Real Estate Exam Prep: Key Topics, Passing Score, and Practice Questions

Real estate licensing exams are administered at the state or provincial level. While specific content varies, most exams cover similar core topics. Here's what appears on virtually every real estate salesperson exam.

Exam Format (Typical)

- 100-150 multiple choice questions - 2-3 hours allowed - 70-75% passing score - Covers: national/uniform portion + state-specific portion - Must pass both portions separately (national and state)

Property Ownership and Rights

Bundle of Rights: Ownership includes the right to use, lease, sell, exclude others, and mortgage the property.

Fee Simple: The most complete form of ownership. Full rights with no conditions.

Life Estate: Ownership for the duration of someone's lifetime; passes to remainder person on death.

Easements: Right to use another's land for a specific purpose (utility lines, right of way). Runs with the land — survives ownership changes.

Encumbrances: Anything that limits the owner's rights. Includes easements, liens, deed restrictions, and encroachments.

Contracts

A valid real estate contract requires: offer and acceptance, consideration (something of value exchanged), legally competent parties, legal purpose, and in most jurisdictions, writing (Statute of Frauds).

Listing Agreements: Exclusive right-to-sell gives the broker commission regardless of who finds the buyer. Exclusive agency gives commission only if the broker finds the buyer. Open listing — first broker to find a buyer earns commission.

Purchase Agreement: Must include description of the property, purchase price, earnest money amount, financing contingencies, closing date, and what personal property is included.

Financing Basics

LTV (Loan-to-Value Ratio): Loan amount ÷ Appraised value. Lenders use this to assess risk.

PMI (Private Mortgage Insurance): Required when LTV exceeds 80%. Protects the lender.

Points: Prepaid interest. One point = 1% of the loan amount. Paying points lowers the interest rate.

ARM (Adjustable Rate Mortgage): Rate tied to an index. Caps limit rate changes per period and over the loan's life.

Fair Housing Act

Prohibits discrimination in the sale, rental, or financing of housing based on: race, colour, national origin, religion, sex, familial status, and disability. Blockbusting, steering, and redlining are all violations.

Key exception: owner-occupied buildings with 4 or fewer units are exempt if the owner doesn't use a real estate agent and doesn't use discriminatory advertising.