COLORADO REAL ESTATE NATIONAL EXAM PRACTICE EXAM QUESTIONS AND 100% CORRECT ANSWERS|2025/2026

COLORADO REAL ESTATE NATIONAL EXAM



which of these is a correct formula for calculations related to income-producing property? -
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B ANSWER- rate of return x value = net operating income
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an optioner and optionee entered into an option contract for an industrial building. the option
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ee decided not to purchase the property. the optioner sued the optionee for breach of contrac
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t. assuming the optioner received an option fee, what damages will the optioner likely receive
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in the lawsuit? - ANSWER-
B B B B none of these. B B B




explanation: an optioner (owner) receives an option fee for keeping an offer open while an op
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tionee (prospective buyer) decides whether they'll buy the property. if the optionee decides n
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ot to buy the property, the optioner has no legal recourse other than to keep the option fee.
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as part of offering a lower-than-
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market interest rate on a loan to a borrower, the lender charges a percentage of the loan amo
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unt to increase the lender's yield. this fee is known as - ANSWER-
B B B B B B B B B B B B loan discount points
B B




explanation: loan discount points are charged based on the cost to buy the lower interest rate,
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Bwhich impacts the yield the lender will receive over the life of the loan. a discount point helps
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to decrease the loss to the lender and is an upfront charge at closing.
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two unrelated, unmarried friends purchased a parcel of real estate together and did not specif
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y the form of ownership they desire. the buyers will hold title as - ANSWER-
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tenants in common B B




efore listing a property, a seller filled in and painted over several deep cracks in the living room
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Bwall. The seller only tells the broker about the filled-
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in cracks after the listing agreement is signed. Now, the seller wants the listing broker to lie or
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keep silent about the filled-
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in cracks. The seller reminds the listing broker that an agent owes the principal the fiduciary d
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,uties of obedience, loyalty, and confidentiality. The listing broker should - ANSWER-
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terminate the listing B B B




explanation: in most states, a real estate licensee legally owes third parties the duty of honest
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and disclosure of material defects like filled-
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in cracks. so in this case, the broker should terminate the listing.
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which of these must an owner exclude from a purchase contract in order to keep it? -
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B ANSWER- a planted rose bush
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explanation: once a plant (like a rose bush) has been planted on the property, it is considered
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part of the real estate and transfers with the deed.
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The owner of an income-
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producing residential rental property asked the property manager to calculate the net income
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(NOI) on the property. Each of the 4 units in the apartment building rented for $750 a month.
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The annual property taxes are $5,000, annual insurance premiums are $3,000, lawn care and
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maintenance is $300 monthly and monthly debt service is $1000. What is the property's net o
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perating income? - ANSWER- B B B $24,400 B




calculation: B




$750 (monthly unit rent) x 4 = $3,000 x 12 = $36,000 (annual rent)
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$300 (monthly lawn care & maintenance) x 12 months = $3,600
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Expenses: $5,000 (property taxes) + $3,000 (insurance) + $3,600 (lawn care & maintenance) =
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$11,600 B




Gross Annual Rent: $36,000 - $11,600 (annual operating expenses) = $24,400
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, ***DEBT SERVICE IS NOT INCLUDED IN NOI CALCULATIONS***
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A potential buyer was turned down for a mortgage loan because of the ethnic makeup of the n
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eighborhood where the property is located, and the high crime rate in the area. This is an exa
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mple of - ANSWER- B B B redlining by the lender B B B




A property owner has a large amount of equity in his home but does not want to sell it to gain
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access to his money. What type of loan could the owner use to access the equity in his home w
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ithout having to make monthly loan payments? - ANSWER-
B B B B B B B B reverse mortgage B B




explanation: in reverse mortgage, the lender makes payments to the borrower each month. th
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ere are requirements such as age and equity in the property for this type of loan.
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Fannie Mae, Ginnie Mae, and Freddie Mac are all engaged in the ______ where ______ are bo
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ught and sold. - ANSWER-
B B B B secondary mortgage market; promissory notes B B B B




explanation: the primary mortgage market is where loans are created or originated. mortgage
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s are NOT negotiable instruments and can't be bought and sold.
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A buyer was purchasing agricultural property. The method used for the legal description was t
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he government (rectangular) survey system. If the purchase transaction was for a quarter-
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quarter section, how much land did the buyer buy? - ANSWER-
B B B B B B B B B B 40 acres B B




explanation: in the rectangular survey system, a quarter- B B B B B B B



quarter section is 40 acres (a traditional section is 640 acres; there are 640 acres in a square m
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ile)



The buyer's agent and the buyer are doing a walk-
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through before closing. There was a large storm in the area the previous night, and the buyer a
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nd the broker found water in the basement. Whom should the buyer's agent inform first of thi
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s material fact? - ANSWER-
B B B B the buyer, who will need to decide what steps to take, if any.
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