Colorado Practice Test for PSI Questions and Answers GRADED A+ The brokerage firm owns the listing contract and has designated a broker to represent the seller. In this case, the designated broker:
A. performs the services and represents the seller. B. is an employing broker, both represent the seller. C. is not supervised by the employing broker. D. will be an agent of the buyer. - ANSWER-performs the services and represents the seller.
Only a designated broker has an agency relationship with the seller- the designated agency relationship does not extend to the employing broker unless the employing broker is also designated. Designated agents can only represent a client as a single agent or transaction agent. The employing broker is still obligated to supervise the designated broker, but the designated broker isn't allowed to share any knowledge with an employing broker who isn't also designated to that client.
If a broker wishes to be the only broker involved in a transaction, thereby "double ending" this sale, she may
A. represent both parties as a transaction broker. B. treat both parties as customers. C. represent one party as an agent and the other as a transaction broker. D. act as an agent to each party. - ANSWER-represent both parties as a transaction broker. Dual Agency in Colorado is not allowed. Dual agency occurs when real estate agents from the same firm claim to represent both the buyer and the seller in the same transaction.
An inactive broker has been asked by a friend to list her house in six months. In this case, the broker
A. must pay her errors and omissions insurance, which will activate the license. B. may activate her license prior to listing the home. C. should list the house as a FSBO so the broker won't have to activate her license. D. must refer the potential seller (friend) to an active licensee and receive a referral fee. - ANSWER-B. may activate her license prior to listing the home. The answer is may activate her license prior to listing the home. In order to take the listing, the broker must activate her license by meeting all requirements, including obtaining E&O insurance. Inactive brokers may not receive a referral fee. Listing the home as a FSBO and acting as a broker is illegal.
A buyer is assuming a loan at a closing on October 25. The loan balance after the October 1 payment is $125,000 and the interest rate is 10%. How will the interest proration appear on the buyer's closing statement?
A. $235.22 credit B. $806.45 credit C. $236.82 debit D. $1041.67 debit - ANSWER-B. $806.45 credit
The answer is $806.45 credit. To solve this problem, take the total amount times the
interest rate, then divide by 12 to find monthly interest:
$125,000 x .1 = $12,500 ÷ 12 = $1,041.67 monthly interest
Now, divide that answer by the number of days in October and multiply that by the number
of days the buyer must pay for:
$1,041.67 ÷ 31 X 24 = $806.45 prorated amount
Interest on assumed loans is always a buyer credit and seller debit because interest is
paid in arrears, and the buyer did not own the property at that time.
All of the following are true of the six-column worksheet EXCEPT
A. it is a tool for tracking who pays what. B. it replaces the buyer and seller closing statements. C. it is not given to parties. D. the information on it is transferred to the buyer and seller closing statements. - ANSWER-B. it replaces the buyer and seller closing statements. The six-column worksheet does not replace the buyer and seller closing statements.
All of the following are true of the brokerage firm's office policy requirements EXCEPT
A. it must include the license numbers and name of each broker associate. B. if the Commission audits the firm, the employing broker must be able to produce the policy. C. the only required element is a statement on designated brokerage. D. each broker associate must read and sign a copy of the policy. - ANSWER-A. it must
include the license numbers and name of each broker associate. The answer is it must include the license numbers and name of each broker associate. A list of the brokerage firm's associate brokers would not be included in the office policy.
A transaction broker is most likely a(n)
A. coach B. agent C. facilitator D. advocate - ANSWER-C. facilitator A transaction broker facilitates or coordinates the transaction, in a neutral way, to completion. An agent has fiduciary obligations, as illustrated by a coach or advocate.
8. Colorado law requires buyers to be notified of the source of water for residential properties, how does the buyer receive this notice?
A. The buyer's listing contract B. The water department sends a notice after closing C. Contract to Buy and Sell or listing contract D. Seller's Property Disclosure or Water Addendum - ANSWER-D. Seller's Property Disclosure or Water Addendum
The Contract to Buy and Sell gives the buyer notice to review the seller's property disclosure or source of potable water addendum to verify the water supply is adequate prior to closing.
9. A general agent acting for a principal
A. has no authority to bind her principal B. has limited authority to bind her principal. C. has unlimited authority to bind her principal. D. must have a power of attorney. - ANSWER-B. has limited authority to bind her principal. General agents are allowed to bind their principal based upon a signed agreement. Special agents have no power to bind, and a universal agent has unlimited power to bind the principal.
A. performs the services and represents the seller. B. is an employing broker, both represent the seller. C. is not supervised by the employing broker. D. will be an agent of the buyer. - ANSWER-performs the services and represents the seller.
Only a designated broker has an agency relationship with the seller- the designated agency relationship does not extend to the employing broker unless the employing broker is also designated. Designated agents can only represent a client as a single agent or transaction agent. The employing broker is still obligated to supervise the designated broker, but the designated broker isn't allowed to share any knowledge with an employing broker who isn't also designated to that client.
If a broker wishes to be the only broker involved in a transaction, thereby "double ending" this sale, she may
A. represent both parties as a transaction broker. B. treat both parties as customers. C. represent one party as an agent and the other as a transaction broker. D. act as an agent to each party. - ANSWER-represent both parties as a transaction broker. Dual Agency in Colorado is not allowed. Dual agency occurs when real estate agents from the same firm claim to represent both the buyer and the seller in the same transaction.
An inactive broker has been asked by a friend to list her house in six months. In this case, the broker
A. must pay her errors and omissions insurance, which will activate the license. B. may activate her license prior to listing the home. C. should list the house as a FSBO so the broker won't have to activate her license. D. must refer the potential seller (friend) to an active licensee and receive a referral fee. - ANSWER-B. may activate her license prior to listing the home. The answer is may activate her license prior to listing the home. In order to take the listing, the broker must activate her license by meeting all requirements, including obtaining E&O insurance. Inactive brokers may not receive a referral fee. Listing the home as a FSBO and acting as a broker is illegal.
A buyer is assuming a loan at a closing on October 25. The loan balance after the October 1 payment is $125,000 and the interest rate is 10%. How will the interest proration appear on the buyer's closing statement?
A. $235.22 credit B. $806.45 credit C. $236.82 debit D. $1041.67 debit - ANSWER-B. $806.45 credit
The answer is $806.45 credit. To solve this problem, take the total amount times the
interest rate, then divide by 12 to find monthly interest:
$125,000 x .1 = $12,500 ÷ 12 = $1,041.67 monthly interest
Now, divide that answer by the number of days in October and multiply that by the number
of days the buyer must pay for:
$1,041.67 ÷ 31 X 24 = $806.45 prorated amount
Interest on assumed loans is always a buyer credit and seller debit because interest is
paid in arrears, and the buyer did not own the property at that time.
All of the following are true of the six-column worksheet EXCEPT
A. it is a tool for tracking who pays what. B. it replaces the buyer and seller closing statements. C. it is not given to parties. D. the information on it is transferred to the buyer and seller closing statements. - ANSWER-B. it replaces the buyer and seller closing statements. The six-column worksheet does not replace the buyer and seller closing statements.
All of the following are true of the brokerage firm's office policy requirements EXCEPT
A. it must include the license numbers and name of each broker associate. B. if the Commission audits the firm, the employing broker must be able to produce the policy. C. the only required element is a statement on designated brokerage. D. each broker associate must read and sign a copy of the policy. - ANSWER-A. it must
include the license numbers and name of each broker associate. The answer is it must include the license numbers and name of each broker associate. A list of the brokerage firm's associate brokers would not be included in the office policy.
A transaction broker is most likely a(n)
A. coach B. agent C. facilitator D. advocate - ANSWER-C. facilitator A transaction broker facilitates or coordinates the transaction, in a neutral way, to completion. An agent has fiduciary obligations, as illustrated by a coach or advocate.
8. Colorado law requires buyers to be notified of the source of water for residential properties, how does the buyer receive this notice?
A. The buyer's listing contract B. The water department sends a notice after closing C. Contract to Buy and Sell or listing contract D. Seller's Property Disclosure or Water Addendum - ANSWER-D. Seller's Property Disclosure or Water Addendum
The Contract to Buy and Sell gives the buyer notice to review the seller's property disclosure or source of potable water addendum to verify the water supply is adequate prior to closing.
9. A general agent acting for a principal
A. has no authority to bind her principal B. has limited authority to bind her principal. C. has unlimited authority to bind her principal. D. must have a power of attorney. - ANSWER-B. has limited authority to bind her principal. General agents are allowed to bind their principal based upon a signed agreement. Special agents have no power to bind, and a universal agent has unlimited power to bind the principal.
