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welcome to the 2021 michigan real estate exam this test has 60 questions with explained answers that will help you prepare for the test before we get started we want to tell you about our free real estate exam cheat sheet that is packed with tips to help you pass the exam on your first try you can get it by clicking the first link in the description now let's get started and good luck question one how much time is given to pass the michigan salesperson exam a two hours b three hours c 3.5 hours d 4 hours the correct answer is c 3.5 hours candidates will be given 210 minutes or 3.5 hours total includes state and national portion to complete the examination question two how many hours of pre-licensing education do you need in michigan a 30 hours b 40 hours c 50 hours d 60 hours the correct answer is b 40 hours michigan requires one course to get your real estate license a 40 hour fundamentals of real estate for salespersons course question three how old do you have to be in michigan to obtain a real estate license a 25 years old b 21 years old c 20 years old d 18 years old the correct answer is d 18 years old you must be at least 18 years of age you must be either a u.s citizen or a lawfully admitted alien meet trec's qualifications for honesty trustworthiness and integrity question four biff is hired by owner gilligan to oversee a residential property complex including supervising complex employees and maintenance but he has limited authority biff is the a lessee b property manager c leasing agent d managing agent the correct answer is b property manager a property manager oversees the property on behalf of the owner and is typically required to oversee employees and maintenance and protect the interest of and obtain the optimum financial return for the property owner who employs the manager a lsc is the tenant of a property pursuant to a lease a leasing agent is retained by a property owner to locate tenants for the owner's building a managing agent has more power than a property manager including the ability to use their judgment and discretion in matters affecting the property question five paula enters into a contract for the purchase of jordan's home paula applies for a mortgage the contract requires her to get a document from her mortgage lender stating that the lender will be loaning her the necessary funds what is that document called a an assurance b a promissory note c a commitment d a letter of approval the correct answer is c a commitment a commitment is a document from a mortgage lender stating that the lender will be loaning the purchaser or borrower the necessary funds the promissory note contains the borrower's promise to repay the debt and the manner and frequency of payment example monthly via check the note also contains the principal balance owned and the interest rate a letter of approval may refer to a pre-approval letter issued by the lender to show potential sellers that the borrower may be approved for a loan for a particular amount question six rowland a broker arranges a sale and opens escrow before escrow closes his license is revoked by the department of real estate dre what happens to roland's commission a roland's commission goes to the real estate education research and recovery fund b the seller does not have to pay any commission c the commission is split between the buyer and seller d roland gets his commission the correct answer is d roland gets his commission the broker's commission is earned when a ready willing and able buyer is found thus since the broker was licensed at the time he procured a buyer as contracted for he is able to collect his fee question seven the blank prohibits an employer from discriminating against a person with a disability seeking employment based on their disability a civil rights act of 1964 b americans with disabilities act ada c civil rights acts of 1866 and 1870 d unruh law the correct answer is b americans with disabilities act ada the americans with disabilities act ada protects against discriminatory conduct against a person seeking employment question 8 salesperson sally advertised in a newspaper that anyone who bought a home through her services would receive a free home appliance valued up to five hundred dollars such an advertisement is a illegal under any conditions b legal provided the chance to win is disclosed c legal provided full disclosure is made to all interested parties d illegal since the value exceeds 300 the correct answer is c legal provided full disclosure is made to all interested parties disclosure is key to most such questions provided everyone is made aware of the promotion and its terms this is a perfectly acceptable business practice question nine a prohibition against a for sale sign in a residential neighborhood a is permitted provided it applies to everyone in the neighborhood equally b violates the fifth amendment c violates the first amendment d violates the fourteenth amendment the correct answer is c violates the first amendment prohibiting the display of for sale signs is a violation of the first amendment freedom of speech right and prohibits the free flow of truthful commercial information a homeowners association hoa may impose reasonable rules about the posting of a for sale sign though cannot prohibit it question 10 a newspaper advertisement is considered blind when it a doesn't include the property address b contains misleading information c doesn't state the sales price d fails to state the fact the advertiser is a broker or agent and does not include their department of real estate dre license number the correct answer is d fails to state the fact the advertiser is a broker or agent and does not include their department of real estate dre license number the lack of licensee identification creates the blind ad question 11 if a group of brokers agreed to divide a market area or set commission rates it would a be a cooperative business practice b create an extra protection for consumers c violate real estate law d violate antitrust law the correct answer is d violate antitrust law any restraint of trade is a federal antitrust violation question 12 any suggestion by a licensee that the racial makeup of a neighborhood is changing to induce panic selling is an example of a blockbusting b steering c redlining d usury the correct answer is a blockbusting blockbusting also known as panic selling is the prohibited practice of inducing a person to offer a dwelling for sale by creating fear over the changing demographics within the neighborhood question 13 the uniform commercial code which pertains to a bulk sale transfer exists primarily for the protection of a creditors b buyers c sellers d customers the correct answer is a creditors creditors need protection from those who might attempt to walk away from their debt obligations question 14 when purchasing a business the buyer needs to be certain a certificate of clearance has been issued by the a secretary of state sos b department of business and transportation dbt c alcoholic beverage control a b c d state board of equalization s-b-o-e the correct answer is d state board of equalization s-b-o-e the certificate of clearance issued by the state board of equalization sboe assures the buyer of a business opportunity that any taxes do have been paid question 15 a good example of an implied contract is a an agent is told by a potential seller that he'd like the agent to do a market analysis b a tenant staying despite not paying rent c after a written lease expires rent is paid and the check cashed d a tenant communicating that they expect the full deposit back because the landlord did not ever note damage to the property the correct answer is c after a written lease expires rent is paid and the check cashed the owner shows through his actions that the contract is still valid even though it is now simply implied question 16 which of the following is not true regarding a contract of sale a it must be signed by all parties b it must be notarized c pre-printed contracts are acceptable d it is acceptable to refer to a document that is in the public record if the property description is very complex the correct answer is b it must be notarized signatures on a contract of sale do not have to be notarized the other options are all true regarding contracts of sale pre-printed contracts are typically used in residential transactions and if something is not desired not applicable both parties need to initial the alterations they make question 17 deed restrictions and easements on a property are considered blank when written into the deed a a turnaround investment b a consideration c a bad investment d exceptions and reservations the correct answer is d exceptions and reservations exceptions and reservations are restrictions or limitations explicitly described in the deed question 18 in a real estate transaction the blank is the current owner of the property and is conveying his or her property to someone else a grantor b guarantor c agent d landlord the correct answer is a grantor the grantor grants a piece of property to the grantee to complete a transfer of real estate question 19 substituting a new obligation for an existing one with the intent to cancel the latter is called a novation b latches c assignment d execution the correct answer is a novation novation is when a new contract is used to replace the initial contract question 20 why are net listings generally frowned upon in the real estate industry a the broker typically takes a smaller than average commission b all of these c they drive down the prices of homes for sale d they can lead to brokers taking advantage of property owners the correct answer is d they can lead to brokers taking advantage of property owners in a net listing the seller names a price they want for their property and any amount above that sale price goes to the broker net listings are frowned upon in many states and illegal in others because they can lead to brokers not acting in the best interest of the seller for example if a seller wanted 150 000 for their home and there was an offer for 152 000 in a net listing the broker may be tempted to not accept the offer because his commission on the sale would be relatively small question 21 a seller's broker sold a property to a buyer four months later when the first raise of the season began the buyer discovered significant roof leaks the buyer sued both the seller and the broker for the cost of repairs the seller sued the broker in the same action since the seller had informed the broker numerous times the building needed a new roof the broker's testimony in court revealed the broker was aware of the leaky roof but had not mentioned it to the buyer since the issue of the leaking roof was not mentioned by the buyer what is the most likely result of the court action a on the basis of the principle of caveat emptor the buyer is not entitled to recover from either the broker or the seller b the buyer may recover from the broker but the seller would not be liable c the buyer may recover from the seller but the broker would not be liable d the buyer may recover from both the seller and the broker further the seller would recover in the suit against the broker the correct answer is d the buyer may recover from both the seller and the broker further the seller would recover in the suit against the broker the lack of disclosure between the broker and the buyer causes the broker to be the responsible party therefore the buyer may recover from both the seller and the broker further the seller may also recover from the broker since the broker was informed of the leaky roof by the seller and did not disclose it to the buyer in actual practice the seller would have disclosed a leaky roof in the transfer disclosure statement tds question 22 a real estate broker takes listing on a residential property the broker likes the property and chooses to buy it in the name of a separate investment company he owns which of the following statements is most correct a the broker has failed to serve the client's best interest and cannot collect a fee b the broker may offer to purchase the property but must first disclose to the seller that they are the buyer c the broker may purchase the property but may only accept half of his agreed to fee d the broker need not disclose his interest in the investment property so long as he is not the sole owner of it the correct answer is b the broker may offer to purchase the property but must first disclose to the seller that they are the buyer disclosure is the critical point in this question there is nothing wrong with purchasing the property provided the broker makes full disclosure to the client and receives their consent question 23 subprime loans are usually an option for a people with great credit who want to remove any interest payment entirely b people with subpart credit and come with a lower interest rate c people with great credit who get a lower interest rate d people with subpar credit and come with a higher interest rate the correct answer is d people with subpar credit and come with a higher interest rate subprime loans carry a higher interest rate because the bank lender feels they carry greater risk of full repayment question 24 most real estate loans deal with simple interest the formula for which is a rate times monthly payment equals annual interest b annual interest times monthly payment equals rate c rate times loan balance equals annual interest d none of these the correct answer is c rate times loan balance equals annual interest the annual interest in a simple interest setup is the balance of the loan multiplied by the interest rate note from our real estate expert when taking the real estate exam you may need to choose from a group of answers in which none of them is the answer you might have in mind when this happens find an answer that is correct and choose that one in this case you might have been thinking that i equals prt i equals principal times rate times time and that would be correct but it is not one of the choices be ready for confusing questions like this one when you take this test question 25 a buyer of a common interest development cid is entitled to receive all except copies of a a homeowner warranty b the governing conditions covenants and restrictions cc and ours c the homeowners association hoa bylaws d the hoa's financial statement the correct answer is a a homeowner warranty a buyer of a condominium or property in a planned urban development pud has the right to receive copies of all the association and subdivision information and documents a homeowner warranty is an insurance policy that is purchased separately by the buyer question 26 under no circumstances may a real estate broker misrepresent a material fact to a buyer if they do the broker faces a disciplinary action by the department of real estate d r e b criminal action c civil action d any of the above the correct answer is d any of the above a material fact is one that affects the value and desirability of a property as such the failure to disclosure is a significant breach of the broker's fiduciary duty to their client if the failure to disclose rises to the level of fraud or deceit the broker may be subject to civil or criminal penalties depending on the nature of the misconduct question 27 it is least likely to be a violation of the real estate law for a broker to pay a portion of the commission to and a unlicensed assistant b a sales person working for another broker c unlicensed person who obtained the listing d buyer or seller in the transaction the correct answer is d buyer or seller in the transaction paying a portion of their commission to a buyer or seller in a transaction is allowable provided full disclosure is made to all parties each of the other answer selections is against the law question 28 gradual liquidation through periodic payments of principal and interest is called a a reverse annuity mortgage b an amortized loan c a heloc d a take out loan the correct answer is a an amortized loan amortized loans are the norm in most residential real estate and gradually lower the owed amount through monthly payments to principal and interest question 29 how does an arm mortgage differ from a fixed rate mortgage the fixed rate will always be the most fiscally smart choice b arm stands for adjustable rate mortgage whose rate may vary with changes in interest rates c there is no difference d upon default the borrower must give up his or her left or right arm the correct answer is b arm stands for adjustable rate mortgage whose rate may vary with changes in interest rates fixed rate mortgages are locked in at the same rate for the life of the loan while arm mortgages have a rate that can float or ride market rates question 30 a latino real estate agent working in a hispanic neighborhood informed current owners they should move out because another ethnic group is moving into the area this conduct is an example of all of the following except a blockbusting b panic selling c a legal practice but an ethical d an illegal practice the correct answer is c a legal practice but unethical discrimination can occur among any protected group here's an example of a question that can cause confusion simply by the structure of answer choice c if the act is illegal answer choice d then it cannot be legal regardless of being classified as ethical or not question 31 when the agent and the principal agree that the agent will represent the principal it is called a express agency b implied agency c principal agency d representative agency the correct answer is a express agency with express agency both the agent and principal must come to a verbal or written agreement about representation question 32 when the agent and the principal have not officially agreed that the agent will represent the buyer but their actions imply this it is called a implied agency b alter agency c insinuated agency d express agency the correct answer is implied agency legally if both parties have taken actions toward a sale then the agent and principal have entered into an implied agency question 33 when a principal doesn't stop an agent from going beyond his or her normal line of duties this is called a agency by alteration b agency by fair use c agency by association d agency by estoppel the correct answer is d agency by estoppel agency by estoppel is created when agents perform duties outside of what they would normally do though related to what their initial task was question 34 when an agreement is formed between an agent and a principal after a sale is confirmed this is called a agency by restitution b agency by ratification c agency by prior agreement d agency by foreclosure the correct answer is b agency by ratification if an agent sells a piece of property without any contract or permission from the principal the principal may create an agency by ratification by approving the sale anyway question 35 when an agent is invested in a project outside his or her agent status this is called a agency coupled with an interest b agency impetus c agency coupled with a principal d agency turnaround the correct answer is a agency coupled with an interest agency coupled with an interest is when an agent invests time or money in a property and also agrees that before doing so he or she will be the agent but one is not conditional on the other question 36 when a broker is given the right to collect the commission no matter who sells a property this is an a secondary right to sell listing b exclusive right to sell listing c primary right to sell listing d executive right to sell listing the correct answer is b exclusive right to sell listing an exclusive right to sell listing is very straightforward the broker is given the exclusive right to sell a property and will collect a commission if someone else sells it question 37 when a homeowner reserves the right to sell his or her own property but offers the exclusive right for only one agent this is an a exclusive agency listing b executive agency listing c homeward agency listing d homebound agency listing the correct answer is a exclusive agency listing an exclusive agency listing is almost identical to an exclusive right to sell listing except the homeowner can sell the property themselves and not have to pay a fee to the agent question 38 when a property owner wishes to use multiple agents to sell a property this is an a open listing b agent listing c owner operator listing d exclusive listing the correct answer is a open listing an open listing is also called a non-exclusive or general listing and is not exclusive question 39 when a broker is hired to sell a property for a minimum price then keep anything over that price this is an a open listing b closed listing c blowout listing d net listing the correct answer is d net listing net listings are illegal in many states while some other states require that the amount of commission a broker can earn is percentage based and negotiated before the sale question 40 blank were put in place to make sure the property buyers rights are protected a broker agency agreements b buyer agency agreements c anti-trust agency agreements d primary agreements the correct answer is b buyer agency agreements as real estate buyers became aware that most agents were protecting the seller's interest buyer agency agreements were created to protect buyers interest question 41 which deed is used to release rights to property in an effort to obtain clear title a warranty deed b reconveyance deed c quit claim deed d bargain and sale deed the correct answer is c quit claim deed there is no warranty afforded with a quit claim deed and the grantor gives up all rights to the property in a bargain in sale deed the grantor does maintain that he or she has an interest in the property a reconveyance deed is used when a borrower homeowner is released from a mortgage records will show that the mortgage has been paid off question 42 what is the term for restrictions easements or liens that give others rights to a property a joint tenancy b is cheat c encumbrances d emblems the correct answer is c encumbrances encumbrances give land use rights to others besides the owner such as right of ways question 43 blank is the right to acquire ownership of private real estate for public use a severance b imminent domain c attachment d as cheat the correct answer is b imminent domain when a government agency or a private entity needs land for public use they access private land through imminent domain question 44 blank is the right of the government to acquire property when the owner dies interstate and has no heirs eligible to inherit the property a as cheat b claimancy c severance d imminent domain the correct answer is a is cheat when a property owner dies without a will or survivors the state assumes title through as cheat question 45 upon sale the instrument that conveys ownership rights to personal property is a blank and that dealing with real property is a blank a land sales contract deed b deed land sales contract c deed bill of sale d bill of sale deed the correct answer is d bill of sale deed a bill of sale transfers title to personal property and a deed transfers title to real property question 46 as is the case with most homes what is the term for pledging something as security for a loan without the necessity of giving it up a freehold estate b security agreement c lease back agreement d hypothecation the correct answer is d hypothecation hypothecation allows a property owner to use the property as security for the loan while still being able to occupy it what is a right to use another's land called a emblement b easement c estoppel d as cheat the correct answer is b easement easements such as party walls connecting adjoining dwellings allow others the right to use another's land question 48 blank are annual crops planted on real property but are considered personal property a implements b recreation c reversions d bargain and sale deed the correct answer is a implements usually for agricultural easements emblems or crops that are considered personal property while still being attached to the land question 49 what is the most desirable deed that provides the greatest amount of protection for the grantee a bargain and sale deed b warranty deed c quit claim deed d trustee deed the correct answer is b warranty deed when a warranty deed is given the grantee is protected from any person who claims it and any liens against the property by the grantor question 50 an estate that is of indefinite duration is called a blank estate a non-freehold b freehold c leasehold d reversion the correct answer is b freehold the only type of estate without constraints on duration is a freehold estate question 51 most appraisers work a for the property owner on a fee-for-service basis b for the real estate agency on a fee-for-service basis c independently on a fee-for-service basis d for the real estate agency on a retainer the correct answer is c independently on a fee-for-service basis to avoid conflicts of interest most appraisers work independently on a fee for service basis question 52 the property being appraised is called a the object property b the valuation property c the adjunct property d the subject property the correct answer is d the subject property the subject property refers to the property being appraised question 53 an appraisal will not help you with a imminent domain b estate valuation c fair market interest d mortgage approval the correct answer is see fair market interest an appraisal is usually performed on a piece of property to help with buying selling eminent domain estate valuation exchanges of ownership mortgage approval property and other taxes and various court proceedings question 54 location is a important in determining property value b unimportant in determining property value c the only factor in determining property value d irrelevant in determining property value the correct answer is a important in determining property value location is one of many factors in determining property value and may be the most important question 55 the location of a piece of property a can both increase and decrease its value b does not affect its value c can increase its value d can decrease its value the correct answer is a can both increase and decrease its value the location of a piece of property can both increase and decrease its perceived value as the many factors surrounding that location fluctuate including school districts crime rates traffic access to employment and many more question 56 heavy vehicle traffic will a affect the value of property based on whether it is residential or commercial b increase the value of property c decrease the value of property d not affect the value of property the correct answer is a affect the value of property based on whether it is residential or commercial vehicle traffic can affect the value of property as generally less traffic is desired around residential property while more of certain types of traffic is desired around commercial property generally businesses prefer high traffic if it is of the type to bring additional customers to them types of traffic that would not be appreciated by businesses would include traffic produced by neighboring manufacturing businesses junkyards and car dealers question 57 the change in value of a piece of property based in its location is not affected by a hazards and nuisances b proximity to transportation c amenities and services d pass performance the correct answer is d past performance location affects the value of property through the following factors access to employment amenities and services hazards and nuisances nearness to transportation neighborhood compatibility safety schools and traffic question 58 fair market value cannot be established unless a transaction is considered a recorded b free of probate c unilateral d arms length the correct answer is d arm's length an arms length transaction is one where both parties are free of duress and potential conflicts of interest only in an arm's length transaction can the agreed-upon value be considered fair market question 59 value in use is a added property value based on a specific person using it for a specific purpose b the value of using a property that anyone can benefit from financially c added property value based on a government sanction allowing it to be used for general purposes d added property value based on a typical person using it for a typical purpose the correct answer is a added property value based on a specific person using it for a specific purpose value in use is an added property value unavailable to the typical buyer because it's for a specific person using it for a specific purpose question 60 a public walkway within a condominium community a needs to be at least five feet wide b must be made of concrete c exist in a common area d is maintained by individual owners the correct answer is c exist in a common area can you visualize exceptions that would make answer selections a and b incorrect for instance some walkways may be narrower than five feet or made of asphalt answer choice d cannot be correct as the homeowners association hoa within a condominium community is responsible for the maintenance of common areas and facilities thus c is the best option as public walkways always exist in a common area in an hoa community thank you for watching this video and remember to get your free cheat sheet by clicking the first link in the description don't forget to share this video with your friends and subscribe for more practice tests