1. A seller says, 'I will pay any broker a 5% commission if they bring me a buyer.' This promise creates a(n):
Answer & explanation
Answer: D. In a unilateral contract only one party is bound (to pay if the act is performed); the other party has no obligation to act. Most real estate contracts are bilateral.
2. Annual taxes of $5,400 are paid in arrears at year-end. Closing is June 15, and the seller owns the day of closing. Using a 360-day year, what is the proration?
Answer & explanation
Answer: B. Daily = $5,400 / 360 = $15. Seller owned Jan 1-Jun 15 = 5 months + 15 days = 165 days. 165 x $15 = $2,475. Because the buyer will pay the whole bill later, the seller is debited and the buyer credited.
3. How long is a regular term on the Idaho Real Estate Commission?
Answer & explanation
Answer: B. Regular terms are four years and begin July 1 of the appointment year. Two years is the license renewal cycle, a common mix-up.
4. A house with only one bathroom and very small closets in a market expecting more suffers from:
Answer & explanation
Answer: C. Functional obsolescence is outdated design or layout inside the property. External obsolescence comes from outside the property and is usually incurable.
5. A rectangular lot is 100 ft by 150 ft. How many square feet is it?
Answer & explanation
Answer: C. Area = length x width = 100 x 150 = 15,000 square feet. (250 is the sum of two sides.)
6. A rectangular parcel measures 330 feet by 660 feet. How many acres does it contain?
Answer & explanation
Answer: D. Area = 330 x 660 = 217,800 sq ft; 217,800 / 43,560 = 5 acres.
7. A broker received a 4.2% commission totaling $12,600. What was the sale price?
Answer & explanation
Answer: C. Sale price = commission / rate = $12,600 / 0.042 = $300,000.
8. A commercial space of 2,400 rentable square feet is quoted at $27 per square foot per year. What is the monthly rent?
Answer & explanation
Answer: B. Annual rent = 2,400 x $27 = $64,800; monthly = $64,800 / 12 = $5,400. Commercial rates are quoted per square foot per YEAR.
9. The seller of a rental property collected $1,800 rent for the month on the 1st. Closing is on the 10th, and the seller owns the day of closing (30-day month). What is the rent proration?
Answer & explanation
Answer: C. Daily rent = $1,800 / 30 = $60. Buyer owns days 11-30 = 20 days. 20 x $60 = $1,200, credited to the buyer because the seller collected rent for days the buyer will own.
10. An Idaho sale closes March 31, 2027. The contract makes the seller responsible for taxes through the day of closing, uses a 365-day year, and estimates 2027 taxes at the 2026 amount of $4,380. What 2027 tax credit does the buyer receive?
Answer & explanation
Answer: A. January 1 through March 31, 2027 is 31 + 28 + 31 = 90 days. $4,380 / 365 = $12 per day; 90 x $12 = $1,080. $1,095 comes from a monthly method (4,380 / 12 x 3), which the stated 365-day method does not use.
11. A buyer purchases a $275,000 home with an 80% LTV loan and pays 2.5 discount points. What do the points cost?
Answer & explanation
Answer: A. Loan = $275,000 x 0.80 = $220,000; points = $220,000 x 0.025 = $5,500. ($6,875 wrongly applies points to the price.)
12. One discount point equals what percentage of the loan amount?
Answer & explanation
Answer: B. One point = 1% of the loan amount (not the purchase price), paid to lower the interest rate.
13. The seller prepaid $4,320 in property taxes for the calendar year. Closing is April 20, and the seller owns the day of closing. Using a 360-day year (30-day months), what is the proration?
Answer & explanation
Answer: B. Daily = $4,320 / 360 = $12. Seller owned Jan 1-Apr 20 = 3 months + 20 days = 110 days, so the buyer owes for 360 - 110 = 250 days. 250 x $12 = $3,000, credited to the seller (who prepaid) and debited to the buyer.
14. A lender approves a $276,000 loan and the buyer wants to keep an 80% LTV. What is the maximum purchase price?
Answer & explanation
Answer: A. Purchase price = loan / LTV = $276,000 / 0.80 = $345,000. ($220,800 wrongly multiplies by 0.80.)
15. A new highway interchange built next to a residential subdivision lowers home values. This is:
Answer & explanation
Answer: D. Loss in value caused by factors outside the property boundaries is external obsolescence.
16. An 8-unit building rents for $1,100 per unit per month with 5% vacancy. Annual operating expenses are $28,320 (excluding debt service). At an 8% capitalization rate, what is the value?
Answer & explanation
Answer: D. PGI = 8 x $1,100 x 12 = $105,600; less 5% vacancy = $100,320; NOI = $100,320 - $28,320 = $72,000; value = $72,000 / 0.08 = $900,000.
17. An investor buys a rental house for $350,000; the land is valued at $75,000. Using straight-line depreciation over 27.5 years, the annual depreciation deduction is:
Answer & explanation
Answer: C. Only the building depreciates: $350,000 - $75,000 = $275,000; $275,000 / 27.5 = $10,000. Using the full price gives $12,727 (wrong).
18. A designated broker moves the main office to a new building without notifying the Commission. What is the result?
Answer & explanation
Answer: C. 54-2040 requires written notice before a new location is used; a change of name or location without notice automatically inactivates the license.
19. A licensee moves to a new residence. Within what time must the Commission be notified in writing?
Answer & explanation
Answer: C. 54-2018 requires written notice of a name, residence address, or personal phone change within 10 business days. Three business days is the notice between associate and broker when the relationship ends.
20. Within which state agency is the Idaho Real Estate Commission now housed?
Answer & explanation
Answer: B. 54-2005 creates the Commission within the Division of Occupational and Professional Licenses (DOPL). The Department of Finance regulates lenders and securities, not real estate licensees.
21. What experience must each licensee member of the Commission have?
Answer & explanation
Answer: D. 54-2006 requires each licensee member to be an active Idaho designated or associate broker with at least five years of active experience in that capacity. Two years of salesperson experience is the broker-license prerequisite, not the commissioner standard.
22. Who appoints members of the Idaho Real Estate Commission?
Answer & explanation
Answer: D. The governor appoints all members, who serve at the governor's pleasure. The executive director runs Commission operations but does not appoint commissioners.
23. An audit finds a trust account irregularity that the broker cannot resolve. What may the Commission order?
Answer & explanation
Answer: D. 54-2058 allows the Commission to order a complete CPA audit at the broker's expense when a deficiency or irregularity cannot be resolved. The Recovery Fund pays only on court judgments for fraud.
24. A lender wants to secure a loan on a 70-acre rural parcel used mainly for raising cattle, outside any city. Can a deed of trust be used?
Answer & explanation
Answer: B. 45-1502's 80-acre allowance applies only to property not principally used for agriculture. Agricultural land outside a city falls under the 40-acre limit, so 70 acres does not qualify.
25. A licensee is convicted of a felony. Within how many days must the licensee send the Commission a copy of the court document?
Answer & explanation
Answer: B. 54-2061 requires a copy within 20 days of the conviction. Ten business days is the deadline for reporting personal address or name changes, a different rule.
Sources
Source verification pending. Confirm current requirements with your state regulator.