RECA PRE-EXAM STUDY QUESTION
AND ANSWERS [100% CORRECT] 2025
What is the difference between "property management" and "real estate brokerage," and how does
each role contribute to the real estate industry?
Property management involves overseeing the daily operations of a property, while real estate
brokerage focuses on buying, selling, or leasing properties. Both roles contribute by ensuring smooth
operations and legal compliance in the real estate market.
How does the concept of "market value" differ from "price" in real estate transactions?
Market value refers to the estimated worth of a property based on factors such as location,
condition, and comparable sales, while price is the actual amount agreed upon between the buyer and
seller.
What role does RECA play in ensuring fair competition in the Alberta real estate market?
RECA enforces regulations to prevent anti-competitive practices, ensuring that all professionals
operate fairly and within legal guidelines to foster a transparent and efficient real estate market.
Explain how real estate professionals are required to handle conflicts of interest in their transactions.
Professionals must disclose any potential conflicts of interest to all parties involved and, when
necessary, seek the consent of the affected parties before proceeding with the transaction.
What steps should a real estate agent take when receiving an offer that conflicts with a seller’s stated
preferences or instructions?
The agent must present the offer to the seller without alteration, advise the seller of the
implications, and ensure that the seller’s preferences and instructions are clearly communicated before
any decisions are made.
Discuss the importance of understanding zoning laws for real estate professionals when working with
buyers and sellers.
Zoning laws govern land use and can significantly affect property values. Real estate professionals
must understand these laws to guide clients effectively and avoid legal issues.
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,What are the ethical implications of "flipping" properties for profit, and how should real estate
professionals address this issue?
Flipping properties for profit raises ethical concerns about transparency, misrepresentation, and
fairness. Professionals should ensure they are fully transparent with clients and avoid misleading
practices that could harm the market.
What are the key aspects of mortgage financing that a real estate professional must understand to best
assist clients in Alberta?
Real estate professionals must understand different mortgage types, interest rates, loan terms,
and the impact of financing on the buyer’s purchasing power to provide accurate guidance.
Describe the process of closing a real estate transaction and the role of the agent in ensuring its smooth
completion.
The agent ensures that all conditions of the sale are met, all documents are properly signed, and
the financial transactions are processed, ensuring the transfer of ownership occurs as agreed.
What is the importance of a "home inspection" in a real estate transaction, and what should a real estate
professional do if an inspection report reveals issues?
A home inspection identifies potential problems with a property. The agent should advise the
buyer on the significance of these issues, help negotiate repairs, or adjust the price accordingly.
Explain the concept of "title insurance" and its significance in real estate transactions.
Title insurance protects buyers and lenders from financial loss due to defects in the property title,
such as claims of ownership or outstanding liens, ensuring the transaction is secure.
What is the difference between "leasehold" and "freehold" property ownership in Alberta?
Leasehold property is leased from a landowner for a specific period, while freehold property
grants full ownership of the land and structures to the buyer.
How should a real estate professional handle a situation where a buyer is unhappy with the property
after the deal has closed?
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, The agent should investigate the issue, clarify any miscommunications, and explore possible
resolutions, such as negotiating with the seller or seeking legal advice, depending on the circumstances.
What is the role of a "real estate appraiser" in the transaction process, and why is their report
important?
A real estate appraiser provides an unbiased estimate of a property’s market value, which helps
buyers, sellers, and lenders make informed decisions based on accurate, third-party assessments.
Explain the concept of "title transfer" in real estate transactions and the steps involved.
Title transfer is the legal process by which ownership of the property is moved from the seller to
the buyer. It involves executing and registering the deed of transfer with the land titles office.
What should a real estate professional do if they suspect a property has been involved in fraudulent
activity, such as misrepresentation of its condition or ownership?
The agent must report the suspicions to RECA, advise the client of the potential issues, and avoid
further involvement in any transactions involving the fraudulent property.
What role do ethical sales tactics play in maintaining trust between real estate professionals and clients?
Ethical sales tactics, such as honesty, transparency, and respect for clients' best interests, are
crucial in building long-term trust and protecting the professional's reputation in the market.
What is the importance of keeping accurate and up-to-date records of all real estate transactions, and
what can happen if these records are not maintained properly?
Accurate records ensure legal compliance, protect clients' interests, and help resolve disputes.
Failure to maintain proper records can result in legal penalties, loss of license, or disciplinary action by
RECA.
What is the role of an "escrow agent" in a real estate transaction, and what responsibilities do they hold?
The escrow agent holds funds or documents in trust until all conditions of the sale are met,
ensuring that neither the buyer nor the seller is at risk until the transaction is complete.
Explain the process and benefits of obtaining pre-approval for a mortgage before entering into a real
estate transaction.
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