Pennsylvania Real Estate Salesperson Practice Exam
126 free Pennsylvania Real Estate Salesperson practice questions with answers and explanations. No signup required. The Pennsylvania Real Estate Salesperson exam is administered by the Pennsylvania Real Estate Commission, with 120 questions and a time limit of 3 hours 30 minutes.
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Property Ownership and Land Use
19 of 33 questions loaded1. A grantee wants the form of deed that provides the greatest protection, including warranties against title defects that arose before the grantor ever owned the property. Which deed should the grantee request?
- A. General warranty deed
- B. Special warranty deed
- C. Quitclaim deed
- D. Deed of trust
Show answer & explanation
Answer: A
A general warranty deed offers the greatest protection because the grantor warrants against all title defects arising at any time — even before the grantor owned the property — through covenants such as seisin, quiet enjoyment, and warranty forever. The special warranty deed is the tempting wrong answer, but it warrants only against defects that arose during the grantor's own period of ownership. A quitclaim deed carries no warranties at all, and a deed of trust is not a conveyance of ownership — it is a security instrument pledging the property for repayment of a debt.2. A grantor delivers a deed to Buyer A, who accepts it but does not record it. The grantor then delivers a deed to the same property to Buyer B, who promptly records. Under the recording system, whose interest is generally protected against the competing claim?
- A. Buyer B, because recording gives constructive notice to the world and generally protects the first party to record
- B. Buyer A, because the first deed delivered always controls regardless of recording
- C. Buyer B, but only if Buyer B also purchased an owner's title insurance policy
- D. Buyer A and Buyer B hold the title equally, because each received a valid deed
Show answer & explanation
Answer: A
Recording a deed in the county land records provides constructive notice to the world of the grantee's interest and establishes priority, generally protecting the first party to record — here, Buyer B. Choice B is the tempting wrong answer because delivery to Buyer A did occur first, but an unrecorded interest gave the world no constructive notice, which is precisely the risk the recording system addresses. Title insurance affects who bears a loss, not recording priority, and competing grantees do not simply share title.3. A grantor signs a deed that contains words of conveyance and an adequate legal description of the property, then places it in a desk drawer, intending to hand it to the grantee at some future time. Has title transferred to the grantee?
- A. No, because a deed must be delivered to and accepted by the grantee to transfer title
- B. Yes, because the grantor's signature completed the conveyance
- C. Yes, because the deed satisfies every formal requirement for validity
- D. No, because the deed has not yet been recorded in the county land records
Show answer & explanation
Answer: A
Even a deed that meets the formal validity requirements — competent parties, words of conveyance, an adequate legal description, and the grantor's signature — must also be delivered to and accepted by the grantee before title transfers. A deed sitting in the grantor's drawer has not been delivered, so no transfer has occurred. Choice D is the tempting wrong answer: recording serves to give constructive notice to the world and establish priority against competing claims, so it protects the grantee's interest — but it is not what transfers title between the parties.4. A buyer takes title by special warranty deed and also purchases an owner's title insurance policy at closing. After closing, the buyer suffers a loss from a title defect covered by the policy — a defect that arose before the grantor ever owned the property and was unknown to everyone when the policy was issued. What is the buyer's best source of recovery?
- A. The owner's title insurance policy, because it covers defects that existed but were unknown when the policy was issued
- B. The special warranty deed, because its covenants warrant against all title defects whenever they arose
- C. The county recorder, because recording the deed guaranteed the title was free of defects
- D. No one — the buyer bears all losses from defects that predate the grantor's ownership
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Answer: A
Title insurance protects the insured against losses from covered title defects that existed but were unknown at the time the policy was issued — exactly this situation. Choice B is the tempting wrong answer: a special warranty deed warrants only against defects that arose during the grantor's own period of ownership, so a defect predating the grantor's ownership falls outside its covenants (that broader protection belongs to a general warranty deed). Recording provides constructive notice and priority, not a guarantee of title quality, and choice D is wrong because the policy exists precisely to cover this loss.5. A title examiner discovers that a seller's former spouse may still hold a stray interest in the property, creating a cloud on the title. The former spouse is willing to release whatever interest they may have but refuses to make any promises about the condition of the title. Which instrument best accomplishes this?
- A. A quitclaim deed from the former spouse
- B. A general warranty deed from the former spouse
- C. A special warranty deed from the former spouse
- D. An owner's title insurance policy purchased by the buyer
Show answer & explanation
Answer: A
A quitclaim deed conveys only whatever interest the grantor may have, with no warranties, and it is commonly used exactly for this purpose — clearing clouds on title. That matches the former spouse's position: releasing a possible interest without promising anything about the title. Both warranty deeds fail because they would require the former spouse to make title warranties they refuse to give. The title insurance policy is the tempting non-deed answer, but insurance only protects the insured against losses from covered defects — it does not remove the former spouse's interest or clear the cloud from the record.6. Which instrument is the written document that actually conveys title to real property from one party to another?
- A. A deed
- B. A mortgage
- C. A listing agreement
- D. A promissory note
Show answer & explanation
Answer: A
A deed is the written instrument that conveys title to real property from a grantor to a grantee. A mortgage is the tempting wrong answer because it is also signed and recorded in a financed purchase, but a mortgage or deed of trust only pledges the property as security for repayment of a promissory note — it does not convey ownership. A listing agreement is merely an employment contract between a seller and a broker, and a promissory note is the borrower's promise to repay a debt, not a conveyance.7. A buyer hopes to purchase a home by taking over the seller's existing low-rate mortgage rather than obtaining a new loan. The seller's mortgage contains a due-on-sale clause. What effect does this clause have on the buyer's plan?
- A. The lender may demand full repayment of the loan when the property is sold, so the buyer cannot assume the loan without the lender's approval.
- B. The seller need only notify the lender of the sale, after which the buyer assumes the loan automatically.
- C. The clause accelerates the loan only if the borrower misses a payment, so a sale does not trigger it.
- D. The clause prohibits the seller from paying the loan off early, but has no effect on a sale.
Show answer & explanation
Answer: A
A due-on-sale clause allows the lender to demand full repayment if the property is sold, which prevents a buyer from assuming the loan without lender approval — so the buyer's plan fails unless the lender consents. Choice C is the common confusion with acceleration upon default: a due-on-sale clause is triggered by the transfer itself, not by missed payments. Choice D confuses it with a prepayment restriction, and B understates the lender's rights.8. A licensee canvasses a neighborhood, telling homeowners that families of a particular national origin have begun moving into the area and urging them to list and sell quickly "before it's too late." This practice is best described as:
- A. Steering
- B. Blockbusting
- C. Redlining
- D. Lawful prospecting for listings
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Answer: B
Blockbusting is inducing owners to sell by suggesting that people of a protected class are moving into the area — exactly what this licensee is doing. Steering is the tempting wrong answer, but steering involves channeling buyers toward or away from neighborhoods based on a protected class, not pressuring owners to sell. Redlining is denying loans or insurance in certain areas based on protected characteristics, and soliciting listings this way is not lawful prospecting.9. A borrower closes on a 200,000 dollar loan and agrees to pay two discount points at closing to lower the note rate. How much will the borrower pay for the discount points?
- A. 2,000 dollars
- B. 4,000 dollars
- C. 400 dollars
- D. 20,000 dollars
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Answer: B
Discount points are prepaid interest paid at closing to lower the note rate, and one point equals one percent of the loan amount. One percent of 200,000 dollars is 2,000 dollars, so two points cost 4,000 dollars. Choice A is the trap for stopping after calculating a single point; C and D come from misplacing the decimal when converting the percentage.10. An owner occupies one unit of her three-unit building and rents out the other two herself, using no real estate licensee and no advertising. She refuses to rent to an applicant solely because of the applicant's race, insisting that small owner-occupied buildings are exempt from fair housing law. Which statement is correct?
- A. She is exempt, because the owner-occupied exemption covers buildings of four or fewer units.
- B. She is not exempt: the owner-occupied exemption never applies to race, and the Civil Rights Act of 1866 prohibits all racial discrimination in property transactions with no exemptions.
- C. She is exempt so long as she continues to avoid discriminatory advertising.
- D. She is exempt because no real estate licensee was involved in the rental.
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Answer: B
The Mrs. Murphy exemption for owner-occupied buildings of four or fewer units never applies to race, and the Civil Rights Act of 1866 separately prohibits all racial discrimination in property transactions with no exemptions at all — so her refusal is illegal. Choices A, C, and D are tempting because the exemption does exist and does require avoiding discriminatory advertising and licensee involvement, but meeting those conditions cannot save conduct based on race, which is categorically outside the exemption.11. A listing salesperson is showing the listed home to an unrepresented buyer. The salesperson knows the home's roof leaks, and the buyer asks the salesperson to reveal the lowest price the seller would accept. Which best describes the salesperson's obligations?
- A. Disclose the known roof defect to the buyer, but refuse to reveal the seller's lowest acceptable price.
- B. Reveal both the defect and the seller's bottom-line price, because honesty requires full disclosure to all parties.
- C. Reveal neither, because the salesperson owes duties only to the seller-client.
- D. Owe the buyer the full set of fiduciary duties, because the buyer is a party to the transaction.
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Answer: A
The unrepresented buyer is a customer, owed honesty, fair dealing, and disclosure of known material defects — so the leaking roof must be disclosed — but not fiduciary duties. The seller's lowest acceptable price is confidential information that would harm the seller-client's bargaining position and must not be revealed. Choice C is the tempting trap: owing fiduciary duties only to the seller does not eliminate the duty to disclose known material defects to a customer. B overshares confidential information, and D wrongly extends fiduciary duties to a non-client.12. Under the federal Fair Housing Act, each of the following is a federally protected class EXCEPT:
- A. Familial status
- B. National origin
- C. Disability
- D. Source of income
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Answer: D
The seven federally protected classes are race, color, religion, national origin, sex, familial status, and disability. Source of income is not on the federal list, so D is the exception. Familial status, national origin, and disability are tempting to pick as the 'odd one out' because they are less obvious than race or religion, but all three are expressly among the seven federal classes.13. A landlord fails to repair a broken heating system in winter, and the tenant vacates the premises. What doctrine may the tenant assert?
- A. Constructive eviction, where conditions caused by the landlord render the premises unusable and the tenant vacates
- B. Actual eviction, requiring physical removal by the landlord
- C. Adverse possession of the leasehold
- D. Novation of the lease
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Answer: A
Constructive eviction requires a substantial interference attributable to the landlord that makes the premises unsuitable, notice and a reasonable opportunity to cure, and the tenant actually vacating within a reasonable time. Remaining in possession while withholding rent generally defeats the claim, which is why the vacating element matters.14. A married couple holds title such that neither may convey their interest without the other's consent, and creditors of one spouse generally cannot reach the property. What tenancy is this?
- A. Tenancy by the entirety
- B. Tenancy in common
- C. Joint tenancy without survivorship
- D. Tenancy at will
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Answer: A
Tenancy by the entirety is available only to married couples in states recognizing it, includes survivorship, and treats the couple as a single owning unit so neither can unilaterally convey or encumber. That unity is what shields the property from the separate creditors of one spouse, unlike a joint tenancy which a single owner can sever.15. A tenant assigns their remaining leasehold interest to a third party. How does this differ from a sublease?
- A. An assignment transfers the entire remaining term to the assignee, while a sublease transfers less than the full remaining interest and retains a reversion in the sublessor
- B. An assignment transfers less than the full term and a sublease transfers all of it
- C. Both terminate the original tenant's liability to the landlord
- D. Neither requires the landlord's consent under any circumstances
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Answer: A
An assignment conveys the whole remaining term so the assignee deals directly with the landlord, while a sublease carves out a shorter interest and the original tenant remains the landlord's tenant. In either case the original tenant generally stays liable on the lease absent a release, and most leases require landlord consent.16. Two co-owners holding as tenants in common cannot agree on the property's disposition. What legal remedy is available?
- A. A partition action, in which a court divides the property or orders a sale and divides the proceeds
- B. An adverse possession claim by the co-owner in possession
- C. Automatic conversion to joint tenancy
- D. No remedy; co-owners must reach agreement
Show answer & explanation
Answer: A
Partition lets any co-tenant compel division, either in kind where the property can be physically split or by sale where it cannot, with proceeds allocated by ownership share. Because in-kind partition is impractical for a single dwelling, partition by sale is the usual outcome in residential disputes.17. A property abuts a non-navigable stream in a state following the eastern common law approach. What water rights does the owner have?
- A. Riparian rights to reasonable use of the water, shared with other owners along the watercourse
- B. Exclusive ownership of all water passing the property
- C. Littoral rights, which apply to flowing streams
- D. No rights unless a permit is obtained
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Answer: A
Riparian rights attach to land adjoining a flowing watercourse and entitle each owner to reasonable use that does not unreasonably harm other riparian owners. Littoral rights attach to land bordering a lake or sea rather than a stream. Ownership of the water itself is not conferred; the right is one of use.18. A state highway agency needs a portion of a private landowner's property to widen a road and follows the legal process to acquire it despite the owner's objection. What must the agency provide to the owner?
- A. Nothing, since the government's power of eminent domain overrides any right to payment
- B. Replacement property of the owner's choosing anywhere in the state
- C. Just compensation reflecting the fair market value of the property taken
- D. A refund of the property taxes the owner paid over the years
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Answer: C
The power of eminent domain lets government and certain authorized entities take private property for public use, but the taking is conditioned on paying the owner just compensation, generally measured by the property's fair market value, as required by constitutional due process protections. The government is not obligated to provide substitute property or reimburse historical taxes.19. A landowner sells the rear portion of a large parcel to a buyer, leaving the buyer's new lot completely landlocked with no access to a public road except by crossing the seller's remaining land. What right does the buyer likely hold?
- A. An easement by prescription, since the buyer has used the access for years
- B. A license, revocable by the seller at any time
- C. An easement by necessity across the seller's remaining land
- D. No right at all, since the buyer should have negotiated access before closing
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Answer: C
An easement by necessity arises when a parcel is divided in a way that leaves one resulting lot without legal access to a public road, and the law implies an access easement across the remaining land because the division itself created the landlocked condition. This differs from an easement by prescription, which requires years of open, continuous, adverse use rather than arising immediately from the division of the parcel.
Contracts and Agency
19 of 23 questions loaded20. Each of the following is one of the core fiduciary duties an agent owes to a principal, commonly summarized by the acronym OLD CAR, EXCEPT:
- A. Honesty and fair dealing
- B. Reasonable care
- C. Accounting
- D. Confidentiality
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Answer: A
The fiduciary duties summarized by OLD CAR are Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care. Honesty and fair dealing is what a licensee owes to customers — non-clients — along with disclosure of known material defects; it is not a fiduciary duty owed to a principal. Confidentiality, accounting, and reasonable care are tempting eliminations precisely because they ARE part of OLD CAR, which makes them wrong answers to this EXCEPT question.21. A buyer submits a written offer on a condominium. The seller signs it after changing only the closing date, moving it one week later, and returns it to the buyer. The buyer, now uneasy about the purchase, decides not to proceed. Can the seller hold the buyer to the buyer's original offer?
- A. No — the seller's alteration was a counteroffer that rejected and terminated the buyer's original offer
- B. Yes — a change to the closing date alone is minor, so the seller's signature formed a binding acceptance
- C. Yes — the original offer remains open until the buyer formally revokes it in writing
- D. Yes — unless the buyer had expressly made the offer contingent on the original closing date
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Answer: A
Any change to the terms of an offer — even one as small as moving the closing date — is a counteroffer that rejects and terminates the original offer. Once terminated, the original offer no longer exists for the seller to enforce, so the buyer is free to walk away. Choice B is the classic trap: there is no 'minor change' exception under which an altered acceptance still binds the offeror. Choices C and D wrongly assume the original offer survived the seller's alteration.22. A seller wants to engage several brokerages at the same time, agreeing to pay a commission only to whichever broker actually procures the buyer — and to pay no one at all if the seller finds the buyer without any broker's help. Which listing arrangement fits the seller's plan?
- A. Exclusive-right-to-sell listing
- B. Exclusive-agency listing
- C. Open listing
- D. Net listing
Show answer & explanation
Answer: C
An open listing is non-exclusive: the seller may list with multiple brokers, and only the broker who procures the buyer earns a commission. Choice B is the tempting answer because an exclusive-agency listing also lets the seller avoid a commission by personally finding the buyer — but an exclusive arrangement does not allow the seller to hire several brokerages at once, which is the defining feature of the seller's plan here.23. A salesperson representing a buyer client discovers that the buyer wants to purchase a home the same salesperson has listed for a seller client. What must occur before the salesperson may continue in the transaction as a dual agent?
- A. Both buyer and seller must give informed written consent, and the salesperson may not advocate for either party against the other
- B. The salesperson need only disclose the dual agency orally at or before closing
- C. Nothing can make it lawful — dual agency is prohibited in every circumstance
- D. Only the seller's consent is needed, because the seller is the party paying the commission
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Answer: A
Dual agency is legal only with the informed written consent of both parties, and a dual agent cannot advocate for one party against the other. Choice B is tempting because disclosure is indeed involved, but an oral disclosure at closing falls short of the informed written consent both parties must give. Choice C overstates the rule — dual agency is restricted, not universally banned — and choice D wrongly ties consent to who pays the commission.24. A purchase contract contains a financing contingency. Despite diligent efforts, the buyer's loan application is denied, and the buyer gives timely notice canceling the contract under the contingency. What happens to the buyer's earnest money deposit?
- A. The buyer may cancel and recover the deposit
- B. The seller keeps the deposit as compensation for time the home was off the market
- C. The deposit is divided between the seller and the listing broker
- D. The buyer forfeits the deposit unless the seller voluntarily agrees to release it
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Answer: A
Financing, inspection, and appraisal contingencies give a buyer the right to cancel and recover the deposit if the condition is not met — here, the loan denial is exactly the unmet condition the contingency protects against. Choices B and D are tempting because a deposit can be at risk when a buyer simply walks away without a contractual basis, but a properly exercised contingency entitles the buyer to both cancellation and return of the deposit.25. A salesperson receives a buyer's earnest money check along with an accepted purchase offer. How must these funds be handled?
- A. Deposited into the broker's trust account, kept separate from the broker's own funds
- B. Deposited into the brokerage's general operating account until closing
- C. Held in the salesperson's personal account and delivered at closing
- D. Turned over directly to the seller as a partial payment on the price
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Answer: A
Earnest money is a good-faith deposit that belongs in the broker's trust account, and the fiduciary duty of accounting requires safeguarding entrusted funds and prohibits commingling client money with the agent's own funds. Choice B is tempting because the funds still reach the brokerage, but an operating account holds the firm's own money — placing client funds there is exactly the commingling the accounting duty forbids.26. Which of the following is an essential element of a valid real estate sales contract?
- A. An earnest money deposit
- B. Mutual assent shown by offer and acceptance
- C. Recording of the contract in the county land records
- D. A licensed broker's signature
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Answer: B
A valid real estate contract requires competent parties, mutual assent (offer and acceptance), consideration, a lawful object, and — under the Statute of Frauds — a written and signed agreement. Choice A is the classic trap: earnest money is a good-faith deposit held in the broker's trust account, but it is not one of the required elements of a valid contract. Recording and a broker's signature are likewise not among the essential elements.27. A seller signs a listing agreement providing that the broker earns a commission unless the seller personally finds the buyer. Three weeks into the listing term, the seller's coworker — whom the seller approached directly, with no broker involvement — signs a contract to buy the home. What commission, if any, is owed?
- A. None, because under an exclusive-agency listing no commission is owed when the seller personally procures the buyer
- B. The full commission, because the property sold during the listing term
- C. Half the commission, because the broker had already begun marketing the property
- D. The full commission, but only if the broker had advertised the home before the coworker's offer
Show answer & explanation
Answer: A
The agreement described — commission owed unless the seller personally finds the buyer — is an exclusive-agency listing, and here the seller personally procured the coworker, so no commission is due. Choice B states the exclusive-right-to-sell rule, under which the broker earns a commission if the property sells during the term regardless of who procures the buyer; it is the tempting answer for anyone who confuses the two exclusive listing types. Choices C and D invent partial or conditional commissions that match neither listing type.28. An agency relationship between a real estate licensee and a client is created when:
- A. the person attends the licensee's open house and signs the guest register
- B. the principal authorizes the licensee to act on the principal's behalf in dealings with third parties
- C. the licensee shows the person at least one property
- D. the licensee accepts an earnest money check from the person
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Answer: B
An agency relationship arises when a principal authorizes an agent to act on the principal's behalf in dealings with third parties — authorization by the principal is the key. Choice C is the tempting distractor because buyers often assume the licensee showing them homes automatically represents them, but touring properties, writing a deposit check, or signing an open-house register does not by itself supply the principal's authorization that creates agency.29. A broker's listing on a lakefront home expires without a sale. Two months later, the broker begins working with a buyer who becomes interested in that same home, now listed with a different brokerage. The buyer asks the broker to reveal the lowest price the former seller-client once said they would accept. May the broker disclose it?
- A. No — confidentiality survives termination of the agency, and the former client's bottom-line price remains protected
- B. Yes — the agency ended when the listing expired, so the duties owed to the former seller ended with it
- C. Yes — the broker is now working with the buyer and must pass along every piece of information that helps the buyer
- D. No — but only because the home is currently listed with a different brokerage
Show answer & explanation
Answer: A
The agency did terminate by expiration of the listing, but confidentiality is the duty that survives termination — it continues to bar revealing information that would harm the former principal's bargaining position, and the seller's lowest acceptable price is the textbook example. Choice B is the tempting answer because expiration genuinely is one way agency terminates; the trap is assuming every duty dies with the agency. Choice D reaches the right result for the wrong reason — the protection comes from the surviving duty of confidentiality, not from where the home is currently listed.30. A licensee is asked to recommend a home inspector and receives a payment from the inspector for each referral, without disclosing it. What is the problem?
- A. The undisclosed referral compensation is a conflict the licensee must disclose, and it may violate settlement service kickback rules
- B. No problem, since the licensee may accept payment from anyone
- C. The problem is only that the inspector is unlicensed
- D. The problem arises only if the inspection is inadequate
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Answer: A
A licensee owes disclosure of any interest in a recommended service provider, because the client is entitled to know the recommendation may not be based solely on merit. Where the service is a settlement service on a federally related loan, undisclosed referral payments can also implicate federal kickback prohibitions.31. A buyer asks whether a death occurred in a home. How should a licensee generally handle stigmatized property questions?
- A. Follow the state's statute on the subject, which frequently provides that such facts are not material defects requiring disclosure
- B. Always disclose every past event at the property regardless of state law
- C. Refuse to answer any question about the property's history
- D. Disclose the occupancy history of prior residents in all cases
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Answer: A
Many states expressly provide that psychological or stigmatizing facts such as a death or a reported haunting are not material defects, while some require a response if directly asked. Disclosure of a prior occupant's medical condition can itself raise fair housing and privacy issues, so the state statute governs rather than instinct.32. A seller signs a valid purchase contract but then refuses to convey the property because a better offer came in. The buyer sues, asking the court to order the seller to complete the sale as agreed rather than simply award money damages. What remedy is the buyer seeking?
- A. Rescission
- B. Liquidated damages
- C. Specific performance
- D. Reformation
Show answer & explanation
Answer: C
Specific performance is an equitable remedy in which a court orders a breaching party to actually perform their contractual obligations, such as conveying title to real property, rather than simply paying monetary damages; courts are more willing to grant this remedy for real estate because each parcel of land is considered unique. Rescission, by contrast, cancels the contract and returns the parties to their pre-contract positions rather than forcing performance.33. A purchase contract states that if the buyer defaults without a valid contingency excuse, the seller may keep the buyer's earnest money deposit as the seller's sole remedy, in an amount the parties agree approximates the seller's likely damages. What is this contract provision called?
- A. A specific performance clause
- B. A liquidated damages clause
- C. A contingency clause
- D. An escalation clause
Show answer & explanation
Answer: B
A liquidated damages clause sets, in advance, a specific and reasonable amount that a defaulting party will pay or forfeit if certain damages are hard to calculate precisely, and it is commonly used in real estate contracts to limit the seller's remedy to keeping the earnest money rather than pursuing a lawsuit for actual damages. Specific performance, in contrast, is a court-ordered remedy compelling a party to complete the transaction rather than pay damages.34. A buyer views a home with Agent One during a showing, then later returns without Agent One and purchases the same home directly through Agent Two after independently deciding to buy following further negotiation led entirely by Agent Two. Both agents claim to be the procuring cause of the sale. What does 'procuring cause' generally determine in this kind of dispute?
- A. Which agent's uninterrupted efforts were the predominant cause that actually brought about the completed sale, which determines entitlement to the commission
- B. Which agent physically unlocked the door on the buyer's first visit to the property
- C. Which agent has the older real estate license
- D. Which agent is affiliated with the listing brokerage
Show answer & explanation
Answer: A
Procuring cause analysis looks at the chain of events and asks which agent's continuous and effective efforts were the predominant, proximate cause of the buyer ultimately completing the purchase, since that determination governs which agent is entitled to a commission when more than one agent worked with the same buyer. Simply being first to show the property does not automatically establish procuring cause if that agent's efforts were abandoned or superseded by another agent's later, uninterrupted work.35. A salesperson, without express authority, tells a buyer that the seller will include a riding lawnmower in the sale. When the seller later learns of this promise and, aware of all the facts, agrees to honor it anyway, what has the seller done?
- A. Rescinded the listing agreement with the salesperson
- B. Ratified the salesperson's unauthorized statement, making it binding as though it had been authorized from the start
- C. Created a subagency relationship with the buyer
- D. Voided the entire purchase contract due to the unauthorized statement
Show answer & explanation
Answer: B
Ratification occurs when a principal, with full knowledge of an agent's unauthorized act, subsequently accepts and approves that act, which retroactively makes it binding as if it had been authorized all along. Here, the seller's informed decision to honor the promise about the lawnmower ratifies the salesperson's earlier unauthorized statement rather than terminating any relationship.36. A brokerage lists a seller's property and, through a multiple listing service, another brokerage shows the home to a buyer while representing the seller rather than the buyer, owing the seller the same fiduciary duties as the listing broker. What is this arrangement called?
- A. Dual agency
- B. Subagency
- C. Designated agency
- D. Buyer agency
Show answer & explanation
Answer: B
Subagency arises when a cooperating brokerage works with a buyer but represents the seller's interests, owing the seller, not the buyer, fiduciary duties, typically because the listing broker extended an offer of subagency through the multiple listing service. This differs from dual agency, where a single agent or brokerage represents both the buyer and seller in the same transaction, and from buyer agency, where the cooperating broker instead represents the buyer.37. A listing salesperson tells a prospective buyer that a home has 'the best view in the whole county,' a subjective opinion of the salesperson, while separately stating incorrectly that the roof was replaced last year when it was not. How should these two statements be classified?
- A. Both statements are puffing and therefore harmless as a matter of law
- B. Both statements are actionable misrepresentation regardless of whether they are opinion or fact
- C. The view comment is puffing, an opinion, while the false roof claim is a misrepresentation of fact that could create liability
- D. The view comment is misrepresentation, while the roof claim is puffing
Show answer & explanation
Answer: C
Puffing refers to subjective, exaggerated opinions or sales talk, such as praising a view, that a reasonable buyer would not rely on as a factual claim, and it generally does not create legal liability. A false statement about an objective, verifiable fact, such as when a roof was replaced, is a misrepresentation, and if the buyer reasonably relies on it to their detriment, the licensee and possibly the seller can face liability.38. A buyer and seller orally agree on all terms for the sale of a home and shake hands, but nothing is put in writing. Under the statute of frauds, what is the general effect on this agreement?
- A. The agreement is generally unenforceable in court because contracts for the sale of real estate must be in writing to be enforceable
- B. The agreement is fully enforceable because oral agreements carry the same legal weight as written ones for real estate
- C. The agreement is void from the start because oral negotiations have no legal significance whatsoever
- D. The agreement becomes enforceable automatically once the buyer pays any amount of earnest money
Show answer & explanation
Answer: A
The statute of frauds requires that contracts for the sale of an interest in real estate be in writing and signed by the party to be bound in order to be enforceable in court, so a purely oral agreement, however sincere, generally cannot be enforced if one party later refuses to perform. This writing requirement protects both parties from disputes over the exact terms of a significant transaction.
Valuation and Market Analysis
19 of 23 questions loaded39. A buyer contracts to purchase a home for 300,000 dollars and borrows 240,000 dollars. The lender's appraisal comes in above the purchase price. What loan-to-value ratio will the lender use?
- A. 20 percent
- B. 80 percent
- C. Less than 80 percent, because the higher appraised value is used as the denominator
- D. It cannot be determined without knowing the exact appraised value
Show answer & explanation
Answer: B
LTV is the loan amount divided by the lesser of the appraised value or the purchase price. Because the appraisal exceeds the 300,000 dollar purchase price, the purchase price is the lesser figure and controls: 240,000 divided by 300,000 is an eighty percent LTV. Choice C is the tempting trap — a higher appraisal does not lower LTV, because the lender uses the lesser of the two figures. Choice D fails for the same reason: since the appraisal is known to be higher, its exact amount is irrelevant. Twenty percent is the down payment share, not the LTV.40. An income property produces a net operating income of 27,000 dollars per year. An investor who requires a nine percent capitalization rate would estimate the property's value at:
- A. 243,000 dollars
- B. 2,430 dollars
- C. 3,000 dollars
- D. 300,000 dollars
Show answer & explanation
Answer: D
Net operating income divided by the capitalization rate yields the estimated value of an income property: 27,000 dollars divided by 0.09 equals 300,000 dollars. Choice C is the tempting slip of dividing by 9 instead of 0.09, choice A comes from multiplying the NOI by 9 rather than dividing by the rate, and choice B multiplies NOI by the decimal rate — each reverses or misapplies the capitalization formula.41. Before closing, a seller had already paid an expense covering a period that extends well past the closing date. On the closing statement, how is this prepaid expense handled between the parties?
- A. The buyer reimburses the seller for the unused portion
- B. The expense is not prorated because the seller chose to pay it in advance
- C. The seller credits the buyer for the seller's share
- D. The broker refunds the unused portion to the seller from the trust account
Show answer & explanation
Answer: A
When an expense is prepaid by the seller, the buyer reimburses the seller for the unused portion, since the buyer will enjoy the benefit of the payment after closing. Choice C is the tempting reversal: a seller credit to the buyer is the correct treatment only for expenses paid in arrears, where the seller owes for time already used. Prepaid shared expenses are still prorated, so choice B is wrong, and the broker's trust account plays no role in allocating prorated expenses between the parties.42. An investor comparing several small rental houses wants a quick screening number for each property before doing any deeper analysis. Which calculation produces the gross rent multiplier?
- A. Net operating income divided by the capitalization rate
- B. Loan amount divided by the lesser of appraised value or purchase price
- C. Monthly gross rent divided by the sale price
- D. Sale price divided by the monthly gross rent
Show answer & explanation
Answer: D
The gross rent multiplier is found by dividing the sale price by the monthly gross rent, giving investors a quick comparison tool. Choice A is tempting because it is also a valuation formula, but net operating income divided by the capitalization rate is the income capitalization method for estimating value, not the GRM. Choice C inverts the GRM formula, and choice B describes the loan-to-value ratio, a financing measure rather than a valuation tool.43. A sale closes on September 1, with the day of closing charged to the buyer. Annual property taxes of 3,600 dollars for the calendar year are due at the end of the year and have not yet been paid. Using a 360-day banker's year with 30-day months, which entry appears on the closing statement?
- A. Credit the seller 1,200 dollars
- B. Credit the buyer 1,200 dollars
- C. Credit the seller 2,400 dollars
- D. Credit the buyer 2,400 dollars
Show answer & explanation
Answer: D
Under a 360-day banker's year, the daily rate is the annual amount divided by 360: 3,600 dollars divided by 360 is 10 dollars per day. The seller owned the property from January 1 through August 31 — eight 30-day months, or 240 days — so the seller's share is 2,400 dollars. Because the taxes are paid in arrears (due at year end, after the seller's period of ownership), the seller credits the buyer for the seller's share, who will later pay the full bill. Choice C is the tempting reversal — crediting the seller is the treatment for expenses the seller prepaid, not for expenses in arrears. Choices A and B use the buyer's 120-day share of 1,200 dollars instead of the seller's share.44. A home sells for 300,000 dollars under a listing with a six percent commission rate. What total commission does the sale generate?
- A. 1,800 dollars
- B. 6,000 dollars
- C. 18,000 dollars
- D. 30,000 dollars
Show answer & explanation
Answer: C
Commission equals the sale price multiplied by the commission rate: 300,000 dollars times six percent is 18,000 dollars, which is then split between the listing and selling brokers per their agreement. Choice A is the classic misplaced-decimal error (multiplying by 0.6 percent instead of 6 percent), and choice D results from applying a ten percent rate rather than the stated six percent.45. On a closing statement, prorating a shared expense such as property taxes or rent between the buyer and the seller means dividing the expense:
- A. Equally between the parties, with each side paying half
- B. According to the portion of the period each party owns the property, using the closing date as the dividing point
- C. According to each party's percentage of equity in the property
- D. Entirely to the seller, because the expense arose during the seller's ownership
Show answer & explanation
Answer: B
Proration divides shared expenses like taxes, rent, or interest based on the portion of the period each party owns the property, with the closing date serving as the dividing point. A fifty-fifty split (choice A) is the tempting trap because the expense is 'shared,' but the split is proportional to each party's time of ownership, not equal — a closing early in the tax year leaves the buyer responsible for far more than half.46. An investor pays 250,000 dollars for a small rental property that produces an annual net operating income of 20,000 dollars. Assuming the price paid reflects the property's value, what capitalization rate does this purchase reflect?
- A. Twelve and one-half percent
- B. Six percent
- C. Ten percent
- D. Eight percent
Show answer & explanation
Answer: D
Because net operating income divided by the capitalization rate yields value, the relationship can be rearranged: the rate equals net operating income divided by value. Here, 20,000 ÷ 250,000 = 0.08, or eight percent. Choice A is the trap of dividing the price by the income — 250,000 ÷ 20,000 = 12.5 — which produces a multiplier, not a capitalization rate.47. A sale closes on May 1, with the day of closing belonging to the buyer. The seller has already paid the entire calendar year's property taxes of 2,400 dollars in advance. Using a 360-day banker's year with 30-day months, which entry appears on the closing statement?
- A. Credit the seller 800 dollars; debit the buyer 800 dollars
- B. Credit the buyer 1,600 dollars; debit the seller 1,600 dollars
- C. Credit the seller 1,600 dollars; debit the buyer 1,600 dollars
- D. Credit the seller 2,400 dollars; debit the buyer 2,400 dollars
Show answer & explanation
Answer: C
Because the taxes were prepaid by the seller, the buyer reimburses the seller for the unused portion. The daily rate is the annual amount divided by 360: 2,400 ÷ 360 = 6.67 dollars per day. The seller owned the property from January 1 through April 30 — four 30-day months, or 120 days — leaving the buyer's unused portion at 240 days: 240 × 6.67 ≈ 1,600 dollars, credited to the seller and debited to the buyer. Choice B reverses the direction, which is the treatment for an expense paid in arrears (where the seller credits the buyer), and choice A is the seller's own 120-day share rather than the unused portion being reimbursed.48. A comparable rental house just sold for 240,000 dollars and generates gross rent of 2,000 dollars per month. What gross rent multiplier does this sale indicate?
- A. 10
- B. 12
- C. 120
- D. 1,200
Show answer & explanation
Answer: C
The gross rent multiplier is the sale price divided by the monthly gross rent: 240,000 ÷ 2,000 = 120. Choice A (10) is the classic error of dividing by the annual rent of 24,000 instead — this multiplier is defined using monthly rent, so keep the rent figure monthly before dividing.49. A buyer purchases a home for 200,000 dollars, and the lender's appraisal also comes in at 200,000 dollars. The lender approves a loan at an eighty percent loan-to-value ratio. How much of a down payment must the buyer make?
- A. 20,000 dollars
- B. 40,000 dollars
- C. 80,000 dollars
- D. 160,000 dollars
Show answer & explanation
Answer: B
LTV is the loan amount divided by the lesser of the appraised value or purchase price, and at an eighty percent LTV the down payment equals the remaining twenty percent. Here both value figures are 200,000 dollars, so the loan is 160,000 dollars and the down payment is 200,000 × 20% = 40,000 dollars. Choice D is the loan amount itself, not the down payment — a common mix-up when the question asks for the buyer's cash contribution rather than the financed portion.50. A home sells for 420,000 dollars under a listing providing for a five percent commission, which the listing brokerage and the selling brokerage have agreed to split equally. What amount does the selling brokerage receive?
- A. 4,200 dollars
- B. 5,250 dollars
- C. 10,500 dollars
- D. 21,000 dollars
Show answer & explanation
Answer: C
Commission equals sale price multiplied by the commission rate, and the total is then split between the listing and selling brokers per their agreement. Here the total commission is 420,000 × 5% = 21,000 dollars, and an equal split gives each brokerage 10,500 dollars. Choice D is the trap for stopping at the total commission and forgetting the question asks for one brokerage's share after the split.51. A home's appraised market value is 350,000 dollars, but a motivated buyer in a bidding war ultimately pays 375,000 dollars to secure it. What best explains the difference between these two figures?
- A. Market value and market price are simply two names for the identical concept and should always be equal
- B. Market value is an appraiser's opinion of the most probable price under normal conditions, while market price is the actual price paid, which can be influenced by unique buyer motivations
- C. Market price is always lower than market value because appraisals intentionally overstate value
- D. The difference indicates the appraisal was performed using the wrong approach to value
Show answer & explanation
Answer: B
Market value is a theoretical estimate of the most probable price a property should bring under typical, arm's-length conditions, while market price is simply what a buyer actually paid in an actual transaction, which can be pushed higher or lower by unusual circumstances like a bidding war, personal urgency, or an uninformed party. The two figures can reasonably diverge without indicating any error in the appraisal.52. A buyer refuses to pay more for a home than the cost of acquiring an equally desirable substitute property in the same market. What appraisal principle does this illustrate?
- A. The principle of contribution
- B. The principle of substitution
- C. The principle of progression
- D. The principle of increasing returns
Show answer & explanation
Answer: B
The principle of substitution holds that a rational buyer will not pay more for a property than the cost of acquiring an equally desirable and available substitute, and this principle underlies the sales comparison approach itself, since comparable sales serve as those available substitutes. Contribution instead measures how much a specific improvement adds to overall value, which is a different concept from comparing whole properties.53. A county assesses a home's value for property tax purposes at a figure lower than its actual market value, applying a uniform percentage to all properties in the jurisdiction. What is this uniform percentage called?
- A. The capitalization rate
- B. The loan-to-value ratio
- C. The assessment ratio (equalization factor)
- D. The gross rent multiplier
Show answer & explanation
Answer: C
Many jurisdictions assess property for tax purposes at a percentage of full market value rather than at 100 percent, and that percentage is called the assessment ratio or equalization factor, applied uniformly so that similarly valued properties bear a proportionate tax burden. This is unrelated to a capitalization rate, which converts income into value for income-producing property, or a loan-to-value ratio, which relates a loan amount to a property's value for lending purposes.54. A 1960s home has only one bathroom and an outdated, awkward floor plan compared to current buyer preferences, even though the structure itself remains in good physical condition. What type of depreciation does this represent for appraisal purposes?
- A. Physical deterioration
- B. External (economic) obsolescence
- C. Functional obsolescence
- D. Locational obsolescence
Show answer & explanation
Answer: C
Functional obsolescence refers to a loss in value caused by outdated design, layout, or features within the property itself, such as an insufficient number of bathrooms or an inefficient floor plan, regardless of the physical soundness of the structure. Physical deterioration instead refers to actual wear and tear on the structure, and external obsolescence refers to value loss caused by negative factors outside the property's boundaries.55. A modest, older home sits among several much larger, newly built luxury homes in the same neighborhood. Under the appraisal principle of progression, what tends to happen to the modest home's value?
- A. Its value tends to be pulled downward to match the neighborhood's oldest, smallest home
- B. Its value becomes impossible to estimate using the sales comparison approach
- C. Its value is unaffected by neighboring properties under any circumstance
- D. Its value tends to be pulled upward by the presence of the larger, more valuable homes nearby
Show answer & explanation
Answer: D
The principle of progression holds that the value of a modest property tends to be enhanced by proximity to more valuable properties, since it benefits from association with the superior surroundings; the opposite effect, called regression, occurs when a more valuable property loses value from proximity to inferior properties. Neighboring property values are a recognized influence in market-based appraisal, not something appraisers disregard.56. An apartment building has a potential gross income of 120,000 dollars per year if fully occupied at market rents. Vacancy and collection losses are estimated at 8,000 dollars for the year. What is the building's effective gross income?
- A. 112,000 dollars
- B. 120,000 dollars
- C. 8,000 dollars
- D. 128,000 dollars
Show answer & explanation
Answer: A
Effective gross income equals potential gross income minus a deduction for vacancy and collection losses, reflecting the income the property realistically collects rather than the theoretical maximum if every unit were rented and every tenant paid in full. Subtracting the 8,000 dollar vacancy and collection loss from the 120,000 dollar potential gross income produces 112,000 dollars.57. A homeowner spends 40,000 dollars adding a swimming pool, but an appraisal shows the pool increases the home's market value by only 15,000 dollars. Which appraisal principle explains why the cost and the value added can differ?
- A. The principle of conformity
- B. The principle of anticipation
- C. The principle of contribution
- D. The principle of substitution
Show answer & explanation
Answer: C
The principle of contribution states that the value of any improvement is measured by how much it adds to the overall property value in the market, not by what it cost to install, so an expensive improvement can add far less value than its price if buyers in that market do not equally value it. Conformity instead concerns how similarity among nearby properties supports value, which is not what this scenario illustrates.
Financing
18 of 21 questions loaded58. Three years into a fully amortized fixed-rate mortgage, a borrower reviews the loan statements and is surprised that, despite making every scheduled payment on time, the principal balance has declined only slightly. What best explains this?
- A. The loan's interest rate has been adjusting upward based on an index plus a margin
- B. In an amortized loan, early scheduled payments are applied mostly to interest, with later payments applied mostly to principal
- C. The payments have been treated as prepaid interest that lowers the note rate rather than reducing the debt
- D. The lender has been applying the payments to private mortgage insurance instead of the loan balance
Show answer & explanation
Answer: B
Amortization repays principal and interest through scheduled payments, with early payments applied mostly to interest and later payments mostly to principal — so a borrower early in the term sees only slow principal reduction even with a perfect payment history. Choice A is tempting but wrong because a fixed-rate mortgage keeps the same rate for the entire term; index-plus-margin adjustments apply to adjustable-rate mortgages. Choice C confuses scheduled payments with discount points, which are prepaid interest paid at closing to lower the note rate.59. Two borrowers close on home purchases the same day. Borrower One is in a lien-theory state; Borrower Two is in a title-theory state. While the loans remain outstanding, which statement correctly describes who holds legal title to each home?
- A. Borrower One retains title while the lender holds a lien; legal title to Borrower Two's home is held by the lender or a trustee until the debt is repaid
- B. Both borrowers surrender legal title to their lenders until the loans are repaid
- C. Legal title to Borrower One's home is held by a trustee, while Borrower Two retains title subject to a lien
- D. Neither borrower holds title; in both states legal title remains with the seller until the final loan payment
Show answer & explanation
Answer: A
In lien-theory states the borrower retains title and the lender holds a lien, while in title-theory states legal title is held by the lender or a trustee until the debt is repaid — exactly as choice A describes. Choice C is the tempting reversal of the two theories, and choices B and D contradict how both systems allocate title.60. A buyer is purchasing a 300,000 dollar home with a conventional loan and wants to avoid paying private mortgage insurance. Under the general rule for conventional loans, what is the minimum down payment the buyer should make?
- A. 15,000 dollars
- B. 30,000 dollars
- C. 60,000 dollars
- D. 75,000 dollars
Show answer & explanation
Answer: C
Private mortgage insurance is generally required on conventional loans when the down payment is less than twenty percent of the purchase price, so the buyer should put down at least twenty percent of 300,000 dollars, which is 60,000 dollars. The tempting answer of 30,000 dollars is only a ten percent down payment — common in practice, but still below the twenty percent threshold, so PMI would generally be required.61. A buyer finances the purchase of a home. At closing, the buyer signs a promissory note along with a second instrument that pledges the home itself as security for repayment of the debt. Which instrument serves this security function?
- A. The promissory note
- B. The mortgage or deed of trust
- C. The deed conveying title
- D. The listing agreement
Show answer & explanation
Answer: B
The mortgage or deed of trust is the instrument that pledges the property as security for repayment of the promissory note. The promissory note is the tempting wrong answer, but it is the debt obligation being secured rather than the instrument that pledges the property; the deed merely conveys title from grantor to grantee, and a listing agreement is an employment contract between a seller and a broker.62. Which of the following best describes a conventional loan?
- A. A loan insured by the Federal Housing Administration
- B. A loan guaranteed by the Department of Veterans Affairs
- C. A loan that is not insured or guaranteed by the federal government
- D. A loan available only to eligible veterans
Show answer & explanation
Answer: C
A conventional loan is not insured or guaranteed by the federal government. Choice A describes an FHA loan, which is insured by the Federal Housing Administration, and choices B and D describe a VA loan, which is guaranteed by the Department of Veterans Affairs for eligible veterans.63. A borrower with an adjustable-rate mortgage receives notice that the interest rate on the loan will change at the upcoming adjustment date. How is the new rate determined?
- A. By adding a margin to a designated index
- B. By adding discount points to the original note rate
- C. At the lender's sole discretion, based on its current profitability
- D. It cannot change — the rate stated in the note applies for the entire term
Show answer & explanation
Answer: A
An adjustable-rate mortgage has a rate that changes periodically based on an index plus a margin. Choice D describes a fixed-rate mortgage, which keeps the same rate for the entire term — the most tempting error for anyone confusing the two loan structures. Discount points are prepaid interest paid at closing to lower the note rate, not a mechanism for later rate adjustments.64. An investor's adjusted basis in a rental property is determined how?
- A. The assessed value for property tax purposes
- B. Original cost plus all repairs and maintenance
- C. Current market value minus the mortgage balance
- D. Original cost plus capital improvements minus depreciation taken
Show answer & explanation
Answer: D
Adjusted basis starts with acquisition cost, increases for capital improvements that add value or extend life, and decreases for depreciation claimed. Ordinary repairs are deducted currently rather than capitalized, so the repair versus improvement distinction determines both the current deduction and the eventual gain calculation.65. An investor purchases residential rental property. Over what period is the building's cost recovered for federal income tax purposes?
- A. 39 years for residential rental property
- B. 15 years for any income property
- C. The full cost is deductible in the year of purchase
- D. 27.5 years for residential rental property, with land not depreciable
Show answer & explanation
Answer: D
Residential rental improvements are recovered over 27.5 years and nonresidential over 39 years, with land never depreciable, so the purchase price must be allocated between land and improvements. Depreciation reduces basis, which increases gain on sale and is subject to recapture at disposition.66. A buyer purchases residential property in a designated special flood hazard area with a federally related mortgage. What requirement applies?
- A. Flood insurance is required as a condition of the loan, and the lender must notify the borrower of the designation
- B. Flood insurance is optional at the borrower's discretion
- C. Standard homeowner's insurance covers flood damage
- D. The property may not be financed at all
Show answer & explanation
Answer: A
Federal law conditions a federally related loan on flood insurance where the structure sits in a special flood hazard area, and the lender must notify the borrower. Standard homeowner policies exclude flood, so the coverage is separate. Flood maps are revised over time, which can bring a previously unaffected property into the requirement.67. A lender collects one-twelfth of the annual property taxes and insurance with each mortgage payment. What is this arrangement called and what governs it?
- A. An escrow or impound account, subject to federal limits on the cushion the lender may hold and an annual statement to the borrower
- B. A discount point arrangement
- C. A prepayment penalty reserve
- D. A private mortgage insurance premium
Show answer & explanation
Answer: A
Escrow accounts spread taxes and insurance across monthly payments, and federal settlement rules cap the cushion a servicer may hold and require an annual escrow account statement with refund of significant surpluses. Shortages arising from tax increases produce payment adjustments the borrower must be notified of.68. An advertisement for residential financing states a monthly payment amount. What does federal law require?
- A. Stating certain credit terms triggers required disclosure of additional terms, including the annual percentage rate
- B. Only the lender's name must appear
- C. Payment amounts may never appear in advertising
- D. Advertising is exempt from credit disclosure requirements
Show answer & explanation
Answer: A
Truth in Lending treats specified terms as triggering terms, so mentioning a payment amount, down payment or the number of payments requires additional disclosures including the annual percentage rate stated with equal prominence. Advertising a low payment without the accompanying terms is a recurring enforcement issue.69. A qualifying veteran wants to purchase a home with no down payment, using a loan program available because of the veteran's military service. Which loan type is this?
- A. An FHA-insured loan
- B. A conventional loan
- C. A USDA rural development loan
- D. A VA-guaranteed loan
Show answer & explanation
Answer: D
VA loans are guaranteed by the U.S. Department of Veterans Affairs and are available to eligible veterans, active-duty service members, and certain surviving spouses, often allowing qualified borrowers to purchase with no down payment because the VA guaranty reduces the lender's risk. FHA loans, by contrast, are open to the general public and still typically require some down payment, even if modest.70. A builder pays an upfront fee to a lender so that a buyer's interest rate is temporarily reduced for the first two years of the loan before rising to the permanent note rate. What is this financing arrangement called?
- A. A wraparound mortgage
- B. A graduated payment mortgage set permanently at the lower rate
- C. A temporary interest rate buydown
- D. An assumption of the builder's construction loan
Show answer & explanation
Answer: C
A temporary buydown involves an upfront payment, often made by a builder or seller, that subsidizes the borrower's interest rate for an initial period of the loan before the rate steps up to the loan's permanent note rate, making early payments more affordable without permanently changing the loan terms. This differs from a graduated payment mortgage, which follows a preset schedule of rising payments built into the loan itself rather than a separate subsidized buydown.71. A borrower obtained a conventional loan with private mortgage insurance because the original down payment was less than twenty percent. As the loan balance is paid down over time, under what general circumstance does PMI typically terminate automatically?
- A. PMI never terminates for the life of a conventional loan regardless of the balance paid down
- B. When the loan balance is scheduled to reach a set threshold of the original property value, commonly around seventy-eight percent, PMI is generally required to terminate automatically
- C. PMI terminates automatically the moment the borrower makes twelve consecutive on-time payments
- D. PMI can only be removed if the borrower completely refinances into a new loan
Show answer & explanation
Answer: B
Federal law generally requires that private mortgage insurance on qualifying conventional loans be automatically terminated once the loan balance is scheduled to reach a set threshold of the home's original value, commonly around seventy-eight percent, sparing the borrower from paying PMI indefinitely. Borrowers may also be able to request earlier cancellation once equity reaches a higher threshold, but automatic termination does not depend simply on a fixed number of on-time payments.72. A lender is qualifying a borrower for a mortgage and calculates the percentage of the borrower's gross monthly income that would go toward the total monthly housing payment plus all other recurring debt obligations. What is this calculation called?
- A. The back-end (total) debt-to-income ratio
- B. The loan-to-value ratio
- C. The capitalization rate
- D. The front-end housing ratio only
Show answer & explanation
Answer: A
The back-end, or total, debt-to-income ratio measures the borrower's total monthly obligations, including the proposed housing payment plus other debts like car loans and credit cards, as a percentage of gross monthly income, giving lenders a fuller picture of repayment capacity than housing costs alone. The front-end ratio, by contrast, measures only the housing payment itself against income, without including other debts.73. A homeowner already has a first mortgage on the property and takes out a home equity loan secured by the same property. In the event of foreclosure, how does the home equity loan generally rank compared to the first mortgage?
- A. It automatically takes priority over the first mortgage because it was recorded more recently
- B. It shares equal priority with the first mortgage regardless of recording date
- C. It is a junior (subordinate) lien and is generally paid only after the first mortgage is satisfied from sale proceeds
- D. It has no lien priority at all and is treated as unsecured debt
Show answer & explanation
Answer: C
Lien priority for mortgages generally follows the order in which the liens were recorded, so a home equity loan taken out after an existing first mortgage becomes a junior or second lien, paid from foreclosure sale proceeds only after the senior first mortgage is satisfied in full. This priority can matter significantly to the junior lienholder if the sale proceeds are insufficient to cover both debts.74. A borrower's loan has monthly payments calculated as though the loan would fully pay off over 30 years, but the entire remaining balance becomes due in a single lump sum after just seven years. What feature does this loan have?
- A. Negative amortization
- B. A balloon payment
- C. A rate cap
- D. A prepayment penalty
Show answer & explanation
Answer: B
A balloon payment loan calculates regular payments on a longer amortization schedule but requires the entire remaining principal balance to be paid off in one large lump sum at a much earlier date, leaving the borrower needing to pay off, refinance, or sell before that date arrives. This differs from negative amortization, where the loan balance actually increases over time because payments do not even cover accruing interest.75. A buyer wants a lender's conclusion that carries more weight with sellers because it is based on the lender's verification of the buyer's income, assets, and credit, rather than only on unverified information the buyer reported. What should the buyer request from the lender?
- A. A pre-qualification
- B. A loan estimate
- C. A commitment letter guaranteeing final funding with no possible conditions
- D. A pre-approval
Show answer & explanation
Answer: D
A pre-approval involves the lender actually verifying the buyer's income, assets, and credit through documentation, giving sellers more confidence in the buyer's ability to obtain financing, whereas a pre-qualification is a more informal, preliminary estimate based on unverified information the buyer simply reports to the lender. Even a pre-approval, however, is typically still subject to final underwriting conditions such as appraisal and continued financial stability, so it is not an unconditional guarantee of funding.
State License Law and Practice
18 of 19 questions loaded76. Which Pennsylvania body adopts regulations governing real estate licensees and hears disciplinary matters?
- A. The Pennsylvania Department of Revenue
- B. The Pennsylvania Housing Finance Agency
- C. The Pennsylvania Insurance Department
- D. The State Real Estate Commission, within the Bureau of Professional and Occupational Affairs
Show answer & explanation
Answer: D
The State Real Estate Commission operates within the Bureau of Professional and Occupational Affairs under the Department of State, adopting regulations and disciplining licensees under the Real Estate Licensing and Registration Act. The Housing Finance Agency administers loan programs, a function unrelated to occupational licensing.77. Under Pennsylvania law, when must a licensee provide the Consumer Notice to a prospective buyer or seller?
- A. Only if the consumer requests information about agency
- B. At the closing table
- C. At the initial interview, before substantive discussion of the consumer's real estate needs
- D. When the agreement of sale is signed
Show answer & explanation
Answer: C
Pennsylvania requires the Consumer Notice at the initial interview, meaning the first contact where a substantive discussion of the consumer's needs occurs, so the consumer understands the available business relationships before revealing confidential information. Delivery at signing or closing defeats the notice's purpose entirely.78. A Pennsylvania licensee is scheduling her required coursework. How does Pennsylvania structure license renewal and continuing education?
- A. Biennial renewal with 14 hours of continuing education per cycle
- B. Annual renewal with 8 hours per year
- C. Triennial renewal with 30 hours per cycle
- D. Renewal every four years with 45 hours per cycle
Show answer & explanation
Answer: A
Pennsylvania licenses renew on a two-year cycle requiring 14 hours of continuing education, with mandatory topics designated by the Commission for each cycle. Because renewal dates are fixed rather than tied to the original license date, a licensee issued late in a cycle still faces the upcoming renewal.79. A Pennsylvania seller of residential property must complete a Seller's Property Disclosure Statement. What is the seller disclosing?
- A. Known material defects across enumerated categories, based on the seller's actual knowledge
- B. The results of a professional home inspection commissioned by the seller
- C. A guarantee of the condition of each listed system
- D. The property's appraised market value
Show answer & explanation
Answer: A
The statement records what the seller actually knows about defects across categories such as roof, systems, water and structural conditions, and it is not an inspection or a warranty. A buyer retains inspection rights, and a seller or licensee who conceals a known defect remains liable notwithstanding what the form says.80. Competing brokerages in a market agree to divide the territory so each works only certain neighborhoods. What violation is this?
- A. Market allocation, a per se antitrust violation
- B. A permissible efficiency arrangement if disclosed to consumers
- C. A fair housing violation only
- D. No violation, since each firm may choose where to work
Show answer & explanation
Answer: A
Agreements among competitors to divide markets, customers or territories are illegal per se, meaning no business justification is accepted. A single firm may independently decide where to concentrate, but coordinating that decision with a competitor converts a unilateral business choice into a conspiracy.81. Pennsylvania recognizes a business relationship in which a licensee provides services without representing either party as an agent. What is this called?
- A. A transaction licensee, who provides services without an agency relationship or fiduciary duties
- B. A dual agent representing both parties equally
- C. A designated agent assigned to one party
- D. A subagent of the listing broker
Show answer & explanation
Answer: A
A transaction licensee furnishes real estate services without becoming anyone's agent, so no fiduciary duties of loyalty attach, though the duties of honesty, disclosure of material defects and confidentiality of specified information remain. The consumer must be informed of this status through the Consumer Notice and any written agreement.82. A licensee calls consumers from a purchased list to solicit listings. What federal restriction applies?
- A. The national Do Not Call registry restricts unsolicited telemarketing calls, with limited exceptions such as an established business relationship
- B. There are no restrictions on calls made by licensed professionals
- C. Calls are permitted if the licensee identifies their brokerage
- D. The restriction applies only to automated dialing
Show answer & explanation
Answer: A
Numbers on the registry may not be called for solicitation absent an exception such as an established business relationship or prior express written consent, and firms must maintain their own internal do-not-call list. Professional licensure confers no exemption, and the rules reach live calls as well as automated ones.83. Pennsylvania requires a written agreement for a listing or buyer representation. Which content requirement applies?
- A. Verbal agreements are sufficient if witnessed
- B. The agreement may be open ended with no termination date
- C. The agreement must state a definite termination date, the fee arrangement, and the services to be provided
- D. Only the commission rate must be stated
Show answer & explanation
Answer: C
Pennsylvania mandates specific content including a definite termination date, so a consumer is never bound indefinitely, along with the compensation arrangement and the scope of services. An agreement lacking a termination date is a recurring disciplinary finding because it leaves the consumer without a clear exit.84. A Pennsylvania broker receives a deposit toward a real estate transaction. What is the general handling requirement?
- A. Deposit into an escrow account maintained in the broker's name at a Pennsylvania institution, by the end of the next business day after receipt
- B. Deposit within thirty days of receipt
- C. Retention by the salesperson until settlement
- D. Immediate delivery to the seller
Show answer & explanation
Answer: A
Pennsylvania requires prompt deposit into a broker-maintained escrow account, with the escrow held separate from the broker's own funds and records maintained for inspection. A salesperson never holds transaction funds, and delivering a deposit to a party rather than into escrow removes the protection escrow exists to provide.85. A brokerage carries insurance intended to cover claims arising from a licensee's negligent errors or omissions in performing real estate services, such as an unintentional mistake in handling a transaction. What type of insurance is this?
- A. General liability insurance covering slip-and-fall injuries at the office
- B. Title insurance protecting the buyer against defects in title
- C. Homeowners insurance covering the listed property itself
- D. Errors and omissions (E&O) insurance
Show answer & explanation
Answer: D
Errors and omissions insurance is specifically designed to cover licensees against claims of negligence, mistakes, or oversights made while performing professional real estate services, distinguishing it from general liability insurance, which typically covers bodily injury or property damage occurring on business premises rather than professional service mistakes. Many states require or strongly encourage licensees to maintain E&O coverage precisely because of the professional liability risks inherent in representing clients.86. A consumer wins a court judgment against a licensee for fraud in a real estate transaction, but the licensee has no assets and cannot pay. What resource might allow the consumer to recover some of the unpaid judgment?
- A. The multiple listing service's insurance pool, which covers unrelated member disputes
- B. The licensee's continuing education provider, which bears no financial responsibility
- C. Automatic reimbursement from the licensing exam vendor
- D. A state real estate recovery fund, which can reimburse certain victims when a judgment against a licensee goes unpaid
Show answer & explanation
Answer: D
Many states maintain a real estate recovery fund, financed through licensee fees, that can compensate consumers who obtain an otherwise uncollectible court judgment against a licensee for certain violations, subject to statutory limits and conditions, providing a limited safety net beyond simply pursuing the licensee personally. This fund is unrelated to unrelated entities like exam vendors or MLS insurance pools, which have no role in satisfying such judgments.87. A listing broker receives several offers on a property at the same time. Absent a specific instruction from the seller, what is the broker's general obligation regarding these offers?
- A. To automatically discard all but the highest-priced offer without seller involvement
- B. To present only offers from buyers represented by the same brokerage
- C. To present all offers to the seller promptly, since sellers are generally entitled to review every offer received unless the seller has directed otherwise
- D. To wait until after closing on one offer to inform the seller other offers existed
Show answer & explanation
Answer: C
Listing brokers generally have a duty to present all offers to the seller in a timely manner so the seller, as principal, can make an informed decision about which offer, if any, to accept, unless the seller has given specific written instructions otherwise, such as asking not to be presented offers below a certain price. Selectively withholding competing offers or delaying disclosure would undermine the seller's ability to evaluate all options and could violate the broker's fiduciary duties.88. A buyer and seller both submit conflicting written demands to the broker holding earnest money in escrow after a contract dispute arises, each claiming entitlement to the full deposit. What is a broker's appropriate course of action when it cannot determine who is entitled to the funds?
- A. Disburse the funds immediately to whichever party demanded them first
- B. Seek resolution through an interpleader action or another recognized dispute process rather than unilaterally disbursing the funds to either party
- C. Keep the funds permanently in the brokerage's operating account until the broker decides who deserves them
- D. Disburse the funds to the party the broker personally believes is more trustworthy
Show answer & explanation
Answer: B
When a broker holding escrowed funds receives conflicting claims and cannot determine which party is legally entitled to the money, the broker generally should not unilaterally decide the dispute but should instead pursue a formal process such as an interpleader action, seeking guidance from the licensing authority, or another recognized method to have a neutral party resolve the conflict. Disbursing the funds based on personal judgment or timing of the demand risks liability for wrongful disbursement.89. A salesperson decides to leave one brokerage to affiliate with a different brokerage. Under general license law procedure, what must generally happen with the salesperson's license during this transition?
- A. The change of affiliation must be properly processed with the licensing authority, and the salesperson generally cannot practice under the new brokerage until the transfer is completed
- B. The salesperson may continue working under the former broker's authority indefinitely without any notice to the licensing authority
- C. The salesperson's license is permanently revoked whenever a change of brokerage occurs
- D. No notice or paperwork is ever required for a change of sponsoring broker
Show answer & explanation
Answer: A
When a salesperson moves between brokerages, license law generally requires the change to be formally processed with the state licensing authority, and the salesperson typically may not conduct licensed activity under the new brokerage's name until that transfer is properly completed, protecting consumers and maintaining accurate license records regarding which broker supervises the salesperson. Simply continuing to work informally without notifying the licensing authority is not a compliant approach.90. A broker deposits a buyer's earnest money into the same operating account the brokerage uses to pay its own office rent and expenses. What licensing violation does this describe?
- A. Commingling of client funds with the broker's own funds, a violation of trust account requirements
- B. Conversion, since the broker has already spent the buyer's money
- C. Steering, since the broker is misusing client funds to influence a transaction
- D. Blockbusting, since client funds were mixed with brokerage funds
Show answer & explanation
Answer: A
Commingling occurs when a licensee mixes client or customer trust funds, such as earnest money, together with the broker's own personal or operating funds instead of keeping them in a separate, dedicated trust or escrow account, and it is a serious license law violation even if the broker never actually spends the client's money. Conversion is a related but more severe violation involving the actual unauthorized use or theft of client funds, which is not established simply by the deposit described here.91. A licensing investigation finds that a broker repeatedly commingled client trust funds with personal funds and altered a client's signature on a disclosure form. What is the likely range of consequences the licensing commission could impose?
- A. No consequence, since commingling alone is only a civil matter between the broker and client
- B. A warning letter only, since first-time violations cannot result in license action under any circumstances
- C. Disciplinary action up to and including license suspension or revocation, since both commingling and forging a signature are serious violations of license law
- D. Automatic criminal imprisonment with no administrative hearing process
Show answer & explanation
Answer: C
Licensing commissions have authority to discipline licensees for violations such as commingling trust funds and forging a client's signature, with available sanctions ranging from reprimands and fines up to license suspension or revocation depending on the severity and pattern of the conduct, following an administrative hearing process. These are clearly not matters resolved with no consequence, and license discipline is an administrative process separate from any criminal charges that might also apply.92. A newly licensed salesperson affiliates with a brokerage to begin practicing real estate. Under general license law principles, who bears responsibility for supervising that salesperson's licensed activities?
- A. The state real estate commission directly supervises every individual salesperson's daily activity
- B. The sponsoring/supervising broker with whom the salesperson is affiliated
- C. No supervision is required once a salesperson passes the licensing exam
- D. Only the multiple listing service is responsible for monitoring salesperson conduct
Show answer & explanation
Answer: B
Real estate salespersons must be affiliated with and supervised by a licensed broker, who bears responsibility for reviewing the salesperson's transactions, contracts, and conduct to ensure compliance with license law, since salespersons cannot practice independently or without broker oversight. The state licensing commission sets and enforces the rules but does not supervise each individual transaction directly; that oversight role belongs to the sponsoring broker.93. A salesperson places an online advertisement for a listed property that includes the salesperson's personal cell number and photo but never mentions the brokerage's name at all. What licensing concern does this advertisement raise?
- A. It likely violates advertising rules requiring that the brokerage's name (or license identification) be clearly disclosed, since licensees generally cannot advertise as though operating independently of their broker
- B. No concern exists, since salespersons may advertise entirely independently of their broker's identity
- C. The concern only applies to print advertising, never to online listings
- D. The advertisement is fine as long as the property's price is accurate
Show answer & explanation
Answer: A
Advertising regulations typically require that a licensee's advertisement clearly disclose the affiliated brokerage's name, because salespersons act under a broker's supervision and license and cannot present themselves as operating independently; omitting the brokerage entirely, sometimes called a blind ad, is generally a violation regardless of the advertising medium. Accuracy of the listed price does not cure the separate problem of failing to identify the responsible brokerage.
Transfer of Title and Closing
7 questions94. A commercial tenant asks a lender for confirmation of the lease's terms and status as part of the landlord's refinancing. What document serves this purpose?
- A. An estoppel certificate, in which the tenant confirms lease terms and the absence of landlord defaults
- B. A subordination agreement
- C. An attornment clause
- D. A memorandum of lease
Show answer & explanation
Answer: A
An estoppel certificate is the tenant's statement of rent, term, deposits and the absence of claims, which the lender relies on and which estops the tenant from later asserting inconsistent facts. Subordination sets lien priority relative to the lease and attornment obligates the tenant to recognize a successor landlord.95. A property sells for 265,000 dollars in a Pennsylvania municipality where the combined state and local realty transfer tax totals 2 percent, customarily split evenly between buyer and seller. What does each party pay?
- A. 2,650 dollars each
- B. 5,300 dollars each
- C. 1,325 dollars each
- D. 530 dollars each
Show answer & explanation
Answer: A
The total tax is 265,000 times 0.02, or 5,300 dollars, and an even split leaves each party paying 2,650 dollars. Pennsylvania imposes a one percent state tax with local jurisdictions adding their own, so the combined rate varies by municipality and the customary allocation is a matter of local practice and contract.96. A buyer and seller sign an installment land contract in which the seller retains title until the price is paid. What interest does the buyer hold?
- A. Equitable title, with possession and the right to legal title upon full performance
- B. Legal title, with the seller holding equitable title
- C. A leasehold estate only
- D. No interest until the final payment
Show answer & explanation
Answer: A
Under a land contract the vendee takes equitable title and possession while the vendor retains legal title as security, delivering the deed on completion. The arrangement carries risk for the buyer, who may accumulate substantial payments without record title, so recording the contract where permitted protects that interest.97. A settlement agent handling a closing requires that funds being disbursed at settlement, such as loan proceeds and buyer down payment funds, be in the form of wire transfers or certified/cashier's checks rather than a buyer's personal check. What principle does this requirement reflect?
- A. The truth in lending requirement, which governs credit cost disclosures
- B. The statute of frauds, which requires real estate contracts to be in writing
- C. The good funds requirement, which ensures that money disbursed at closing is actually collected and available rather than subject to a later bounced check
- D. The doctrine of equitable conversion, which shifts risk of loss to the buyer
Show answer & explanation
Answer: C
Good funds laws and settlement practices require that money being disbursed at closing consist of certified, guaranteed, or wired funds rather than an uncertified personal check, protecting all parties from a closing being unwound later if a check fails to clear after funds have already been distributed. This requirement is unrelated to truth in lending disclosures, which instead govern how lenders present the cost of credit to borrowers.98. An investor sells a rental property and, following specific federal tax rules, uses the proceeds to acquire another like-kind investment property in order to defer paying capital gains tax on the sale. What is this type of transaction commonly called?
- A. A 1031 (like-kind) exchange
- B. A short sale
- C. A deed in lieu of foreclosure transaction
- D. A wraparound refinance
Show answer & explanation
Answer: A
A 1031 exchange, named for the relevant section of the federal tax code, allows an investor to defer paying capital gains tax on the sale of investment or business property by reinvesting the proceeds into another like-kind property that meets specific timing and identification requirements, rather than recognizing the gain immediately. This is unrelated to a short sale, which involves selling for less than the amount owed on the mortgage, typically due to financial distress rather than tax planning.99. A buyer records their deed in the county land records shortly after closing. What legal effect does this recording generally have on later parties who might deal with the property?
- A. It has no legal effect at all, since only actual notice communicated directly to a party matters
- B. It automatically insures the buyer's title against all possible future defects
- C. It transfers title itself, meaning the deed has no legal effect until it is recorded
- D. It gives constructive notice to the world of the buyer's interest, meaning later parties are legally presumed to know about it even without actually checking the records
Show answer & explanation
Answer: D
Recording a deed in the public land records provides constructive notice, meaning that anyone dealing with the property afterward is legally deemed to know about the recorded interest whether or not they actually searched the records, which protects the recorded owner's priority against later claimants. Recording is not what transfers title, since that happens upon valid delivery and acceptance of the deed, and it does not itself provide title insurance protection.100. Before closing, a title company examines the public records to trace the ownership history of a property back through prior deeds, mortgages, and other recorded documents affecting the parcel. What is this examination process called?
- A. A physical survey of the property's boundaries
- B. A title search (examination of the chain of title)
- C. A home inspection
- D. An appraisal of market value
Show answer & explanation
Answer: B
A title search involves examining the public land records to trace a property's chain of ownership and identify any liens, encumbrances, or defects that could affect clear title before closing, which is a distinct process from a boundary survey, which locates physical property lines, or a home inspection, which evaluates the physical condition of the structure. Title insurance is typically issued based on the results of this search.
Showing 100 of 126 questions.
Key facts: Pennsylvania Real Estate Salesperson exam
- Questions
- 120
- Time limit
- 3h 30m
- Passing score
- 75% on each portion (80 national + 40 state)
- Exam fee
- $52
- Governing body
- Pennsylvania Real Estate Commission
This free Pennsylvania Real Estate Salesperson practice test has 126 original questions written from Pennsylvania Real Estate Commission's official sources, last checked against them on August 6, 2026, 100 of them listed on this page and the rest loaded by the drill. Every question shows a worked explanation, and nothing here requires a signup.
The questions are grouped under six outline areas: Property Ownership and Land Use, Valuation and Market Analysis, Contracts and Agency, Financing, State License Law and Practice and Transfer of Title and Closing.
As of 2026, the Pennsylvania Real Estate Salesperson exam fee is $52 (national portion; state portion $49).
Questions by topic in the Pennsylvania Real Estate Salesperson practice bank
Counts describe our practice categories, which may subdivide official domains. They are not the exam’s official topic weights.
About these practice questions
These are original study questions written from published exam objectives—not recalled, copied, or confidential live-exam items. Always confirm current coverage with the official sources linked on this page.
Exam format and study resources
Real Estate Salesperson licensing
In the same family
- Real Estate Salesperson Exam
- California Real Estate Salesperson Exam
- New York Real Estate Salesperson Exam
- Michigan Real Estate Salesperson Exam
- Maryland Real Estate Salesperson Exam
- New Jersey Real Estate Salesperson Exam
- Utah Real Estate Sales Agent Exam
- Massachusetts Real Estate Salesperson Exam
- Connecticut Real Estate Salesperson Exam
- Nevada Real Estate Salesperson Exam
- Oklahoma Provisional Sales Associate Exam
- Washington, D.C. Real Estate Salesperson Exam
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Official sources
The official documents our facts about this exam are taken from.
- Pennsylvania Real Estate Candidate HandbookPearson VUE / Pennsylvania Real Estate Commissionpearsonvue.comeffective March 1, 2026
- Real Estate Salesperson Licensure Requirements SnapshotPennsylvania Department of Statepa.gov
- Occupational Employment and Wage Statistics, May 2025 — Real Estate Sales Agents (SOC 41-9022)U.S. Bureau of Labor Statisticsbls.goveffective May 31, 2025
- Real Estate Commission Licensure GuidePennsylvania Department of Statepa.gov
Last verified against Pennsylvania Department of State's official sources:
Frequently asked questions
How is the Pennsylvania salesperson exam structured, and what score do I need?
The Pennsylvania Real Estate Salesperson Exam is split into two separately scored portions. The National portion has 80 questions with a 150-minute time limit, and the PA State-specific portion has 40 questions with a 60-minute limit. You must reach 75 percent on each portion — passing one does not carry over to the other. Because the two portions are scored independently, budget your practice time proportionally: the National portion is twice as long and covers the general principles (agency, contracts, deeds, finance, fair housing, math) that make up the bulk of the questions you'll face. Time-wise you get roughly 1.9 minutes per National question and 1.5 minutes per State question, so both portions reward recognizing question types quickly rather than deriving everything from scratch.
What do I have to complete before I can sit for the exam, and what does the whole process cost?
Pennsylvania requires 75 hours (5 credits) of pre-license education, and that coursework must have been completed within 5 years to count. You must also be at least 18 years of age. On fees, the exam itself is billed per portion: 52 dollars for the National portion and 49 dollars for the PA State-specific portion. After you pass, the initial license fee is 97 dollars. If you have to retake only one portion, you pay only that portion's fee, which is one practical reason to be sure both are solid before you schedule. The application also requires criminal history documentation covering the past 5 years, and that report must be dated within 180 days — so pull it close to when you actually file rather than months ahead.
Which National-portion topics should I focus on, and how should I drill them?
Drill three clusters.<br><br>Agency duties. The six fiduciary duties are captured by OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care. Questions usually test the edges rather than the list — for example, that confidentiality survives termination of the agency and still bars you from revealing the seller's lowest acceptable price, that accounting prohibits commingling client funds with your own, and that dual agency is legal only with the informed written consent of both parties, where the dual agent cannot advocate for one party against the other. A related trap is the client/customer line: customers are owed only honesty, fair dealing, and disclosure of known material defects — not fiduciary duties.<br><br>Listing types. Under an exclusive-right-to-sell listing the broker is paid if the property sells during the term regardless of who procures the buyer, including the seller. Under an exclusive-agency listing the broker earns nothing if the seller personally finds the buyer. An open listing is non-exclusive: only the procuring broker is paid, and the seller may list with multiple brokers. Drill these by asking one question of every fact pattern — who found the buyer, and does that matter under this listing type?<br><br>Deeds. Rank them by protection: a general warranty deed warrants against all title defects arising at any time, even before the grantor owned the property; a special warranty deed warrants only against defects arising during the grantor's ownership; a quitclaim deed conveys only whatever interest the grantor may have, with no warranties, and is used to clear clouds on title. Also remember that a deed must be delivered to and accepted by the grantee to transfer title — execution alone is not enough.
What math do I actually need, and are there shortcuts for the timed portions?
The recurring calculations are commission, LTV, and proration, plus two valuation ratios.<br><br>Commission is sale price multiplied by the commission rate — a 300,000 dollar sale at six percent produces an 18,000 dollar commission, which is then split between the listing and selling brokers per their agreement. Read carefully for whether the question wants the total commission or one broker's share.<br><br>LTV is the loan amount divided by the lesser of appraised value or purchase price: a 240,000 dollar loan on a 300,000 dollar property is 80 percent LTV, with the down payment making up the remaining 20 percent. That 20 percent figure links directly to a favorite exam fact — PMI is generally required on conventional loans when the down payment is less than 20 percent — so an 80 percent LTV question and a PMI question are often the same question in disguise. When the appraisal comes in below the contract price, use the appraised value as the denominator.<br><br>Proration divides shared expenses such as taxes, rent, or interest between buyer and seller based on each party's ownership portion, with the closing date as the dividing point. Many exams use a 360-day banker's year with 30-day months, so the daily rate is the annual amount divided by 360. Then apply direction: prepaid expenses mean the buyer reimburses the seller for the unused portion; expenses paid in arrears mean the seller credits the buyer for the seller's share. Getting the direction right is worth more points than arithmetic precision, since a sign error turns a credit into a debit.<br><br>Two ratios round it out: the gross rent multiplier is sale price divided by monthly gross rent, and net operating income divided by the capitalization rate yields the value of an income property. Note that these run in opposite directions — GRM multiplies up from rent, cap rate divides down from income — which is a common mix-up. One more number worth memorizing: one discount point equals one percent of the loan amount, and points are prepaid interest paid at closing to lower the note rate.