NY Salesperson Practice Exam.
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Answer: B
Even a deed that satisfies every formal validity requirement — competent parties, words of conveyance, an adequate legal description, and the grantor's signature — must still be delivered to and accepted by the grantee to transfer title, so a deed sitting in the seller's drawer passes nothing. Choice C is the tempting confusion: recording serves to give constructive notice to the world and establish priority, but the transfer between the parties turns on delivery and acceptance, not recording.

Answer: C
Confidentiality is one of the OLD CAR fiduciary duties, and it survives termination of the agency, so the salesperson may not reveal the former client's lowest acceptable price even after the listing expired. Choice A is tempting because the agency itself has ended, but the duty of confidentiality specifically outlives the relationship. A seller's bottom line is confidential bargaining information, not a material fact requiring disclosure, and choice D overstates the rule — general price discussions are part of the job; it is the principal's confidential information that is off-limits.

Answer: A
The gross rent multiplier is the sale price divided by the monthly gross rent, so the comparable indicates a GRM of $180,000 ÷ $1,500 = 120. Applying that multiplier to the subject's rent gives 120 × $1,400 = $168,000. Choice B simply borrows the comparable's own price without adjusting for the subject's lower rent. Choice C comes from mixing an annualized multiplier with a monthly rent figure. Choice D confuses the GRM shortcut with the income capitalization approach — the GRM needs only sale price and gross rent, not NOI or a cap rate.

Answer: A
Commission is calculated by multiplying the sale price by the commission rate: $360,000 × 6 percent = $21,600 total, which is then split between the brokerages per their agreement. The listing brokerage's equal share is $10,800, and the salesperson's fifty percent of that share is $5,400. Choice B is the tempting stopping point — it is the brokerage's share before the salesperson split. Choice C is the undivided total commission, and choice D applies the fifty percent split one time too many.

Answer: A
Because the taxes were prepaid by the seller, the buyer must reimburse the seller for the unused portion — the part of the year the buyer will own the property. Under a banker's year, the daily rate is $2,400 ÷ 360 = $6.67 per day, and the buyer's period from October 1 through year end is three 30-day months, or 90 days: 90 × $6.67 ≈ $600, entered as a credit to the seller. Choice B reverses the direction — a credit to the buyer is correct only when an expense is paid in arrears, not prepaid. Choice C mistakenly uses the seller's own 270-day share ($1,800) instead of the unused 90-day portion.

Answer: A
An open listing is a non-exclusive agreement in which the seller may list with multiple brokers and only the broker who procures the buyer earns a commission. Choice D correctly names the listing type but misstates the payment rule — the procuring broker alone is paid; the commission is not shared among all hired brokers. Choices B and C accurately describe the exclusive listing types, but neither allows the seller to hire multiple brokerages and pay only the procuring one.

Answer: A
A valid real estate contract requires competent parties, mutual assent, consideration, a lawful object, and — for real estate — a written and signed agreement under the Statute of Frauds; the missing writing is what defeats this deal. Choice D is the tempting wrong answer: earnest money is merely a good-faith deposit and is not among the essential elements, so its absence is not what makes the agreement unenforceable.

Answer: D
Private mortgage insurance is generally required on conventional loans when the down payment is less than twenty percent of the purchase price. Here the $30,000 down payment is only 12.5 percent of the $240,000 price, so PMI would generally be required. Choice A has it backwards — FHA loans carry FHA insurance, while PMI is the conventional-loan requirement — and choice C is wrong because PMI turns on the down payment falling below the twenty percent threshold, not on the loan being conventional by itself.

Answer: B
A valid deed requires competent parties, words of conveyance, an adequate legal description, and the grantor's signature, and it must then be delivered to and accepted by the grantee to transfer title. What is required from the grantee is acceptance of the deed — not a signature. Choice B is the classic trap because both parties sign the purchase contract, so it feels natural that both would sign the deed; but only the grantor, who is giving up the interest, must sign the instrument of conveyance.

Answer: B
Proration divides shared items such as rent between buyer and seller based on each party's period of ownership, using the closing date as the dividing point. With a 30-day month, the daily rent is $1,200 ÷ 30 = $40. The buyer owns the property from the 10th through the 30th — 21 days — so the buyer's share of the month's rent is 21 × $40 = $840. Because the seller already collected the entire month's rent in advance, the seller is holding money attributable to the buyer's ownership period, so the closing statement credits the buyer $840 (with a matching debit to the seller). Choice C is the classic mistake of crediting the buyer the seller's 9-day share ($360) instead of the buyer's 21-day share, and choice A reverses the direction of the adjustment entirely.

Answer: A
Marketable title is title free from reasonable doubt or serious defects that a prudent buyer would accept. The tempting wrong answers describe related but distinct concepts: title insurance protects against losses from covered defects that existed but were unknown when the policy issued, and recording provides constructive notice of the grantee's interest — but neither insuring nor recording is what defines marketability, and the type of deed used to convey does not by itself make the underlying title free of defects.

Answer: B
First find the loan amount: with twenty percent down on a $300,000 purchase, the buyer finances $240,000 — an eighty percent loan-to-value. Discount points are prepaid interest, and one point equals one percent of the loan amount, so two points cost 2% of $240,000, or $4,800. The tempting $6,000 answer applies two percent to the $300,000 purchase price, but points are always calculated on the loan amount, not the price; $2,400 is the cost of only one point, and $3,000 is one percent of the purchase price.

Answer: A
The defining feature of an exclusive-right-to-sell listing is that the broker is paid on any sale during the listing period no matter who procures the buyer — even the seller. Choice C is the classic trap: it states the rule for an exclusive-agency listing, under which a seller who personally finds the buyer owes no commission. Choice B describes the payment logic of an open listing, where only the procuring broker is paid, and choice D invents a half-commission rule that is not a feature of this listing type.

Answer: A
Amortization repays principal and interest through scheduled payments, with early payments applied mostly to interest and later payments mostly to principal — so slow principal reduction early in the term is normal, not a servicing error (choice B). Choice C is tempting but wrong because a fixed-rate mortgage keeps the same rate for the entire term; a rate that changes based on an index plus a margin describes an adjustable-rate mortgage. Choice D reverses how amortization actually works.

Answer: B
A due-on-sale clause allows the lender to demand full repayment if the property is sold, which is precisely what prevents a buyer from assuming the loan without lender approval — so the 'automatic' assumption in choice A is exactly what the clause blocks. Choice C confuses the clause with discount points, which are prepaid interest paid at closing to lower the note rate, and choice D invents a rate conversion the clause does not cause.

Answer: D
A valid real estate contract requires competent parties, mutual assent, consideration, a lawful object, and — under the Statute of Frauds — a written and signed agreement. Earnest money is only a good-faith deposit held in the broker's trust account; it is not evidence of consideration by itself and is not a required element. It is the tempting answer to get wrong because nearly every real transaction includes a deposit, but a contract without one can still be fully valid.

Answer: A
Proration divides a shared expense between the parties using the closing date as the dividing point. Under a 360-day banker's year, the daily rate is $3,600 ÷ 360 = $10. The seller's period runs from January 1 through May 15, which is four 30-day months plus 15 days, or 135 days, so the seller's share is 135 × $10 = $1,350. Because the taxes are paid in arrears (the buyer will pay the full bill later), the seller credits the buyer for the seller's share — so choice B, which reverses the direction, is wrong; that direction applies to expenses the seller prepaid. Choice C is the buyer's remaining share of the year, and choice D splits the year in half while ignoring the actual closing date.

Answer: B
Value under the income approach equals net operating income divided by the capitalization rate, so a larger denominator produces a smaller value: $30,000 ÷ 0.06 = $500,000, but $30,000 ÷ 0.08 = $375,000. Choice C is the tempting distractor — unchanged income does not mean unchanged value, because the rate investors demand is the other half of the formula. Choice A reverses the relationship, and choice D confuses this approach with the gross rent multiplier, which is the tool that uses monthly gross rent.

Answer: A
LTV is the loan amount divided by the lesser of the appraised value or purchase price; here both figures are $220,000, so the maximum loan is 90 percent of $220,000, or $198,000. The down payment is the remaining percentage — 10 percent of $220,000, which is $22,000. Choice B is the maximum loan amount itself, not the down payment. Choice D applies the familiar twenty percent down figure, but this lender's maximum LTV requires only ten percent down. Choice C is a decimal error.

Answer: A
Agency may terminate by operation of law, such as the death or incapacity of either party, so the seller's death ended the agency automatically — the broker's marketing expenses and the remaining term do not keep it alive, which is why choice C fails. Because an agency is created by a principal authorizing the agent to act on the principal's behalf, the heir must grant that authorization herself through a new agreement; her mere wish that marketing continue (choice B) does not revive the old one, and no consent from the broker is needed for the termination (choice D).

Answer: A
Customers, unlike clients, are owed only honesty, fair dealing, and disclosure of known material defects — not fiduciary duties. Choice B is the common misconception that working directly with a licensee creates client-level duties; fiduciary duties such as loyalty, obedience, and confidentiality belong to the agency relationship with the client, and choice C is wrong because a licensee still owes customers baseline duties of honesty and disclosure.

Answer: D
In a lien-theory state the borrower retains title and the lender merely holds a lien, so the buyer's fear is misplaced. Choice A is the tempting overgeneralization: it is in title-theory states — not every state — that legal title is held by the lender or a trustee until the debt is repaid, and choice C fails for the mirror-image reason, since title-theory states do exist. Choice B is wrong because the promissory note is the repayment obligation; the mortgage or deed of trust is what pledges the property as security, and in a lien-theory state neither transfers title to the lender.

Answer: C
A VA loan is guaranteed by the Department of Veterans Affairs for eligible veterans, which is exactly the federal guarantee the veteran described. Choice B is the tempting wrong answer: an FHA loan is government-backed, but it is insured by the Federal Housing Administration, not guaranteed. A conventional loan is not insured or guaranteed by the federal government at all, and private mortgage insurance is private backing, not a federal guarantee.

Answer: C
A time-is-of-the-essence clause makes the contract's stated deadlines strictly enforceable, and failure to perform by the date constitutes a breach — so the seller may treat the buyer's missed closing date as a breach without more. Choice A is the tempting answer because parties often accommodate short delays, but the whole point of the clause is to eliminate that flexibility and make the date binding. Choice D wrongly adds a proof-of-loss precondition that the clause does not require: missing the deadline is itself the breach.

Answer: C
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: it sounds protective but warrants only against defects that arose during the grantor's own period of ownership, which fails this buyer's requirement. A quitclaim deed conveys whatever interest the grantor may have with no warranties at all, and a deed of trust is not a conveyance warranty — it is a financing instrument that pledges the property as security for a debt.

Answer: D
Title transfers when a valid deed is delivered to and accepted by the grantee — which happened here at closing — so the buyer owns the property and choices A and B are wrong: recording is not what conveys title. What recording does is provide constructive notice to the world of the grantee's interest and establish priority, generally protecting the first party to record. Choice C is the tempting overstatement: delivery and acceptance made the buyer the owner, but without the constructive notice that recording provides, the buyer's interest is invisible in the land records and vulnerable on priority against a later party who records first.

Answer: B
Whatever exemption a private seller might claim under other laws, the Civil Rights Act of 1866 separately prohibits all racial discrimination in property transactions and contains no exemptions, so refusing a buyer because of race is always illegal. Choice C is the tempting distractor, but the Mrs. Murphy exemption concerns owner-occupied buildings of four or fewer units and never applies to race in any event. Keeping the reason unwritten does not change the legality of the refusal.

Answer: C
A quitclaim deed conveys only whatever interest the grantor may have, with no warranties, and is commonly used to clear clouds on title. A general warranty deed is the tempting opposite: it offers the greatest protection because the grantor warrants against all title defects arising at any time, even before the grantor owned the property. A special warranty deed still makes a warranty, limited to the grantor's period of ownership, and a deed of trust is a financing instrument that pledges property as security for a note — it does not clear title.

Answer: B
Recording a deed in the county land records provides constructive notice to the world and establishes priority, generally protecting the first party to record — here, Buyer B. Choice A is the tempting trap: delivery and acceptance did transfer an interest to Buyer A first, but because that deed was never recorded, the land records gave the world no constructive notice of it, and the recording system generally resolves the competing claims in favor of the party who recorded first. Choice C inverts the rule — it is recording, not the unrecorded deed, that supplies constructive notice.

Answer: C
Under an exclusive-agency listing, the broker earns a commission unless the seller personally finds the buyer — and here the seller did, with no licensee involvement, so no commission is owed. Choice A is the classic trap: being paid whenever the property sells during the term, regardless of who procures the buyer, is the rule for an exclusive-right-to-sell listing, not an exclusive-agency listing. Choice D describes no listing type — under an exclusive-agency listing the broker is paid in every case except a sale the seller personally procures.

Answer: C
Advertising that indicates a preference or limitation based on a protected class — here, religion — is illegal even if the underlying transaction itself would be exempt, and the Mrs. Murphy exemption for owner-occupied buildings of four or fewer units cannot be combined with discriminatory advertising. Choice A is the tempting trap: the building may fit the exemption's profile, but the exemption is unavailable once discriminatory advertising is used. Choice D is wrong because the Civil Rights Act of 1866 prohibits racial discrimination in property transactions; a religious preference is instead reached by the Fair Housing Act's advertising rule.

Answer: A
Dual agency is legal only with the informed written consent of both parties, so consent from one party (B) or a late oral disclosure (C) is not enough. Choice D fails twice: consent is missing, and a dual agent cannot advocate for one party against the other, so negotiating hardest for the buyer would itself violate the dual agent's position.

Answer: C
Most financed purchases use a mortgage or deed of trust that pledges the property as security for repayment of the promissory note. Choice A is tempting because both documents are signed at closing, but the promissory note — not the mortgage — is the repayment obligation itself. Choice B describes a deed, the instrument that conveys title from a grantor to a grantee, and choice D describes a listing agreement.

Answer: B
OLD CAR stands for Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care and diligence — the fiduciary duties owed to clients. Honesty and fair dealing is tempting because licensees do owe it, but it is owed to customers (along with disclosure of known material defects); it is a general duty owed to everyone, not one of the fiduciary duties reserved for clients.

Answer: A
A listing agreement is an employment contract: the seller hires the broker to market the property and produce a ready, willing, and able buyer. It is not a contract of sale between buyer and seller, and it conveys no interest in the property itself — the instrument that conveys title from a grantor to a grantee is a deed, which makes choice C the tempting mix-up.

Answer: B
A time-is-of-the-essence clause makes stated deadlines strictly enforceable, so failing to perform by the closing date is a breach — there is no automatic grace period or extension. Choice D is the tempting escape hatch, but a financing contingency lets a buyer cancel and recover the deposit only when the condition is not met; here the loan was approved, so the financing condition was satisfied and the contingency offers no protection against missing the deadline.

Answer: C
Any change to the terms of an offer is a counteroffer, and a counteroffer rejects and terminates the original offer. Once the seller altered the closing date, the buyer's original offer was extinguished, so the seller could not later 'accept' it — forming a contract now requires new mutual assent from the buyer. Choice A is tempting because the seller ended up agreeing to the original terms, but there was no longer a live offer to accept. Choice D is wrong because earnest money is simply a good-faith deposit held in the broker's trust account; it is not one of the essential elements of a valid contract.

Answer: A
The gross rent multiplier is found by dividing the sale price by the monthly gross rent, giving investors a quick comparison tool. Choice B is the tempting trap because some multipliers are quoted on annual income, but the GRM as defined here uses monthly gross rent. Choice C inverts the formula, and choice D is the income capitalization formula used to estimate the value of an income property, not the GRM.

Answer: A
Commission equals the sale price multiplied by the commission rate: $450,000 × 0.05 = $22,500. Choice B results from a misplaced decimal (0.5 percent), choice C applies a 6 percent rate instead of the 5 percent stated in the agreement, and choice D applies 10 percent. Always use the rate actually stated in the listing agreement.

Answer: A
Net operating income divided by the capitalization rate yields the estimated value: $42,000 ÷ 0.07 = $600,000. Choice B multiplies NOI by the rate instead of dividing, which produces the annual return on a known value rather than the value itself. Choice C divides by 7 instead of 7 percent (a decimal error), and choice D multiplies NOI by 7. Remember the direction of the formula: income divided by rate equals value.

Answer: B
LTV is the loan amount divided by the lesser of the appraised value or the purchase price. Here the appraised value ($190,000) is less than the purchase price ($200,000), so LTV = $152,000 ÷ $190,000 = 80 percent. Choice A is the tempting trap: dividing by the $200,000 purchase price gives 76 percent, but the rule requires using the lesser figure. Choice C compares appraisal to price, and choice D reflects the down payment percentage rather than the loan-to-value ratio.

Answer: A
An agency relationship arises when a principal (the client) authorizes an agent (the licensee) to act on the principal's behalf in dealings with third parties. Choice C is the tempting trap: compensation does not define agency — it is the principal's authorization, not the source of payment or the act of showing homes, that creates the relationship.

Answer: B
A special warranty deed warrants only against defects that arose during the grantor's period of ownership, so a defect created before the grantor acquired the property falls outside the warranty. Choice A is the classic trap: it describes a general warranty deed, which warrants against all title defects arising at any time, even before the grantor owned the property. Choice D confuses the special warranty deed with a quitclaim deed, which is the deed that conveys with no warranties, and choice C is wrong because title insurance is a separate protection that does not create deed liability for the grantor.

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 — it looks backward at the state of title as of the policy date. The tempting wrong answer is B: a defect that first arises after issuance did not exist when the policy was issued, so it falls outside that protection. Market value declines are not title defects at all, and the fact that early amortized payments go mostly to interest is simply how scheduled loan repayment works, not an insurable title loss.

Answer: B
The seven federally protected classes under the Fair Housing Act are race, color, religion, national origin, sex, familial status, and disability. Familial status — which protects households with children under eighteen and pregnant persons — is the only listed option among them. Marital status is the tempting wrong answer because it sounds similar, but it is not one of the seven federal classes; familial status concerns children in the household, not whether a person is married.

Answer: A
Because net operating income divided by the capitalization rate yields value, the rate implied by an actual sale is found by dividing NOI by the sale price: $40,000 ÷ $500,000 = 0.08, or 8 percent. Choice B is the tempting reversal — dividing price by NOI ($500,000 ÷ $40,000 = 12.5) produces a multiplier, not a rate. Choices C and D are decimal-conversion errors when turning 0.08 into a percentage.

Answer: A
Proration divides shared expenses such as taxes, rent, or interest between the buyer and the seller based on the portion of the period each party owns the property, and the closing date is the dividing point. Choice B is tempting because proration does 'split' a cost, but the split follows each party's time of ownership, not an automatic 50/50 division. Choice C uses the wrong date — the contract date has no role in proration — and choice D ignores that the buyer bears the expense for the portion of the period after closing.

Answer: A
Financing, inspection, and appraisal contingencies give the buyer the right to cancel and recover the deposit when the stated condition is not met — here, the loan denial triggered exactly that right, so the seller has no claim to the funds. Choice B reflects the misconception that a seller automatically keeps the deposit whenever a sale fails; that is not the case when a contingency excuses the buyer. The earnest money is a good-faith deposit held in the broker's trust account in the meantime, not the broker's compensation.

Answer: C
The duty of loyalty requires the agent to place the principal's interests above the agent's own and to avoid conflicts of interest such as undisclosed self-dealing — which is exactly what secretly buying the client's property through a relative is. Accounting is the tempting wrong answer, but that duty concerns safeguarding money and property entrusted to the agent, which is not what this scenario involves; nothing here concerns entrusted funds, instructions (obedience), or the client's confidential information.

Answer: A
Accounting requires the agent to safeguard money entrusted to the agent and prohibits commingling client funds with the agent's own funds; earnest money belongs in the broker's trust account. Mixing the deposit into the operating account is commingling even when it is meant to be brief, because the prohibition contains no exception for temporary convenience. Loyalty is the tempting distractor, but loyalty concerns placing the principal's interests above the agent's own and avoiding conflicts of interest — the specific duty governing the handling of entrusted funds is accounting.

Answer: A
A deed is the written instrument that conveys title to real property from a grantor to a grantee — it is the document of transfer itself. The promissory note is the buyer's promise to repay the loan, and the mortgage (or deed of trust) merely pledges the property as security for that repayment; neither one transfers ownership. The title insurance policy is also tempting because it concerns title, but it only protects the insured against losses from covered title defects — it does not convey anything.

Answer: D
An adjustable-rate mortgage has a rate that changes periodically based on an index plus a margin — the adjustment is tied to a published index, not to the lender's whim or the borrower's payment record. Choice B describes a fixed-rate mortgage, which keeps the same interest rate for the entire term; that is the tempting mix-up because it is the other basic rate structure.

Answer: C
Steering is channeling buyers toward or away from neighborhoods based on a protected class, and national origin is one of the seven federally protected classes — so limiting the showings this way is steering regardless of the salesperson's motives, which makes choice D the tempting trap. Blockbusting is different: it means inducing owners to sell by suggesting that people of a protected class are moving in. Redlining is denying loans or insurance in certain areas based on protected characteristics.