Georgia Real Estate Salesperson Exam — All Questions

The principle of contribution states that the value of a component or improvement is measured by:

• a.The raw number of square feet of floor area or land area that the improvement happens to occupy
• b.The owner's personal emotional attachment to and sentimental feelings about that improvement
• c.Its original construction or installation cost in every case, dollar for dollar, with no exception
• d.How much it adds to the overall value of the property, not its cost✓

Under contribution, an improvement is worth the amount it adds to the whole property's market value, which may be more or less than its cost. This principle explains why some renovations do not fully return their expense, a key point in over-improvement analysis.

Under Internal Revenue Code Section 121, a qualifying homeowner may generally EXCLUDE from taxable capital gain:

• a.Up to $250,000 of gain if single, or $500,000 if married filing jointly✓
• b.Up to a full one million dollars of gain on any property at all, at any time and any frequency
• c.All gain on any and every investment or rental property the taxpayer happens to own and sell
• d.Absolutely nothing, because gain on the sale of a home is always fully and entirely taxable

Section 121 lets homeowners who owned and used the home as their principal residence for at least two of the prior five years exclude up to $250,000 of gain (single) or $500,000 (married filing jointly). It applies to a primary residence, not to investment property.

Depreciation recapture on the sale of investment real estate means that:

• a.All of the depreciation deductions previously claimed are simply refunded to the investor in cash
• b.The investor is legally required to physically restore and rebuild the depreciated building itself
• c.Gain from prior depreciation may be taxed, often at a special rate✓
• d.No income tax is ever owed at all on the sale of a property that has previously been depreciated

When depreciated property is sold at a gain, the portion of gain due to depreciation deductions is 'recaptured' and taxed under special rules, reflecting the earlier tax benefit. It is a tax concept, not a requirement to rebuild, and it increases, not eliminates, tax on sale.

Which appraisal approach is generally MOST reliable for a special-purpose property, such as a church or public school, that rarely sells and earns no market income?

• a.The sales comparison approach, which depends on recent sales of similar comparable properties
• b.The income approach, which converts a property's market rental income into an indicated value
• c.The gross rent multiplier method, which relies on typical market rents that these lack entirely
• d.The cost approach✓

Special-purpose properties have few or no comparable sales and generate no market rent, so the cost approach (replacement cost new, less depreciation, plus land) is typically most reliable. Sales comparison lacks comparables and the income/GRM methods need market income these properties do not produce.

The four characteristics an item must have to possess value in the market, often remembered as DUST, are:

• a.Debt, Utility, Supply, and Taxes, a mix of unrelated financing and cost terms rather than value
• b.Demand, Utility, Scarcity, and Transferability✓
• c.Depreciation, Use, Sale, and Title, which describe stages of ownership rather than value itself
• d.Demand, Ownership, Scarcity, and Time, which swaps in two terms that are not part of the concept

For something to have market value it must have Demand (buyers who want it), Utility (usefulness), Scarcity (limited supply), and Transferability (the ability to convey it). The DUST acronym captures these four essentials of value.

An item of personal property that has become permanently attached to real estate, such as a built-in bookcase, is called a:

• a.Chattel
• b.Fixture✓
• c.Trade fixture
• d.Emblement

A fixture is personal property that has been permanently affixed to real estate and is treated as part of the real property. Courts consider the method of attachment, adaptation, and intent to determine fixture status.

Two unmarried business partners take title so that each owns a 60% and 40% share with no right of survivorship. This is:

• a.Joint tenancy
• b.Tenancy by the entirety
• c.Tenancy in common✓
• d.Ownership in severalty

Tenancy in common allows co-owners to hold unequal shares and has no right of survivorship, so each owner's interest passes to their own heirs. Joint tenancy requires equal shares and includes survivorship.

A homeowner wants to operate a small hair salon in a residential zone. The best way to seek permission for this specific departure from zoning is to request a:

• a.A use variance from the zoning board
• b.A building permit from the inspector
• c.A recorded private deed restriction
• d.A special-use (conditional-use) permit✓

A special-use or conditional-use permit allows a specific use that the zoning ordinance permits under conditions, such as a home business. A variance instead addresses hardship deviations like setback relief.

An appraiser is valuing a new special-purpose building, such as a church, with few comparable sales. Which approach is most appropriate?

• a.Cost approach✓
• b.Sales comparison approach
• c.Gross rent multiplier
• d.Income capitalization approach

The cost approach is best for special-purpose or newer properties that rarely sell and produce no income, because it estimates replacement cost minus depreciation plus land value. Comparable sales and income data are scarce for such properties.

When an appraiser adjusts for differences between a comparable property and the subject, adjustments are always made to the:

• a.Subject property's value
• b.Both properties equally
• c.Comparable property's sale price✓
• d.Listing price of the subject

In the sales comparison approach, adjustments are made to the comparable properties, never to the subject. If the comparable is superior, its price is adjusted downward; if inferior, upward.

A loan that is insured by the federal government to protect the lender against borrower default, allowing lower down payments, is a(n):

• a.Conventional loan
• b.FHA-insured loan✓
• c.Purchase-money mortgage from the seller
• d.Blanket mortgage

An FHA-insured loan is insured by the Federal Housing Administration, protecting the lender and allowing lower down payments and more lenient qualifying. A conventional loan carries no government insurance or guarantee.

Which federal law prohibits lenders from denying credit based on race, religion, sex, marital status, or age?

• a.RESPA
• b.Truth in Lending Act
• c.Fair Housing Act
• d.Equal Credit Opportunity Act✓

The Equal Credit Opportunity Act (ECOA) prohibits discrimination in any aspect of a credit transaction based on protected characteristics. It applies to all lending, not just housing.

A contract in which one party has begun performance but obligations remain on both sides is best described as:

• a.An executory contract✓
• b.An executed contract
• c.A void contract
• d.A unilateral contract

An executory contract is one that is not yet fully performed, with obligations remaining. Once all parties have completed performance, the contract becomes executed.

A seller receives an offer and returns it with a higher price. This response is legally a:

• a.Valid acceptance
• b.Counteroffer✓
• c.Contingency
• d.Novation

Changing any material term of an offer creates a counteroffer, which rejects the original offer and creates a new offer the original offeror may accept or reject. No contract exists until an offer is accepted without changes.

Earnest money in a purchase contract primarily serves to:

• a.Pay the listing agent's earned commission
• b.Replace the buyer's down payment in full
• c.Show the buyer's good-faith commitment✓
• d.Guarantee the seller accepts the offer

Earnest money demonstrates the buyer's good-faith intent to complete the purchase and is typically applied to the purchase price or closing costs at closing. If the buyer defaults without a valid contingency, the seller may be entitled to it.

A contract signed by a minor is generally:

• a.Void from the start
• b.Automatically enforceable
• c.Illegal
• d.Voidable by the minor✓

A contract with a minor is generally voidable at the minor's option because minors lack full contractual capacity. The adult party is bound unless the minor chooses to disaffirm the contract.

An agent's duty to promptly account for and deliver all money and property belonging to the client reflects which fiduciary duty?

• a.Loyalty
• b.Obedience
• c.Accounting✓
• d.Confidentiality

The duty of accounting requires the agent to properly handle, report, and promptly deliver all funds and documents belonging to the client. Trust funds must be kept separate and never commingled.

A licensee who assists a buyer in a transaction but represents the seller is acting toward the buyer as:

• a.A customer, owed honesty and fairness only✓
• b.A client owed the full fiduciary duties
• c.A dual agent in the same transaction
• d.A designated agent of the same firm

A person the agent does not represent is a customer, owed honesty, fairness, and disclosure of material facts, but not full fiduciary representation. Fiduciary duties are reserved for the client (principal).

An agent tells a buyer, 'This is the best home in the whole city.' This statement is generally considered:

• a.Fraud
• b.Puffing✓
• c.Misrepresentation
• d.A breach of fiduciary duty

Puffing is an exaggerated opinion or sales talk that a reasonable buyer would not take as a statement of fact. It is legal, unlike misrepresentation or fraud, which involve false statements of material fact.

A latent defect is best described as:

• a.A defect the buyer can easily see on a walkthrough
• b.A cosmetic issue that does not affect value
• c.A hidden material defect not readily observable by the buyer✓
• d.A defect the seller is never required to disclose

A latent defect is a hidden, material problem not discoverable through ordinary inspection, such as a cracked foundation behind a wall. Sellers and agents generally must disclose known latent defects.

A grantor conveys whatever interest they may have in a property with no warranties of title. This is accomplished with a:

• a.Quitclaim deed✓
• b.General warranty deed
• c.Special warranty deed
• d.Bargain and sale deed

A quitclaim deed conveys only whatever interest the grantor holds, if any, and provides no warranties of title. It is often used to clear clouds on title or transfer between family members.

A lender refuses to make loans in a particular neighborhood based on its racial composition. This illegal practice is:

• a.Steering
• b.Redlining✓
• c.Blockbusting
• d.Puffing

Redlining is the illegal practice of denying loans or insurance in specific areas, often based on the racial or ethnic makeup of the neighborhood. It violates the Fair Housing Act and fair lending laws.

An investment property generates $24,000 in net operating income and is valued at $300,000. What is the capitalization rate?

• a.6%
• b.8%✓
• c.12%
• d.4%

Cap rate equals net operating income divided by value: $24,000 / $300,000 = 0.08, or 8%. The cap rate expresses the property's return independent of financing.

A buyer obtains an 80% loan-to-value mortgage on a home priced at $350,000. What is the loan amount?

• a.$70,000
• b.$300,000
• c.$280,000✓
• d.$350,000

An 80% loan-to-value ratio means the loan equals 80% of $350,000, which is $280,000. The remaining $70,000 is the buyer's down payment.

Real estate licensees in Georgia are regulated by which body?

• a.The Georgia Association of Realtors
• b.The Georgia Department of Banking
• c.The Georgia Real Estate Commission (GREC)✓
• d.The county probate court

The Georgia Real Estate Commission (GREC) licenses and regulates real estate brokers and salespersons in Georgia. Trade associations such as the Georgia Association of Realtors do not issue or govern licenses.

In Georgia, a newly licensed real estate salesperson must:

• a.Work under the supervision of a licensed broker✓
• b.Immediately open an independent brokerage
• c.Hold client funds in a personal account
• d.Practice without any continuing education

A Georgia salesperson (associate) must be affiliated with and supervised by a licensed broker, who is responsible for the salesperson's activities and trust funds. Independent practice requires a broker license.

Under Georgia's Brokerage Relationships in Real Estate Transactions Act (BRRETA), a licensee who represents a client owes that client:

• a.Only a general duty of honest dealing
• b.Statutory duties of loyalty and confidence✓
• c.No enforceable duties until the closing
• d.Duties owed to the broker, not the client

BRRETA sets out the statutory duties a Georgia licensee owes to a client, including loyalty, obedience to lawful instructions, disclosure, confidentiality, and accounting. Customers are owed a more limited set of duties such as honesty and disclosure of material facts.

In a typical Georgia residential closing, the settlement is generally conducted by or under the supervision of:

• a.The listing agent
• b.The buyer's lender directly
• c.A licensed Georgia attorney✓
• d.The Georgia Real Estate Commission

Georgia is an attorney-closing state, meaning the closing must be conducted by or under the supervision of a licensed Georgia attorney. This differs from states that permit escrow or title-company closings without an attorney.

How many instructional hours must a Georgia Salespersons Prelicense Course provide?

• a.Sixty instructional hours
• b.Seventy-five instructional hours✓
• c.Twenty-five instructional hours
• d.One hundred instructional hours

GREC course standards set the Salespersons Prelicense Course at a minimum of 75 instructional hours. Sixty hours is the Brokers Prelicense Course and 25 hours is both the Community Association Managers Prelicense Course and the Sales Postlicense Course. Cite: Ga. Comp. R. & Regs. r. 520-2-.04.

Information on a Georgia licensee's own website has gone out of date. How soon must it be updated or removed?

• a.Within ten days of becoming outdated
• b.Within seven days of becoming outdated
• c.Within thirty days of becoming outdated✓
• d.Within ninety days of becoming outdated

The current advertising rule gives 30 days: outdated information on a website maintained by a licensee must be updated or removed within thirty days of becoming outdated. An older version of the rule used a ten-day period tied to listing expiration; the rule in force today is the thirty-day standard. Cite: Ga. Comp. R. & Regs. r. 520-1-.09(5)(c).

What must a newly licensed Georgia salesperson complete during the first year of licensure?

• a.A 25-hour Sales Postlicense course approved by the Commission✓
• b.A 36-hour continuing education sequence including license law
• c.A 75-hour Salespersons Prelicense refresher at an approved school
• d.A 60-hour Brokers Prelicense course taken at an approved school

Within one year of the issuance of an original salesperson's license the licensee must furnish evidence of a post-license course of at least 25 instructional hours approved by the Commission. The 36 continuing education hours belong to the four-year renewal period, not the first year. Cite: Ga. Comp. R. & Regs. r. 520-1-.05(1); O.C.G.A. 43-40-8(d).

A Georgia home sells for $250,000. What is the Georgia real estate transfer tax on the deed?

• a.$25.00
• b.$750.00
• c.$2,500.00
• d.$250.00✓

The rate is $1 for the first $1,000 or fractional part, then 10 cents for each additional $100 or fractional part: $1 + (249,000/100 x $0.10) = $250.00. The $750 figure comes from applying the intangible recording tax rate, and $2,500 from applying a flat one percent. Cite: Georgia Department of Revenue, Real Estate Transfer Tax; O.C.G.A. 48-6-1.

Who is liable for the Georgia real estate transfer tax on a residential sale?

• a.The seller, though the contract often shifts it to the buyer✓
• b.The buyer, though the contract often shifts it to the seller
• c.The closing attorney, who remits it out of settlement funds
• d.The lender, which collects it with the borrower's prepaid items

The Department of Revenue states that the seller is liable for the real estate transfer tax, although the parties frequently agree in the sales contract that the buyer will pay it. The tax must be paid before the deed can be recorded with the clerk of the superior court. Cite: Georgia Department of Revenue, Real Estate Transfer Tax; O.C.G.A. 48-6-1.

At what age may a Georgia candidate sit for the broker's examination, and at what age may the license be activated?

• a.Sit the exam at 18, activate the license at 18
• b.Sit the exam at 19, activate the license at 21
• c.Sit the exam at 20, activate the license at 21✓
• d.Sit the exam at 21, activate the license at 21

GREC states that an individual must be at least 21 to be licensed as a broker or associate broker, and that applicants may take the broker's examination at age 20 but cannot activate the license until 21. A salesperson, by contrast, must be 18. Cite: Georgia Real Estate Commission, Obtaining a License - Real Estate (Broker).

A Georgia seller tells a licensee, "Get me $300,000 and keep anything above it." How must the licensee treat that arrangement?

• a.Accept it, but disclose the arrangement to the buyer in writing
• b.Accept it only with the written consent of the qualifying broker
• c.Accept it only if the excess is deposited into the trust account
• d.Refuse it; the broker must add a fee and quote a gross price✓

The Commission prohibits brokers from accepting net brokerage engagements and makes it obligatory for the broker to add the broker's fee, so the client is told the gross price of the property and the broker's services. No disclosure or consent cures a net engagement. Cite: Ga. Comp. R. & Regs. r. 520-1-.06(1)(c).

What does GREC require of every exclusive brokerage agreement?

• a.It may run until either party gives thirty days' written notice
• b.It must set out its terms fully and have a definite expiration date✓
• c.It must be filed with the Commission within one month of signing
• d.It must be renewed in writing at the end of every ninety-day term

Each exclusive brokerage agreement must fully set forth its terms and have a definite expiration date, and the licensee securing it must furnish each person signing it a true copy at that time. Brokerage engagements are not filed with the Commission. Cite: Ga. Comp. R. & Regs. r. 520-1-.06(1)(a)-(b).

Before a Georgia broker places earnest money into an interest-bearing trust account, what must the broker have?

• a.Approval of the account by the Commission's staff accountant
• b.A court order directing who is entitled to the interest earned
• c.Notice to the parties that interest will be paid to the broker
• d.A written agreement of the parties on who receives the interest✓

If a broker elects to deposit funds into an interest-bearing trust account, the broker must obtain the written agreement of the parties indicating to whom the interest will be paid before those funds are deposited. Keeping the interest without that written agreement is a separately citable violation. Cite: Ga. Comp. R. & Regs. r. 520-1-.08(1)(d).

May a Georgia firm's unlicensed assistant sit an open house and hand out flyers?

• a.No; hosting an open house is a prohibited task for support personnel✓
• b.Yes, if the broker has approved the assistant's task list in writing
• c.Yes, if the assistant is paid hourly rather than by commission
• d.Yes, if the assistant only hands out brochures the broker approved

The Commission's task guidelines expressly list hosting open houses, kiosks, home show booths or fairs among the tasks support personnel shall not perform. Support personnel may accompany a licensee to an open house only for security purposes. Cite: Ga. Comp. R. & Regs. r. 520-1-.07(6)(f).

A Georgia salesperson takes a buyer's earnest money check on a Saturday. What does the rule require of the salesperson?

• a.Deposit it into the firm's trust account by the next business day
• b.Place it in the broker's custody as soon as practicably possible✓
• c.Hold it until the seller accepts, then deliver it to the broker
• d.Return it to the buyer if the broker's office is closed that day

A licensee must place all cash, checks or other items of value received in a brokerage capacity into the custody of the broker holding the licensee's license as soon after receipt as is practicably possible. The salesperson does not make the deposit; the broker does. Failing to turn funds over carries a $500 citation fine. Cite: Ga. Comp. R. & Regs. r. 520-1-.08(1)(b); r. 520-1-.14(3)(a).

A candidate passes the Georgia salesperson's examination and applies for a license four months later. What is the consequence?

• a.The candidate must retake the salesperson's qualifying examination
• b.The candidate must repeat the 75-hour Salespersons Prelicense Course
• c.The candidate may apply but pays double the original fee✓
• d.The candidate must ask the Commission in writing for an extension

Application must be made within three months of the examination date; after three months the applicant pays a fee equal to twice the original application fee. Only after twelve months does the examination have to be retaken. Cite: Ga. Comp. R. & Regs. r. 520-1-.04(5)(a).

How long after passing the Georgia salesperson's examination may a candidate still apply for a license without retesting?

• a.Three months from the date of the examination
• b.Six months from the date of the examination
• c.Two years from the date of the examination
• d.Twelve months from the date of the examination✓

Anyone who fails to apply for a salesperson's license within twelve months of the examination date must retake the examination. The three-month mark is the point at which the application fee doubles, not the point at which the score expires. Cite: Ga. Comp. R. & Regs. r. 520-1-.04(5)(a).

What must appear on every viewable web page of a Georgia licensee's real estate website?

• a.The licensee's six-digit Georgia license number
• b.The name and the telephone number of the licensee's firm✓
• c.A statement that the licensee is an independent contractor
• d.The date the listing information was most recently updated

Internet advertising of real estate for sale, rent, lease or exchange must disclose the name and telephone number of the licensee's firm on every viewable web page; where character limits prevent it, the ad must link directly to a compliant display. Cite: Ga. Comp. R. & Regs. r. 520-1-.09(5).

How long must a Georgia broker keep the written monthly trust account reconciliation statements?

• a.One year from the date each statement is prepared
• b.Two years from the date each statement is prepared
• c.Three years from the date each statement is prepared✓
• d.Seven years from the date each statement is prepared

A broker must cause a written reconciliation comparing total trust liability with the reconciled bank balances to be made at least monthly, must review it, and must keep copies in the broker's files for a period of three years. Cite: Ga. Comp. R. & Regs. r. 520-1-.08(6)(a).

A Georgia corporation's qualifying broker resigns without notice. How long may the firm continue brokerage business?

• a.Thirty days, within which it must name a new qualifying broker
• b.Sixty days, in which to name a new qualifying broker✓
• c.Ninety days, within which it must name a new qualifying broker
• d.Not at all; it must cease brokerage activity immediately

When a qualifying broker dies, resigns or is discharged unexpectedly, the firm must secure a new qualifying broker within 60 days or cease all real estate brokerage activity until it does. Meanwhile it must designate an officer, member or partner to sign filings and disburse trust funds. Cite: Ga. Comp. R. & Regs. r. 520-1-.07(3).

When does an individual Georgia real estate license lapse if the renewal fee is not paid?

• a.On the last day of the month of the licensee's birthday✓
• b.On the last day of the month the license was first issued
• c.On December 31 of the fourth year of the renewal period
• d.On the fourth anniversary of the date the license issued

An individual license lapses on the last day of the month of the licensee's birthday; a firm licensed as a broker lapses on the last day of the month of the fourth anniversary of its original licensure. Renewing the broker's individual license does not renew the firm's license. Cite: Ga. Comp. R. & Regs. r. 520-1-.05(3).

A Georgia salesperson wants to buy a rental house for her own account. What must she do first?

• a.Get the qualifying broker's written consent to the purchase price
• b.File notice of the intended purchase with the Commission
• c.Advise the broker holding her license in writing beforehand✓
• d.Place the transaction under a brokerage engagement with the firm

No licensee may buy, sell, lease, exchange or option real estate in the licensee's own name, or in the name of an entity in which the licensee is an officer, employee, beneficiary or member, without first advising in writing the broker for whom the licensee acts. Consent is not what the rule requires; prior written notice is. Cite: Ga. Comp. R. & Regs. r. 520-1-.11(1).

A Georgia salesperson advertises his own home, which is not listed with any firm. What must the advertisement include?

• a.The name and telephone number of his firm as registered
• b.A note that the property is offered by owner without a broker
• c.The words "not a brokerage transaction" near the asking price
• d.A legend that the seller holds a Georgia real estate license✓

A licensee advertising real estate the licensee owns and that is not under a brokerage engagement must include either the legend that the seller, buyer, landlord or tenant holds a real estate license, or the legend "Georgia Real Estate License #" with the six-digit number. Written notice to and approval from the broker are also required. Cite: Ga. Comp. R. & Regs. r. 520-1-.09(8).

What continuing education must an active Georgia salesperson show in order to renew?

• a.24 hours per renewal period, of which 3 hours are license law
• b.36 hours per renewal period, of which 3 hours are license law✓
• c.36 hours per renewal period, of which 6 hours are license law
• d.18 hours per renewal period, of which 3 hours are license law

Thirty-six instructional hours of continuing education are required for each four-year renewal period, effective July 1, 2015, and at least three of those hours must be on the topic of license law, effective July 1, 2016. The 2025 rule change added an 18-hour broker education requirement for brokers only; salesperson requirements were not changed. Cite: Ga. Comp. R. & Regs. r. 520-1-.05(1)(d)-(f).

GREC exempts some active Georgia licensees from continuing education entirely. Which ones?

• a.Those licensed only as community association managers
• b.Those who also hold an active license in another state
• c.Those whose Georgia real estate license number is below 100,000✓
• d.Those who have held a Georgia license for twenty years

GREC applies the continuing education requirement to active licensees whose license number is above 100,000; a licensee whose number is below 100,000, meaning licensure before 1980, is not required to complete continuing education. A non-resident is not exempt, but may satisfy the requirement with proof from the resident state. Cite: Georgia Real Estate Commission, Education Requirements - Real Estate.

A Georgia broker opens a second designated trust account. What does the rule require?

• a.Notify the Commission of the institution and account within one month✓
• b.Obtain the Commission's written approval before accepting any deposit
• c.File a certified public accountant's report on the new account at once
• d.Register the account with the Commission at the next license renewal

Brokers may maintain more than one designated trust or escrow account but must notify the Commission of the name of the financial institution and each account's name or number within one month of opening each account. Failure to register an account is a $600 citation fine per account. Cite: Ga. Comp. R. & Regs. r. 520-1-.08(1)(a); r. 520-1-.14(3)(n).