Sample practice questions

A few real questions from this free bank, with full explanations. Use the practice tool above for the whole set.

1. 1. Property Ownership

   A homeowner installs custom built-in bookshelves that are bolted to the wall studs. Absent an agreement, these built-ins are most likely considered:

   • a.Personal property the seller may remove
   • b.Trade fixtures owned by the buyer's lender
   • c.Fixtures that convey with the real property
   • d.Emblements belonging to the seller

   Answer: c

   Explanation: An item permanently attached and adapted to the property is a fixture and normally conveys with the real estate unless the contract says otherwise. Method of attachment (bolted to studs) and adaptation strongly indicate a fixture. Emblements are annual crops.

2. 2. Valuation and Market Analysis

   An investor is valuing an apartment building. The appraiser divides the building's net operating income by a capitalization rate. This reflects the:

   • a.Cost approach
   • b.Income approach
   • c.Sales comparison approach
   • d.Assessed value method

   Answer: b

   Explanation: The income approach values income-producing property by capitalizing net operating income (NOI divided by cap rate equals value). It is the primary approach for investment property such as apartments, where income potential drives value.

3. 3. Financing

   A buyer assumes the seller's existing loan and also gives the seller a new, larger loan that 'wraps around' the old one. This financing technique is a:

   • a.Wraparound mortgage
   • b.Reverse mortgage
   • c.Purchase-money bridge loan
   • d.Blanket release

   Answer: a

   Explanation: A wraparound mortgage is a junior loan that includes (wraps around) an existing loan, which stays in place. The buyer pays the wraparound lender, who continues paying the underlying loan. It is a form of seller financing, subject to any due-on-sale clause.

4. 4. Contracts

   A buyer and seller agree to replace their original purchase contract with an entirely new contract, discharging the old one. This substitution is called:

   • a.Assignment
   • b.Rescission by mistake
   • c.Estoppel
   • d.Novation

   Answer: d

   Explanation: Novation is the substitution of a new contract or new party for an existing one, with the intent to discharge the original obligation. Assignment transfers rights under the existing contract but does not necessarily release the original party.

5. 5. Agency

   An agent exaggerates that a home has 'the best view in the entire city.' This kind of non-factual sales talk is known as:

   • a.Fraud
   • b.Negligent misrepresentation
   • c.Puffing
   • d.Latent defect

   Answer: c

   Explanation: Puffing is opinion-based sales talk that a reasonable buyer would not rely on as fact, such as calling a view 'the best.' It is generally not actionable. Fraud and misrepresentation involve false statements of material fact that induce reliance and harm.

6. 6. Practice of Real Estate

   A lender refuses to make loans in a specific older neighborhood regardless of the applicant's qualifications. This illegal practice is called:

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

   Answer: d

   Explanation: Redlining is the illegal practice of denying loans or insurance in particular areas, often correlating with the racial or ethnic makeup of a neighborhood. It violates fair housing and fair lending laws. Steering and blockbusting are separate prohibited practices.

7. 7. Property Management

   A landlord wrongfully makes an apartment uninhabitable, effectively forcing the tenant to leave. This is known as:

   • a.Actual eviction by court order
   • b.Constructive eviction
   • c.Novation of the lease
   • d.Subletting

   Answer: b

   Explanation: Constructive eviction occurs when a landlord's failure to maintain habitable conditions substantially interferes with the tenant's use, effectively forcing them out. The tenant may be released from the lease. Actual eviction is a formal legal process to remove a tenant.

8. 8. Washington License Law (RCW 18.85)

   Real estate licensing in Washington is administered by the Department of Licensing under which chapter of the Revised Code of Washington?

   • a.RCW 64.06
   • b.RCW 18.85
   • c.RCW 59.18
   • d.RCW 84.40

   Answer: b

   Explanation: Washington real estate broker licensing is governed by RCW 18.85 and administered by the Washington State Department of Licensing (DOL). RCW 64.06 covers the seller disclosure statement, and RCW 59.18 is the Residential Landlord-Tenant Act.

9. 9. Washington Agency Law (RCW 18.86)

   In most Washington residential resales, the seller must give the buyer a completed real estate 'Form 17.' This form is the:

   • a.Lead paint addendum
   • b.Purchase and sale agreement
   • c.Seller Disclosure Statement required under RCW 64.06
   • d.Escrow instruction letter

   Answer: c

   Explanation: Washington's Form 17 is the Seller Disclosure Statement required by RCW 64.06 for most residential sales. The seller discloses the known condition of the property and systems. The buyer typically has a right to rescind within a set period after receiving it if not satisfied.

10. 10. Washington Practice & Closing

    When a Washington firm receives earnest money, the funds must generally be:

    • a.Spent on marketing the property
    • b.Given to the seller before closing
    • c.Kept as cash by the individual broker
    • d.Deposited into the firm's trust account and handled per RCW 18.85 rules

    Answer: d

    Explanation: Earnest money and other client funds must be deposited into the firm's real estate trust account and handled according to the requirements of RCW 18.85, not commingled with personal or operating funds. The designated broker is responsible for the trust account.