CRE NATIONAL EXAM QUESTIONS AND ANSWERS
Priority of judgment liens would be based on the: - CORRECT ANSWER✅✅a. date of the debt
b. date of the lien recording
c. amount of the debt
d. the foreclosure process
B. Priority is based on the date of the lien recording
A client wants to buy a commercial property. You tell her they are putting in an exit ramp off the
highway, that is proposed but not set in stone, that would allow easy access to the business. The client
buys and they end up putting the ramp elsewhere. Are you responsible as the broker? - CORRECT
ANSWER✅✅a. No, the agent was truthful
b. No, this is puffing
c. yes, this is puffing
d. yes, this is a misrepresentation
A. The agent is blameless. Had the agent not indicated the exit ramp was a proposal, the agent may have
been subject to a claim of misrepresentation.
As per the Free Dictionary regarding "puffing" - Puffing is generally an expression or exaggeration made
by a salesperson or found in an advertisement that concerns the quality of goods offered for sale. It
presents opinions rather than facts and is usually not considered a legally binding promise. Such
statements as "this car is in good shape" and "your wife will love this watch" constitute puffing.
- CORRECT ANSWER✅✅Ok because the broker doesn't like the other broker either
Not ok and both broker and agent can be in trouble for lack of supervision
The agent could get in trouble, but not the employing broker unless the broker put his views in writing.
Ok because he is selling his listings quickly
Explanation
,An agent has no authority to withhold offers from a client. All offers must be presented to the client for
their review and decision. This is a obligation that must be understood by the agent and employing
broker. An agent's personal views about another agent are irrelevant to the transaction. There are no
excuses for not putting the client's interests first.
An agent does not like another broker and refuses to present his offers. The agent's employing broker
notices he does a good job and sells his listing quickly. They agree that he does not need any supervision
or training. He is independent. This is: - CORRECT ANSWER✅✅a. Ok because the broker doesn't like the
other broker either
b. Not ok and both broker and agent can be in trouble for lack of supervision
c. The agent could get in trouble, but not the employing broker unless the broker put his views in
writing.
d. Ok because he is selling his listings quickly
B. An agent has no authority to withhold offers from a client. All offers must be presented to the client
for their review and decision. This is a obligation that must be understood by the agent and employing
broker. An agent's personal views about another agent are irrelevant to the transaction. There are no
excuses for not putting the client's interests first.
All units in a community are being assessed for sidewalk improvements to a road along one side of the
community. This is: - CORRECT ANSWER✅✅a. Rise in property taxes
b. A Community Assessment
c. Rise in HOA dues
d. A Special Assessment
D. Although a rise in property taxes is close, because the government is definitely pulling more money
out of your pocket, this situation has its own name and is referred to as a Special Assessment. A Special
Assessment is whenever the government levies a tax on property owners in an area to pay for a project
deemed to be beneficial to them. Common examples are sidewalks as in the question, sewer systems,
street paving, better street lighting and such.
,Home Owner Associations also turn to Special Assessments when they are short on reserve funds to
cover a capital improvement or deferred maintenance, such as the roof is shot, the pool or parking lot
needs resealing, the building(s) need repainting or the central furnace is dying a painful death.
How does this effect you as an agent? :
Whenever you are representing a buyer in a community with an HOA. Your due diligence includes
reviewing a series of State mandated HOA disclosures from the HOA management. One of the things
you are looking for is any current or planned Special Assessments.
Often when a developer builds a community, they set the HOA dues artificially low to attract buyers.
Once the HOA is turned over to the residents, it is incumbent on them to review and if need be, raise
their HOA dues to build enough of a reserve account to cover future big-ticket maintenance. Boosting
HOA dues is never popular, particularly when the community is new and shiny. But sooner or later
everything new gets old and needs maintenance. If the community did not set aside funds, the cost of
playing catch up can result in some absolute whoppers of Special Assessments. When that happens,
property values take a beating and owners may try to sell before the assessment takes affect
Agency means the broker owes to their clients certain duties. Which of the following is NOT TRUE: -
CORRECT ANSWER✅✅a. Loyalty
b. Honesty
c. Accounting
d. Indemnification
D. Here is a definition of indemnification from The Free Dictionary: "To compensate for loss or damage;
to provide security for financial reimbursement to an individual in case of a specified loss incurred by the
person."
As brokers we assist our clients with expert knowledge regarding real estate transactions. We are not an
insurance company.
The agency relationship evolved from the master-servant relationship under English common law. The
servant owed absolute loyalty to the master. This loyalty was superior to the servant's personal interests
as well as the interests of others. Common law is established by court decisions. Under common law,
, the agent owes the principal five duties, including: (1) care: (2) obedience, (3) accounting, (4) loyalty
(including confidentiality), and (5) disclosure. Statutory law is the law enacted by the legislature.
When employing the cost approach to appraisal, the improvements and land are valued: - CORRECT
ANSWER✅✅a. Individually by one approach
b. Separately
c. Jointly by one approach
d. Jointly by more than one approach
B. In real estate appraisal, the Cost Approach is one of three basic valuation methods. The others are
market, or sale comparison, and income.
The Cost Approach is based on the principle of substitution which asserts that no sane buyer will pay
more for a property than that amount for which the land could be acquired and upon which similar
improvements can be constructed. It is a method of appraising property based on the depreciated
reproduction or replacement cost (new) of improvements, plus the market value of the land. Although
there are several approaches available to determine how much it will cost to construct the
improvements, only a higher authority than us can create land. Therefore, an appraiser will estimate the
cost of constructing improvements using cost-based approaches and add to it the market value of the
land using a sales comparison approach.
The real estate contract for a specific property for use as an unlicensed petroleum sales operation was
forced to terminate. The termination was the result of: - CORRECT ANSWER✅✅a. impossibility of
performance
b. novation
c. breach of contract
d. operation of law
A. Impossibility-of-Performance Doctrine is a principle whereby a party may be released from a contract
on the ground that uncontrollable circumstances have rendered performance impossible.
A builder purchased a lot with seller financing. The seller's loan would allow for a later construction loan
to be the priority loan. The loan obtained contained a: - CORRECT ANSWER✅✅a. release clause
Priority of judgment liens would be based on the: - CORRECT ANSWER✅✅a. date of the debt
b. date of the lien recording
c. amount of the debt
d. the foreclosure process
B. Priority is based on the date of the lien recording
A client wants to buy a commercial property. You tell her they are putting in an exit ramp off the
highway, that is proposed but not set in stone, that would allow easy access to the business. The client
buys and they end up putting the ramp elsewhere. Are you responsible as the broker? - CORRECT
ANSWER✅✅a. No, the agent was truthful
b. No, this is puffing
c. yes, this is puffing
d. yes, this is a misrepresentation
A. The agent is blameless. Had the agent not indicated the exit ramp was a proposal, the agent may have
been subject to a claim of misrepresentation.
As per the Free Dictionary regarding "puffing" - Puffing is generally an expression or exaggeration made
by a salesperson or found in an advertisement that concerns the quality of goods offered for sale. It
presents opinions rather than facts and is usually not considered a legally binding promise. Such
statements as "this car is in good shape" and "your wife will love this watch" constitute puffing.
- CORRECT ANSWER✅✅Ok because the broker doesn't like the other broker either
Not ok and both broker and agent can be in trouble for lack of supervision
The agent could get in trouble, but not the employing broker unless the broker put his views in writing.
Ok because he is selling his listings quickly
Explanation
,An agent has no authority to withhold offers from a client. All offers must be presented to the client for
their review and decision. This is a obligation that must be understood by the agent and employing
broker. An agent's personal views about another agent are irrelevant to the transaction. There are no
excuses for not putting the client's interests first.
An agent does not like another broker and refuses to present his offers. The agent's employing broker
notices he does a good job and sells his listing quickly. They agree that he does not need any supervision
or training. He is independent. This is: - CORRECT ANSWER✅✅a. Ok because the broker doesn't like the
other broker either
b. Not ok and both broker and agent can be in trouble for lack of supervision
c. The agent could get in trouble, but not the employing broker unless the broker put his views in
writing.
d. Ok because he is selling his listings quickly
B. An agent has no authority to withhold offers from a client. All offers must be presented to the client
for their review and decision. This is a obligation that must be understood by the agent and employing
broker. An agent's personal views about another agent are irrelevant to the transaction. There are no
excuses for not putting the client's interests first.
All units in a community are being assessed for sidewalk improvements to a road along one side of the
community. This is: - CORRECT ANSWER✅✅a. Rise in property taxes
b. A Community Assessment
c. Rise in HOA dues
d. A Special Assessment
D. Although a rise in property taxes is close, because the government is definitely pulling more money
out of your pocket, this situation has its own name and is referred to as a Special Assessment. A Special
Assessment is whenever the government levies a tax on property owners in an area to pay for a project
deemed to be beneficial to them. Common examples are sidewalks as in the question, sewer systems,
street paving, better street lighting and such.
,Home Owner Associations also turn to Special Assessments when they are short on reserve funds to
cover a capital improvement or deferred maintenance, such as the roof is shot, the pool or parking lot
needs resealing, the building(s) need repainting or the central furnace is dying a painful death.
How does this effect you as an agent? :
Whenever you are representing a buyer in a community with an HOA. Your due diligence includes
reviewing a series of State mandated HOA disclosures from the HOA management. One of the things
you are looking for is any current or planned Special Assessments.
Often when a developer builds a community, they set the HOA dues artificially low to attract buyers.
Once the HOA is turned over to the residents, it is incumbent on them to review and if need be, raise
their HOA dues to build enough of a reserve account to cover future big-ticket maintenance. Boosting
HOA dues is never popular, particularly when the community is new and shiny. But sooner or later
everything new gets old and needs maintenance. If the community did not set aside funds, the cost of
playing catch up can result in some absolute whoppers of Special Assessments. When that happens,
property values take a beating and owners may try to sell before the assessment takes affect
Agency means the broker owes to their clients certain duties. Which of the following is NOT TRUE: -
CORRECT ANSWER✅✅a. Loyalty
b. Honesty
c. Accounting
d. Indemnification
D. Here is a definition of indemnification from The Free Dictionary: "To compensate for loss or damage;
to provide security for financial reimbursement to an individual in case of a specified loss incurred by the
person."
As brokers we assist our clients with expert knowledge regarding real estate transactions. We are not an
insurance company.
The agency relationship evolved from the master-servant relationship under English common law. The
servant owed absolute loyalty to the master. This loyalty was superior to the servant's personal interests
as well as the interests of others. Common law is established by court decisions. Under common law,
, the agent owes the principal five duties, including: (1) care: (2) obedience, (3) accounting, (4) loyalty
(including confidentiality), and (5) disclosure. Statutory law is the law enacted by the legislature.
When employing the cost approach to appraisal, the improvements and land are valued: - CORRECT
ANSWER✅✅a. Individually by one approach
b. Separately
c. Jointly by one approach
d. Jointly by more than one approach
B. In real estate appraisal, the Cost Approach is one of three basic valuation methods. The others are
market, or sale comparison, and income.
The Cost Approach is based on the principle of substitution which asserts that no sane buyer will pay
more for a property than that amount for which the land could be acquired and upon which similar
improvements can be constructed. It is a method of appraising property based on the depreciated
reproduction or replacement cost (new) of improvements, plus the market value of the land. Although
there are several approaches available to determine how much it will cost to construct the
improvements, only a higher authority than us can create land. Therefore, an appraiser will estimate the
cost of constructing improvements using cost-based approaches and add to it the market value of the
land using a sales comparison approach.
The real estate contract for a specific property for use as an unlicensed petroleum sales operation was
forced to terminate. The termination was the result of: - CORRECT ANSWER✅✅a. impossibility of
performance
b. novation
c. breach of contract
d. operation of law
A. Impossibility-of-Performance Doctrine is a principle whereby a party may be released from a contract
on the ground that uncontrollable circumstances have rendered performance impossible.
A builder purchased a lot with seller financing. The seller's loan would allow for a later construction loan
to be the priority loan. The loan obtained contained a: - CORRECT ANSWER✅✅a. release clause
