100+ Free Real Estate Practice Exam Questions (March 2026)

Agents or brokers function under certain legally mandated duties called fiduciary duties. Fiduciary duties include: Loyalty, confidentiality, disclosure, obedience, reasonable care and diligence, accounting and more. Honesty and fairness must be given to an unrepresented buyer.

The agent is not entitled to any compensation. With exclusive agency listings agents only get paid if they sell the property. No fee is earned if the owner alone sells the property. Also if it was open listing, the agent would still NOT be entitled to any compensation. This scenario only works because it is an exclusive agency listing.

Restrictive covenants, are also know as CCR's(conditions, covenants, and restrictions). The main purpose of the CCR's is to maintain the look and feel of the community. CCR’s limit the use of a particular property, a condominium, or a subdivision. Such restrictions are either written in the deeds to the property or into the bylaws for the subdivision, which the deeds will reference. In real estate transactions, restrictive covenants are binding legal obligations written into the deed of a property by the seller.

Specific performance is a legal remedy that binds the parties of a contract to the terms of the contract. Specific performance asserts that parties must perform the exact terms of the agreement as they promised to do when the agreement was made.

Most real estate sales contracts include contingency clauses, making them voidable. A voidable contract is a legal agreement between two parties that may be unenforceable for any number of reasons. If a contract has a contingency it's voidable. It still can be considered valid but only after the contingencies are met or no longer exist.

Special use properties are properties that are there to "benefit the public," such as: Schools, Hospitals and Police Stations. These properties are described as different, because they are usually designed in a way that cannot fit in a typical zone. More examples include of religious facilities, nursing homes, assisted living facilities, hotels, truck terminals, meat processing plants, seed plants, and more. Think multiple buildings, large areas, etc.

The habendum clause is the statement in a contract that describes the rights and interests being given. It almost always begins with the words "to have and to hold."

Closing is the final step in executing a real estate transaction. It is when official ownership and payment is transferred to the rightful parties. The fees that the buyer pays to close the deal are called closing costs.

A fixture is any physical property that is permanently attached to real property. Trade fixtures refer to items installed in connection with the business, such as stoves or refrigerators in a restaurant.

This is an example of a balloon loan. A balloon loan is a mortgage which does not fully amortize over the term. Amortization is when payments divide into equal amounts for the duration of the loan. A balloon loan is different as not all payments are the equally divided and the most substantial payments are called Balloon payments.

Appraisals are the best way to determine fair value. The overall appraisal process is based on a number of factors, such as its cost, the income it generates or its fair market value as compared to similar assets.

Fixing is the practice of setting the price of a good or service to make a particular price a standard. So in our terms, real estate fixing is when competing agents meet up and agree on the same commission rates. Typically agencies set their commission rates depending on the price of the property. Any agreement even if it just implied with other brokerages to set a standard commission rate is a violation of the antitrust laws.

In real estate, the increase of the actual land via a stream, lake or sea by the action of water which deposits soil upon the shoreline is accretion.

A timeshare is a property with a divided form of ownership or use rights. These properties are typically resort building units, in which multiple parties hold rights to use the property, and each owner of the same accommodation is allotted their period of time. They differ from regular condominiums as they typically are exclusively for vacations.

Partition is a term used in real estate to describe an act, by a court order, to divide up a concurrent estate into separate portions representing interests of the owners of a property.

The amount owed is called the principal and the price of borrowing the money is called the interest.

Typically the party who usually pays the loan origination fee on a Federal Housing Administration loan is the borrower. The origination fee covers the borrowers right to obtain FHA-backed financing, so it is traditionally a paid by the borrower. FHA Loans are mortgage issued by an FHA-approved lender and insured by the FHA which is the Federal Housing Administration. FHA loans are sought after because they require lower minimum down payments and credit scores than many conventional loans.

An offer from a third party does not affect someone else's offer. A counteroffer by that offeree would affect an offer, however, as well as a cancellation or death of the offeror before the offer is accepted.

The Environmental Protection Agency (EPA) is the federal agency responsible for dealing with environmental issues. The EPA was established in December 1970 by an executive order of United States President Richard Nixon. The agency enforces all federal environmental rules and regulations.

Property tax is an ad valorem tax assessed on real estate by a local government and paid by the property owner. Public services for real estate owners are paid by real property tax.

The seller is usually entitled to keep the earnest money, because this is considered forfeiture of the contract. The only way the buyer can back out and get their earnest money back is if something happens with the inspection, appraisal, or they have a contract clause offering that protection.

The Fair Housing Act is a law that prohibits discrimination in the buying, selling, renting or financing of housing. These laws prohibit discrimination based on race, religion, color, sex, disability, children, nationality and more. Changing terms of a sale because someone is Chinese is clearly illegal and a violation of The Fair Housing Act.

Joan is the optionor, and Bob is the optionee. And Bob can assign an option if he wants. Joan cannot force to purchase the property. Remember, a seller cannot force a buyer to buy the property with an option to purchase. It's worth noting that they can in a lease to purchase, but in the question, it specifies it's an option contract.

The Residential Lead-Based Paint Hazard Reduction Act was established in 1996. Real estate agents must be aware of this federal law providing homes before 1978 the following: an agreement of sale/lease with lead warning statement and statement allowing prospective buyers 10 days obtain certified inspection/assessment before purchase obligation or must disclose info. about existing lead paint to purchaser AND provide purchaser federal gov't prepared lead hazard brochure.

The assessed value is a property's determined valuation to calculate the appropriate tax rates.

Commingling refers to mixing brokers funds with clients funds. The opposite of commingling is separation, which is just separating the funds.

Condominium often shortened to condo, is a type of living space which is similar to an apartment but which is independently sellable and therefore regarded as real estate. Unlike apartments, which are leased by their tenants, condominium units are owned outright. The answer is all the condominium owners in the form of percentage undivided interests because all condominium owners legally own a portion of all the facilities there.

Warehousing has to deal with loans and the secondary market. The term refers to the process where a bank or lender packages mortgage loans to consumers for the purpose of quickly selling those loans on the secondary market.

Antitrust Laws are a collection of federal and state government laws that regulate the conduct and organization of business corporations, normally to promote fair competition for the benefit of consumers. In retrospect, antitrust laws protect the consumer and are healthy for a stable economy. It’s important to know and understand the ones that deal with real estate as they directly relate to how you function as an agent.

The three main forms of depreciation are : Economic Obsolescence, Functional Obsolescence, and Physical Deterioration.

The market data approach, also known as the sales comparison approach, involves comparing a property to other recently sold properties in the same area of similar size and condition. For residential real estate, the market data approach is typically regarded as the most accurate comparison method.

Think of supply and demand like a scale usually if one side raises, the other will lower or vice versa. Generally, low supply and high demand increase price. In contrast, the greater the supply and the lower the demand, the price tends to fall. So in real estate terms, when the supply of available houses in an area decreases significantly the average cost of housing goes up.

Economic Obsolescence refers to the loss of property value due to external factors, meaning things off the property affecting the properties value. Examples of causes of economic obsolescence can include: flight patterns, a busy highway, and rise in local crime. Read More Here

This is a bit of a trick question. There are four main elements of a valid real estate contract: The party must be the legal age of 18 or older and deemed legally competent. The contract must be legal or hold a legal purpose. A clear and specific consideration must be included in the agreement. The contract must hold mutual consent or be agreed upon by both parties. Monetary consideration is optional. Consideration is a main element, but it doesn't necessarily have to be money. Remember, consideration is anything of legal value, it could be a promise or promise to perform an action.

If demand increases more than supply does, we get an increase in price. If supply rises more than demand, we get a decrease in price. If they rise or decrease the same amount, the price remains the same.

There are three different main approaches that appraisers use while they make an appraisal. They are the Market Data Approach, Cost Approach, and Income Approach. The Market Data Approach is also commonly called the sales comparison approach. The Cost Approach is also referred to as summation. And lastly, the Income Approach, is also known as capitalization. Each method has its own set of benefits. When applied together, the various valuation methods provide the best estimate of the value of the income-producing real estate under evaluation.

Safe Drinking Water Act (SDWA) was established in 1974. It allowed greater control by EPA to control contaminant levels, take legal action against public water auth. for violations, and require periodic water testing and notification to state authority and homeowners if contaminated.

A comparative market analysis is an examination of the prices at which similar properties in the same area recently sold. Agents can use a comparative market analysis for their clients to help them determine a price when selling or buying a home.

Service Contracts are agreements between a customer or client and a person or company who will be providing services. A listing agreement is a service contract between the seller and the broker, or brokerage company.

Liquidated damages are presented in certain legal contracts as an estimate of otherwise intangible or hard-to-define losses to one of the parties. A liquidated damages clause specifies a predetermined amount of money that must be paid as damages for failure to perform under a contract.

In this instance age doesn't really matter. What does matter is that the middle age couple has a mortgage with a high interest rate and at the current rates at much lower. They would most likely qualify for a refinance and they would definitely derive the most value from it. Bonus tip. The rule of thumb is that refinancing is a good idea if you can reduce your interest rate by at least 2%. Generally speaking, homeowners should have a solid credit score to refinance, although there are a few exceptions in government run loan assistance programs.

In this case, the contract would be voidable by the buyer because of fraud. Voidable contracts have the necessary elements to be enforceable, so they appear to be valid, but can be rejected by one party if the contract is discovered to have any number of defects. Fraud is the act of intentionally deceiving another party for financial or personal gain.

A blind offer in real estate is a purchase contract written by a buyer without seeing the property. This is common in commercial properties such as apartment complexes, and it’s not uncommon in multi-family homes such as duplexes and fourplexes. It’s not typical in single-family homes or apartments.

A depth table is used to estimate the value of commercial properties. A depth table is a table used by real estate appraisers to show land values in percentages based on variations in the depth of the lot.

Dual agency is when one real estate agent represents both the buyer and seller in a transaction. A single agency has a relationship with the buyer or the seller, but not both.

The correct statement is: “In title theory states, banks or mortgage lenders hold the title of a property until it is paid in full. In lien theory states, however, banks or mortgage lenders never retain title to the property.” In lien theory states banks or mortgage lenders never retain title to the property. Instead, the mortgage lender holds a lien against the property.

Mortgage points, also known as discount points, are fees paid directly to the lender at closing in exchange for a reduced interest rate. The interest rate decreases not the down payment. They are a great option for someone who knows they will be owning a specific property for a long time. Mortgage points are directly paid to the lender or bank at closing.

The process of valuing real estate is a challenging one. There are many different techniques and sources that can be used to arrive at an estimate of the cost. It requires extensive experience to achieve accurate results with all relevant factors present. Reconciliation is the final step in a real estate appraisal where the appraiser weighs each appraisal approach and determines which one is most relevant and should be used.

An amendment typically changes terms of a contract. An addendum “adds” terms to a contract. For example, let's say a buyer and seller have agreed to an April 10th closing date but later both agreed to change the closing date to April 25th. They would use an amendment. Addendums are used to add or delete terms or conditions NOT previously agreed to. That's the difference.

The primary public land-use control is zoning and issued by the government. The primary private land-use control is deed restrictions or restrictive covenants, which limit what can be done on the property by the owner. The biggest difference is that the government does not write or enforce private controls but it does impose and enforce public controls like zoning.

Appreciation, in general terms, is an increase in the value of an asset over time. The increase can occur for a number of reasons, including increased demand or weakening supply, or as a result of changes in inflation or interest rates.

Tenants by the entirety Is a special form of co-ownership used in some states that allow a husband or wife to inherit the other spouse's ownership interest upon death. Community Property Laws are based on the idea that husband and wife are equal, separate, partners rather than one whole one like tenants by the entirety. Both terms pertain to spouses.

Closing is always the final step in executing a real estate transaction. Closing is known by many names. Some areas may call it settlement and transfer, some may call it passing papers. Traditionally it is called closing.

An easement in gross is basically selling rights to the land to another person, but without giving them legal ownership. An example of an easement in gross is an easement to a utility company to run a power line across a burdened piece of property.

Easements are appurentent meaning generally pass along with ownership changes in real estate, but there are several ways of legally terminating them. Expiration, release, merging, and abandonment of the easement are all ways to legally terminate the applicable easement. The servient estate serves the dominant estate and cannot terminate the easement even through revocation.

The Federal Housing Administration (FHA) provides mortgage insurance on single-family, multifamily, manufactured home, and hospital loans made by FHA-approved lenders throughout the United States and its territories.

The term retroactive liability is used in connection with CERCLA and the Superfund. It means that all previous owners also can be held accountable for the hazardous waste site.

Void contracts are not contracts because they lack an essential element of a contract and are thus unenforceable. Voidable contracts have the necessary elements to be enforceable, so they appear to be valid, but can be rejected by one party if the contract is discovered to have any number of defects.

Emblements are annual crops cultivated by a tenant that is treated as the tenant's personal property. Read More Here

The contract was established under duress, fraud, deception, or coercion making it voidable. A voidable contract is a legal agreement between two parties that may be unenforceable for any number of reasons. Voidable contracts have the necessary elements to be enforceable, so they appear to be valid, but can be rejected by one party if the contract is discovered to have any number of defects.

Depreciation is any loss in the value of a property over time from any cause. There are three main forms of depreciation: Economic Obsolescence, Functional Obsolescence, and Physical Deterioration.

Each state determines the rules for brokerage firm trust accounts and how earnest money must be deposited.

Probate is the analysis and transfer administration of estate assets previously owned by a deceased person. When a property owner dies, his or her assets are commonly reviewed in a probate court if they do not have a will.

The Superfund Amendments and Re-authorization Act of 1986 (SARA) was passed when the original act, CERCLA, expired in 1985. It amended the comprehensive environmental response, compensation, and liability act. The big change had to do with liability. When a property owner has been innocent of all involvement with a hazardous waste site, under certain circumstances, he may claim immunity from responsibility. In plain terms it allows truly innocent landowners to have immunity from legal liability. SARA also required EPA to revise the Hazard Ranking System to ensure that it accurately assessed the relative degree of risk to human health and the environment posed.

There are four main elements of a valid real estate contract: The party must be the legal age of 18 or older and deemed legally competent. The contract must be legal or hold a legal purpose. A clear and specific consideration must be included in the agreement. The contract must hold mutual consent or be agreed upon by both parties. If a minor signs the contract it is considered voidable.

The five most popular types of businesses are Sole Proprietorship, General Partnership, Limited Partnership, Corporation, and Limited Liability Company (LLC). From the question above; "Corporation, Sole Proprietorship, Limited Liability Company" are all real business structures. Here are the definitions: Corporations may be formed for profit or nonprofit purposes. A corporation is managed and operated by a board of directors. A Sole Proprietorship is one individual or married couple in business alone. Lastly, an (LLC) is a hybrid legal entity that has certain characteristics of both a corporation and a partnership or sole proprietorship.

A borrower is a mortgagor while the lender is the mortgagee. A mortgagee is an entity that lends money to a borrower (also known as a mortgagor) for the purpose of purchasing real estate.

Holding earnest money is only legal with written authorization, and even then it's best to deposit it as soon as possible. Having verbal authority is not good enough, and in many states is considered illegal.

Fixtures are personal property attached to the land to count as real property. Window blinds are screwed into the house, therefore they are considered a fixture in this example.

Trusts can be created during an individual's lifetime, or they can be established following someone's death. A trust works as it follows: the first party, the trustor or settlor, transfers a property upon the second party for the benefit of the third party, the beneficiary. The trustee is required to manage the trust property in accordance with the trustor's wishes and in the beneficiary's best interests. A trustor can be an individual or organization.

Specific performance is an equitable remedy in the law of contract, whereby a court issues an order requiring a party to perform a specific act, such as to complete performance of the contract. In our instance since the washer and dryer were included in the contract, the buyer may sue the seller for specific performance.

If Aaron can't get to his property from a public road without crossing over his neighbor Ron's property he is landlocked. He needs an easement for ingress and egress over Ron's property to be able to enter and exit the property. Read More Here

A balloon loan is a mortgage which does not fully amortize over the term. Amortization is when payments divide into equal amounts for the duration of the loan. A balloon loan is different as not all payments are equally divided and the most substantial payments are called Balloon payments. A common example of a balloon loan is the seven-year Fannie Mae Balloon, which features monthly payments based on a 30-year mortgage. Making the rate of payments much lower. At the end of seven years, the rest of the loan is due. This last payment is called a balloon payment because of its large size. At that point, the borrower may sell the home to cover the balloon payment or take out a new loan to cover the payment, effectively refinancing the mortgage.

Gross Rent Multiplier is the ratio of the price of a real estate investment to its annual rental income before accounting for expenses such as property taxes, insurance, and utilities. More specifically its a measure of the value of an investment property that is obtained by dividing the property's sale price by its gross annual rental income. The math looks like this: Gross Rent Multiplier = Property Price / Gross Rental Income. So in our case it would be 500,000/75,000 which equals 6.66!

The statute of frauds requires certain types of contracts to be executed in writing. The statute covers contracts for the sale of land, agreements involving goods worth over $500, and contracts lasting one year or more.

Remember, execution means the contract is closed and cannot be assigned. Only executory contracts can be assigned.

When an asset is no longer useful to its owner, then it is said to be past its economic life. The economic life of an asset could be different than its actual physical life. Economic life usually is shorter than physical life, as a structure generally will still physically exist but not be viable in the marketplace.

A property owner or homeowner can sue to obtain the required just compensation through the process of inverse condemnation. Inverse condemnation is the event in which the government takes private property but fails to pay compensation or just compensation. Read More Here

Constructive eviction is a term used in the law of real property to describe when a landlord sidesteps the formal, legal eviction process, and instead attempts to force the eviction of the tenant by rendering the property uninhabitable. A tenant who is constructively evicted may terminate the lease and seek damages.

Under riparian rights, all landowners whose properties adjoin a river or stream, have the right to make reasonable use of it as it flows through or over their properties. The only limitation owners have is they cannot stop or prevent the flow of water. Riparian rights vary from state to state but most grant unrestricted use. Unrestricted use means owners have the right to access it for swimming, boating, and fishing, build docs, etc. Read More Here

Covenants are agreements or promises within deeds. For example, a warranty deed can include six forms of covenants. Those six are a series of legally binding promises and warranties to the grantee agreeing to protect the grantee against any prior claims and demands of all persons whomsoever in regards to the conveyed land.

A less than freehold estate (also known as a leasehold estate) is an estate held by one who rents or leases property. The key difference between a leasehold estate and a freehold estate is the limitation of time. As lease is a legal estate, leasehold estate can be bought and sold on the open market.

Owning real estate carries with it a "bundle of legal rights” The bundle of rights is the right of possession, the right of control, the right of exclusion, the right of enjoyment and the right of disposition. When a person purchases property, he or she is given the rights to the property. Interestingly the rights can be split up and given to different parties. Think of the bundle of rights as a bundle of sticks. Read More Here

Receiving compensation from both the buyer and the seller is not an antitrust violation. Dual agency is when one real estate agent represents both the buyer and seller in a transaction. While it may seem ideal from an agent’s perspective, it can lead to some significant risks, which is why it is illegal in eight states. In most states, though, dual agency is legal, but state laws have measures in place to protect parties that use it. Still even in states where it is illegal it is not classified as an antitrust violation, while all the other examples are.

A condominium is a type of living space which is similar to an apartment but which is independently sellable and therefore regarded as real estate. Unlike apartments, which are leased by their tenants, condominium units are owned outright. A condominium is often shortened to condo. What is the difference between a condo and a co-op? Well, a condo is a private residence in a multiunit structure that includes ownership of commonly used property. A co-op is also a multiunit building, but that’s where the similarities end. A co-op owner has an interest or share in the entire building and a contract or lease that allows the owner to occupy a unit. While a condo owner owns a unit, a co-op owner does not own the unit.

Disclosure statements, purchase contracts, and exclusive agency contracts are all legal documents but it is the listing agreement that clearly defines the relationship between the broker and seller.

It generally has to do with performance. Time is of the essence clause in real estate contracts refers to a clause that requires one party in a real estate contract to fulfill their obligations within a specific time frame.

Demand is an economic principle referring to a consumer's desire to purchase goods and services and willingness to pay a price for a specific good or service (holding all other factors constant).

Compliance with zoning ordinances is monitored through the issuance of zoning permits; where the property owner or developer cannot substantially alter the use of the property without getting a zoning permit, which will not be issued unless the proposed development conforms to the zoning ordinance. Zoning permits are usually required before building permits can be issued.

A lawsuit for specific performance would grant your client the house. Specific Performance asks the court to force the opposing party into a contract that binds them to actually perform the contract at issue, rather than award damages for breach of contract.

The alienation clause is a contract provision that comes into effect when ownership of a specified asset is transferred or sold. It ensures that if a transfer of property happens the lender is paid in full from the original borrower. It's a legal clause lenders add for protection.

Surveying is the "general" technique of determining three-dimensional positions of points and the distances and angles between them. The point of a survey is to accurately measure land in a legal fair manner. While subdivision surveying is definitely a form of surveying this question is asking for the general form, which is just surveying.

You’ll hear a lot of people use the word Market Value or Market Price. This just means the actual selling price of the property. So if your home sells for $250,000. Its market value is $250,000.

The proper procedure for changing a contract that has already become binding is to sign a separate amendment. Remember, separate amendments are used to modify or change executory contracts.

Earnest money should be deposited into a trust account in a timely manner, according to state laws. While the time period varies from state-to-state its best practice to always deposit the money as soon as possible.

It is permissible to attach legal descriptions to the contract rather than writing them into the contract itself, but they must be attached. This is common with sales contracts with extensive and detailed legal descriptions.

A bit of a trick question. Voidable contracts MAY be valid, often they appear valid but are not. Remember, voidable contracts have the necessary elements to be enforceable, so they appear to be valid, but can be rejected by one party if the contract is discovered to have any number of defects. Since the question says “may be” valid it is voidable.

No replacement cost, is the cost of replacing an asset or property. Reproduction cost estimates how much it would cost to exactly reproduce an asset or property to exact specifications. Reproduction cost looks at the cost of creating an exact replica, and should not be confused with replacement cost, which looks at the cost of replacing an insured property with one of similar functionality. Reproduction cost is more specific.

A creditor can consider age, if it's used to determine the meaning of other factors important to creditworthiness. For example, a creditor could use your age to determine if your income might drop because you’re about to retire. A creditor cannot consider age in any of the other situations listed.

As a licensed real estate agent, it is important to make sure all clients are treated in the same fair and honest manner. There should be no differences in services provided based on one person to another.