Perry Real Estate College Final Examination 2026/2027
PERRY REAL ESTATE COLLEGE
FINAL EXAMINATION — 2026/2027
Comprehensive Real Estate Principles & State-Specific Licensing Competency Assessment
120 Questions | Testing Time: 150–180 Minutes | Passing Score: 70–75%
──────────────────────────────────────────────────
Instructions: This examination consists of 120 multiple-choice questions divided into 10 content domains.
Each question has four answer choices (A, B, C, D). Select the one best answer for each question. There is no
penalty for guessing, so you should attempt to answer every question. The correct answer and a detailed
rationale for each question are provided immediately after the options. You have 150 to 180 minutes to
complete this examination. A passing score requires answering at least 70–75% of the questions correctly,
depending on your state’s requirements. Please read each question carefully before selecting your answer.
Note: This exam is designed to assess your understanding of fundamental real estate principles, state-specific
licensing requirements, and professional ethical standards. Questions range from basic knowledge recall to
complex scenario analysis. Calculator use is permitted for Domain 9 (Mathematics & Calculations).
1
, Perry Real Estate College Final Examination 2026/2027
Domain 1: Real Estate Law & Licensing
1. Under a fiduciary relationship, which duty requires an agent to place the principal's
interests above their own?
A. Disclosure
B. Obedience
C. Loyalty
D. Accounting
Correct Answer: C
Rationale: The duty of loyalty requires an agent to place the principal's interests above their own. This is
the cornerstone fiduciary duty that distinguishes an agency relationship from other professional
relationships. While disclosure, obedience, and accounting are also fiduciary duties, loyalty specifically
addresses the obligation to prioritize the client's interests above all others, including the agent's own self-
interest.
2. A real estate salesperson's license is held by which party?
A. The salesperson personally
B. The state licensing board
C. The sponsoring broker
D. The real estate commission
Correct Answer: C
Rationale: A salesperson's license is held by the sponsoring broker. This means the broker is responsible for
the salesperson's conduct and must supervise all transactions. If the salesperson leaves the broker, the
license must be transferred to a new sponsoring broker before the salesperson can practice. This structure
ensures accountability within the brokerage.
3. Which of the following best describes dual agency?
A. One agent representing two different brokers
B. One agent representing both the buyer and seller in the same transaction
C. Two agents cooperating on a single listing
D. A broker holding licenses in two different states
Correct Answer: B
Rationale: Dual agency occurs when a single agent or brokerage represents both the buyer and seller in the
same transaction. This creates an inherent conflict of interest because the agent owes fiduciary duties to
both parties. Most states require written informed consent from both parties before dual agency can be
established, and some states prohibit it entirely.
4. A broker discovers a material defect in a property but is instructed by the seller not to
disclose it. What is the broker's legal obligation?
A. Follow the seller's instructions because the seller is the client
B. Disclose the defect anyway because material facts must always be disclosed
C. Withdraw from the listing without explanation
D. Report the seller to the state licensing board only
Correct Answer: B
Rationale: Material facts must always be disclosed regardless of the seller's instructions. While the seller is
the client and the broker owes obedience as a fiduciary duty, the duty of honesty and the legal obligation to
disclose material defects supersede the duty of obedience. The broker cannot conceal information that
would affect a buyer's decision, even at the client's direction.
5. Under designated agency, how are the interests of the buyer and seller protected within the
same brokerage?
A. The broker personally represents both parties
B. Separate agents within the brokerage are assigned to represent each party
C. The brokerage declines to represent either party
D. The state assigns an independent overseer
Correct Answer: B
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, Perry Real Estate College Final Examination 2026/2027
Rationale: Under designated agency, the managing broker assigns separate agents within the same
brokerage to represent the buyer and seller independently. Each designated agent owes full fiduciary
duties only to their assigned client, and the broker acts as a facilitator for the overall transaction. This
arrangement allows the brokerage to serve both parties while minimizing conflicts of interest.
6. Which of the following actions would most likely result in license revocation by the state
real estate commission?
A. Failing to close a transaction within 30 days
B. Conversion of escrow funds for personal use
C. Charging a commission rate below the industry standard
D. Working with a buyer who has been pre-qualified rather than pre-approved
Correct Answer: B
Rationale: Conversion of escrow funds for personal use—also known as commingling or conversion—is one
of the most serious violations in real estate and typically results in license revocation. Escrow funds must
be kept in a separate trust account and can only be disbursed according to the terms of the contract.
Misappropriation of these funds constitutes theft and breaches the fiduciary duty of accounting.
7. What is the primary purpose of a real estate license law?
A. To protect the commissions earned by real estate agents
B. To protect the public from incompetent or unethical practitioners
C. To limit the number of real estate agents in a given market
D. To establish a minimum commission rate for all transactions
Correct Answer: B
Rationale: The primary purpose of real estate license law is to protect the public by ensuring that
practitioners meet minimum competency and ethical standards. Licensing laws establish qualifications,
continuing education requirements, and disciplinary procedures to safeguard consumers. This protective
purpose distinguishes license law from trade association rules that may focus on member interests.
8. A licensee fails to renew their license by the expiration date. Which of the following
statements is correct?
A. The licensee may continue practicing for a 30-day grace period
B. The licensee must cease all licensed activities immediately upon expiration
C. The license is automatically renewed if continuing education has been completed
D. The licensee may practice under another broker's license temporarily
Correct Answer: B
Rationale: When a license expires, the licensee must immediately cease all activities that require a license.
There is no automatic grace period that allows continued practice. Some states offer a reinstatement period
during which the license can be renewed (often with a late fee), but during this time the individual cannot
engage in licensed activities. Practicing with an expired license is a violation subject to disciplinary action.
9. In an agency relationship, the duty of accounting requires the agent to:
A. Calculate the property's market value for the client
B. Keep accurate records of all funds and documents entrusted to the agent
C. Prepare annual financial statements for the client's portfolio
D. Report all income to the Internal Revenue Service on the client's behalf
Correct Answer: B
Rationale: The duty of accounting requires the agent to keep accurate records of all money and documents
entrusted to them by the client. This includes earnest money deposits, rent collected on behalf of the client,
and any other funds handled during the transaction. The agent must be able to provide a full accounting of
these funds at any time and must not commingle client funds with personal funds.
10. Which type of agency is created when a broker shows a property to a buyer without a
written buyer representation agreement?
A. Express agency
B. Implied agency
C. Dual agency
D. Universal agency
3
PERRY REAL ESTATE COLLEGE
FINAL EXAMINATION — 2026/2027
Comprehensive Real Estate Principles & State-Specific Licensing Competency Assessment
120 Questions | Testing Time: 150–180 Minutes | Passing Score: 70–75%
──────────────────────────────────────────────────
Instructions: This examination consists of 120 multiple-choice questions divided into 10 content domains.
Each question has four answer choices (A, B, C, D). Select the one best answer for each question. There is no
penalty for guessing, so you should attempt to answer every question. The correct answer and a detailed
rationale for each question are provided immediately after the options. You have 150 to 180 minutes to
complete this examination. A passing score requires answering at least 70–75% of the questions correctly,
depending on your state’s requirements. Please read each question carefully before selecting your answer.
Note: This exam is designed to assess your understanding of fundamental real estate principles, state-specific
licensing requirements, and professional ethical standards. Questions range from basic knowledge recall to
complex scenario analysis. Calculator use is permitted for Domain 9 (Mathematics & Calculations).
1
, Perry Real Estate College Final Examination 2026/2027
Domain 1: Real Estate Law & Licensing
1. Under a fiduciary relationship, which duty requires an agent to place the principal's
interests above their own?
A. Disclosure
B. Obedience
C. Loyalty
D. Accounting
Correct Answer: C
Rationale: The duty of loyalty requires an agent to place the principal's interests above their own. This is
the cornerstone fiduciary duty that distinguishes an agency relationship from other professional
relationships. While disclosure, obedience, and accounting are also fiduciary duties, loyalty specifically
addresses the obligation to prioritize the client's interests above all others, including the agent's own self-
interest.
2. A real estate salesperson's license is held by which party?
A. The salesperson personally
B. The state licensing board
C. The sponsoring broker
D. The real estate commission
Correct Answer: C
Rationale: A salesperson's license is held by the sponsoring broker. This means the broker is responsible for
the salesperson's conduct and must supervise all transactions. If the salesperson leaves the broker, the
license must be transferred to a new sponsoring broker before the salesperson can practice. This structure
ensures accountability within the brokerage.
3. Which of the following best describes dual agency?
A. One agent representing two different brokers
B. One agent representing both the buyer and seller in the same transaction
C. Two agents cooperating on a single listing
D. A broker holding licenses in two different states
Correct Answer: B
Rationale: Dual agency occurs when a single agent or brokerage represents both the buyer and seller in the
same transaction. This creates an inherent conflict of interest because the agent owes fiduciary duties to
both parties. Most states require written informed consent from both parties before dual agency can be
established, and some states prohibit it entirely.
4. A broker discovers a material defect in a property but is instructed by the seller not to
disclose it. What is the broker's legal obligation?
A. Follow the seller's instructions because the seller is the client
B. Disclose the defect anyway because material facts must always be disclosed
C. Withdraw from the listing without explanation
D. Report the seller to the state licensing board only
Correct Answer: B
Rationale: Material facts must always be disclosed regardless of the seller's instructions. While the seller is
the client and the broker owes obedience as a fiduciary duty, the duty of honesty and the legal obligation to
disclose material defects supersede the duty of obedience. The broker cannot conceal information that
would affect a buyer's decision, even at the client's direction.
5. Under designated agency, how are the interests of the buyer and seller protected within the
same brokerage?
A. The broker personally represents both parties
B. Separate agents within the brokerage are assigned to represent each party
C. The brokerage declines to represent either party
D. The state assigns an independent overseer
Correct Answer: B
2
, Perry Real Estate College Final Examination 2026/2027
Rationale: Under designated agency, the managing broker assigns separate agents within the same
brokerage to represent the buyer and seller independently. Each designated agent owes full fiduciary
duties only to their assigned client, and the broker acts as a facilitator for the overall transaction. This
arrangement allows the brokerage to serve both parties while minimizing conflicts of interest.
6. Which of the following actions would most likely result in license revocation by the state
real estate commission?
A. Failing to close a transaction within 30 days
B. Conversion of escrow funds for personal use
C. Charging a commission rate below the industry standard
D. Working with a buyer who has been pre-qualified rather than pre-approved
Correct Answer: B
Rationale: Conversion of escrow funds for personal use—also known as commingling or conversion—is one
of the most serious violations in real estate and typically results in license revocation. Escrow funds must
be kept in a separate trust account and can only be disbursed according to the terms of the contract.
Misappropriation of these funds constitutes theft and breaches the fiduciary duty of accounting.
7. What is the primary purpose of a real estate license law?
A. To protect the commissions earned by real estate agents
B. To protect the public from incompetent or unethical practitioners
C. To limit the number of real estate agents in a given market
D. To establish a minimum commission rate for all transactions
Correct Answer: B
Rationale: The primary purpose of real estate license law is to protect the public by ensuring that
practitioners meet minimum competency and ethical standards. Licensing laws establish qualifications,
continuing education requirements, and disciplinary procedures to safeguard consumers. This protective
purpose distinguishes license law from trade association rules that may focus on member interests.
8. A licensee fails to renew their license by the expiration date. Which of the following
statements is correct?
A. The licensee may continue practicing for a 30-day grace period
B. The licensee must cease all licensed activities immediately upon expiration
C. The license is automatically renewed if continuing education has been completed
D. The licensee may practice under another broker's license temporarily
Correct Answer: B
Rationale: When a license expires, the licensee must immediately cease all activities that require a license.
There is no automatic grace period that allows continued practice. Some states offer a reinstatement period
during which the license can be renewed (often with a late fee), but during this time the individual cannot
engage in licensed activities. Practicing with an expired license is a violation subject to disciplinary action.
9. In an agency relationship, the duty of accounting requires the agent to:
A. Calculate the property's market value for the client
B. Keep accurate records of all funds and documents entrusted to the agent
C. Prepare annual financial statements for the client's portfolio
D. Report all income to the Internal Revenue Service on the client's behalf
Correct Answer: B
Rationale: The duty of accounting requires the agent to keep accurate records of all money and documents
entrusted to them by the client. This includes earnest money deposits, rent collected on behalf of the client,
and any other funds handled during the transaction. The agent must be able to provide a full accounting of
these funds at any time and must not commingle client funds with personal funds.
10. Which type of agency is created when a broker shows a property to a buyer without a
written buyer representation agreement?
A. Express agency
B. Implied agency
C. Dual agency
D. Universal agency
3
