BSRV4601 Fundamentals of Real Estate: Exam 2 - Questions
with Correct Answers
100 questions
1. The REA's main functions include:
A. Valuing all property
B. Licensing, setting rules, handling complaints and educating consumers
C. Registering mortgages
D. Setting interest rates
Correct Answer: B. Licensing, setting rules, handling complaints and educating consumers
Rationale: Regulator functions.
2. A 'customer' in real estate terms is:
A. The vendor
B. A person who deals with a licensee but is not the client, such as a buyer
C. The agency owner
D. The regulator
Correct Answer: B. A person who deals with a licensee but is not the client, such as a buyer
Rationale: Licensees still owe customers fair dealing.
3. Complaints to the REA about events that happened many years ago:
A. Are always rejected
B. Must go to LINZ
C. Are automatically upheld
D. May still be considered, though delay can affect the outcome
Correct Answer: D. May still be considered, though delay can affect the outcome
Rationale: Discretion applies.
4. Which body can order a licensee to apologise, pay compensation or undergo training after a
complaint?
A. LINZ
B. REINZ
C. The bank
D. A Complaints Assessment Committee or the Disciplinary Tribunal
Correct Answer: D. A Complaints Assessment Committee or the Disciplinary Tribunal
Rationale: Range of orders available.
5. The Real Estate Agents Act 2008 replaced the:
A. Land Transfer Act 1952
B. Real Estate Agents Act 1976
C. Fair Trading Act 1986
D. Unit Titles Act 1972
Correct Answer: B. Real Estate Agents Act 1976
Rationale: Introduced a new regulatory regime.
6. Licensees must renew their licence:
A. Every ten years
B. Annually
C. Never
D. Only when they change agency
Correct Answer: B. Annually
Rationale: Licences must be renewed each year.
,7. The main statute regulating real estate agency work in New Zealand is the:
A. Land Transfer Act 2017
B. Fair Trading Act 1986
C. Real Estate Agents Act 2008
D. Property Law Act 2007
Correct Answer: C. Real Estate Agents Act 2008
Rationale: It governs licensing, conduct and complaints.
8. Continuing professional development for licensees helps to:
A. Increase commissions automatically
B. Replace supervision
C. Avoid complaints entirely
D. Maintain and update knowledge and skills
Correct Answer: D. Maintain and update knowledge and skills
Rationale: Required by the REA.
9. A licensee must explain to clients:
A. Only the commission rate verbally
B. How the agency agreement works, including fees and expenses
C. Nothing about costs
D. Only after signing
Correct Answer: B. How the agency agreement works, including fees and expenses
Rationale: Informed decisions.
10. A licensee must recommend that a person seek legal advice:
A. Never
B. Before signing a contractual document such as an agency agreement or sale and purchase
agreement
C. Only after settlement
D. Only if the price is high
Correct Answer: B. Before signing a contractual document such as an agency agreement or
sale and purchase agreement
Rationale: Protects consumers.
11. If a licensee's relative wants to buy the client's property, the licensee must:
A. Disclose the relationship and obtain the client's informed written consent
B. Keep it secret
C. Lower the price
D. Sell to them without telling anyone
Correct Answer: A. Disclose the relationship and obtain the client's informed written consent
Rationale: Statutory consent requirements.
12. Licensees must ensure that their communications with customers are:
A. Vague
B. Clear, accurate and not misleading
C. Persuasive at any cost
D. Only verbal
Correct Answer: B. Clear, accurate and not misleading
Rationale: Clarity.
, 13. Where a licensee is uncertain about a legal matter, they should:
A. Give firm legal advice anyway
B. Ignore the issue
C. Make up an answer
D. Recommend the party seek independent legal advice
Correct Answer: D. Recommend the party seek independent legal advice
Rationale: Know limits.
14. A licensee's fiduciary duties to a client include:
A. Loyalty, confidentiality and acting in the client's best interests
B. Acting for the buyer secretly
C. Disclosing the client's bottom price to buyers
D. Maximising personal commission above all
Correct Answer: A. Loyalty, confidentiality and acting in the client's best interests
Rationale: Fiduciary relationship.
15. Under the Professional Conduct and Client Care Rules, a licensee must act in good faith and
deal fairly with:
A. All parties engaged in a transaction
B. Only the vendor
C. Only the agency
D. Only buyers who sign
Correct Answer: A. All parties engaged in a transaction
Rationale: Fair dealing applies to customers too.
16. Licensees must keep client information confidential unless:
A. The client consents or disclosure is required by law
B. A buyer asks
C. It helps the sale
D. It is interesting
Correct Answer: A. The client consents or disclosure is required by law
Rationale: Confidentiality duty.
17. A licensee who receives a referral fee from a mortgage broker for referring a client must:
A. Keep it secret
B. Pass it to REINZ
C. Ignore it
D. Disclose it to the client
Correct Answer: D. Disclose it to the client
Rationale: Benefit disclosure.
18. The difference between an appraisal and a registered valuation is that:
A. An appraisal is legally binding
B. A registered valuation is prepared by a registered valuer
C. They are identical
D. A valuation is free
Correct Answer: B. A registered valuation is prepared by a registered valuer
Rationale: Different professionals.
with Correct Answers
100 questions
1. The REA's main functions include:
A. Valuing all property
B. Licensing, setting rules, handling complaints and educating consumers
C. Registering mortgages
D. Setting interest rates
Correct Answer: B. Licensing, setting rules, handling complaints and educating consumers
Rationale: Regulator functions.
2. A 'customer' in real estate terms is:
A. The vendor
B. A person who deals with a licensee but is not the client, such as a buyer
C. The agency owner
D. The regulator
Correct Answer: B. A person who deals with a licensee but is not the client, such as a buyer
Rationale: Licensees still owe customers fair dealing.
3. Complaints to the REA about events that happened many years ago:
A. Are always rejected
B. Must go to LINZ
C. Are automatically upheld
D. May still be considered, though delay can affect the outcome
Correct Answer: D. May still be considered, though delay can affect the outcome
Rationale: Discretion applies.
4. Which body can order a licensee to apologise, pay compensation or undergo training after a
complaint?
A. LINZ
B. REINZ
C. The bank
D. A Complaints Assessment Committee or the Disciplinary Tribunal
Correct Answer: D. A Complaints Assessment Committee or the Disciplinary Tribunal
Rationale: Range of orders available.
5. The Real Estate Agents Act 2008 replaced the:
A. Land Transfer Act 1952
B. Real Estate Agents Act 1976
C. Fair Trading Act 1986
D. Unit Titles Act 1972
Correct Answer: B. Real Estate Agents Act 1976
Rationale: Introduced a new regulatory regime.
6. Licensees must renew their licence:
A. Every ten years
B. Annually
C. Never
D. Only when they change agency
Correct Answer: B. Annually
Rationale: Licences must be renewed each year.
,7. The main statute regulating real estate agency work in New Zealand is the:
A. Land Transfer Act 2017
B. Fair Trading Act 1986
C. Real Estate Agents Act 2008
D. Property Law Act 2007
Correct Answer: C. Real Estate Agents Act 2008
Rationale: It governs licensing, conduct and complaints.
8. Continuing professional development for licensees helps to:
A. Increase commissions automatically
B. Replace supervision
C. Avoid complaints entirely
D. Maintain and update knowledge and skills
Correct Answer: D. Maintain and update knowledge and skills
Rationale: Required by the REA.
9. A licensee must explain to clients:
A. Only the commission rate verbally
B. How the agency agreement works, including fees and expenses
C. Nothing about costs
D. Only after signing
Correct Answer: B. How the agency agreement works, including fees and expenses
Rationale: Informed decisions.
10. A licensee must recommend that a person seek legal advice:
A. Never
B. Before signing a contractual document such as an agency agreement or sale and purchase
agreement
C. Only after settlement
D. Only if the price is high
Correct Answer: B. Before signing a contractual document such as an agency agreement or
sale and purchase agreement
Rationale: Protects consumers.
11. If a licensee's relative wants to buy the client's property, the licensee must:
A. Disclose the relationship and obtain the client's informed written consent
B. Keep it secret
C. Lower the price
D. Sell to them without telling anyone
Correct Answer: A. Disclose the relationship and obtain the client's informed written consent
Rationale: Statutory consent requirements.
12. Licensees must ensure that their communications with customers are:
A. Vague
B. Clear, accurate and not misleading
C. Persuasive at any cost
D. Only verbal
Correct Answer: B. Clear, accurate and not misleading
Rationale: Clarity.
, 13. Where a licensee is uncertain about a legal matter, they should:
A. Give firm legal advice anyway
B. Ignore the issue
C. Make up an answer
D. Recommend the party seek independent legal advice
Correct Answer: D. Recommend the party seek independent legal advice
Rationale: Know limits.
14. A licensee's fiduciary duties to a client include:
A. Loyalty, confidentiality and acting in the client's best interests
B. Acting for the buyer secretly
C. Disclosing the client's bottom price to buyers
D. Maximising personal commission above all
Correct Answer: A. Loyalty, confidentiality and acting in the client's best interests
Rationale: Fiduciary relationship.
15. Under the Professional Conduct and Client Care Rules, a licensee must act in good faith and
deal fairly with:
A. All parties engaged in a transaction
B. Only the vendor
C. Only the agency
D. Only buyers who sign
Correct Answer: A. All parties engaged in a transaction
Rationale: Fair dealing applies to customers too.
16. Licensees must keep client information confidential unless:
A. The client consents or disclosure is required by law
B. A buyer asks
C. It helps the sale
D. It is interesting
Correct Answer: A. The client consents or disclosure is required by law
Rationale: Confidentiality duty.
17. A licensee who receives a referral fee from a mortgage broker for referring a client must:
A. Keep it secret
B. Pass it to REINZ
C. Ignore it
D. Disclose it to the client
Correct Answer: D. Disclose it to the client
Rationale: Benefit disclosure.
18. The difference between an appraisal and a registered valuation is that:
A. An appraisal is legally binding
B. A registered valuation is prepared by a registered valuer
C. They are identical
D. A valuation is free
Correct Answer: B. A registered valuation is prepared by a registered valuer
Rationale: Different professionals.
