Real Estate Sales Exam Sales Process 3 — Questions and Answers
Question 1: What does 'earnest money' represent in a real estate transaction?
- The agent's commission deposit
- A buyer's good-faith deposit showing intent to purchase (Correct answer)
- The seller's closing cost contribution
- A lender's application fee
Correct answer: A buyer's good-faith deposit showing intent to purchase
Earnest money is a deposit made by the buyer to demonstrate seriousness and is applied toward the purchase at closing.
Question 2: A seller receives two simultaneous offers. What is the agent's ethical obligation?
- Present only the higher-priced offer
- Present both offers to the seller and let the seller decide (Correct answer)
- Accept the first offer received automatically
- Disclose both offers to each buyer so they can increase their bids
Correct answer: Present both offers to the seller and let the seller decide
The agent must present all offers to the seller, who then decides how to respond to each; disclosing one buyer's offer details to another violates confidentiality.
Question 3: Which contingency allows a buyer to exit a contract if they cannot obtain financing?
- Inspection contingency
- Appraisal contingency
- Mortgage contingency (Correct answer)
- Title contingency
Correct answer: Mortgage contingency
A mortgage (financing) contingency protects the buyer's earnest money if they are unable to secure a loan within the specified timeframe.
Question 4: What is the difference between a buyer's market and a seller's market?
- A buyer's market has high prices; a seller's market has low prices
- A buyer's market has more homes than buyers; a seller's market has more buyers than homes (Correct answer)
- A buyer's market occurs in summer; a seller's market occurs in winter
- A buyer's market requires cash offers; a seller's market allows financing
Correct answer: A buyer's market has more homes than buyers; a seller's market has more buyers than homes
Supply and demand determine market type: excess inventory favors buyers, while scarce inventory gives sellers negotiating power.
Question 5: An agent shows a listed property to a buyer who is also their client. What type of agency situation exists?
- Single agency
- Dual agency (Correct answer)
- Sub-agency
- Non-agency
Correct answer: Dual agency
Dual agency occurs when one agent or brokerage represents both the buyer and seller in the same transaction, requiring disclosure and consent.
Question 6: Which factor does NOT directly affect a property's listing price in a CMA?
- Recent comparable sales in the area
- Square footage of the subject property
- The seller's outstanding mortgage balance (Correct answer)
- Condition and features of the home
Correct answer: The seller's outstanding mortgage balance
A CMA is based on market data; the seller's mortgage balance is a personal financial matter that does not influence market value.
Question 7: What is the purpose of a pre-listing home inspection?
- To satisfy the buyer's lender requirement
- To identify and address defects before the property is listed (Correct answer)
- To establish the final sale price
- To fulfill state disclosure law requirements
Correct answer: To identify and address defects before the property is listed
A pre-listing inspection lets sellers discover and repair issues proactively, reducing surprises that could derail a sale later.
Real Estate Sales Exam Sales Process 3
What does 'earnest money' represent in a real estate transaction?