Real Estate Sales Exam Real Estate License Law and Regulations 2 — Questions and Answers
Question 1: Under the Sherman Antitrust Act, which practice among competing real estate brokers is illegal?
- Offering buyer rebates
- Price-fixing commission rates (Correct answer)
- Advertising lower fees
- Sharing listing data through an MLS
Correct answer: Price-fixing commission rates
Price-fixing — brokers agreeing to charge the same commission rates — violates the Sherman Antitrust Act and is a federal crime.
Question 2: RESPA (Real Estate Settlement Procedures Act) primarily regulates:
- Property tax assessments
- Settlement costs and kickback prohibitions on federally related mortgage loans (Correct answer)
- Zoning classifications
- Landlord-tenant disputes
Correct answer: Settlement costs and kickback prohibitions on federally related mortgage loans
RESPA governs settlement procedures for federally related mortgage loans and prohibits unearned fee kickbacks between settlement service providers.
Question 3: What is the primary purpose of an earnest money deposit in a real estate transaction?
- To pay for the home inspection
- To demonstrate the buyer's good faith and bind the contract (Correct answer)
- To cover the first month's mortgage payment
- To compensate the listing agent
Correct answer: To demonstrate the buyer's good faith and bind the contract
Earnest money is a good-faith deposit made by the buyer to demonstrate serious intent and bind the purchase contract.
Question 4: A licensee who practices real estate without a valid, active license is subject to:
- A verbal warning only
- Civil and criminal penalties, and loss of any earned commission (Correct answer)
- Mandatory CE courses only
- A probationary license
Correct answer: Civil and criminal penalties, and loss of any earned commission
Practicing real estate without a valid license can result in civil fines, criminal charges, and forfeiture of any commissions earned.
Question 5: Which type of agency relationship is created when a broker represents both the buyer and seller in the same transaction?
- Single agency
- Subagency
- Dual agency (Correct answer)
- Designated agency
Correct answer: Dual agency
Dual agency exists when one broker (or brokerage) represents both the buyer and seller in the same transaction, requiring informed written consent from both parties.
Question 6: The National Association of REALTORS® Code of Ethics requires REALTORS® to place whose interests above their own?
- The listing broker's
- The client's (Correct answer)
- The public's
- The MLS board's
Correct answer: The client's
The NAR Code of Ethics requires REALTORS® to protect and promote the interests of their client above their own personal interests.
Real Estate Sales Exam Real Estate License Law and Regulations 2
Under the Sherman Antitrust Act, which practice among competing real estate brokers is illegal?