will increase the amount of the offer if the seller turns
down the offer. What should the broker do?
A. Present the offer without comment
B. Tell the seller that the buyer will pay more
C. Suggest that the seller make a counteroffer
D. Refuse to present the offer
Correct Answer: B. Tell the seller that the buyer will pay more
Rationale: As a fiduciary to the seller, the broker must disclose any information that could benefit the
seller in negotiations, including knowledge of a potential higher offer.
2. An exclusive right to sell listing obtained by a broker associate belongs to:
A. The broker associate
B. The seller
C. The employing broker only
D. The state real estate commission
Correct Answer: C. The employing broker only
Rationale: Listings are contracts between the seller and the employing broker, not the individual
licensee, even if the broker associate secured the listing.
3. An agency relationship between a property owner and a property manager is usually created by:
A. Verbal agreement
B. Implied contract
C. Listing agreement
D. Management agreement
Correct Answer: D. Management agreement
Rationale: A written property management agreement creates a legal agency relationship, outlining
the manager’s duties and authority.
4. What critical aspect of the property inspection process MUST licensees convey to prospective
buyers?
A. That inspections are mandatory
,B. That the licensee will conduct the inspection
C. The need for inspections to be completed within the time stated in the contract
D. That inspections can be delayed if needed
Correct Answer: C. The need for inspections to be completed within the time stated in the contract
Rationale: Timing is crucial in contracts; missing inspection deadlines can waive the buyer’s rights or
lead to breach of contract.
5. A licensee is listing a property in a known flood plain. The seller denies any flooding. What is the
licensee required to do?
A. Accept the seller’s claim without question
B. File a report with FEMA
C. Inform the seller of the legal obligation to disclose facts regarding flood plains
D. Keep the flood plain information confidential
Correct Answer: C. Inform the seller of the legal obligation to disclose facts regarding flood plains
Rationale: Licensees must ensure sellers understand their duty to disclose material facts like location
in a flood plain, even if they deny past flooding.
6. Unrepresented buyers ask whether they should order a home inspection. How should the listing
agent respond?
A. "No, it’s not necessary."
B. "It depends on your loan requirements."
C. "If you feel it is in your best interest, please do so."
D. "Only if you suspect a problem."
Correct Answer: C. "If you feel it is in your best interest, please do so."
Rationale: The agent must remain neutral and avoid giving advice to unrepresented buyers, but should
encourage due diligence.
7. A seller's statement in a property disclosure document means:
A. The owner guarantees no problems exist
B. The property is certified by a home inspector
C. The owner is disclosing known latent defects
D. The agent has verified all property issues
Correct Answer: C. The owner is disclosing known latent defects
Rationale: Disclosure statements are for the seller to reveal known issues, especially latent defects
that aren’t easily visible.
8. What is the duration of a home warranty’s coverage?
A. One year from date of purchase
B. Five years
C. Until the property is sold
D. As disclosed in the contract that offers the warranty
Correct Answer: D. As disclosed in the contract that offers the warranty
Rationale: Home warranties vary in coverage and term; buyers should refer to the contract for specific
details.
,9. A buyer negotiates inclusion of kitchen appliances in the sale contract, but the seller removes them.
What can the buyer do?
A. Cancel the sale
B. Demand a reduction in price
C. Sue the seller for specific performance
D. Report the agent to the commission
Correct Answer: C. Sue the seller for specific performance
Rationale: Specific performance is a legal remedy to enforce terms of a contract, such as inclusion of
personal property agreed upon.
10. A licensee with a buyer agency agreement shows a property listed by another company. What
must the licensee do?
A. Disclose their agency relationship and buyer’s finances
B. Disclose the agency relationship and material facts about the buyer when presenting an offer
C. Avoid disclosing agency
D. Keep all buyer information confidential
Correct Answer: B. Disclose the agency relationship and material facts about the buyer when
presenting an offer
Rationale: Disclosure of agency and any material facts affecting the transaction is required for
transparency and fairness.
11. A broker signs a listing contract for a home. What could make the contract voidable?
A. The home has a structural defect
B. The buyer is a minor
C. The seller was heavily under the influence of alcohol at the time of signing
D. The broker has a prior felony
Correct Answer: C. The seller was heavily under the influence of alcohol at the time of signing
Rationale: Contracts signed by someone who lacks capacity (e.g., due to intoxication) can be voidable.
12. A gross lease is one in which the tenant pays:
A. All property taxes and insurance
B. A share of maintenance costs
C. No operating expenses of the leased space
D. Utility bills only
Correct Answer: C. No operating expenses of the leased space
Rationale: In a gross lease, the landlord covers all operating expenses, and the tenant pays only rent.
13. A company agrees to lease property for a gambling casino where gambling is illegal. This contract
is:
A. Void
B. Valid
C. Voidable
D. Enforceable with a permit
, Correct Answer: A. Void
Rationale: Contracts for illegal purposes are void and unenforceable from the start.
14. When a broker prepares an offer with inspection contingencies, those contingencies should:
A. Be open-ended
B. Be decided by the seller
C. Have short deadlines
D. Be optional
Correct Answer: C. Have short deadlines
Rationale: Contingencies must be resolved quickly to avoid delaying the transaction and ensure clarity.
15. Under an exclusive agency listing, the owner can sell the house themselves and:
A. Owe no commission
B. Split the commission
C. Still owe the broker a fee
D. Terminate the listing automatically
Correct Answer: A. Owe no commission
Rationale: Exclusive agency listings allow the owner to avoid commission if they sell without the
agent’s help.
16. When a seller questions the amount of commission, the agent should say:
A. "It’s set by law."
B. "It’s non-negotiable."
C. "The amount of commission is negotiable."
D. "I’ll talk to my broker."
Correct Answer: C. "The amount of commission is negotiable."
Rationale: Commissions are negotiable between brokers and clients; implying otherwise could violate
antitrust laws.
17. A salesperson is sued for misrepresentation. Who is ultimately responsible?
A. The state real estate board
B. The seller
C. The supervising broker
D. The listing agent
Correct Answer: C. The supervising broker
Rationale: Brokers are responsible for the actions of their affiliated licensees under their supervision.
18. An Equal Housing Opportunity notice MUST be:
A. Mentioned in every ad
B. On all property flyers
C. Displayed in the brokerage office
D. Approved by HUD
Correct Answer: C. Displayed in the brokerage office
Rationale: HUD requires brokers to display this notice to show compliance with fair housing laws.
ACTUAL REAL EXAM ACCURATE QUESTIONS
AND ANSWERS WITH RATIONALES |
VERIFIED AND LATEST UPDATED |
GUARANTEED PASS
1. A broker, acting as agent for the seller, presents an offer to buy from the broker's former college
roommate. The broker knows that the buyer will increase the amount of the offer if the seller turns
down the offer. What should the broker do?
A. Present the offer without comment
B. Tell the seller that the buyer will pay more
C. Suggest that the seller make a counteroffer
D. Refuse to present the offer
Correct Answer: B. Tell the seller that the buyer will pay more
Rationale: As a fiduciary to the seller, the broker must disclose any information that could benefit the
seller in negotiations, including knowledge of a potential higher offer.
2. An exclusive right to sell listing obtained by a broker associate belongs to:
A. The broker associate
B. The seller
C. The employing broker only
D. The state real estate commission
Correct Answer: C. The employing broker only
Rationale: Listings are contracts between the seller and the employing broker, not the individual
licensee, even if the broker associate secured the listing.
3. An agency relationship between a property owner and a property manager is usually created by:
A. Verbal agreement
B. Implied contract
C. Listing agreement
D. Management agreement
Correct Answer: D. Management agreement
Rationale: A written property management agreement creates a legal agency relationship, outlining
the manager’s duties and authority.
4. What critical aspect of the property inspection process MUST licensees convey to prospective
buyers?
A. That inspections are mandatory
,B. That the licensee will conduct the inspection
C. The need for inspections to be completed within the time stated in the contract
D. That inspections can be delayed if needed
Correct Answer: C. The need for inspections to be completed within the time stated in the contract
Rationale: Timing is crucial in contracts; missing inspection deadlines can waive the buyer’s rights or
lead to breach of contract.
5. A licensee is listing a property in a known flood plain. The seller denies any flooding. What is the
licensee required to do?
A. Accept the seller’s claim without question
B. File a report with FEMA
C. Inform the seller of the legal obligation to disclose facts regarding flood plains
D. Keep the flood plain information confidential
Correct Answer: C. Inform the seller of the legal obligation to disclose facts regarding flood plains
Rationale: Licensees must ensure sellers understand their duty to disclose material facts like location
in a flood plain, even if they deny past flooding.
6. Unrepresented buyers ask whether they should order a home inspection. How should the listing
agent respond?
A. "No, it’s not necessary."
B. "It depends on your loan requirements."
C. "If you feel it is in your best interest, please do so."
D. "Only if you suspect a problem."
Correct Answer: C. "If you feel it is in your best interest, please do so."
Rationale: The agent must remain neutral and avoid giving advice to unrepresented buyers, but should
encourage due diligence.
7. A seller's statement in a property disclosure document means:
A. The owner guarantees no problems exist
B. The property is certified by a home inspector
C. The owner is disclosing known latent defects
D. The agent has verified all property issues
Correct Answer: C. The owner is disclosing known latent defects
Rationale: Disclosure statements are for the seller to reveal known issues, especially latent defects
that aren’t easily visible.
8. What is the duration of a home warranty’s coverage?
A. One year from date of purchase
B. Five years
C. Until the property is sold
D. As disclosed in the contract that offers the warranty
Correct Answer: D. As disclosed in the contract that offers the warranty
Rationale: Home warranties vary in coverage and term; buyers should refer to the contract for specific
details.
,9. A buyer negotiates inclusion of kitchen appliances in the sale contract, but the seller removes them.
What can the buyer do?
A. Cancel the sale
B. Demand a reduction in price
C. Sue the seller for specific performance
D. Report the agent to the commission
Correct Answer: C. Sue the seller for specific performance
Rationale: Specific performance is a legal remedy to enforce terms of a contract, such as inclusion of
personal property agreed upon.
10. A licensee with a buyer agency agreement shows a property listed by another company. What
must the licensee do?
A. Disclose their agency relationship and buyer’s finances
B. Disclose the agency relationship and material facts about the buyer when presenting an offer
C. Avoid disclosing agency
D. Keep all buyer information confidential
Correct Answer: B. Disclose the agency relationship and material facts about the buyer when
presenting an offer
Rationale: Disclosure of agency and any material facts affecting the transaction is required for
transparency and fairness.
11. A broker signs a listing contract for a home. What could make the contract voidable?
A. The home has a structural defect
B. The buyer is a minor
C. The seller was heavily under the influence of alcohol at the time of signing
D. The broker has a prior felony
Correct Answer: C. The seller was heavily under the influence of alcohol at the time of signing
Rationale: Contracts signed by someone who lacks capacity (e.g., due to intoxication) can be voidable.
12. A gross lease is one in which the tenant pays:
A. All property taxes and insurance
B. A share of maintenance costs
C. No operating expenses of the leased space
D. Utility bills only
Correct Answer: C. No operating expenses of the leased space
Rationale: In a gross lease, the landlord covers all operating expenses, and the tenant pays only rent.
13. A company agrees to lease property for a gambling casino where gambling is illegal. This contract
is:
A. Void
B. Valid
C. Voidable
D. Enforceable with a permit
, Correct Answer: A. Void
Rationale: Contracts for illegal purposes are void and unenforceable from the start.
14. When a broker prepares an offer with inspection contingencies, those contingencies should:
A. Be open-ended
B. Be decided by the seller
C. Have short deadlines
D. Be optional
Correct Answer: C. Have short deadlines
Rationale: Contingencies must be resolved quickly to avoid delaying the transaction and ensure clarity.
15. Under an exclusive agency listing, the owner can sell the house themselves and:
A. Owe no commission
B. Split the commission
C. Still owe the broker a fee
D. Terminate the listing automatically
Correct Answer: A. Owe no commission
Rationale: Exclusive agency listings allow the owner to avoid commission if they sell without the
agent’s help.
16. When a seller questions the amount of commission, the agent should say:
A. "It’s set by law."
B. "It’s non-negotiable."
C. "The amount of commission is negotiable."
D. "I’ll talk to my broker."
Correct Answer: C. "The amount of commission is negotiable."
Rationale: Commissions are negotiable between brokers and clients; implying otherwise could violate
antitrust laws.
17. A salesperson is sued for misrepresentation. Who is ultimately responsible?
A. The state real estate board
B. The seller
C. The supervising broker
D. The listing agent
Correct Answer: C. The supervising broker
Rationale: Brokers are responsible for the actions of their affiliated licensees under their supervision.
18. An Equal Housing Opportunity notice MUST be:
A. Mentioned in every ad
B. On all property flyers
C. Displayed in the brokerage office
D. Approved by HUD
Correct Answer: C. Displayed in the brokerage office
Rationale: HUD requires brokers to display this notice to show compliance with fair housing laws.
