RES Real Estate Contracts & Transactions 2

Question 1

What is an escrow account in real estate?

Accepted Answer

A neutral third-party account that holds funds and documents until all conditions of the transaction are met

Answer

An escrow account is held by a neutral third party (title company, escrow agent) to safeguard funds and documents during the transaction, ensuring neither party can access them until all conditions are satisfied.

Question 2

What is a counteroffer in real estate negotiations?

Accepted Answer

A response to an offer that changes one or more terms, rejecting the original offer and creating a new offer

Answer

A counteroffer legally rejects the original offer and presents new terms. The original offeror can then accept, reject, or counter again. Each counteroffer extinguishes the previous offer.

Question 3

What is dual agency and what are the risks?

Accepted Answer

When one agent or brokerage represents both buyer and seller, creating potential conflicts of interest

Answer

Dual agency occurs when one agent (or agents from the same brokerage) represents both parties, which can compromise fiduciary duties. Most states require written disclosure and consent from both parties.

Question 4

What is a purchase money mortgage?

Accepted Answer

A mortgage provided by the seller to finance part of the purchase price

Answer

A purchase money mortgage (seller financing) is when the seller acts as the lender, allowing the buyer to make payments directly to the seller rather than obtaining a traditional bank mortgage.

Question 5

What is a home inspection contingency?

Accepted Answer

A contract provision allowing the buyer to have the property professionally inspected and negotiate repairs or withdraw based on findings

Answer

A home inspection contingency gives the buyer the right to have the property inspected by a professional. Based on findings, the buyer can request repairs, renegotiate the price, or withdraw from the contract.

RES - Real Estate Salesperson Exam Practice Test

RES - Real Estate Salesperson Exam Practice Test

RES Real Estate Contracts & Transactions 2