Real Estate Principles Chapters 1-15 Exam
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Correct] 2025 Latest Release
What are the primary responsibilities of a real estate agent when representing a seller in a real estate
transaction?
A real estate agent must promote the seller's interests, provide accurate market information, and
assist with negotiations while following all legal requirements and ethical standards.
How does the concept of "fair housing" impact the way real estate agents conduct business?
Fair housing laws prohibit discrimination based on race, color, religion, sex, national origin,
familial status, or disability in the sale or rental of housing. Agents must ensure that their practices
comply with these laws to ensure equal opportunities for all individuals.
What is the purpose of a listing agreement between a real estate agent and a seller?
A listing agreement formalizes the relationship between the seller and the agent, authorizing the
agent to market the property and seek a buyer while outlining the agent’s compensation and other
terms.
How does the principle of "highest and best use" influence property valuation?
The principle suggests that the value of a property is determined by the potential use that would
yield the highest return on investment. An appraiser evaluates the land based on its most profitable use.
What is the difference between an exclusive right-to-sell listing and an exclusive agency listing?
In an exclusive right-to-sell listing, the agent is guaranteed a commission regardless of who sells
the property. In an exclusive agency listing, the seller may sell the property themselves without paying
the agent a commission.
What are the key factors that affect property value in the market?
Location, property condition, market demand, interest rates, and local economic conditions are
primary factors influencing the value of real estate.
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,How does a comparative market analysis (CMA) help in pricing a property?
A CMA compares similar properties recently sold in the area to estimate a property’s market
value, helping sellers and agents set a competitive and realistic listing price.
What role do escrow and title companies play in a real estate transaction?
Escrow companies manage the funds and documents during a transaction, ensuring that all
conditions of the contract are met. Title companies ensure the title to the property is clear of issues and
issue title insurance.
What is the difference between a lien and an easement in real estate law?
A lien is a legal claim against a property for unpaid debts, while an easement grants someone the
right to use a portion of the property for a specific purpose, such as access or utilities.
How does an appraisal differ from a home inspection?
An appraisal is an evaluation of a property’s market value by a licensed appraiser, while a home
inspection examines the property’s condition and identifies potential issues that could affect its safety or
value.
What are the tax implications of selling a home for profit?
Sellers may owe capital gains tax on the profit made from the sale, depending on how long they
owned the property and whether it was their primary residence. Tax laws allow for exemptions under
certain conditions.
What is the difference between a mortgage broker and a mortgage lender?
A mortgage broker acts as an intermediary, helping buyers find and apply for loans from multiple
lenders, while a mortgage lender provides the actual financing for the loan.
What does the term "equity" mean in real estate?
Equity is the difference between the current market value of a property and the remaining
balance of any liens or mortgages on it.
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,What is the role of a real estate agent during a closing?
The agent assists by ensuring that all paperwork is completed, the terms of the sale are met, and
that the transaction is finalized smoothly, often guiding both the buyer and seller through the process.
How does zoning affect property use and value?
Zoning laws determine how properties can be used (e.g., residential, commercial, industrial) and
impact the value by limiting or expanding the potential uses for the land.
What is a seller’s disclosure, and why is it important?
A seller’s disclosure is a document provided by the seller that outlines any known issues or
defects with the property. It is important because it ensures transparency and protects both parties in
the transaction.
What is the purpose of earnest money in a real estate transaction?
Earnest money is a deposit made by the buyer to show their seriousness about purchasing the
property. It is typically applied to the purchase price or refunded if the deal falls through due to
contingencies.
What does the term "mortgage contingency" mean in a real estate contract?
A mortgage contingency clause allows the buyer to back out of the contract if they are unable to
secure financing, protecting them from being bound to a purchase they cannot afford.
How does an adjustable-rate mortgage (ARM) differ from a fixed-rate mortgage?
An ARM has an interest rate that changes over time, often based on a benchmark rate, while a
fixed-rate mortgage has a constant interest rate throughout the loan term.
What is the role of a real estate attorney in a transaction?
A real estate attorney reviews contracts, helps negotiate terms, ensures that the transaction
complies with local laws, and addresses any legal issues that arise during the process.
What are the different types of property ownership in real estate?
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, Property can be owned in several ways, including sole ownership, joint tenancy, tenancy in
common, and community property, each affecting how the property is managed and transferred.
What is the difference between "clear title" and "cloud on title"?
Clear title means the property has no legal claims or disputes attached, while a cloud on title
indicates there are issues, such as liens or disputes, that could complicate the transfer of ownership.
What is a "short sale" in real estate?
A short sale occurs when a property is sold for less than the amount owed on the mortgage, and
the lender agrees to accept the reduced amount to avoid foreclosure.
What is the function of the multiple listing service (MLS)?
The MLS is a database used by real estate agents to list properties for sale, allowing agents to
share information and collaborate on finding buyers for properties.
What is the significance of a pre-approval letter in a real estate transaction?
A pre-approval letter from a lender confirms that a buyer is financially qualified for a loan,
helping sellers feel confident in the buyer’s ability to secure financing and complete the sale.
How does the principle of "eminent domain" relate to real estate?
Eminent domain allows the government to take private property for public use, with
compensation to the owner. It is often used for infrastructure projects like roads or schools.
What are the potential consequences of not disclosing material defects in a property?
Failing to disclose material defects can lead to legal issues, including lawsuits for fraud or
misrepresentation, and may result in financial penalties or a forced sale of the property.
How does a real estate agent earn commission?
A real estate agent earns a commission based on the sale price of the property, usually as a
percentage, which is split between the seller’s and buyer’s agents.
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