Massachusetts Real Estate
Salesperson License Exam Questions
And Verified Answers
\."Stick Built Homes"? - Answer-Homes built on a property using traditional construction
methods.
\.1031 Exchange? - Answer-IRC Section 1031 provides an exception and allows you to
postpone paying tax on the gain if you reinvest the proceeds in similar property as part
of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC
Section 1031 is tax-deferred, but it is not tax-free.
\.1031 Like Kind Exchanges? - Answer-Way to defer Capital Gains Taxes. Property
owner must reinvest the proceeds form the sale in property of the same type within
approximately 6 months. Defers taxes, does not eliminate them.
\.1099 -v- W2 Employee? - Answer-1099=Independent Contractor, paid by job or
commission, set own hours, can turn down work, etc, no taxes withheld, but may take
many write-offs (Many Residential RE Agents)
W2=Salaried of paid hourly, employer controls what and how you do (Commercial RE
Agents), taxes withheld by employers
\.203b program? - Answer-Anyone qualifies for FHA Financing as long as they are
buying a primary residence (live in for at least 2 years) that meets FHA requirements.
Generally for 1-4 family owner occupied and under the FHA's price limit (determined by
the county.
\.3 basic approaches to evaluate value of real estate? - Answer-Sales Comparison
Approach, Income Approach, Cost Approach.
\.3 primary powers of the Fed? - Answer-The Fed Funds rate=rate for interbank lending.
Discount Rate is the rate that the Fed loans to banks.
Reserve Requirement=How much banks must maintain on hand as cash against their
deposits.
Federal Open Market Committee (FOMC)=buying and selling of debt to and from
member banks of the Fed. The more it buys, the more $ is available for the banks to
lend out and vice versa! Also stabilized the cost of borrowing for the US Govt.
,\.3 ways the US Department of the Treasury can raise money? - Answer-Raising
revenue (taxes)
Borrowing by creating bills, notes, bonds but this may have the effect of "crowding out"
private borrowers making credit less freely available to them.
Printing Money but since it is affected by supply & demand, it reduces the value of
money (inflation).
\.4 Ways Easement Appurtenance are created? - Answer-By Deed, By Implication, By
Necessity and by Prescription=Use of the right of way for more than 20 years (ONCHA).
\.6D Closing Certificate? - Answer-For the sale of every condo unit. Establishes the
status of the condo fees as of the date the unit is sold. Condo fees never go away...the
run with th land!
\.A brokerage pays an agent 1.5% commission on the first $500,000 of any sale, plus
2% of any selling price over that. What was the sale price if the total commission was
$10,000? - Answer-We would first determine what the commission would be on the first
$500,000 (500,000 x .015) which is $7500. We would then subtract from the total
amount of the commission which was $10,000 (10,000 - 7,500) which equals $2,500.
We would then divide by the commission rate over $500,000, which is 2% (2,500 / .02)
which equals $83,334. We would then add that back to $500,000. The total sale price
was $583,334.
\.A Datum? - Answer-Point used to measure elevation.
\.A homeowner's insurance underwriter would use which of the following when
underwriting a property? - Answer-The Comprehensive Loss Underwriting Exchange
records past consumer claims, and is used in homeowner's insurance underwriting.
\.A seller needs to clear $514,000 to discharge their existing loan. They have costs of
$5,000, back taxes of $7,600, and are paying a commission of 4.5%. How much should
they sell for? - Answer-To calculate the sale price, first add the seller's costs (treating
their net profit as a cost, since they must receive it when they sell their house):
$514,000 + $7,600 + 5,000 = $526,600. Next, divide the seller's costs by the difference
between 1 and the commission to find their sales price: $526,.955 = $551,413.61
(rounded up to $551,414 in the answer).
\.A township's "school section" is section number? - Answer-The school section in a
township is the 16th section.
\.A21 Certificate? - Answer-Used in MA to certify that commercial property is free of
contamination.
,\.Absolute title? - Answer-Absolute title is free from any attachment, judgment, or lien,
and is accepted as a sole document of title required for selling the property or obtaining
a mortgage. Also called perfect title.
\.Acceleration Clause? in a note - Answer-The clause in a mortgage or deed of trust that
can be enforced to make the entire debt due immediately if the borrower defaults on an
installment payment or other covenant. "Calling in the note"
\.Accretion? - Answer-Accretion is the gradual deposit of land by wind or water (e.g.
sand washing up on a beach).
\.Accretion? - Answer-Increase or Property by gradual natural action by wind or water.
\.Adjustable Rate Mortgage (ARM)? - Answer-A loan characterized by a fluctuating
interest rate, usually one tied to a bank or savings and loan association cost-of-funds
index.
\.Adverse Possession? - Answer-Legal term for Squatter's Rights. If a piece of property
is used openly and without permission for more than 20 years, the squatter may take
legal action to the property. ONCHA
\.Aeolian Soil? - Answer-Soil deposited by wind, such as sand dunes or silt.
\.After what date must homes in MA have carbon monoxide detectors? - Answer-March
31, 2006
\.Agency for Toxic substances and Disease Registry? ATSDR - Answer-Created by
CERCLA Allows the EPA to identify who is responsible for contamination of sites and
force them to clean up. If no one can be found, the EPA can clean up the site using a
special trust fund.
\.Agents must disclose... - Answer-When they represent themselves (family, business
associates) Must be in writing. Agent may not lease or buy property if they are
representing the owner w/out written disclosure.
\.Air Rights? - Answer-Rights to the space above the land. Vertical Interests may be
sold or leased separately from the surface rights. Up to 80 feet now. 80-500 feet belong
to FAA. Used to be "heaven to hell" Cuius est solum..."
\.Alienation of Title? - Answer-Any loss of ownership.
\.ALJ? - Answer-HUD Administrative Law Judge.
\.All of the following details of a real estate sale must be reported to the IRS? - Answer-
The financial details of the transaction must be reported to the IRS on a form 1099-S
(the seller's name, their social security number, the sales price, etc.). The appraised
, value of the property does not need to be reported, since it does not impact the seller's
tax liability.
\.Alluvion? - Answer-Increasing of land are along a shore by deposited alluvium or by
the recession of water.
\.Alluvium? - Answer-Clay, silt, sand, gravel or similar deposited by running water.
\.Amortization? - Answer-Payment of debt in equal installments.
\.Annexation? - Answer-When property was personal and is now real, planting a
sapling...
\.Apparent/Ostensible Agency? - Answer-Apparent or Ostensible Agency is when
authority does not exist, however it appears to. In this scenario, the agent appears to be
the listing agent, even though there has been no authority given, verbal or written by the
seller to this agent.
\.Apparent/Ostensible Agency? - Answer-Authority that does not exist, even though it
appears to.
\.Appraisers? - Answer-People who estimate what buyers will pay for real estate and
their estimates of value are known as appraisals. Appraisers must have a license.
\.Appurtenances? - Answer-Property Rights that exist outside the boundaries of the
property itself. Easement, right of way, is an example or a deeded parking space in a
condo.
\.APR/Annual percentage rate? - Answer-The annual rate that is charged for borrowing
(or made by investing), expressed as a single percentage number that represents the
actual yearly cost of funds over the term of a loan. This includes any fees or additional
costs associated with the transaction...including interest rate, points, loan fees and a
disclosure of mortgage penalties. Doesn't include any 3rd party fees, muni tax, atty fees,
credit reports, appraisal fees, survey fees or other closing costs.
\.Asbestos? - Answer-EPA banned all usage in 1989 and was overturned by the courts
in 1991. Was used as insulation. Flocked/Popcorn ceilings were banned in 1978 but
installers could use their existing stock until 1986.
\.Aside from Novation, leases can be terminated: - Answer-Performance(at end of their
time), Surrender(cancel before expiration), Action of Law(Eminent domain, tax sale,
bankruptcy), Destruction, Foreclosure, Actual Eviction, Constructive Eviction (landlord
violates COQE).
\.Assigned Contracts? - Answer-Contracts can be assigned which is the transfer of a
party's rights and obligations to another party. Ex sublet on a lease
Salesperson License Exam Questions
And Verified Answers
\."Stick Built Homes"? - Answer-Homes built on a property using traditional construction
methods.
\.1031 Exchange? - Answer-IRC Section 1031 provides an exception and allows you to
postpone paying tax on the gain if you reinvest the proceeds in similar property as part
of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC
Section 1031 is tax-deferred, but it is not tax-free.
\.1031 Like Kind Exchanges? - Answer-Way to defer Capital Gains Taxes. Property
owner must reinvest the proceeds form the sale in property of the same type within
approximately 6 months. Defers taxes, does not eliminate them.
\.1099 -v- W2 Employee? - Answer-1099=Independent Contractor, paid by job or
commission, set own hours, can turn down work, etc, no taxes withheld, but may take
many write-offs (Many Residential RE Agents)
W2=Salaried of paid hourly, employer controls what and how you do (Commercial RE
Agents), taxes withheld by employers
\.203b program? - Answer-Anyone qualifies for FHA Financing as long as they are
buying a primary residence (live in for at least 2 years) that meets FHA requirements.
Generally for 1-4 family owner occupied and under the FHA's price limit (determined by
the county.
\.3 basic approaches to evaluate value of real estate? - Answer-Sales Comparison
Approach, Income Approach, Cost Approach.
\.3 primary powers of the Fed? - Answer-The Fed Funds rate=rate for interbank lending.
Discount Rate is the rate that the Fed loans to banks.
Reserve Requirement=How much banks must maintain on hand as cash against their
deposits.
Federal Open Market Committee (FOMC)=buying and selling of debt to and from
member banks of the Fed. The more it buys, the more $ is available for the banks to
lend out and vice versa! Also stabilized the cost of borrowing for the US Govt.
,\.3 ways the US Department of the Treasury can raise money? - Answer-Raising
revenue (taxes)
Borrowing by creating bills, notes, bonds but this may have the effect of "crowding out"
private borrowers making credit less freely available to them.
Printing Money but since it is affected by supply & demand, it reduces the value of
money (inflation).
\.4 Ways Easement Appurtenance are created? - Answer-By Deed, By Implication, By
Necessity and by Prescription=Use of the right of way for more than 20 years (ONCHA).
\.6D Closing Certificate? - Answer-For the sale of every condo unit. Establishes the
status of the condo fees as of the date the unit is sold. Condo fees never go away...the
run with th land!
\.A brokerage pays an agent 1.5% commission on the first $500,000 of any sale, plus
2% of any selling price over that. What was the sale price if the total commission was
$10,000? - Answer-We would first determine what the commission would be on the first
$500,000 (500,000 x .015) which is $7500. We would then subtract from the total
amount of the commission which was $10,000 (10,000 - 7,500) which equals $2,500.
We would then divide by the commission rate over $500,000, which is 2% (2,500 / .02)
which equals $83,334. We would then add that back to $500,000. The total sale price
was $583,334.
\.A Datum? - Answer-Point used to measure elevation.
\.A homeowner's insurance underwriter would use which of the following when
underwriting a property? - Answer-The Comprehensive Loss Underwriting Exchange
records past consumer claims, and is used in homeowner's insurance underwriting.
\.A seller needs to clear $514,000 to discharge their existing loan. They have costs of
$5,000, back taxes of $7,600, and are paying a commission of 4.5%. How much should
they sell for? - Answer-To calculate the sale price, first add the seller's costs (treating
their net profit as a cost, since they must receive it when they sell their house):
$514,000 + $7,600 + 5,000 = $526,600. Next, divide the seller's costs by the difference
between 1 and the commission to find their sales price: $526,.955 = $551,413.61
(rounded up to $551,414 in the answer).
\.A township's "school section" is section number? - Answer-The school section in a
township is the 16th section.
\.A21 Certificate? - Answer-Used in MA to certify that commercial property is free of
contamination.
,\.Absolute title? - Answer-Absolute title is free from any attachment, judgment, or lien,
and is accepted as a sole document of title required for selling the property or obtaining
a mortgage. Also called perfect title.
\.Acceleration Clause? in a note - Answer-The clause in a mortgage or deed of trust that
can be enforced to make the entire debt due immediately if the borrower defaults on an
installment payment or other covenant. "Calling in the note"
\.Accretion? - Answer-Accretion is the gradual deposit of land by wind or water (e.g.
sand washing up on a beach).
\.Accretion? - Answer-Increase or Property by gradual natural action by wind or water.
\.Adjustable Rate Mortgage (ARM)? - Answer-A loan characterized by a fluctuating
interest rate, usually one tied to a bank or savings and loan association cost-of-funds
index.
\.Adverse Possession? - Answer-Legal term for Squatter's Rights. If a piece of property
is used openly and without permission for more than 20 years, the squatter may take
legal action to the property. ONCHA
\.Aeolian Soil? - Answer-Soil deposited by wind, such as sand dunes or silt.
\.After what date must homes in MA have carbon monoxide detectors? - Answer-March
31, 2006
\.Agency for Toxic substances and Disease Registry? ATSDR - Answer-Created by
CERCLA Allows the EPA to identify who is responsible for contamination of sites and
force them to clean up. If no one can be found, the EPA can clean up the site using a
special trust fund.
\.Agents must disclose... - Answer-When they represent themselves (family, business
associates) Must be in writing. Agent may not lease or buy property if they are
representing the owner w/out written disclosure.
\.Air Rights? - Answer-Rights to the space above the land. Vertical Interests may be
sold or leased separately from the surface rights. Up to 80 feet now. 80-500 feet belong
to FAA. Used to be "heaven to hell" Cuius est solum..."
\.Alienation of Title? - Answer-Any loss of ownership.
\.ALJ? - Answer-HUD Administrative Law Judge.
\.All of the following details of a real estate sale must be reported to the IRS? - Answer-
The financial details of the transaction must be reported to the IRS on a form 1099-S
(the seller's name, their social security number, the sales price, etc.). The appraised
, value of the property does not need to be reported, since it does not impact the seller's
tax liability.
\.Alluvion? - Answer-Increasing of land are along a shore by deposited alluvium or by
the recession of water.
\.Alluvium? - Answer-Clay, silt, sand, gravel or similar deposited by running water.
\.Amortization? - Answer-Payment of debt in equal installments.
\.Annexation? - Answer-When property was personal and is now real, planting a
sapling...
\.Apparent/Ostensible Agency? - Answer-Apparent or Ostensible Agency is when
authority does not exist, however it appears to. In this scenario, the agent appears to be
the listing agent, even though there has been no authority given, verbal or written by the
seller to this agent.
\.Apparent/Ostensible Agency? - Answer-Authority that does not exist, even though it
appears to.
\.Appraisers? - Answer-People who estimate what buyers will pay for real estate and
their estimates of value are known as appraisals. Appraisers must have a license.
\.Appurtenances? - Answer-Property Rights that exist outside the boundaries of the
property itself. Easement, right of way, is an example or a deeded parking space in a
condo.
\.APR/Annual percentage rate? - Answer-The annual rate that is charged for borrowing
(or made by investing), expressed as a single percentage number that represents the
actual yearly cost of funds over the term of a loan. This includes any fees or additional
costs associated with the transaction...including interest rate, points, loan fees and a
disclosure of mortgage penalties. Doesn't include any 3rd party fees, muni tax, atty fees,
credit reports, appraisal fees, survey fees or other closing costs.
\.Asbestos? - Answer-EPA banned all usage in 1989 and was overturned by the courts
in 1991. Was used as insulation. Flocked/Popcorn ceilings were banned in 1978 but
installers could use their existing stock until 1986.
\.Aside from Novation, leases can be terminated: - Answer-Performance(at end of their
time), Surrender(cancel before expiration), Action of Law(Eminent domain, tax sale,
bankruptcy), Destruction, Foreclosure, Actual Eviction, Constructive Eviction (landlord
violates COQE).
\.Assigned Contracts? - Answer-Contracts can be assigned which is the transfer of a
party's rights and obligations to another party. Ex sublet on a lease
