Residential Builder's Salesperson
Practice Exam Questions With
Complete Solutions
Course
Michigan builders license
Question 1
A prospective buyer asks a salesperson to guarantee that a newly constructed home will never
experience foundation settling. What is the most appropriate response?
A. Guarantee that no settling will occur.
B. Explain that minor settling is normal, but significant structural issues are covered under the
builder's warranty.
C. Tell the buyer that foundation issues are the homeowner's responsibility.
D. Avoid answering the question.
Answer: B. Explain that minor settling is normal, but significant structural issues are
covered under the builder's warranty.
Complete Solution
All homes experience some degree of natural settling after construction due to soil compaction
and environmental conditions. However, builders typically provide warranties covering structural
defects for a specified period.
A salesperson should:
Provide accurate information.
Avoid making guarantees beyond the builder's written warranty.
Refer buyers to the official warranty documentation.
Making false guarantees may expose both the salesperson and builder to legal liability.
Question 2
Which document legally outlines the terms and conditions of purchasing a newly constructed
home?
A. Marketing brochure
,B. Purchase agreement
C. Warranty booklet
D. Property advertisement
Answer: B. Purchase agreement
Complete Solution
The purchase agreement is the legally binding contract between the buyer and the builder.
It generally includes:
Purchase price
Property description
Closing date
Financing terms
Builder obligations
Buyer obligations
Default provisions
Marketing materials and brochures do not create contractual obligations unless incorporated into
the agreement.
Question 3
Which federal law prohibits discrimination in housing based on race, religion, sex, disability,
familial status, color, or national origin?
A. Truth in Lending Act
B. Fair Housing Act
C. Sherman Antitrust Act
D. Equal Credit Opportunity Act
Answer: B. Fair Housing Act
Complete Solution
The Fair Housing Act prohibits discrimination during:
Advertising
, Showing homes
Negotiations
Financing
Sales
A builder's salesperson must provide equal professional service to every prospective purchaser
and avoid steering, discriminatory statements, or unequal treatment.
Violations can result in substantial civil penalties and lawsuits.
Question 4
When explaining financing options, a builder's salesperson should:
A. Recommend whichever loan pays the highest commission.
B. Provide general information and refer buyers to qualified lenders.
C. Approve mortgage applications.
D. Guarantee loan approval.
Answer: B. Provide general information and refer buyers to qualified lenders.
Complete Solution
Salespersons may explain financing programs offered through participating lenders but should
not:
Promise approval
Give financial advice beyond their expertise
Misrepresent loan terms
Licensed mortgage professionals evaluate borrower qualifications.
Question 5
A buyer requests several upgrades after signing the purchase agreement. What is the appropriate
procedure?
A. Perform the work without documentation.
B. Complete a written change order approved by both parties.
, C. Ignore the request.
D. Wait until closing.
Answer: B. Complete a written change order approved by both parties.
Complete Solution
A written change order protects both the builder and buyer by documenting:
Description of changes
Additional costs
Schedule adjustments
Required signatures
Verbal agreements often lead to misunderstandings and disputes.
Question 6
Earnest money deposited with a purchase agreement primarily demonstrates:
A. The builder's profit.
B. The buyer's serious intent to purchase.
C. The lender's approval.
D. Property ownership.
Answer: B. The buyer's serious intent to purchase.
Complete Solution
Earnest money serves as a good-faith deposit demonstrating the buyer's commitment.
Depending on the contract, it may:
Be credited toward the purchase price.
Be refunded under certain contingencies.
Be forfeited if the buyer defaults without contractual justification.
The purchase agreement specifies how earnest money is handled.
Question 7
Practice Exam Questions With
Complete Solutions
Course
Michigan builders license
Question 1
A prospective buyer asks a salesperson to guarantee that a newly constructed home will never
experience foundation settling. What is the most appropriate response?
A. Guarantee that no settling will occur.
B. Explain that minor settling is normal, but significant structural issues are covered under the
builder's warranty.
C. Tell the buyer that foundation issues are the homeowner's responsibility.
D. Avoid answering the question.
Answer: B. Explain that minor settling is normal, but significant structural issues are
covered under the builder's warranty.
Complete Solution
All homes experience some degree of natural settling after construction due to soil compaction
and environmental conditions. However, builders typically provide warranties covering structural
defects for a specified period.
A salesperson should:
Provide accurate information.
Avoid making guarantees beyond the builder's written warranty.
Refer buyers to the official warranty documentation.
Making false guarantees may expose both the salesperson and builder to legal liability.
Question 2
Which document legally outlines the terms and conditions of purchasing a newly constructed
home?
A. Marketing brochure
,B. Purchase agreement
C. Warranty booklet
D. Property advertisement
Answer: B. Purchase agreement
Complete Solution
The purchase agreement is the legally binding contract between the buyer and the builder.
It generally includes:
Purchase price
Property description
Closing date
Financing terms
Builder obligations
Buyer obligations
Default provisions
Marketing materials and brochures do not create contractual obligations unless incorporated into
the agreement.
Question 3
Which federal law prohibits discrimination in housing based on race, religion, sex, disability,
familial status, color, or national origin?
A. Truth in Lending Act
B. Fair Housing Act
C. Sherman Antitrust Act
D. Equal Credit Opportunity Act
Answer: B. Fair Housing Act
Complete Solution
The Fair Housing Act prohibits discrimination during:
Advertising
, Showing homes
Negotiations
Financing
Sales
A builder's salesperson must provide equal professional service to every prospective purchaser
and avoid steering, discriminatory statements, or unequal treatment.
Violations can result in substantial civil penalties and lawsuits.
Question 4
When explaining financing options, a builder's salesperson should:
A. Recommend whichever loan pays the highest commission.
B. Provide general information and refer buyers to qualified lenders.
C. Approve mortgage applications.
D. Guarantee loan approval.
Answer: B. Provide general information and refer buyers to qualified lenders.
Complete Solution
Salespersons may explain financing programs offered through participating lenders but should
not:
Promise approval
Give financial advice beyond their expertise
Misrepresent loan terms
Licensed mortgage professionals evaluate borrower qualifications.
Question 5
A buyer requests several upgrades after signing the purchase agreement. What is the appropriate
procedure?
A. Perform the work without documentation.
B. Complete a written change order approved by both parties.
, C. Ignore the request.
D. Wait until closing.
Answer: B. Complete a written change order approved by both parties.
Complete Solution
A written change order protects both the builder and buyer by documenting:
Description of changes
Additional costs
Schedule adjustments
Required signatures
Verbal agreements often lead to misunderstandings and disputes.
Question 6
Earnest money deposited with a purchase agreement primarily demonstrates:
A. The builder's profit.
B. The buyer's serious intent to purchase.
C. The lender's approval.
D. Property ownership.
Answer: B. The buyer's serious intent to purchase.
Complete Solution
Earnest money serves as a good-faith deposit demonstrating the buyer's commitment.
Depending on the contract, it may:
Be credited toward the purchase price.
Be refunded under certain contingencies.
Be forfeited if the buyer defaults without contractual justification.
The purchase agreement specifies how earnest money is handled.
Question 7
