Florida Real Estate Sales Associate — All Questions

Which of the following is a form of physical deterioration in an appraisal?

• a.A declining local job market
• b.An outdated one-car garage in a two-car neighborhood
• c.A worn roof and peeling paint due to age and wear✓
• d.A newly built freeway causing noise nearby

Physical deterioration is a loss in value from wear, tear, age, and the action of the elements, such as a worn roof or peeling paint. It can be curable or incurable depending on cost. Functional and external obsolescence are the other two categories of depreciation.

The 'gross rent multiplier' (GRM) is calculated by:

• a.Subtracting expenses from the sale price
• b.Dividing the loan amount by the down payment
• c.Multiplying net income by the cap rate
• d.Dividing the sale price by the gross rental income✓

The gross rent multiplier is found by dividing a property's price by its gross rental income, giving a quick relationship between price and rent. It is a simple screening tool for income properties, often using monthly or annual rent. Unlike the cap rate, it does not account for operating expenses.

An appraiser reconciling the results of the three approaches to value will:

• a.Weigh the approaches based on reliability and the property type to reach a final opinion✓
• b.Discard all approaches and use the asking price
• c.Always use the highest of the three values
• d.Simply average the three values together in every case

Reconciliation is the process of weighing the value indications from the applicable approaches to arrive at a single, supported opinion of value. The appraiser gives more weight to the approach most reliable for the property type, rather than mechanically averaging. Judgment and data quality guide the final conclusion.

Which factor would most likely cause economic (external) obsolescence?

• a.Construction of a noisy airport expansion adjacent to the property✓
• b.An outdated kitchen layout inside the home
• c.A cracked driveway on the property
• d.Worn interior carpeting

Economic or external obsolescence results from negative influences outside the property, such as a new airport, highway, or industrial use nearby. Because these factors are beyond the owner's control, this depreciation is usually incurable. Internal issues like layout or carpeting are functional or physical in nature.

A home sells for $400,000 with a total commission rate of 6 percent. What is the total commission?

• a.$18,000
• b.$2,400
• c.$40,000
• d.$24,000✓

Total commission equals sale price times commission rate: $400,000 x 0.06 = $24,000. Percentages are converted to decimals before multiplying. This total would then be split among the brokerages and agents involved.

A property sells for $250,000 with a 6 percent commission. If the listing and selling brokerages split the commission equally, how much does each brokerage receive?

• a.$12,500
• b.$7,500✓
• c.$3,750
• d.$15,000

First find the total commission: $250,000 x 0.06 = $15,000. An equal split gives each brokerage $15,000 / 2 = $7,500. Individual agents would then split their brokerage's share per their own agreements.

A buyer makes a 20 percent down payment on a $350,000 home. How much is the down payment?

• a.$35,000
• b.$7,000
• c.$70,000✓
• d.$280,000

The down payment equals the price times the down payment percentage: $350,000 x 0.20 = $70,000. The remaining $280,000 would typically be financed. Converting 20 percent to 0.20 is the key step.

A lender requires a loan-to-value (LTV) ratio of 80 percent on a home appraised at $300,000. What is the maximum loan amount?

• a.$240,000✓
• b.$375,000
• c.$24,000
• d.$60,000

The maximum loan equals value times the LTV ratio: $300,000 x 0.80 = $240,000. The borrower would need to cover the remaining $60,000 as a down payment. LTV compares the loan amount to the property's value.

Annual property taxes are $3,600. Using a 360-day year, what is the daily proration amount?

• a.$1.00
• b.$30.00
• c.$10.00✓
• d.$100.00

Using a 360-day year, divide annual taxes by 360: $3,600 / 360 = $10.00 per day. Prorations allocate expenses like taxes between buyer and seller at closing. Many closings use a 360-day (banker's) year for simplicity.

A parcel of land measures 200 feet by 300 feet. What is its area in square feet?

• a.1,000 square feet
• b.6,000 square feet
• c.60,000 square feet✓
• d.500 square feet

Area of a rectangle equals length times width: 200 ft x 300 ft = 60,000 square feet. Area calculations are common in real estate for lots and buildings. To convert to acres, you would divide by 43,560.

One acre equals 43,560 square feet. How many acres is a lot containing 87,120 square feet?

• a.2 acres✓
• b.4 acres
• c.0.5 acre
• d.1 acre

Divide total square feet by 43,560: 87,120 / 43,560 = 2 acres. Memorizing that one acre is 43,560 square feet is essential for land math. This conversion appears frequently on real estate exams.

A home's value increased from $200,000 to $250,000. What is the percentage of increase?

• a.50 percent
• b.25 percent✓
• c.20 percent
• d.5 percent

Percentage increase equals the change divided by the original value: ($250,000 - $200,000) / $200,000 = $50,000 / $200,000 = 0.25, or 25 percent. Always divide by the original (starting) amount. The result shows growth relative to the starting value.

An investment property generates $30,000 in net operating income and is valued using an 8 percent capitalization rate. What is its indicated value?

• a.$37,500
• b.$240,000
• c.$375,000✓
• d.$2,400,000

In the income approach, value equals net operating income divided by the cap rate: $30,000 / 0.08 = $375,000. A lower cap rate produces a higher value for the same income. This formula is central to valuing income property.

A seller wants to net $188,000 after paying a 6 percent commission on the sale price. What must the sale price be (rounded)?

• a.$211,000
• b.$199,280
• c.$188,000
• d.$200,000✓

The seller keeps 94 percent of the price after a 6 percent commission, so price = $188,000 / 0.94 = $200,000. You divide the net amount by (100% minus the commission rate). Dividing rather than adding 6 percent avoids a common error.

A mortgage loan of $150,000 has an annual interest rate of 6 percent. How much interest accrues in the first month (simple interest)?

• a.$9,000
• b.$75
• c.$1,500
• d.$750✓

Annual interest is $150,000 x 0.06 = $9,000; one month is $9,000 / 12 = $750. Early in an amortized loan, most of each payment goes toward interest. Monthly interest is the annual interest divided by 12.

A buyer pays 2 discount points on a $180,000 loan. How much do the points cost?

• a.$1,800
• b.$360
• c.$3,600✓
• d.$36,000

Each point equals one percent of the loan amount, so 2 points on $180,000 = $180,000 x 0.02 = $3,600. Points are prepaid interest paid to lower the loan's interest rate. They are calculated on the loan amount, not the purchase price.

Annual property taxes of $2,400 are paid in arrears. At a closing on July 1, using a 360-day year, how much does the seller owe for the 6 months already elapsed?

• a.$600
• b.$2,400
• c.$400
• d.$1,200✓

The seller owes taxes for the portion of the year they owned the property. Six months is half the year: $2,400 x 6/12 = $1,200. In arrears means taxes are paid after the period, so the seller credits the buyer for their share.

A rectangular building is 40 feet wide and 80 feet long. At a construction cost of $120 per square foot, what is the total cost?

• a.$384,000✓
• b.$96,000
• c.$3,840
• d.$38,400

First find the area: 40 ft x 80 ft = 3,200 square feet. Then multiply by cost per square foot: 3,200 x $120 = $384,000. Cost-per-square-foot calculations are common in the cost approach and construction estimates.

An agent receives a 3 percent share of a $500,000 sale, then keeps 70 percent after a 30 percent brokerage split. What is the agent's take-home amount?

• a.$7,000
• b.$15,000
• c.$4,500
• d.$10,500✓

The agent's gross share is $500,000 x 0.03 = $15,000. Keeping 70 percent after the split gives $15,000 x 0.70 = $10,500. Commission splits are applied in sequence: first compute the share, then apply the split.

A property assessed at $250,000 is taxed at a millage rate of 20 mills. What is the annual tax?

• a.$5,000✓
• b.$500
• c.$50,000
• d.$2,500

One mill equals $1 per $1,000 of assessed value, so 20 mills is $20 per $1,000. Tax equals $250,000 / 1,000 x 20 = $5,000. Millage rates are a common way local governments express property tax rates.

Florida requires an applicant for a sales associate license to complete a state-approved prelicensing course of how many classroom hours?

• a.90 hours including a mandatory legal-ethics seminar
• b.63 hours✓
• c.40 hours of coursework plus a supervised brokerage internship
• d.14 hours, the same as a continuing-education cycle

Florida's Course I prelicensing education for a sales associate is 63 classroom hours and must be completed before sitting for the state exam. The broker prelicense course is longer at 72 hours. Course hour requirements are set by rule and can change.

What is the minimum passing score on the Florida sales associate state licensing examination?

• a.80%, matching the broker examination standard
• b.70% on each of two separately graded sections
• c.A scaled score set individually for each testing window
• d.75%✓

An applicant must score at least 75 out of 100 to pass the Florida sales associate state exam. The same 75% standard applies to the broker exam. Applicants who fail may retake the exam within the allowed timeframe.

Before a Florida sales associate's initial license expires, the licensee must complete how much post-licensing education?

• a.72 hours, identical to the broker prelicensing requirement
• b.45 hours✓
• c.No additional education until the second renewal period
• d.14 hours of continuing education, the same as every later cycle

A newly licensed Florida sales associate must complete 45 hours of approved post-licensing education before the first license renewal. Failing to do so causes the license to become null and void. This is separate from later continuing education.

After the first renewal, a Florida sales associate must complete how many hours of continuing education each two-year cycle?

• a.14 hours✓
• b.63 hours, repeating the original prelicensing course
• c.45 hours of approved post-licensing coursework
• d.None, provided the license is kept active

After completing post-licensing education, a Florida licensee must take 14 hours of continuing education each two-year renewal cycle, including required law and ethics/business hours. The exact breakdown is set by rule and can change.

A Florida real estate license must be renewed every:

• a.Two years (24 months)✓
• b.Year, on the licensee's birthday
• c.Ten years, unless discipline shortens the period
• d.Five years, matching the broker experience requirement

Florida real estate licenses are issued on a two-year (biennial) renewal cycle. Continuing-education and, for new licensees, post-licensing requirements must be met to renew. Practicing on an expired license is prohibited.

The Florida Real Estate Commission (FREC) is composed of how many members appointed by the Governor?

• a.Nine, including three sitting circuit judges
• b.Seven✓
• c.Eleven, one drawn from each appellate district
• d.Five, all of whom must be active brokers

FREC consists of seven members appointed by the Governor and confirmed by the Senate, including licensed brokers, a broker or sales associate, and consumer members. The exact composition is set in Chapter 475.

FREC operates as part of which state agency?

• a.The Department of Business and Professional Regulation (DBPR)✓
• b.The Florida Department of Financial Services
• c.The U.S. Department of Housing and Urban Development
• d.The real property section of the Florida Bar

FREC functions within the Florida Department of Business and Professional Regulation (DBPR), which provides administrative support and enforcement. FREC handles licensing, rulemaking, and discipline under Chapter 475.

Under FREC rules, a broker who receives an earnest money deposit must place it into the escrow account no later than the end of:

• a.The month in which the purchase contract is signed
• b.Thirty calendar days following the closing date
• c.The third business day after receipt✓
• d.The same business hour in which the funds are received

A Florida broker must deposit trust funds such as earnest money into the escrow account no later than the end of the third business day after receipt. Timely handling of escrow is strictly enforced. Delays can result in discipline.

A Florida sales associate who receives a buyer's earnest money deposit must deliver it to the broker:

• a.Whenever the associate next visits the brokerage office
• b.Within three business days, the same as the broker's deadline
• c.Only after the seller has accepted the offer in writing
• d.By the end of the next business day✓

A sales associate must turn escrow funds over to the employing broker immediately, no later than the end of the next business day. The broker then has until the end of the third business day to deposit them. Associates may not hold escrow funds.

When a broker has conflicting demands on escrowed funds, FREC must be notified in writing within:

• a.24 hours of learning of the dispute
• b.15 business days✓
• c.One full license renewal cycle
• d.30 calendar days after the scheduled closing

A broker with conflicting demands or good-faith doubt about escrowed funds must notify FREC in writing within 15 business days. The broker must then institute a settlement procedure within 30 business days.

After notifying FREC of conflicting escrow demands, a broker must institute a settlement procedure within:

• a.30 business days✓
• b.15 business days, the same as the notice deadline
• c.90 calendar days from the date of the dispute
• d.The end of the current license renewal period

Following the 15-business-day notice to FREC, the broker must institute one of the settlement procedures (EDO, mediation, arbitration, or interpleader) within 30 business days. The broker may not simply keep or arbitrarily release the funds.

The Florida Real Estate Recovery Fund limits reimbursement to how much per single transaction?

• a.The full amount of any uncollected court judgment
• b.$50,000✓
• c.$25,000, regardless of the judgment amount
• d.$150,000, the same as the per-licensee aggregate cap

The Recovery Fund pays a maximum of $50,000 per transaction to reimburse a consumer holding an uncollectible judgment against a licensee. A separate aggregate cap applies per licensee. Payment triggers automatic suspension of that licensee.

The aggregate amount the Recovery Fund will pay for claims against any one licensee is capped at:

• a.$150,000✓
• b.$50,000, matching the single-transaction limit
• c.$500,000 across the licensee's entire career
• d.An unlimited amount until the fund is exhausted

The Recovery Fund limits total payments arising from the acts of a single licensee to $150,000 in the aggregate. Each individual transaction is capped at $50,000. These statutory limits protect the solvency of the fund.

When the Recovery Fund pays a claim on a licensee's behalf, that licensee's license is:

• a.Permanently revoked with no possibility of reinstatement
• b.Downgraded from broker to sales associate status
• c.Automatically suspended until the fund is repaid with interest✓
• d.Unaffected, because the fund exists to protect licensees

Payment from the Recovery Fund results in automatic suspension of the offending licensee's license until the licensee repays the fund in full plus interest. This deters wrongdoing and helps replenish the fund.

The longest period for which FREC may suspend a real estate license is:

• a.An indefinite period at the Commission's discretion
• b.One year for any single violation
• c.10 years✓
• d.Five years, after which revocation becomes automatic

FREC may suspend a license for a maximum of 10 years. More serious violations can lead to revocation, which is more permanent. Penalties are imposed after due process under Chapter 475 and Chapter 455.

FREC may impose an administrative fine of up to what amount for each count of a violation?

• a.$5,000✓
• b.$25,000 aggregated across all counts
• c.$1,000 per license the violator holds
• d.$10,000, but only for a first offense

FREC may levy an administrative fine of up to $5,000 for each count or separate offense. Fines may be combined with suspension, revocation, probation, or other discipline. Amounts are set by statute and can change.

How many statutory duties does a Florida single agent owe to the principal?

• a.Five, the same as a designated sales associate
• b.Ten, including a guarantee of the sale price
• c.Three, the same as a no-brokerage relationship
• d.Seven✓

A single agent owes seven duties: dealing honestly and fairly, loyalty, confidentiality, obedience, full disclosure, accounting for all funds, and skill, care, and diligence. This is the fullest fiduciary relationship allowed in Florida.

Which duty is unique to the transaction broker relationship rather than a single agent relationship?

• a.Obedience to all lawful instructions of the principal
• b.Full fiduciary loyalty to one party
• c.Limited confidentiality✓
• d.A guarantee that the transaction will successfully close

A transaction broker owes limited confidentiality, along with honesty, accounting, disclosure of material facts, and skill and care. It does not owe the full loyalty, obedience, and confidentiality that a single agent owes.

In a no-brokerage relationship, a Florida licensee owes all of the following EXCEPT:

• a.Accounting for all funds entrusted to the licensee
• b.Dealing honestly and fairly
• c.Loyalty and obedience to the customer✓
• d.Disclosing all known facts that materially affect the value of residential property

In a no-brokerage relationship the licensee owes only three duties: honesty and fair dealing, disclosure of known material facts affecting residential value, and accounting for funds. Loyalty and obedience arise only in a single agent relationship.

Under Florida's Chapter 475, dual agency is:

• a.Prohibited✓
• b.Permitted if both parties sign a written consent form
• c.The default relationship presumed with the public
• d.Allowed only in commercial transactions over $1 million

Florida law does not authorize dual agency, in which one licensee fully represents both buyer and seller. Instead, Florida uses single agent, transaction broker (the default), and no-brokerage relationships. Attempting undisclosed dual representation is a violation.

A Florida single agent may change to a transaction broker during a transaction only if:

• a.The broker files a notice with FREC within 15 days
• b.The principal consents before the change✓
• c.The transaction exceeds the designated-sales-associate asset threshold
• d.The buyer and seller are represented by different firms

To transition from single agent to transaction broker, the licensee must obtain the principal's consent, typically through a signed Consent to Transition to Transaction Broker notice, before the change takes effect. Without consent the relationship cannot change.

The single agent notice required in a residential transaction must be:

• a.Recorded in the county's official public records
• b.Delivered orally at the first showing and confirmed later by email
• c.Provided only if the customer specifically asks about representation
• d.In writing, before or when entering into a listing or representation✓

Florida requires the single agent notice to be in writing and given before or at the time of entering into a listing agreement or an agreement to represent a buyer. Proper, timely disclosure of the relationship is mandatory.

A Florida licensee who changes their mailing address must notify the DBPR within:

• a.The next license renewal cycle
• b.30 days, the same as an escrow settlement period
• c.24 hours of the move
• d.10 days✓

A licensee must notify the DBPR of a change in mailing address within 10 days. Keeping current contact information on file is required so official notices reach the licensee. Failing to do so can lead to discipline.

A Florida broker's principal office entrance sign must include the broker's name, any trade name, and the words:

• a.'FREC-Approved Brokerage Office'
• b.'Licensed Real Estate Broker'✓
• c.'Member, National Association of REALTORS'
• d.'Bonded and Insured Real Estate Office'

A broker's entrance sign must show the broker's name (and any registered trade name) together with the words 'Licensed Real Estate Broker' or a permitted abbreviation. This lets the public identify the responsible broker.

'Blind advertising' by a Florida licensee, which is prohibited, is advertising that:

• a.Fails to list the exact square footage of the home
• b.Contains an exaggerated opinion about a property's view
• c.Omits the licensed name of the brokerage firm✓
• d.Is published in a language other than English

Blind advertising conceals the fact that the advertiser is a licensee by leaving out the brokerage's licensed name. Florida requires that advertising include the brokerage name so consumers know they are dealing with a licensed firm.

A Florida broker may pay a share of a real estate commission to:

• a.The buyer directly, as an incentive to close the deal
• b.An unlicensed assistant who showed the property to buyers
• c.Only a properly licensed person✓
• d.Any person who referred the buyer, licensed or not

A broker may share a commission only with a properly licensed person. Paying compensation to an unlicensed person for real estate services is prohibited. Sales associates are paid only through their employing broker.

A Florida sales associate may lawfully be paid a real estate commission by:

• a.Either the buyer or the seller by mutual agreement
• b.The title company handling the escrow account
• c.Only their employing broker✓
• d.The seller directly at the closing table

A sales associate may be compensated for real estate services only by the employing broker, never directly by a buyer, seller, or other party. This preserves the broker's supervisory responsibility under Chapter 475.

FREC rules require a broker to reconcile the escrow (trust) account:

• a.At least monthly✓
• b.At the end of every calendar quarter
• c.Only when a discrepancy is reported by a client
• d.Once during each license renewal cycle

A broker must review and reconcile the escrow account at least monthly, comparing the account balance against the broker's records and outstanding liabilities. Written reconciliation statements must be kept and signed.

A 'broker associate' in Florida is a person who:

• a.Holds a broker license but works under another broker✓
• b.Holds only a sales associate license and manages an office
• c.Is a broker who owns the brokerage outright
• d.Is an unlicensed partner in a brokerage firm

A broker associate holds a broker license but chooses to work under the direction of another broker rather than operate independently. This differs from a sales associate, who holds a lower-level license.

Which of the following is a ground for disciplinary action under Section 475.25?

• a.Placing escrow funds into the trust account on time
• b.Recommending that a buyer consult an attorney before signing
• c.Refusing to carry out an unlawful instruction from a principal
• d.Culpable negligence or breach of trust in a transaction✓

Section 475.25 lists grounds for discipline, including fraud, misrepresentation, concealment, dishonest dealing, and culpable negligence or breach of trust. Lawful, protective acts such as depositing escrow on time are not violations.