Free Real Estate Salesperson Examination — National Portion (Real Estate Principles and Practices) Practice Questions

Sample Practice Questions

Try these 10 sample questions from the Real Estate Salesperson Examination — National Portion (Real Estate Principles and Practices) practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1A buyer is purchasing a parcel on which the seller's manufactured home sits on a permanent foundation and has been permanently affixed to the land. The buyer's lender asks the listing agent how the home relates to the mortgage being placed on the parcel. How is a manufactured home that is permanently affixed to the land generally treated?

   1. A. As movable personal property that can secure only a separate chattel loan
   2. B. As a fixture that serves as collateral for any mortgage on the property
   3. C. As a trade fixture that the seller may remove before closing at will
   4. D. As a leasehold improvement owned separately from the land beneath it

   Answer: B

   Explanation: HUD's housing counselor glossary defines a fixture as "A physical property permanently attached to real property" and states: "If a manufactured home is permanently affixed to the land, it’s generally considered a fixture, serving as collateral for any mortgage on the property." Because this home is permanently affixed, it is generally treated as a fixture that is part of the mortgage collateral. Chattel financing is used when the home secures the loan without the land, and a trade fixture is equipment a business tenant installs, so neither describes this home.

   Reference: HUD Housing Counselors Training Study Guide: Glossary — Glossary, entry "Fixture" (page 15)

2. 2A city levies a charge on every lot along a street to pay for constructing new sidewalks there. A homeowner asks the listing agent how this charge differs from the regular property tax. How does IRS homeowner guidance treat a charge for constructing new sidewalks?

   1. A. As a deductible real estate tax, because the city included it on the tax bill
   2. B. As an assessment for a local benefit that is added to the property's basis
   3. C. As a homeowners' association assessment, because only one street is charged
   4. D. As a deductible repair charge, because sidewalks are public infrastructure

   Answer: B

   Explanation: IRS Publication 530 states: "You can’t deduct amounts you pay for local benefits that tend to increase the value of your property. Local benefits include the construction of streets, sidewalks, or water and sewer systems. You must add these amounts to the basis of your property." It explains that an assessment can be deducted only if it is "for maintenance, repair, or interest charges," such as "a charge to repair an existing sidewalk." Constructing new sidewalks is a local-benefit special assessment even if it appears on the tax bill. It is not an association assessment, because the government imposes it.

   Reference: IRS Publication 530, Tax Information for Homeowners — What You Can and Can't Deduct, "Assessments for local benefits"

3. 3A national bank is making a $350,000 residential mortgage loan that will be held in its own portfolio and is not insured, guaranteed or eligible for sale to a government-sponsored enterprise. Under the OCC's appraisal regulation, what valuation must the bank obtain?

   1. A. An appropriate evaluation; no appraisal by a state certified or licensed appraiser is required
   2. B. An appraisal prepared by a state certified appraiser, because the loan is a residential loan
   3. C. An appraisal prepared by a state licensed appraiser, because it is a federally related loan
   4. D. A broker price opinion from a licensee, used as the primary basis for the property's value

   Answer: A

   Explanation: 12 CFR 34.43(a) exempts from the appraisal requirement a transaction that "is a residential real estate transaction that has a transaction value of $400,000 or less." For such a transaction, 34.43(b) requires that "the institution shall obtain an appropriate evaluation of real property collateral that is consistent with safe and sound banking practices." A $350,000 residential loan therefore needs an evaluation, not an appraisal by a state certified or licensed appraiser. A broker price opinion cannot substitute, because it does not provide market value.

   Reference: 12 CFR Part 34, Real Estate Lending and Appraisals (eCFR) — 12 CFR 34.43(a)(1) and (b)

4. 4A buyer comparing Loan Estimates tells the agent she plans to stay in the home many years and would like the lowest possible interest rate. According to CFPB guidance on points, which choice lets a borrower receive a lower interest rate?

   1. A. Choosing lender credits to cover costs
   2. B. Choosing a zero-point loan from the lender
   3. C. Paying a larger earnest money deposit
   4. D. Paying points at closing to the lender

   Answer: D

   Explanation: CFPB's Your Home Loan Toolkit explains that "Points are a percentage of a loan amount" and lists the choices: a zero point loan, "You can pay points at closing to receive a lower interest rate," or "you can choose to have points paid to you (also called lender credits) and use them to cover some of your closing costs." Paying points buys a lower rate. Lender credits do the reverse, trading a higher rate for help with closing costs, and the earnest money deposit has no effect on the rate.

   Reference: CFPB, Your Home Loan Toolkit — Section 1, step 5: Understand the trade-off between points and interest rate (page 7)

5. 5A buyer and seller in different states sign a residential purchase agreement entirely through an e-signature platform. Later the seller claims the agreement is unenforceable because no one signed in ink. Under the federal E-SIGN Act, how is the agreement treated?

   1. A. It is unenforceable until both parties re-sign a paper copy before a notary
   2. B. It is enforceable only if each party's state has adopted e-signature rules
   3. C. It is enforceable only for the deposit, not for the transfer of the property
   4. D. It may not be denied legal effect solely because electronic signatures were used

   Answer: D

   Explanation: E-SIGN provides that "a signature, contract, or other record relating to such transaction may not be denied legal effect, validity, or enforceability solely because it is in electronic form," and that "a contract relating to such transaction may not be denied legal effect, validity, or enforceability solely because an electronic signature or electronic record was used in its formation." The seller cannot avoid the agreement just because it was signed electronically.

   Reference: 15 U.S.C. 7001, General rule of validity (E-SIGN Act; U.S. Code, 2024 ed.) — 15 U.S.C. 7001(a)(1) and (a)(2)

6. 6A buyer under contract on a home with a finished basement asks where the radon test should be placed. The sellers lived only on the main and upper floors, but the buyers plan to use the basement as a family room. According to EPA's Home Buyer's and Seller's Guide to Radon, where should the home be tested?

   1. A. In the lowest level that could be used regularly
   2. B. On the main floor where the sellers spent most time
   3. C. In the attic, where radon gas collects as it rises
   4. D. Outdoors near the foundation, beside the home

   Answer: A

   Explanation: EPA's guide states: "EPA also recommends testing a home in the lowest level that could be used regularly, since a buyer may choose to live in a lower area of the home than that used by the seller." Because the buyers plan to use the basement regularly, the test belongs there, not on the floors the sellers used.

   Reference: EPA, Home Buyer's and Seller's Guide to Radon (EPA 402/K-24/001) — Opening summary, "If You Are Buying a Home" (page 1)

7. 7A leasing agent screening a rental applicant approves the application but requires a co-signer, partly because a consumer report showed several late payments, though the applicant's low income was the main reason. Under FTC guidance for landlords, what must the agent do?

   1. A. Nothing, because the application was approved rather than denied outright
   2. B. Nothing, because the consumer report was not the primary reason for the decision
   3. C. Give the applicant an adverse action notice, even though the report played only a part
   4. D. Send a copy of the consumer report to the co-signer instead of to the applicant

   Answer: C

   Explanation: The FTC explains that if a landlord will "reject an applicant, increase the rent or deposit, require a co-signer, or take any other adverse action based partly or completely on information in a consumer report, you must give the applicant or tenant a notice of that fact." It adds: "Even if the information in the report played only a small part in the overall decision, you must notify the applicant or tenant." Requiring a co-signer is an adverse action even though the application was approved.

   Reference: FTC: Using Consumer Reports: What Landlords Need to Know — Section on adverse action notices

8. 8In a jurisdiction where a general warranty deed is not commonly used, a land developer delivers a deed that warrants only that the developer has not conveyed the lot to anyone else and that the lot is free from encumbrances made by the developer or anyone claiming through the developer. How do the developer's warranties compare with those of a general warranty deed?

   1. A. They cover every title defect arising at any time in the property's history
   2. B. They give no assurance of any kind, the same as a deed of release
   3. C. They are limited to the grantor's own acts and those claiming through the grantor
   4. D. They cover only defects that appear in the public tax assessment records

   Answer: C

   Explanation: The Interstate Land Sales Act describes this alternative to a warranty deed as "a deed or grant which warrants that the grantor has not conveyed the lot to another person and that the lot is free from encumbrances made by the grantor or any other person claiming by, through, or under him." Such a deed warrants only against the grantor's own acts and those claiming through the grantor. A general warranty deed covers the whole chain of title, and a deed with no warranties gives no assurance at all.

   Reference: 15 U.S.C. 1702, Exemptions (U.S. Code, 2024 ed.) — 15 U.S.C. 1702(b)(1)(D)

9. 9An individual who owns two single-family houses wants to sell one and believes the Fair Housing Act's single-family owner exemption lets her choose buyers freely. She plans to list the house with a real estate broker. How does using the broker affect the exemption?

   1. A. The exemption applies because she owns no more than three single-family houses
   2. B. The exemption applies because the broker, not she, will choose the buyer
   3. C. The exemption applies only if the house is sold without a broker's services
   4. D. The exemption applies once she has lived in the house for twenty-four months

   Answer: C

   Explanation: 42 U.S.C. 3603(b)(1) exempts certain single-family houses sold by a private owner, but provides that the sale is excepted "only if such house is sold or rented (A) without the use in any manner of the sales or rental facilities or the sales or rental services of any real estate broker, agent, or salesman." Listing with a broker removes the exemption, even though she owns no more than three houses.

   Reference: 42 U.S.C. 3603, Effective dates of certain prohibitions (U.S. Code, 2024 ed.) — 42 U.S.C. 3603(b)(1)

10. 10A seller paid the full calendar-year property tax bill of $3,650 in advance. The sale closes on July 1 of a 365-day year, and the buyer is treated as owning the home beginning with the date of sale. How much should the buyer reimburse the seller for the buyer's share of the taxes?

    1. A. $1,810
    2. B. $1,840
    3. C. $1,825
    4. D. $1,830

    Answer: B

    Explanation: IRS Publication 530 states that "the seller is treated as paying the property taxes up to but not including the date of sale" and the buyer "beginning with the date of sale." The buyer owns July 1 through December 31, which is 184 days. $3,650 / 365 = $10 per day, and 184 x $10 = $1,840. $1,810 is the seller's 181 days, $1,825 treats the year as two equal halves, and $1,830 wrongly leaves out the closing day.

    Reference: IRS Publication 530, Tax Information for Homeowners — Real Estate Taxes, "Division of real estate taxes" and example