Real Estate Sales Exam Practice Questions 4 — Questions and Answers
Question 1: A buyer's agent shows a property listed by another broker. At the first substantive meeting with the buyer, the agent is required to:
- Present the listing broker's commission agreement
- Provide the buyer with an agency disclosure (Correct answer)
- Obtain a signed buyer representation agreement
- Give the seller's disclosure statement
Correct answer: Provide the buyer with an agency disclosure
Most states require agents to provide an agency disclosure form at or before the first substantive contact to clarify who the agent represents.
Question 2: What does the term 'time is of the essence' mean in a purchase contract?
- The seller must respond to all offers within 24 hours
- All deadlines in the contract are strict and binding (Correct answer)
- The buyer has extra time to secure financing
- Closing must occur before the listing expires
Correct answer: All deadlines in the contract are strict and binding
A 'time is of the essence' clause makes contract deadlines absolute, meaning failure to meet them can constitute a breach.
Question 3: A homeowner wants to build a structure that violates the current setback requirements. She should apply for a:
- Conditional use permit
- Variance (Correct answer)
- Rezoning
- Plat amendment
Correct answer: Variance
A variance is an exception granted by a zoning board allowing a specific property to deviate from standard zoning requirements due to unique hardship.
Question 4: Which of the following liens generally has the highest priority in a foreclosure sale?
- Second mortgage
- Mechanic's lien
- Property tax lien (Correct answer)
- Judgment lien
Correct answer: Property tax lien
Property tax liens hold super-priority status and are paid before all other liens, including first mortgages, in most states.
Question 5: A seller fails to disclose a known leaky roof. The buyer discovers the defect after closing. This is an example of:
- Puffing
- Fraudulent misrepresentation by omission (Correct answer)
- Caveat emptor
- Innocent misrepresentation
Correct answer: Fraudulent misrepresentation by omission
Deliberately concealing a material defect the seller knew about constitutes fraudulent misrepresentation by omission, which can expose the seller to liability.
Question 6: Under Regulation Z (Truth in Lending Act), the annual percentage rate (APR) is disclosed so buyers can:
- Compare the true cost of different loan offers (Correct answer)
- Negotiate a lower interest rate with the lender
- Determine the property's appraised value
- Calculate their monthly principal payment
Correct answer: Compare the true cost of different loan offers
APR includes interest, fees, and costs expressed as a yearly rate, giving borrowers a standardized tool to compare loan offers.
Question 7: Which valuation approach is most appropriate for a single-family home in a neighborhood with many recent sales?
- Income approach
- Cost approach
- Sales comparison approach (Correct answer)
- Gross rent multiplier method
Correct answer: Sales comparison approach
The sales comparison approach is the preferred method for residential properties because ample comparable sales data is typically available.
Real Estate Sales Exam Practice Questions 4
A buyer's agent shows a property listed by another broker.
At the first substantive meeting with the buyer, the agent is required to: