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Free Michigan Real Estate Broker Examination Practice Questions

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Sample Practice Questions

Try these 10 sample questions from the Michigan Real Estate Broker Examination practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

  1. 1The seller permanently fastened custom shelving to the living-room wall and did not reserve it in the contract. How should the broker classify the shelving for the conveyance?

    1. A. Fixture
    2. B. Chattel
    3. C. Trade fixture
    4. D. Emblement

    Answer: A

    Explanation: "Fixtures are items of personal property which are attached to the land in such a manner as to be considered part" The seller-owned shelving is permanently attached to the home and was not reserved; it is a fixture rather than movable chattel, a tenant's trade fixture, or an emblement.

    Reference: California Department of Real Estate Reference Book, Chapter 4 — Chapter 4, Fixtures, pp. 57-58

  2. 2An analyst values a typical house by examining recent sales of similar nearby houses and adjusting for differences. Which valuation approach is the analyst using?

    1. A. Cost approach
    2. B. Income capitalization approach
    3. C. Sales comparison approach
    4. D. Gross rent multiplier approach

    Answer: C

    Explanation: "Sales comparison approach. Recent sales and listings of similar type properties in the area are analyzed to" The analyst uses comparable market transactions, which defines the sales comparison approach.

    Reference: ca-dre-ref15.pdf — Chapter 15, Sales Comparison Approach

  3. 3A buyer chooses a mortgage with a fixed introductory period followed by rate adjustments tied to market conditions. What can happen after the introductory period?

    1. A. The rate can reset periodically as market conditions change
    2. B. The rate remains at the introductory level until the loan is paid
    3. C. The rate changes only if the borrower refinances the loan
    4. D. The rate resets once and then becomes fixed for the remaining term

    Answer: A

    Explanation: "During the second period, your rate goes up and down regularly based on market changes." The later ARM period can involve repeated market-linked adjustments; the other patterns describe fixed or differently structured rate arrangements.

    Reference: Consumer Financial Protection Bureau, Types of Mortgage Loans — Adjustable-Rate Mortgages, two periods

  4. 4A seller's agent learns the seller's confidential minimum price. A licensee in the same office is not an agent of that seller and asks for it. What should the seller's agent do absent permission or legal authorization?

    1. A. Share it because both licensees work in the same office
    2. B. Share it only after the other licensee submits an offer
    3. C. Keep it confidential from that nonagent licensee
    4. D. Give it to the other licensee once agency disclosure is signed

    Answer: C

    Explanation: "including the duty not to disclose confidential information to any licensee who is not an agent of the client." The office connection alone does not make the other licensee the client's agent; client permission or law would be needed to disclose.

    Reference: Michigan Occupational Code, Article 25 — MCL 339.2512d(2)(g)

  5. 5For a property-management account, who may be authorized to sign checks besides the broker?

    1. A. A tenant selected by the property owner
    2. B. A maintenance vendor paid from the account
    3. C. A salesperson designated by the property owner
    4. D. An employee designated by the property-management broker

    Answer: D

    Explanation: The statute allows "A real estate broker or any designated employee of the real estate broker engaged in property management" to be a signatory.

    Reference: 299-1980-25 — MCL 339.2512c(4)

  6. 6A buyer asks whether an owner's title insurance policy can address a covered defect that does not appear in public records. Which statement best describes the policy's potential protection?

    1. A. It may insure covered off-record risks, depending on the policy terms
    2. B. It insures only defects identified during the public-record title search
    3. C. It insures only recorded defects omitted from the seller's deed
    4. D. It insures off-record defects only after they later appear in public records

    Answer: A

    Explanation: "it alone extends protection against many nonrecorded types of risks, depending on the type of policy purchased." A title policy may reach covered off-record risks; it is not confined to recorded defects or conditioned on later recording.

    Reference: California Department of Real Estate Reference Book, Chapter 5 — Chapter 5, Title Insurance

  7. 7What is the county real estate transfer-tax rate in a county with fewer than 2,000,000 people?

    1. A. $3.75 per $500
    2. B. $1.10 per $500
    3. C. $0.75 per $500
    4. D. $0.55 per $500

    Answer: D

    Explanation: MCL 207.504 sets the county tax at "55 cents in a county with a population of less than 2,000,000."

    Reference: Act 134 of 1966 — MCL 207.504

  8. 8A property owner repeatedly sells property as a principal. Which activity triggers broker licensure based on transaction count?

    1. A. More than 3 sales in 12 months
    2. B. More than 4 sales in 24 months
    3. C. More than 10 sales in 12 months
    4. D. More than 5 sales in 12 months

    Answer: D

    Explanation: A principal vocation includes "Engaging in more than 5 real estate sales in any 12-month period."

    Reference: 299-1980-25 — MCL 339.2502b(1)(a)

  9. 9What identifying information must every Michigan broker advertisement include?

    1. A. The broker's business name without contact information
    2. B. The broker's telephone number without a business name
    3. C. The broker's business name and telephone number or street address
    4. D. The salesperson's name and individual license number

    Answer: C

    Explanation: The advertisement must include "the broker's name or the name under which the broker is conducting business" and the broker's phone or street address.

    Reference: 299-1980-25 — MCL 339.2512e(1)

  10. 10A seller conveys an unplatted parcel in an unincorporated area that abuts an unaccepted private road. What separate disclosure is required?

    1. A. The road is public and maintained by the county road commission
    2. B. The road is private and need not be maintained by the county road commission
    3. C. The road is private but maintained by the county road commission
    4. D. The road becomes public when the conveyance instrument is recorded

    Answer: B

    Explanation: MCL 560.261 requires notice that the road "is private and is not required to be maintained by the board of county road commissioners." The seller must disclose the road's private, non-county-maintained status.

    Reference: Act 288 of 1967 — MCL 560.261

Topics in this practice bank

These topics describe the available practice for Michigan Real Estate Broker Examination. Review the examination outline and its sources for scope and allocation details.

  • I. Property Ownership (Broker 10% of general-practice outline)
    • A. Real and personal property; conveyances
    • B. Land characteristics and legal descriptions
    • 1. Metes and bounds method of legal property description
    • 2. Lot and block (recorded plat) method of legal property description
    • 3. Government survey (rectangular survey) method of legal property description
    • 4. Measuring structures (linear and square footage)
    • 5. Land measurement
    • C. Encumbrances and effects on property ownership
    • 1. Types of liens and their effect on the title and value of real property
    • 2. Easements, rights of way and licenses, including their effect on the title, value and use of real property
    • 3. Encroachments and their effect on the title, value and use of real property
    • 4. Potential encumbrances on title, such as probate, leases, or adverse possession
    • 5. Property rights that may be conveyed separately from use of the land surface, such as mineral and other subsurface rights, air rights, or water rights
    • D. Types of ownership
    • 1. Ownership in severalty/sole ownership
    • 2. Implications of ownership as tenants in common
    • 3. Implications of ownership in joint tenancy
    • 4. Forms of common-interest ownership, such as Timeshares, Condominiums and Co-ops
    • 5. Property ownership held in a trust or by an estate
    • 6. Ownership by business entities
    • 7. Life Estate ownership
  • II. Land use Controls (Broker 5% of general-practice outline)
    • A. Government rights in land
    • 1. Government rights to impose property taxes and special assessments
    • 2. Government rights to acquire land through eminent domain, condemnation and escheat
    • B. Government controls on land use
    • C. Private controls
    • 1. Deed conditions or restrictions on property use
    • 2. Subdivision covenants, conditions and restrictions (CC&Rs) on property use
    • 3. Condominium and owners’ associations regulations or bylaws on property use
  • III. Valuation (Broker 8% of general-practice outline)
    • A. Appraisals
    • 1. Appraisals for valuation of real property
    • 2. Situations which require appraisal by a licensed or certified appraiser and brokerage-related actions that constitute unauthorized appraisal practice
    • 3. General steps in appraisal process
    • B. Estimating Value
    • 1. Economic principles and property characteristics that affect value of real property
    • 2. Sales or market comparison approach to property valuation and appropriate uses
    • 3. Cost approach to property valuation and appropriate uses
    • 4. Income analysis approach to property valuation and appropriate uses
    • C. Comparative Market Analysis (CMA)
    • 1. Competitive/Comparative Market Analysis (CMA), BPO or equivalent
    • 2. Automated Valuation Method (AVM), appraisal valuation and Comparative Market Analysis (CMA)
  • IV. Financing (Broker 9% of general-practice outline)
    • A. Basic Concepts and Terminology
    • 1. Loan financing (for example, points, LTV, PMI, interest, PITI)
    • 2. General underwriting process (e.g., debt ratios, credit scoring and history)
    • 3. Standard mortgage/deed of trust clauses and conditions
    • 4. Essential elements of a promissory note
    • B. Types of Loans
    • 1. Conventional loans
    • 2. Amortized loans, partially amortized (balloon) loans, interest-only loans
    • 3. Adjustable-rate mortgage (ARM) loans
    • 4. Government Loans
    • a. FHA insured loans
    • b. VA guaranteed loans
    • c. USDA/Rural Development loan programs
    • 5. Owner financing (for example, installment or land contract/contract for deed)
    • 6. Reverse-mortgage loans
    • 7. Home equity loans and lines of credit
    • 8. Construction loans
    • 9. Rehab loans
    • 10. Bridge loans
    • C. Financing and Lending
    • 1. Real Estate Settlement Procedures Act (RESPA), including kickbacks
    • 2. Truth-in-Lending Act (Regulation Z), including advertising
    • 3. Requirements and time frames of TRID (TILARESPA Integrated Disclosures)
    • 4. Equal Credit Opportunity Act
    • 5. Lending Process (application through loan closing)
    • 6. Risky loan features, such as prepayment penalties and balloon payments
  • V. Contracts (Broker 19% of general-practice outline)
    • A. General Contract Law
    • 1. General principles of contract law
    • 2. Elements necessary for a contract to be valid
    • 3. Effect of the Statute of Frauds
    • 4. Offer and a contract
    • 5. Enforceability of contracts
    • 6. Void, voidable and unenforceable contracts
    • 7. Bilateral and unilateral contracts
    • 8. Nature and use of option agreements
    • 9. Notice, delivery, acceptance and execution of contracts
    • 10. Appropriate use, risks, and advantages of electronic signatures and paperless transactions
    • 11. Rights and obligations of the parties to a contract
    • 12. Possible remedies for breach or nonperformance of contract
    • 13. Termination, rescission and cancellation of contracts
    • B. Purchase and Lease Contracts
    • 1. Addenda and amendments to contracts
    • 2. Purchase agreements
    • 3. Contract contingencies and methods for satisfying them
    • 4. Leases and rental agreements
    • 5. Lease-purchase agreements
    • 6. Types of leases
    • C. Proper handling of multiple offers and counteroffers
  • VI. Agency (Broker 13% of general-practice outline)
    • A. Agency and non-agency relationships
    • 1. Agency relationships and how they are established
    • 2. Types of listing contracts
    • 3. Buyer brokerage/tenant representation contracts
    • 4. Other brokerage relationships, including transaction brokers and facilitators
    • 5. Powers of attorney and other assignments of authority
    • 6. Conditions for termination of agency or brokerage service agreements
    • B. Agent Duties
    • 1. Fiduciary duties of agents
    • 2. Agent's duties to customers/non-clients, including honesty and good faith
    • C. Agency Disclosures
    • 1. Disclosure of agency/representation
    • 2. Disclosure of possible conflict of interest or selfinterest
  • VII. Property Disclosures (Broker 7% of general-practice outline)
    • A. Property Condition
    • 1. Seller's property condition disclosure requirements
    • 2. Property conditions that may warrant inspections or a survey
    • 3. Red flags that warrant investigation of public or private land use controls
    • B. Environmental and Government Disclosures
    • 1. Environmental issues requiring disclosure
    • 2. Federal, state, or local disclosure requirements regarding the property
    • C. Disclosure of material facts and material defects
  • VIII. Property Management (Broker 5% of general-practice outline)
    • A. Duties and Responsibilities
    • 1. Procurement and qualification of prospective tenants
    • 2. Fair housing and ADA compliance specific to property management
    • 3. How to complete a market analysis to identify factors in setting rents or lease rates
    • 4. Property manager responsibility for maintenance, improvements, reporting and risk management (BROKER ONLY)
    • 5. Handling landlord and tenant funds; trust accounts, reports and disbursements (BROKER ONLY)
    • 6. Provisions of property management contracts (BROKER ONLY)
    • B. Landlord and tenant rights and obligations
  • IX. Transfer of Title (Broker 6% of general-practice outline)
    • A. Types of deeds
    • B. Title Insurance and Searches
    • 1. Title insurance policies and title searches
    • 2. Potential title problems and resolutions
    • 3. Marketable and insurable title
    • C. Closing Process
    • 1. When transfer of ownership becomes effective
    • 2. Process and importance of recordation
    • 3. Settlement procedures (closing) and parties involved
    • 4. Home and new construction warranties
    • D. Special Processes
    • 1. Special issues in transferring foreclosed properties
    • 2. Special issues in short sale transactions
    • 3. Special issues in probate transactions
  • X. Practice of Real Estate (Broker 12% of general-practice outline)
    • A. Antidiscrimination
    • 1. Federal Fair Housing Act general principles and exemptions
    • 2. Protected classes under Federal Fair Housing Act
    • 3. Protections against discrimination based on gender identity and sexual orientation
    • 4. Prohibited conduct under Federal Fair Housing Act (Redlining, Blockbusting, Steering, Disparate Treatment)
    • 5. Fair housing advertising rules
    • 6. Americans with Disabilities Act (ADA) obligations pertaining to accessibility and reasonable accommodations
    • B. Legislation and Regulations
    • 1. Licensees’ status as employees or independent contractors
    • 2. Antitrust laws and types of violations, fines and penalties
    • 3. Do-Not-Call List rule compliance
    • 4. Proper use of Social Media and Internet communication and advertising
    • C. Duties and Responsibilities
    • 1. Protection of confidential personal information (written, verbal or electronic)
    • 2. Duties when handling funds of others in transactions
    • 3. Licensee responsibility for due diligence in real estate transactions
    • D. Supervisory Responsibilities (BROKER ONLY)
    • 1. Broker's supervisory responsibilities (licensees, teams and unlicensed assistants and employees) (BROKER ONLY)
    • 2. Broker relationship with licensees (employees or independent contractors and governing rules) (BROKER ONLY)
  • XI. Real Estate Calculations (Broker 6% of general-practice outline)
    • A. Calculations for Transactions
    • 1. Seller’s net proceeds
    • 2. Buyer funds needed at closing
    • 3. Real property tax and other prorations
    • 4. Real property transfer fees
    • 5. PITI (Principal, Interest, Taxes and Insurance) payments estimate given loan rate and term
    • B. General Concepts
    • 1. Equity
    • 2. Rate of return/Capitalization rate
    • 3. Loan-to-Value ratio
    • 4. Discount points and loan origination fees
  • Duties and Powers of the Department and the State Board of Real Estate (Broker-3 Items)
    • General powers
    • Investigations, conferences, hearings, and exemptions
    • Penalties
  • Licensing Requirements (Broker-4 Items)
    • Activities requiring a license and exemptions
    • Types of licenses
    • Eligibility for licensing
    • License renewal, including continuing education
    • Transfer or change in license
  • Statutory Requirements Governing the Activities of Licenses (Broker-15 Items)
    • Advertising
    • Commissions and Specific Services for Which Fees may be charged
    • Disclosure/conflict of interest
    • Handling of contracts, documents, listing and recommendations
    • Handling of monies and trust accounts
    • Place of business/branch office requirements (Broker Only)
    • Record keeping
    • Inducements
    • Alternative Dispute Resolution vs. Arbitration (Broker only)
    • No disclosure duty attaches to stigmatized property
    • Closing responsibilities
  • Contractual Relationships (Broker – 5 Items)
    • Agency relationships available in MI
    • Transaction coordinator
    • Designated agency
    • Dual agency
    • Agency disclosures
    • Broker/Salesperson relationships
    • Service Provision Agreements (Listings, Buyer Broker)
  • Additional State Topics (Broker-13 Items)
    • Land Division Act - Public Act 591 (Disclosure of Private Road)
    • Michigan fair housing
    • Elliott-Larsen Civil Rights Act
    • Persons with Disabilities Civil Rights Act
    • Landlord Tenant Relationship Act, Truth in Renting Act
    • Usury laws (Broker only)
    • State Transfer Tax
    • Michigan Condominium Act
    • Michigan State Housing Development Authority (MSHDA)
    • Uniform State Anti-trust Act
    • Michigan Right to Farm Act (Seller’s Disclosure Required)
    • Changes in the Land Contract Laws (Dodd Frank Law-federal)

How to use these free practice questions

Choose an answer, check the explanation, and review your progress by chapter. Practice questions and explanations are free to access without signing up.

These are independent study questions, not actual examination items. For examination requirements and official information, view Michigan Real Estate Broker Examination details.