Real Estate Sales Exam Sales Process 4 — Questions and Answers
Question 1: What does 'days on market' (DOM) primarily indicate to a buyer?
- The number of showings scheduled
- How long a property has been listed without going under contract (Correct answer)
- The seller's motivation level as reported by the agent
- The number of price reductions applied
Correct answer: How long a property has been listed without going under contract
DOM measures elapsed time since listing; high DOM often signals overpricing or property issues that buyers should investigate.
Question 2: Which clause in a purchase contract specifies what personal property stays with the home?
- Contingency clause
- Inclusion/exclusion clause (Correct answer)
- Escalation clause
- Due diligence clause
Correct answer: Inclusion/exclusion clause
Inclusion and exclusion clauses define which fixtures and personal property are part of the sale versus what the seller retains.
Question 3: A buyer wants to offer below list price because the home needs repairs. What strategy best supports this approach?
- Submit the low offer without explanation
- Include repair estimates or inspection findings to justify the reduced offer (Correct answer)
- Ask the agent to verbally inform the seller of the reasoning
- Wait for the seller to reduce the price before submitting any offer
Correct answer: Include repair estimates or inspection findings to justify the reduced offer
Documenting repair costs gives the seller a factual basis to accept a lower price rather than viewing it as an arbitrary lowball.
Question 4: What is an escalation clause in a purchase offer?
- A clause that raises the sale price if the property appraises above list price
- A provision that automatically increases the buyer's offer by a set amount above competing offers up to a maximum (Correct answer)
- A term allowing the seller to increase the asking price after an offer is received
- A contingency tied to rising mortgage interest rates
Correct answer: A provision that automatically increases the buyer's offer by a set amount above competing offers up to a maximum
An escalation clause lets a buyer compete in multiple-offer situations by automatically outbidding competitors by a specified increment up to a cap.
Question 5: What happens to earnest money if a buyer backs out due to a valid contingency?
- The seller keeps the earnest money as liquidated damages
- The earnest money is returned to the buyer (Correct answer)
- The earnest money is split between buyer and seller
- The broker retains the earnest money as commission
Correct answer: The earnest money is returned to the buyer
When a buyer exercises a valid contingency, the contract is terminated without penalty and the earnest money is refunded.
Question 6: Which action best demonstrates a listing agent's fiduciary duty of loyalty to the seller?
- Revealing the seller's minimum acceptable price to potential buyers
- Withholding the seller's urgent need to sell to protect negotiating position (Correct answer)
- Encouraging buyers to submit higher offers by sharing seller motivations
- Disclosing all known defects to buyers before an offer is made
Correct answer: Withholding the seller's urgent need to sell to protect negotiating position
Loyalty requires the agent to protect the seller's confidential information, including motivations that could weaken their negotiating position.
Question 7: A seller accepts an offer contingent on the buyer's current home selling. This is known as a:
- Bridge loan contingency
- Home sale contingency (Correct answer)
- Kick-out clause contingency
- Inspection contingency
Correct answer: Home sale contingency
A home sale contingency makes the purchase dependent on the buyer closing on their existing property within a defined timeframe.
Real Estate Sales Exam Sales Process 4
What does 'days on market' (DOM) primarily indicate to a buyer?