NYC Real Estate Prep Test Questions
with 100% Correct Answers
Harry has an ownership interest in a 60-unit apartment building as a limited partner.
According to IRS rules, this kind of ownership is:
a. active income
b. passive income
c. portfolio income
d. deductible income - Answer-B- A limited partner does not materially participate in the
managing and operation of the investment. Therefore, under the IRS code, Hurry's
income from the investment is classified as a passive activity. Active income includes
salaries or income from a business in which the taxpayer materially participates.
Portfolio income is interest, annuities, dividends, royalties, and profits from the sale of
portfolio assets.
In a tax-deferred exchange, the individual who accepts the funds from the sale and
handles the contract is called the:
a. arbitrator
b. mediator
c. qualified intermediary
d. coordinator - Answer-C- In a tax-deferred exchange, the individual who accepts the
funds from the sale and handles the contract is called the qualifies intermediary (QI).
Which of the following documents do mortgage brokers use to make certain disclosures
to potential borrowers?
a. agency disclosure form
b. pre-approval letter
c. letter of intent
d. pre-application disclosure and fee agreement - Answer-D- The pre-application
disclosure and fee agreement is used by mortgage brokers to make certain disclosures
regarding the mortgage fee and other matters. The agency disclosure form is used to
disclose whom the real estate agent represents in the sale of rental of one-to-four unit
residential properties. A pre-approval letter is a document from a lender stating that a
purchaser is pre-approved for a loan. A letter of intent is an agreement to purchase a
property such as condominium.
,Which of the following is FALSE? A (n) mortgage banker:
a. may lend money
b. may collect the loan payments
c. closes the loan in its own name
d. is licensed by the Federal Deposit Insurance Corporation - Answer-D- A mortgage
banker is licensed by the NYS Banking Department.
The property manager's fee is generally which of the following?
a. a percentage of all rental income when the rent roll exceeds a certain pre agreed
upon amount
b. a lump sum paid in advance on a yearly basis
c. 25 percent of the rental income
d. a base fee and a percentage of the rents collected - Answer-D- There are various fee
arrangements between a property manager and owner. One of them is a base fee and a
percentage of the rents collected.
Laurel, a real estate broker, is also a property manager for an eight-unit residential
property. In her role as property manager, Laurel is a(n):
a. general agent
b. fiduciary
c. special agent
d. both a and b - Answer-D- Because they perform a variety of duties, property
managers are general agents. A special agent generally performs one duty such as
marketing the real estate. Because of their role as agents, a fiduciary relationship, a
position of trust, exist between the manager and the owner.
To be licensed as a real estate broker, an individual must be at least how old?
a. 16
b. 18
c. 20
d. 21 - Answer-C-A person must be at least 20 years old to be licensed as real estate
broker in New York.
Which of the following individuals is exempt from licensure?
a. attorneys admitted to practice in the New York courts
b. property managers who manage property for more than one individual or company
c. individuals who only list property for sale
, d. auctioneers who only auction commercial real estate - Answer-A-Attorneys who are
admitted to practice in the New York courts are exempt from obtaining a license as long
as they do not employ salespeople.
To save in paperwork, Broker Bright decides to combine her office operating account
with the deposits obtained from contracts of sale. Broker Bright is guilty of:
a. nothing at all
b. illegal commingling of funds
c. an authorized practice of law
d. accepting money without authorization - Answer-B -According to New York law,
brokers must maintain a separate escrow account for client monies including deposits.
The office operating account must be separate.
. A net listing is one:
a. that requires the broker to have a fixed price for the property
b. that is legal in New York
c. that most brokers would prefer
d. in which the seller specifies a certain amount of money to be received upon sale of
the property and all monies above that amount are the broker's commission - Answer-D
-An illegal net listing contract allows the broker to keep as a commission any money
obtained from the sale above a sale price specified by the seller.
A broker's agent is hired by the:
a. principal
b. seller
c. customer
d. broker - Answer-D- A broker's agent is one who is hired by a broker to assist the
broker in selling or finding a property for the principal.
Which of the following is TRUE regarding dual agency relationships in New York?
a. they are permissible with timely disclosure and informed consent
b. they are illegal under all circumstances
c. they are allowed only in commercial transactions
d. they are allowed only in the sale of condominium or cooperative properties - Answer-
A -Under New York law, dual agency is permissible with disclosure and informed
consent of buyer and seller.
A listing agreement in which the property is listed with only one broker who is entitled to
a commission if he sells the property but not if the owner sells the property is called
a(n):
a. exclusive-right-to-sell agreement
with 100% Correct Answers
Harry has an ownership interest in a 60-unit apartment building as a limited partner.
According to IRS rules, this kind of ownership is:
a. active income
b. passive income
c. portfolio income
d. deductible income - Answer-B- A limited partner does not materially participate in the
managing and operation of the investment. Therefore, under the IRS code, Hurry's
income from the investment is classified as a passive activity. Active income includes
salaries or income from a business in which the taxpayer materially participates.
Portfolio income is interest, annuities, dividends, royalties, and profits from the sale of
portfolio assets.
In a tax-deferred exchange, the individual who accepts the funds from the sale and
handles the contract is called the:
a. arbitrator
b. mediator
c. qualified intermediary
d. coordinator - Answer-C- In a tax-deferred exchange, the individual who accepts the
funds from the sale and handles the contract is called the qualifies intermediary (QI).
Which of the following documents do mortgage brokers use to make certain disclosures
to potential borrowers?
a. agency disclosure form
b. pre-approval letter
c. letter of intent
d. pre-application disclosure and fee agreement - Answer-D- The pre-application
disclosure and fee agreement is used by mortgage brokers to make certain disclosures
regarding the mortgage fee and other matters. The agency disclosure form is used to
disclose whom the real estate agent represents in the sale of rental of one-to-four unit
residential properties. A pre-approval letter is a document from a lender stating that a
purchaser is pre-approved for a loan. A letter of intent is an agreement to purchase a
property such as condominium.
,Which of the following is FALSE? A (n) mortgage banker:
a. may lend money
b. may collect the loan payments
c. closes the loan in its own name
d. is licensed by the Federal Deposit Insurance Corporation - Answer-D- A mortgage
banker is licensed by the NYS Banking Department.
The property manager's fee is generally which of the following?
a. a percentage of all rental income when the rent roll exceeds a certain pre agreed
upon amount
b. a lump sum paid in advance on a yearly basis
c. 25 percent of the rental income
d. a base fee and a percentage of the rents collected - Answer-D- There are various fee
arrangements between a property manager and owner. One of them is a base fee and a
percentage of the rents collected.
Laurel, a real estate broker, is also a property manager for an eight-unit residential
property. In her role as property manager, Laurel is a(n):
a. general agent
b. fiduciary
c. special agent
d. both a and b - Answer-D- Because they perform a variety of duties, property
managers are general agents. A special agent generally performs one duty such as
marketing the real estate. Because of their role as agents, a fiduciary relationship, a
position of trust, exist between the manager and the owner.
To be licensed as a real estate broker, an individual must be at least how old?
a. 16
b. 18
c. 20
d. 21 - Answer-C-A person must be at least 20 years old to be licensed as real estate
broker in New York.
Which of the following individuals is exempt from licensure?
a. attorneys admitted to practice in the New York courts
b. property managers who manage property for more than one individual or company
c. individuals who only list property for sale
, d. auctioneers who only auction commercial real estate - Answer-A-Attorneys who are
admitted to practice in the New York courts are exempt from obtaining a license as long
as they do not employ salespeople.
To save in paperwork, Broker Bright decides to combine her office operating account
with the deposits obtained from contracts of sale. Broker Bright is guilty of:
a. nothing at all
b. illegal commingling of funds
c. an authorized practice of law
d. accepting money without authorization - Answer-B -According to New York law,
brokers must maintain a separate escrow account for client monies including deposits.
The office operating account must be separate.
. A net listing is one:
a. that requires the broker to have a fixed price for the property
b. that is legal in New York
c. that most brokers would prefer
d. in which the seller specifies a certain amount of money to be received upon sale of
the property and all monies above that amount are the broker's commission - Answer-D
-An illegal net listing contract allows the broker to keep as a commission any money
obtained from the sale above a sale price specified by the seller.
A broker's agent is hired by the:
a. principal
b. seller
c. customer
d. broker - Answer-D- A broker's agent is one who is hired by a broker to assist the
broker in selling or finding a property for the principal.
Which of the following is TRUE regarding dual agency relationships in New York?
a. they are permissible with timely disclosure and informed consent
b. they are illegal under all circumstances
c. they are allowed only in commercial transactions
d. they are allowed only in the sale of condominium or cooperative properties - Answer-
A -Under New York law, dual agency is permissible with disclosure and informed
consent of buyer and seller.
A listing agreement in which the property is listed with only one broker who is entitled to
a commission if he sells the property but not if the owner sells the property is called
a(n):
a. exclusive-right-to-sell agreement
