Try 10 Free Practice Questions

1. Course 1: Real Estate Essentials

   1. A married couple purchases a home as joint tenants. One spouse dies. What happens to their interest in the property?

   • A)It passes to their estate and is distributed according to their will.
   • B)It automatically passes to the surviving spouse through the right of survivorship.
   • C)The property must be sold and the proceeds divided with the estate.
   • D)The surviving spouse must apply to the court to claim the interest.
   Show answer and explanation

   Answer: B

   Joint tenancy carries the right of survivorship: the deceased tenant’s interest passes automatically to the surviving joint tenant and never enters the estate or the will. This is the key distinction from tenancy in common, where the share would go to the estate. It is one of the most commonly examined property ownership concepts in Course 1.

2. Course 2: Residential Transactions

   2. A buyer has a gross annual income of $96,000. Monthly costs are: mortgage principal and interest $1,850, property taxes $350, heating $100. What is the Gross Debt Service (GDS) ratio?

   • A)24.50%
   • B)28.75%
   • C)31.20%
   • D)34.00%
   Show answer and explanation

   Answer: B

   Add the monthly housing costs: $1,850 + $350 + $100 = $2,300. Annualize: $2,300 × 12 = $27,600. Divide by gross annual income: $27,600 ÷ $96,000 = 28.75%. GDS covers principal, interest, taxes and heat (plus 50% of condo fees where applicable) but excludes car loans and credit cards, which belong in the TDS ratio. Confusing the two is the most common error on Course 2 math questions.

3. Course 3: Additional Residential

   3. A buyer signs an agreement to purchase a pre-construction condominium and receives the disclosure statement. Which statement correctly describes their rescission rights?

   • A)There is no statutory right to rescind once the agreement is signed.
   • B)They may rescind within 10 days of receiving the disclosure statement or signing, whichever is later.
   • C)They may rescind within 10 days only if a material change occurs.
   • D)They may rescind within 30 days, the same period that applies to resale condos.
   Show answer and explanation

   Answer: B

   The Condominium Act gives purchasers of new, pre-construction units a 10-day rescission period running from the later of receiving the disclosure statement or signing. Critically, this cooling-off period does not apply to resale condominiums, where the buyer’s protection comes from a negotiated status certificate condition instead. Students routinely misapply the 10 days to resale deals.

4. Course 4: Commercial Transactions

   4. A property has gross potential income of $250,000, a 5% vacancy allowance, operating expenses of $70,000, and annual mortgage payments of $60,000. At a 6.5% cap rate, what is its estimated value?

   • A)$1,653,846
   • B)$2,576,923
   • C)$2,769,231
   • D)$3,846,154
   Show answer and explanation

   Answer: B

   Effective gross income = $250,000 × 0.95 = $237,500. NOI = $237,500 − $70,000 = $167,500. Mortgage payments are debt service, not an operating expense, so they are excluded from NOI entirely. Value = $167,500 ÷ 0.065 = $2,576,923. Deducting debt service from NOI (which gives $1,653,846) is the single most common mistake on Course 4 valuation questions.

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