NATIONAL REAL ESTATE EXAM PRACTICE TEST QUESTIONS
WITH FULLY SOLVED ANSWERS
1) In most cases, broker compensation, as a percentage of home price, falls somewhere
t t t t t t t t t t t t t
between: -- Answer ✔✔ 5-7% t t t t
2) What does it mean when a contract says that time is of the essence? -- Answer ✔✔
t t t t t t t t t t t t t t t t t
Parties must perform their contractual duties by a specific date and time in order to
t t t t t t t t t t t t t t t
avoid a breach of contract.
t t t t
3) What type of permission allows an individual property to deviate from a specific
t t t t t t t t t t t t t
provision of a zoning ordinance? -- Answer ✔✔ variance
t t t t t t t t
4) In the sales comparison approach to property valuation, what does the principle of
t t t t t t t t t t t t t
substitution state? -- Answer ✔✔ The value of a property is only what a consumer t t t t t t t t t t t t t t t
would pay to acquire a comparable property.
t t t t t t
5) A property manager's PRIMARY responsibility to the owner is to: -- Answer ✔✔
t t t t t t t t t t t t t
realize the highest return possible and maximize the owner's return on that investment
t t t t t t t t t t t t
6) When a tenancy at sufferance occurs, the tenant is referred to as a: -- Answer ✔✔
t t t t t t t t t t t t t t t t
holdover tenant t
7) A married couple bought a home ten years ago for $400,000. Their neighborhood has
t t t t t t t t t t t t t t
rapidly grown in popularity, and they were able to sell their home this year for
t t t t t t t t t t t t t t t
$950,000. How much of that money will they be required to pay capital gains tax on? --
t t t t t t t t t t t t t t t t t
Answer ✔✔ $50,000 t t
8) How does errors and omissions insurance (E&O) affect the defendants in fair housing
t t t t t t t t t t t t t
cases?* -- Answer ✔✔ E&O may not cover any defense for a fair housing violation.
t t t t t t t t t t t t t t
,9) An agent should present all offers to their client UNLESS:* -- Answer ✔✔ the client
t t t t t t t t t t t t t t t
explicitly instructs the agent not to present any offers below a certain amount in
t t t t t t t t t t t t t t
writing
10) TILA does NOT apply to which of the following kinds of loans? -- Answer ✔✔ business
t t t t t t t t t t t t t t t t
loans
11) Allie cannot depreciate her investment property for a tax deduction. What kind of
t t t t t t t t t t t t t
property is it? -- Answer ✔✔ undeveloped land
t t t t t t t
12) An appraisal is required for all: -- Answer ✔✔ federally related loan programs
t t t t t t t t t t t t
13) Erin pays a flat fee every month to rent her apartment. Her landlord pays for the
t t t t t t t t t t t t t t t t
property's maintenance, security, taxes, utilities, and all other operating expenses.
t t t t t t t t t t
What kind of lease is this? -- Answer ✔✔ gross lease
t t t t t t t t t t
14) The purpose of the Truth-in-Lending Act (TILA) is to provide which of the following?* -
t t t t t t t t t t t t t t
- Answer ✔✔ meaningful disclosure of credit terms of the loan to the borrower
t t t t t t t t t t t t t
15) There are no exceptions for discrimination based on: -- Answer ✔✔ race
t t t t t t t t t t t
16) A valid sales contract stipulates that the seller must repair a hole in the roof before
t t t t t t t t t t t t t t t t
closing day. The seller failed to do so, which makes the seller guilty of: -- Answer ✔✔
t t t t t t t t t t t t t t t t t
breach of contract t t
17) What usually happens to earnest money at the successful closing of the sale? -- Answer
t t t t t t t t t t t t t t t
✔✔ It counts towards the buyer's closing costs.
t t t t t t t
18) Liability for others by mandate of law or by express agreement is called: -- Answer ✔✔
t t t t t t t t t t t t t t t t
vicarious liability t
19) Which type of listing agreement is most likely to cause a conflict of interest, and is
t t t t t t t t t t t t t t t t
therefore discouraged? -- Answer ✔✔ net listing t t t t t t
, 20) John submitted an offer to buy a condo, but he can only carry out the purchase if the
t t t t t t t t t t t t t t t t t t
bank approves his request for a loan. For this reason, the contract must contain a: --
t t t t t t t t t t t t t t t t
Answer ✔✔ contingency t t
21) If a buyer makes a 15% down payment and obtains a $120,000 mortgage, what is the
t t t t t t t t t t t t t t t t
sales price of the property? -- Answer ✔✔ $141,176
t t t t t t t t
22) What is eminent domain? -- Answer ✔✔ The power of the government to seize
t t t t t t t t t t t t t t
citizen's private property without the consent of the owner.
t t t t t t t t
23) The party responsible for paying the origination fee when obtaining conventional
t t t t t t t t t t t
financing is: -- Answer ✔✔ the borrower t t t t t t
24) What is attached to an original contract before it is signed? -- Answer ✔✔ addendum
t t t t t t t t t t t t t t
25) Arturo is buying a house for $400,000. He will be making a down payment of 5%. He
t t t t t t t t t t t t t t t t t
already submitted a check for $2,000 as earnest money, which will be applied to the
t t t t t t t t t t t t t t t
purchase. How much will Arturo need to pay on closing day? -- Answer ✔✔ $18,000
t t t t t t t t t t t t t t
26) A Christian organization owns a fourplex. It wants to rent to only Christian tenants.
t t t t t t t t t t t t t t
Under the federal Fair Housing Act, is this legal? -- Answer ✔✔ Yes. Religious
t t t t t t t t t t t t t t
organizations which rent to tenants for residential purposes are exempt from the Fair
t t t t t t t t t t t t t
Housing Act t
27) What happens to trade fixtures after a business moves out of a leased property? --
t t t t t t t t t t t t t t t
Answer ✔✔ The tenant removes their trade fixtures and takes them upon moving out.
t t t t t t t t t t t t t
28) Suppose that a borrower has a gross monthly income of $3,000 and wants to qualify for
t t t t t t t t t t t t t t t
ta conforming loan (total debt service ratio of 36%) with a monthly PITI payment of
t t t t t t t t t t t t t t t
$800. What is the maximum amount of additional long-term obligations this borrower
t t t t t t t t t t t t
may have after PITI? -- Answer ✔✔ $280
t t t t t t t
29) A square bedroom measures 10 feet by 10 feet. What is the area of the room? --
t t t t t t t t t t t t t t t t t
Answer ✔✔ 100 square feet t t t t
WITH FULLY SOLVED ANSWERS
1) In most cases, broker compensation, as a percentage of home price, falls somewhere
t t t t t t t t t t t t t
between: -- Answer ✔✔ 5-7% t t t t
2) What does it mean when a contract says that time is of the essence? -- Answer ✔✔
t t t t t t t t t t t t t t t t t
Parties must perform their contractual duties by a specific date and time in order to
t t t t t t t t t t t t t t t
avoid a breach of contract.
t t t t
3) What type of permission allows an individual property to deviate from a specific
t t t t t t t t t t t t t
provision of a zoning ordinance? -- Answer ✔✔ variance
t t t t t t t t
4) In the sales comparison approach to property valuation, what does the principle of
t t t t t t t t t t t t t
substitution state? -- Answer ✔✔ The value of a property is only what a consumer t t t t t t t t t t t t t t t
would pay to acquire a comparable property.
t t t t t t
5) A property manager's PRIMARY responsibility to the owner is to: -- Answer ✔✔
t t t t t t t t t t t t t
realize the highest return possible and maximize the owner's return on that investment
t t t t t t t t t t t t
6) When a tenancy at sufferance occurs, the tenant is referred to as a: -- Answer ✔✔
t t t t t t t t t t t t t t t t
holdover tenant t
7) A married couple bought a home ten years ago for $400,000. Their neighborhood has
t t t t t t t t t t t t t t
rapidly grown in popularity, and they were able to sell their home this year for
t t t t t t t t t t t t t t t
$950,000. How much of that money will they be required to pay capital gains tax on? --
t t t t t t t t t t t t t t t t t
Answer ✔✔ $50,000 t t
8) How does errors and omissions insurance (E&O) affect the defendants in fair housing
t t t t t t t t t t t t t
cases?* -- Answer ✔✔ E&O may not cover any defense for a fair housing violation.
t t t t t t t t t t t t t t
,9) An agent should present all offers to their client UNLESS:* -- Answer ✔✔ the client
t t t t t t t t t t t t t t t
explicitly instructs the agent not to present any offers below a certain amount in
t t t t t t t t t t t t t t
writing
10) TILA does NOT apply to which of the following kinds of loans? -- Answer ✔✔ business
t t t t t t t t t t t t t t t t
loans
11) Allie cannot depreciate her investment property for a tax deduction. What kind of
t t t t t t t t t t t t t
property is it? -- Answer ✔✔ undeveloped land
t t t t t t t
12) An appraisal is required for all: -- Answer ✔✔ federally related loan programs
t t t t t t t t t t t t
13) Erin pays a flat fee every month to rent her apartment. Her landlord pays for the
t t t t t t t t t t t t t t t t
property's maintenance, security, taxes, utilities, and all other operating expenses.
t t t t t t t t t t
What kind of lease is this? -- Answer ✔✔ gross lease
t t t t t t t t t t
14) The purpose of the Truth-in-Lending Act (TILA) is to provide which of the following?* -
t t t t t t t t t t t t t t
- Answer ✔✔ meaningful disclosure of credit terms of the loan to the borrower
t t t t t t t t t t t t t
15) There are no exceptions for discrimination based on: -- Answer ✔✔ race
t t t t t t t t t t t
16) A valid sales contract stipulates that the seller must repair a hole in the roof before
t t t t t t t t t t t t t t t t
closing day. The seller failed to do so, which makes the seller guilty of: -- Answer ✔✔
t t t t t t t t t t t t t t t t t
breach of contract t t
17) What usually happens to earnest money at the successful closing of the sale? -- Answer
t t t t t t t t t t t t t t t
✔✔ It counts towards the buyer's closing costs.
t t t t t t t
18) Liability for others by mandate of law or by express agreement is called: -- Answer ✔✔
t t t t t t t t t t t t t t t t
vicarious liability t
19) Which type of listing agreement is most likely to cause a conflict of interest, and is
t t t t t t t t t t t t t t t t
therefore discouraged? -- Answer ✔✔ net listing t t t t t t
, 20) John submitted an offer to buy a condo, but he can only carry out the purchase if the
t t t t t t t t t t t t t t t t t t
bank approves his request for a loan. For this reason, the contract must contain a: --
t t t t t t t t t t t t t t t t
Answer ✔✔ contingency t t
21) If a buyer makes a 15% down payment and obtains a $120,000 mortgage, what is the
t t t t t t t t t t t t t t t t
sales price of the property? -- Answer ✔✔ $141,176
t t t t t t t t
22) What is eminent domain? -- Answer ✔✔ The power of the government to seize
t t t t t t t t t t t t t t
citizen's private property without the consent of the owner.
t t t t t t t t
23) The party responsible for paying the origination fee when obtaining conventional
t t t t t t t t t t t
financing is: -- Answer ✔✔ the borrower t t t t t t
24) What is attached to an original contract before it is signed? -- Answer ✔✔ addendum
t t t t t t t t t t t t t t
25) Arturo is buying a house for $400,000. He will be making a down payment of 5%. He
t t t t t t t t t t t t t t t t t
already submitted a check for $2,000 as earnest money, which will be applied to the
t t t t t t t t t t t t t t t
purchase. How much will Arturo need to pay on closing day? -- Answer ✔✔ $18,000
t t t t t t t t t t t t t t
26) A Christian organization owns a fourplex. It wants to rent to only Christian tenants.
t t t t t t t t t t t t t t
Under the federal Fair Housing Act, is this legal? -- Answer ✔✔ Yes. Religious
t t t t t t t t t t t t t t
organizations which rent to tenants for residential purposes are exempt from the Fair
t t t t t t t t t t t t t
Housing Act t
27) What happens to trade fixtures after a business moves out of a leased property? --
t t t t t t t t t t t t t t t
Answer ✔✔ The tenant removes their trade fixtures and takes them upon moving out.
t t t t t t t t t t t t t
28) Suppose that a borrower has a gross monthly income of $3,000 and wants to qualify for
t t t t t t t t t t t t t t t
ta conforming loan (total debt service ratio of 36%) with a monthly PITI payment of
t t t t t t t t t t t t t t t
$800. What is the maximum amount of additional long-term obligations this borrower
t t t t t t t t t t t t
may have after PITI? -- Answer ✔✔ $280
t t t t t t t
29) A square bedroom measures 10 feet by 10 feet. What is the area of the room? --
t t t t t t t t t t t t t t t t t
Answer ✔✔ 100 square feet t t t t
