Mastering PSI NJ Real Estate Exam,
PSI Practice Questions & Answers
exam ready
What is the primary purpose of the New Jersey Real Estate Commission?
✔️✔️ To regulate and oversee real estate licensing, education, and professional conduct within the
state
What document is required to legally act as a real estate agent in New Jersey?
✔️✔️ A valid real estate license issued by the New Jersey Real Estate Commission
What type of ownership allows two or more people to own property with equal rights and no
right of survivorship?
✔️✔️ Tenancy in Common
What is the term for a property owner’s right to use, enjoy, and dispose of their property?
✔️✔️ Bundle of Rights
What is required before a broker can lawfully pay a commission to a salesperson?
✔️✔️ The salesperson must be licensed and affiliated with the broker
What does “fiduciary duty” mean in real estate?
✔️✔️ A legal obligation to act in the best interest of a client
What is a lien?
✔️✔️ A legal claim against property as security for a debt
What type of lien has priority over most other liens?
✔️✔️ A tax lien
What is the primary function of a listing agreement?
✔️✔️ To authorize a broker to represent a property owner in selling or leasing a property
What does “agency disclosure” refer to?
✔️✔️ A requirement to inform clients of the agent’s role and relationship in a transaction
What is the difference between a general and special agent?
✔️✔️ A general agent has broader authority, while a special agent is limited to specific tasks
What is earnest money?
✔️✔️ A deposit made by a buyer to demonstrate good faith in a real estate transaction
1
,What is the purpose of a comparative market analysis (CMA)?
✔️✔️ To estimate a property’s market value based on similar recent sales
What is the definition of encumbrance?
✔️✔️ Any claim, lien, or restriction on a property that affects its value or use
What is adverse possession?
✔️✔️ The legal acquisition of title to land through continuous and open possession over time
What is the role of escrow in real estate transactions?
✔️✔️ To hold funds or documents by a neutral third party until conditions are met
What is the purpose of title insurance?
✔️✔️ To protect against financial loss from defects in the property title
What is a deed?
✔️✔️ A legal document that transfers ownership of real property
What is the difference between a warranty deed and a quitclaim deed?
✔️✔️ A warranty deed guarantees clear title; a quitclaim deed transfers whatever interest the
grantor has without guarantees
What is zoning?
✔️✔️ Government regulations controlling land use and development
What is the purpose of a mortgage?
✔️✔️ To secure a loan with real property as collateral
What happens in foreclosure?
✔️✔️ A lender takes possession of property due to the borrower’s failure to repay a loan
What is amortization?
✔️✔️ The gradual repayment of a loan through scheduled payments
What is a mortgagee?
✔️✔️ The lender in a mortgage agreement
What is a mortgagor?
✔️✔️ The borrower in a mortgage agreement
What is the Equal Credit Opportunity Act designed to do?
✔️✔️ Prohibit discrimination in lending
2
, What is steering in real estate?
✔️✔️ Directing buyers or tenants toward or away from certain areas based on protected
characteristics
What is redlining?
✔️✔️ Denying or limiting financial services to certain areas based on demographics
What is the function of the Fair Housing Act?
✔️✔️ To prohibit discrimination in housing based on protected classes
What is a protected class under fair housing laws?
✔️✔️ A group protected from discrimination such as race, religion, or national origin
What is puffing in real estate?
✔️✔️ Exaggerated statements of opinion that are not legally binding
What is a material fact?
✔️✔️ Any fact that could influence a buyer’s decision
What is required in a valid real estate contract?
✔️✔️ Offer, acceptance, consideration, legal purpose, and competent parties
What is consideration?
✔️✔️ Something of value exchanged between parties in a contract
What is a contingency?
✔️✔️ A condition that must be met for a contract to be binding
What is a short sale?
✔️✔️ A sale where the property is sold for less than the mortgage balance with lender approval
What is depreciation in real estate?
✔️✔️ The loss of property value over time
What is appreciation?
✔️✔️ An increase in property value over time
What is capitalization rate?
✔️✔️ A rate used to estimate return on an investment property
What is gross rent multiplier?
✔️✔️ A method to evaluate rental property value based on rental income
3
PSI Practice Questions & Answers
exam ready
What is the primary purpose of the New Jersey Real Estate Commission?
✔️✔️ To regulate and oversee real estate licensing, education, and professional conduct within the
state
What document is required to legally act as a real estate agent in New Jersey?
✔️✔️ A valid real estate license issued by the New Jersey Real Estate Commission
What type of ownership allows two or more people to own property with equal rights and no
right of survivorship?
✔️✔️ Tenancy in Common
What is the term for a property owner’s right to use, enjoy, and dispose of their property?
✔️✔️ Bundle of Rights
What is required before a broker can lawfully pay a commission to a salesperson?
✔️✔️ The salesperson must be licensed and affiliated with the broker
What does “fiduciary duty” mean in real estate?
✔️✔️ A legal obligation to act in the best interest of a client
What is a lien?
✔️✔️ A legal claim against property as security for a debt
What type of lien has priority over most other liens?
✔️✔️ A tax lien
What is the primary function of a listing agreement?
✔️✔️ To authorize a broker to represent a property owner in selling or leasing a property
What does “agency disclosure” refer to?
✔️✔️ A requirement to inform clients of the agent’s role and relationship in a transaction
What is the difference between a general and special agent?
✔️✔️ A general agent has broader authority, while a special agent is limited to specific tasks
What is earnest money?
✔️✔️ A deposit made by a buyer to demonstrate good faith in a real estate transaction
1
,What is the purpose of a comparative market analysis (CMA)?
✔️✔️ To estimate a property’s market value based on similar recent sales
What is the definition of encumbrance?
✔️✔️ Any claim, lien, or restriction on a property that affects its value or use
What is adverse possession?
✔️✔️ The legal acquisition of title to land through continuous and open possession over time
What is the role of escrow in real estate transactions?
✔️✔️ To hold funds or documents by a neutral third party until conditions are met
What is the purpose of title insurance?
✔️✔️ To protect against financial loss from defects in the property title
What is a deed?
✔️✔️ A legal document that transfers ownership of real property
What is the difference between a warranty deed and a quitclaim deed?
✔️✔️ A warranty deed guarantees clear title; a quitclaim deed transfers whatever interest the
grantor has without guarantees
What is zoning?
✔️✔️ Government regulations controlling land use and development
What is the purpose of a mortgage?
✔️✔️ To secure a loan with real property as collateral
What happens in foreclosure?
✔️✔️ A lender takes possession of property due to the borrower’s failure to repay a loan
What is amortization?
✔️✔️ The gradual repayment of a loan through scheduled payments
What is a mortgagee?
✔️✔️ The lender in a mortgage agreement
What is a mortgagor?
✔️✔️ The borrower in a mortgage agreement
What is the Equal Credit Opportunity Act designed to do?
✔️✔️ Prohibit discrimination in lending
2
, What is steering in real estate?
✔️✔️ Directing buyers or tenants toward or away from certain areas based on protected
characteristics
What is redlining?
✔️✔️ Denying or limiting financial services to certain areas based on demographics
What is the function of the Fair Housing Act?
✔️✔️ To prohibit discrimination in housing based on protected classes
What is a protected class under fair housing laws?
✔️✔️ A group protected from discrimination such as race, religion, or national origin
What is puffing in real estate?
✔️✔️ Exaggerated statements of opinion that are not legally binding
What is a material fact?
✔️✔️ Any fact that could influence a buyer’s decision
What is required in a valid real estate contract?
✔️✔️ Offer, acceptance, consideration, legal purpose, and competent parties
What is consideration?
✔️✔️ Something of value exchanged between parties in a contract
What is a contingency?
✔️✔️ A condition that must be met for a contract to be binding
What is a short sale?
✔️✔️ A sale where the property is sold for less than the mortgage balance with lender approval
What is depreciation in real estate?
✔️✔️ The loss of property value over time
What is appreciation?
✔️✔️ An increase in property value over time
What is capitalization rate?
✔️✔️ A rate used to estimate return on an investment property
What is gross rent multiplier?
✔️✔️ A method to evaluate rental property value based on rental income
3
