The best way to study for the real estate licensing exam is to use actual sample questions as part of your preparation. You need to know what type of questions you are likely to see on the test. At Real Estate Prep Guide, we have free real estate exam questions available to help you get started. Here, you will find five real practice questions along with detailed explanations for each answer.
- A home was purchased in 2005 for $425,000. It was sold recently for $478,000. What is the rate of return on profit for this house? (Answer: 12.47%)
- Which of the following contains a list of all real property in the jurisdiction with annual information including its assessed value? (Answer: assessment roll)
- Rosita buys a summer cottage that has a mechanic's lien against it placed by the workman, who was not paid by the former owner Jim, for constructing a dock. The lien now: (Answer: remains as a claim against the property)
- The assignment of costs between the buyer and the seller at the closing is called: (Answer: proration)
- A house sells for $195,000. The total commission rate is 6%, of which the listing office receives 2.5% and the selling office 3.5%. Susan, the selling agent, receives a 60% split of the commission. How much will she earn as commission dollars? (Answer: $4,095.00)
Full Explanations for the Real Estate Licensing Exam Questions
- A home was purchased in 2005 for $425,000. It was sold recently for $478,000. What is the rate of return on profit for this house?
Explanation: The answer is ‘12.47%’. The rate of return is the amount received, as a percentage of the initial investment. In order to calculate the rate of return you need to start by taking the current value of the property and subtracting the original value. In this case, that figure would be $478,000 minus $425,000, or $53,000. From there, you take that number and divide it by the original value: $53,000 divided by $425,000 is .1247. Finally, multiply that number by 100 and express the final value as a percentage to get the correct answer. In this example, the rate of return is 12.47 percent.
- Which of the following contains a list of all real property in the jurisdiction with annual information including its assessed value?
Explanation: The answer is ‘assessment roll’. An assessment roll is essentially a public record that contains important information about real property. As a general rule, an assessment roll for an individual jurisdiction will be kept and managed by a municipality or a county. This is a useful practice question for two reasons. First, you need to know what an assessment roll is — as you might be asked about it directly on your exam. Beyond that, this practice question should serve as an important reminder to focus on learning the key real estate terms. Many questions ask about the meaning of different real estate industry terminology.
- Rosita buys a summer cottage that has a mechanic's lien against it placed by the workman, who was not paid by the former owner Jim, for constructing a dock. The lien now:
Explanation: The answer is ‘remains as a claim against the property’. A mechanic’s lien is a very powerful debt collection tool that can be used by contractors and workers that put in labor or materials to ‘improve’ real property. It is essentially a legal document that attaches to real property and gives an unpaid contractor a security interest in the property. You should know that a mechanic’s lien always runs with the property. If a property is sold, the mechanic’s lien will not go away. The claim remains against the property until the lien is fully satisfied. It does not matter who owns the property.
- The assignment of costs between the buyer and the seller at the closing is called:
Explanation: The answer is ‘proration’. Proration is the allocation of money at the closing of a property. This calculation is typically done by a real estate broker, real estate salesperson, or real estate attorney. Once again, this question should serve as a reminder that all test-takers need to put in the time and effort to learn key real estate terms. Regardless of your state, it is likely that you will run into certain questions on your licensure exam that ask for definitions of real estate industry terminology.
- A house sells for $195,000. The total commission rate is 6%, of which the listing office receives 2.5% and the selling office 3.5%. Susan, the selling agent, receives a 60% split of the commission. How much will she earn as commission dollars?
Explanation: The answer is ‘$4,095.00’. The practice question is an excellent example of the type of calculation you might be asked to complete during your state’s real estate licensing test. Here is how you do it: Start with the total value of the sale. In this case, the house sold for $195.000. Next, you need to know the total value of the commission received by the selling office. For the purposes of getting this answer, we do not care about the listing office’s commission. To move towards the final answer, take the actual sale value and multiply by percent of commission received by the relevant office ($195,000 multiplied by 0.035). The commission earned by the selling office is $6,825. Susan receives 60 percent of this amount. In other words, she gets $6,825 multiplied by 60 percent (.60), or $4,095.
One of the lessons you can take from this practice question is that not every number included in the prompt will be relevant to getting the answer. In this example, the total commission (6 percent) and the listing office commission (2.5 percent) are simply extra information; these numbers will not be used. Do not assume that every number needs to be included in your calculation to get to the right answer.
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