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PSI NATIONAL REAL ESTATE SALESPERSON
PRACTICE EXAM
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"A written agreement in which a purchaser agrees to buy and a seller agrees to sell is called -
CORRECT ANSWER a contract."
"A seller signs a listing agreement with a broker. The seller can cancel the listing at any time
without legal liability if - CORRECT ANSWER the broker violates the terms of the contract."
"A gross lease can be best defined as one where the tenant pays, as a part of the rent, -
CORRECT ANSWER no operating expenses of the leased space."
"If leased premises become unusable for the purpose state in the lease, the tenant may have the
right to abandon the premises. This action is called - CORRECT ANSWER constructive
eviction." "Salesperson Susan was at the local coffee shop with some agents from other offices. The subject
of commissions came up, and agents began to compare their commission rates. Susan should -
CORRECT ANSWER advise her friends this could constitute a violation of Sherman Antitrust
Act." "A salesperson qualified a minority couple with two children and defined their price range as between $110,000 and $120,000 for the three-bedroom house they wanted. They asked to look at two listings in a nonminority neighborhood. The salesperson did not show them the properties because they were priced under $90,000 and had only two small bedrooms. Did the salesperson
act appropriately and why or why not? - CORRECT ANSWER No, because it is appropriate to
show any property for which the buyer is qualified." "On February 1, a seller paid $1,140 in annual property tax for the current calendar year. He sold the house with the closing set for April 1. What will be the seller's credit for the property taxes
already paid if the buyer pays for the day of closing? Use a 360-day year and a 30-day month. -
CORRECT ANSWER $288"
"A charge of violation of Federal Fair Housing laws can be heard by an administrative law judge within the Department of Housing and Urban Development (HUD) or by a Federal district court judge in Federal court. The advantage of a Federal court hearing to the complaining party is that
CORRECT ANSWER there is no dollar limit on damages paid."
"For Federal income tax purposes, which of the following are costs of homeownership that may
be deducted from gross income? - CORRECT ANSWER Mortgage loan interest, local property
taxes, mortgage loan origination fees." "A realty firm has just entered into an agreement to represent a home builder in the sale of a new subdivision. The firm has located several potential buyers and five homes have been sold to purchasers that the firm's agents have contacted. The realty firm has an agency relationship with
- CORRECT ANSWER the builder." "Although states make specific laws governing water rights and the rights in land that borders water, most states generally follow one of two basic doctrines regarding water rights. In many states, the common law doctrine of riparian and littoral rights dictates that water rights are automatically conveyed with property. In others, all water rights are controlled by the state under
the doctrine of - CORRECT ANSWER prior appropriation."
"Depreciation is calculated based on the - CORRECT ANSWER cost of the building only."
"When preparing a market data estimate of value, which of the following categories of
adjustment is NOT essential? - CORRECT ANSWER The original cost of the building."
“A competitive market analysis is MOST often used for - CORRECT ANSWER setting a listing
price." "According to the principle of progression, a three-bedroom, one-story home is MOST likely to
bring the highest sales price if located in a neighborhood in which - CORRECT ANSWER most
homes are larger than the sale home." "A prospective seller asks a salesperson to recommend a listing price for a property. The
salesperson should suggest - CORRECT ANSWER a competitive market analysis to determine
the property's value." "If all other factors are equal, in which location is a parking lot likely to bring the highest sales
price? - CORRECT ANSWER Business district zoned for a six story office building."
"A broker supplies the financing for a project to build condominiums with the stipulation that he has the exclusive right to sell the completed condos. Which of the following BEST describes this
relationship? - CORRECT ANSWER Agency coupled with an interest."
"When a principal authorizes an agent to perform a particular act or transaction, it is an example
of a - CORRECT ANSWER special agency."
"A licensee has an agency representation agreement with a buyer. When showing another company's listing, what obligation does the licensee have to the seller and the listing broker at the
other company? - CORRECT ANSWER Disclose the agency relationship when arranging the
showing and disclose material information about the buyer if presenting an offer." "The day after a broker's listing on a house expired, it was listed with another broker and offered in the MLS. Several days later, a third licensee called the first broker and asked for the key to show
the home. The broker should inform the caller that - CORRECT ANSWER he is no longer the
listing agent." "The Department of Housing and Urban Development estimates that most private homes built before 1978 contain potentially dangerous levels of lead. Because of this, some Federal agencies,
such as FHA, - CORRECT ANSWER require the buyer to acknowledge disclosure of the
presence of any known lead paint." "What critical aspect of the property inspection process MUST licensees convey to prospective
buyers? - CORRECT ANSWER Need for inspections to be completed within the time stated in
the contract." "A licensee is listing a property in a known flood plain. The seller flatly denies that the structure
and the property have ever been flooded. What is the licensee required to do in this situation? -
CORRECT ANSWER Inform the seller of the legal obligation to disclose facts regarding flood
plains."
"An example of a contract terminated due to inability to perform would be one in which the -
CORRECT ANSWER seller had contracted for sale of the entire property without the
knowledge or consent of the other joint tenant."
"The sellers want to accept a purchase offer, but only if the price is raised by $5,000. What should
they give the prospective buyer? - CORRECT ANSWER Counteroffer."
"A broker has signed a listing contract for the sale of a home. Which of the following could make
this contract voidable? - CORRECT ANSWER The seller is heavily under the influence of alcohol
at the time of signing." "A mentally disabled person who has been declared incompetent by a judge wishes to enter into
a contract. Under what conditions can such a person do so? - CORRECT ANSWER The person
appointed by the court to act for the disabled person must contract on his or her behalf." "If the terms of a contract indicate that Party A will be obliged to perform her part of the contract
only if Party B chooses to take a certain action, then the contract is a - CORRECT ANSWER
unilateral contract in which only Party A has made a promise to perform." "Even after an offer has been accepted and is binding, the buyer and seller may still choose to sign mutual release papers rather than proceed to closing. Which of the following circumstances
would NOT give either party a justifiable reason to insist on a mutual release? - CORRECT
ANSWER The buyer finds a better property for better terms."
"Prospective buyers made an offer on a property. The seller did NOT accept, but made a counteroffer. The prospective buyers signed the counteroffer and the real estate agent delivered their acceptance to the seller. In the interim, the same buyers had found another house that they
liked better and made an offer on it, which was accepted. Which of the following is TRUE? -
CORRECT ANSWER Both contracts are valid."
"A buyer was negotiating the purchase of a house for himself. During a conversation with the seller, the seller agreed to include all kitchen appliances in the sale, and this fact was included in the sales contract. In this situation, if the seller takes the appliances with him, what recourse does
the buyer have? - CORRECT ANSWER The buyer may sue the seller for specific performance."
"A company agrees to lease a property to be used as a gambling casino. State laws prohibit
gambling. This particular contract would be legally defined as - CORRECT ANSWER void."
"Even with title insurance, the policyholder may still suffer losses arising from - CORRECT
ANSWER land use change due to zoning ordinances."
broker's statement and makes an offer on a house in the neighborhood. Before closing, it is determined that the taxes are actually among the highest in the area. The buyer could seek to
rescind the contract on the basis of - CORRECT ANSWER misrepresentation."
"A landlord may legally refuse to rent to a prospective tenant if the tenant - CORRECT
ANSWER has ever been convicted of selling illegal drugs."
"Earnest money should be deposited into a trust account - CORRECT ANSWER in a timely
manner, according to state laws."
"An equal housing opportunity notice MUST be - CORRECT ANSWER displayed in the
brokerage office." "If you own a building free and clear that is worth $115,000 and want an annual return of 12%,
what net income is needed each month? - CORRECT ANSWER $1,150"
"A buyer wants to purchase a home for $160,000 with a 15% down payment. The lender charges
2 points. How much money does the buyer need up front to make the purchase? - CORRECT
ANSWER $26,720"
"On January 15, a seller paid $960 in annual property tax for the current calendar year. A buyer is purchasing the house with the closing set for March 1. What will be the seller's credit for the property taxes already paid if the buyer pays for the day of closing? Use a 360-day year and a 30-
day month. - CORRECT ANSWER $800"
"If a borrower can afford to make monthly principal and interest payments of $1,000 and the lender will make a 30-year loan at 5-1/2%, or a 20-year loan at 4-1/2%, what is the largest loan (rounded to the nearest $100) this buyer can afford? (BE SURE TO USE THE AMORTIZATION
TABLE.) - CORRECT ANSWER $176,100"
"An investment property returns 12% of its value or $21,000 annually. What is the value of the
property? - CORRECT ANSWER $175,000"
"A couple bought a rental house for $195,000. Its assessed value was $180,000. If the tax rate is $1.50 per $100 of assessed value, what is the monthly contribution the lender will REQUIRE for
taxes? Round to the nearest cent. - CORRECT ANSWER $225.00"
"A home buyer is obtaining a fully amortized loan in the amount of $140,000. The savings and loan will give him the loan for 15 years at 5% or for 30 years at 6%. To the nearest dollar, what is the difference between the monthly payments for these two loans? (BE SURE TO USE THE
AMORTIZATION TABLE.) - CORRECT ANSWER $267"
"A minority couple come to a salesperson looking for a house. The salesperson has some properties for which the couple qualify but avoids showing or mentioning these listings. Instead, the salesperson shows only properties in low-priced and integrated neighborhoods. This practice
is known as - CORRECT ANSWER steering."
"A lender will make an 80% loan-to-value loan on a property that is appraised for $72,250 and sells for $73,500. If the buyer has saved $14,450 for a down payment, how much more (if any) will
he need in order to make the down payment required under the terms of this loan? - CORRECT
ANSWER He needs an additional $1,250 in order to make the down payment."
"What is the duration of a home warranty's coverage? - CORRECT ANSWER as disclosed in the
contract that offers the warranty" "A couple are moving to a new city. They have decided to rent temporarily before buying a house to see which part of the city they would like to live in. What type of lease would BEST suit the
couple's needs? - CORRECT ANSWER Month-to-month lease."
"When a listing broker is preparing an Offer to Purchase for a buyer customer, contingencies
involving inspections or approval by a third party should - CORRECT ANSWER have short
deadlines." "A prospective buyer made an offer to purchase a property. The owner responded with a counteroffer. While the buyer was reviewing the counteroffer, the owner received a better offer.
The owner can accept the second offer if - CORRECT ANSWER the owner withdraws the
counteroffer before it is accepted." "A contract has been drawn which obliges the sellers to convey title to their land to the buyers if
the buyers come up with $22,000 on or before December 31st. This is called - CORRECT
ANSWER an option contract."
"State laws differ on whether a buyer is entitled to know about - CORRECT ANSWER a suicide
that occurred in the house last year."
"When the sellers are lending part of the purchase price, they may secure the debt either with a
deed of trust or a mortgage. For the seller, one benefit of the deed of trust is that - CORRECT
ANSWER foreclosure is usually simpler and faster."
"Even if a loan applicant's current income seems adequate to qualify for a certain loan, the Equal Credit Opportunity Act allows a lender to refuse the loan as a high risk if the applicant's main
source of income is - CORRECT ANSWER commission sales."
"A borrower has defaulted on the mortgage. The mortgage contains an acceleration clause. This
permits the lender to - CORRECT ANSWER demand immediate payment of the entire note."
"According to the Truth-in-Lending Act, if any "trigger terms" are used in an ad, all of the following
disclosures MUST appear in the ad EXCEPT the - CORRECT ANSWER prepayment penalties and
rebates." "Three people buy a house as tenants in common. Subsequently, two of the owners want to sell, but the third discourages each potential purchaser. The two owners who wish to sell the house
can - CORRECT ANSWER file an action for partition against the third owner."
"A legal easement can be created by any of the following EXCEPT - CORRECT ANSWER merger
of the titles." "In the sale of property, there is often confusion over whether an item is a fixture or personal
property. What is the best way to avoid this confusion? - CORRECT ANSWER Specify
questionable items of property in the written sales contract." "If conditions for property use are included in a deed and these conditions are violated, what is
the most severe potential penalty? - CORRECT ANSWER A court may order the return of the
property to the original owner."
"A deed restriction is applicable to the activities of - CORRECT ANSWER present and future
owners." "An environmental impact statement typically describes the effects of a proposed project on
factors such as - CORRECT ANSWER public health and safety."
"A couple listed their home with a broker. After 2 months, the seller found a buyer, and the sale closed. The seller was not obligated to pay a commission to the broker. This listing was MOST
likely - CORRECT ANSWER an exclusive agency listing."
"A broker, acting as agent for the seller, presents an offer to buy from the broker's former college roommate. The broker knows that the buyer will increase the amount of the offer if the seller
turns down the offer. When presenting the offer, the broker should - CORRECT ANSWER tell
the seller that the buyer will pay more." "Under the terms of their listing contract, the owners may sell their house themselves and pay no commission. If their agent sells it, a commission will be due. What kind of listing contract do the
owners have? - CORRECT ANSWER Exclusive agency listing."
"Under the common law of agency, licensees owe the broker with whom they are associated all
of the following duties EXCEPT - CORRECT ANSWER indemnification."
"Unrepresented buyers ask the licensee who listed the home whether they should order a property inspection as a part of their due diligence for the purchase of the home. Which of the
following would be the most appropriate way for the listing agent to respond? - CORRECT
ANSWER If you feel it is in your best interest, please do so."
"A seller tells the listing agent that her home was treated for termites 10 years ago, so there are
no termites now. Before listing the property, the agent should - CORRECT ANSWER tell the
seller to disclose the termite treatment on the property disclosure." "While an agent is showing a listed property, the seller and the buyer enter into an oral agreement for the purchase of the home. If a dispute over the terms arises later, the agreement
may be unenforceable because - CORRECT ANSWER the agreement does not comply with the
Statute of Frauds." "Alex, 14, and Kent, 17, inherited a piece of property. The next year, Kent deeded the whole property to Alex, who immediately put it on the market. An adult buyer made a written offer
which was accepted by Alex. Which of the following is TRUE? - CORRECT ANSWER The buyer
cannot legally compel Alex to sell." "A contract for the sale of a home has been signed by both parties. This contract will remain
executory until - CORRECT ANSWER the transaction has closed."
