MA Real Estate Exam Questions with
Complete Solutions
What percentage of a building's replacement value must be covered by fire
insurance according to typical coinsurance clauses? - ANSWER-80 percent
Explanation: Insurance policies usually carry coinsurance clauses that require
coverage up to 80 percent of the building's replacement value.
The metes and bounds and monuments of a property can be found in what clause in
a deed? - ANSWER-Description was correct.
Explanation: The metes and bounds and monuments of a property provides a legal
description of real estate that will be accepted in a court of law and can be found in
the Description clause of a deed.
A deed is valid only when it is - ANSWER-delivered and accepted.
Explanation: Actual delivery of the deed by the grantor and acceptance by the
grantee must take place before a transfer of title by deed can take place.
Malcolm just received his salesperson's license and has joined a firm. He will MOST
likely be hired for tax purposes as a(n) - ANSWER-independent contractor.
Explanation: A survey by the National Association of REALTORS® found that nine
out of ten real estate firms treated their sales associates as independent contractors,
which allows them to avoid the bookkeeping of withholding taxes, Social Security
payments, unemployment insurance, etc.
Real estate license laws are designed to - ANSWER-protect the public and maintain
high standards. was correct.
Explanation: Real estate license laws were instituted to protect the public from
incompetent or dishonest brokers and salespersons and to maintain high standards
in the real estate industry.
When a broker is retained by the buyer, the broker owes the prospective seller -
ANSWER-honest, straightforward treatment. was correct.
Explanation: When retained by the buyer, the broker owes a prospective seller
honest, straightforward treatment.
A seller's broker must disclose to a prospective buyer that the - ANSWER-heating
system doesn't work.
,Explanation: The seller's broker must disclose latent defects but is not responsible
for disclosing facts that might stigmatize the property or that the person who lives in
the home has AIDS.
The contract of sale states that the earnest money deposit is to be placed in an
interest-bearing account with any interest earned to be given to the buyer. This is: -
ANSWER-Okay, because the buyer and seller have agreed to this was correct.
Explanation: The law requires a broker maintain a separate non-interest-bearing
trust bank account to receive client funds tendered to the broker in trust but does not
require interest earned be distributed in a particular way. The broker is an agent and
should carry out the client's instructions completely, so long as they are legal.
If a buyer's earnest money check is returned for insufficient funds after being
deposited into the broker's trust account, the broker should: - ANSWER-Tell the
seller or cooperating broker that the check bounced was correct.
Explanation: Although the broker's client may be able to replace the funds quickly,
the broker should inform the cooperating broker/seller immediately. An unfunded
bank check is material fact (and possibly fraud). Licensees should avoid the
appearance of impropriety, protect the public and disclose material facts concerning
a transaction.
Which option best describes an exclusive-right-to sell listing? - ANSWER-The listing
agent will be paid the commission no matter who procures the buyer.
Explanation: When a principal signs an exclusive-right-sell listing with a broker, the
principal will pay the broker a commission even if the principal or another agent
procures the buyer.
In order to purchase a home, Darla needs to take out a mortgage. A mortgage is an
example of a(n): - ANSWER-Answer: Executory contract
An executory contract is a contract that has terms to be completed at a later date. It
is not fully performed until all acts required are completed, such as a mortgage.
An executed contract is a fully performed contract.
A unilateral contract involves a promise to induce the other party to do some act,
such as an open listing contract, where the property owner can cancel the listing at
any time prior to an agreed upon deal.
An implied contract is formed based upon the actions of the parties that evidence an
What does "CO" mean? - ANSWER-Answer: Certificate of occupancy
CO is an abbreviation for certificate of occupancy, which is the municipal document
verifying that the premises and parts thereof are approved and safe for occupancy.
, Building additions usually require a CO. A building inspector performs an inspection
before the CO is issued and also checks properties for violations.
Paula enters into a contract for the purchase of Jordan's home. Paula applies for a
mortgage. The contract requires her to get a document from her mortgage lender
stating that the lender will be loaning her the necessary funds. What is that
document called? - ANSWER-Answer: Commitment
A commitment is a document from a mortgage lender stating that the lender will be
loaning the purchaser/borrower the necessary funds.
The promissory note contains the borrower's promise to repay the debt and the
manner and frequency of payment (e.g., monthly via check). The note also contains
the principal balance owned and the interest rate.
A letter of approval may refer to a pre-approval letter issued by the lender to show
potential sellers that the borrower may be approved for a loan for a particular
amount.
Biff is hired by owner Gilligan to oversee a residential property complex, including
supervising complex employees and maintenance, but he has limited authority. Biff
is the: - ANSWER-Answer: Property manager
A property manager oversees the property on behalf of the owner and is typically
required to oversee employees and maintenance and protect the interests of and
obtain the optimum financial return for the property owner who employs the
manager.
A lessee is the tenant of a property pursuant to a lease.
A leasing agent is retained by a property owner to locate tenants for the owner's
building. A managing agent has more power than a property manager, including the
ability to use their judgment and discretion in matters affecting the property.
Nice home of four bedrooms and one bathroom sold for less than expected. Which
method of depreciation may explain this? - ANSWER-Functional obsolescence
Loss of value based on not enough bathrooms given the bedrooms.
Buyer Z has bought a vacant lot zoned for residential and commercial use. Z decides
to build a four-family house. Z's real estate agent recommends that Z build a retail
building instead. Why would the agent recommend that? - ANSWER-Under the
principle of highest and best use, the retail building would be a more profitable way
to use the lot
In the income valuation of an apartment property, operating expenses include all
EXCEPT: - ANSWER-Mortgage payment
Mortgage loan payments are not an operating expense, it's a cost of buying.
Complete Solutions
What percentage of a building's replacement value must be covered by fire
insurance according to typical coinsurance clauses? - ANSWER-80 percent
Explanation: Insurance policies usually carry coinsurance clauses that require
coverage up to 80 percent of the building's replacement value.
The metes and bounds and monuments of a property can be found in what clause in
a deed? - ANSWER-Description was correct.
Explanation: The metes and bounds and monuments of a property provides a legal
description of real estate that will be accepted in a court of law and can be found in
the Description clause of a deed.
A deed is valid only when it is - ANSWER-delivered and accepted.
Explanation: Actual delivery of the deed by the grantor and acceptance by the
grantee must take place before a transfer of title by deed can take place.
Malcolm just received his salesperson's license and has joined a firm. He will MOST
likely be hired for tax purposes as a(n) - ANSWER-independent contractor.
Explanation: A survey by the National Association of REALTORS® found that nine
out of ten real estate firms treated their sales associates as independent contractors,
which allows them to avoid the bookkeeping of withholding taxes, Social Security
payments, unemployment insurance, etc.
Real estate license laws are designed to - ANSWER-protect the public and maintain
high standards. was correct.
Explanation: Real estate license laws were instituted to protect the public from
incompetent or dishonest brokers and salespersons and to maintain high standards
in the real estate industry.
When a broker is retained by the buyer, the broker owes the prospective seller -
ANSWER-honest, straightforward treatment. was correct.
Explanation: When retained by the buyer, the broker owes a prospective seller
honest, straightforward treatment.
A seller's broker must disclose to a prospective buyer that the - ANSWER-heating
system doesn't work.
,Explanation: The seller's broker must disclose latent defects but is not responsible
for disclosing facts that might stigmatize the property or that the person who lives in
the home has AIDS.
The contract of sale states that the earnest money deposit is to be placed in an
interest-bearing account with any interest earned to be given to the buyer. This is: -
ANSWER-Okay, because the buyer and seller have agreed to this was correct.
Explanation: The law requires a broker maintain a separate non-interest-bearing
trust bank account to receive client funds tendered to the broker in trust but does not
require interest earned be distributed in a particular way. The broker is an agent and
should carry out the client's instructions completely, so long as they are legal.
If a buyer's earnest money check is returned for insufficient funds after being
deposited into the broker's trust account, the broker should: - ANSWER-Tell the
seller or cooperating broker that the check bounced was correct.
Explanation: Although the broker's client may be able to replace the funds quickly,
the broker should inform the cooperating broker/seller immediately. An unfunded
bank check is material fact (and possibly fraud). Licensees should avoid the
appearance of impropriety, protect the public and disclose material facts concerning
a transaction.
Which option best describes an exclusive-right-to sell listing? - ANSWER-The listing
agent will be paid the commission no matter who procures the buyer.
Explanation: When a principal signs an exclusive-right-sell listing with a broker, the
principal will pay the broker a commission even if the principal or another agent
procures the buyer.
In order to purchase a home, Darla needs to take out a mortgage. A mortgage is an
example of a(n): - ANSWER-Answer: Executory contract
An executory contract is a contract that has terms to be completed at a later date. It
is not fully performed until all acts required are completed, such as a mortgage.
An executed contract is a fully performed contract.
A unilateral contract involves a promise to induce the other party to do some act,
such as an open listing contract, where the property owner can cancel the listing at
any time prior to an agreed upon deal.
An implied contract is formed based upon the actions of the parties that evidence an
What does "CO" mean? - ANSWER-Answer: Certificate of occupancy
CO is an abbreviation for certificate of occupancy, which is the municipal document
verifying that the premises and parts thereof are approved and safe for occupancy.
, Building additions usually require a CO. A building inspector performs an inspection
before the CO is issued and also checks properties for violations.
Paula enters into a contract for the purchase of Jordan's home. Paula applies for a
mortgage. The contract requires her to get a document from her mortgage lender
stating that the lender will be loaning her the necessary funds. What is that
document called? - ANSWER-Answer: Commitment
A commitment is a document from a mortgage lender stating that the lender will be
loaning the purchaser/borrower the necessary funds.
The promissory note contains the borrower's promise to repay the debt and the
manner and frequency of payment (e.g., monthly via check). The note also contains
the principal balance owned and the interest rate.
A letter of approval may refer to a pre-approval letter issued by the lender to show
potential sellers that the borrower may be approved for a loan for a particular
amount.
Biff is hired by owner Gilligan to oversee a residential property complex, including
supervising complex employees and maintenance, but he has limited authority. Biff
is the: - ANSWER-Answer: Property manager
A property manager oversees the property on behalf of the owner and is typically
required to oversee employees and maintenance and protect the interests of and
obtain the optimum financial return for the property owner who employs the
manager.
A lessee is the tenant of a property pursuant to a lease.
A leasing agent is retained by a property owner to locate tenants for the owner's
building. A managing agent has more power than a property manager, including the
ability to use their judgment and discretion in matters affecting the property.
Nice home of four bedrooms and one bathroom sold for less than expected. Which
method of depreciation may explain this? - ANSWER-Functional obsolescence
Loss of value based on not enough bathrooms given the bedrooms.
Buyer Z has bought a vacant lot zoned for residential and commercial use. Z decides
to build a four-family house. Z's real estate agent recommends that Z build a retail
building instead. Why would the agent recommend that? - ANSWER-Under the
principle of highest and best use, the retail building would be a more profitable way
to use the lot
In the income valuation of an apartment property, operating expenses include all
EXCEPT: - ANSWER-Mortgage payment
Mortgage loan payments are not an operating expense, it's a cost of buying.
