1. A home sells for $520,000 with a 5% commission. The listing broker pays 2.5% to the buyer's broker and splits the listing side 60/40 with the listing salesperson (salesperson gets 60%). How much does the listing salesperson earn?
Answer & explanation
Answer: C. Total = $520,000 x 0.05 = $26,000. Buyer broker gets 2.5% = $13,000, leaving $13,000 for the listing side. Salesperson = $13,000 x 0.60 = $7,800.
2. 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Answer: C. Functional obsolescence is outdated design or layout inside the property.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.
3. A buyer contracts to buy a home for $300,000, but it appraises at $290,000. The lender offers 75% LTV. What is the maximum loan?
Answer & explanation
Answer: B. LTV is applied to the LESSER of price or appraised value: $290,000 x 0.75 = $217,500. Using the $300,000 price ($225,000) is the common mistake.
4. A house is L-shaped: one section is 40 ft by 30 ft and the other is 20 ft by 15 ft. At $185 per square foot, what is the estimated cost to build?
Answer & explanation
Answer: C. Area = (40 x 30) + (20 x 15) = 1,200 + 300 = 1,500 sq ft; 1,500 x $185 = $277,500.
5. A seller wants to net $250,000 after paying a 6% commission and $6,000 in other closing costs. To the nearest dollar, what must the sale price be?
Answer & explanation
Answer: B. Net + other costs = $256,000, which equals 94% of the price (100% - 6%). Price = $256,000 / 0.94 = $272,340.43, about $272,340. Adding 6% to $256,000 ($271,360) understates the price.
6. When competing brokerages agree to charge the same commission rate, they commit:
Answer & explanation
Answer: D. Agreeing on commissions among competitors is illegal price fixing under the Sherman Antitrust Act; commissions must be set independently and are always negotiable.
7. Within what time must an aggrieved person file a housing discrimination complaint with the commission under IC 22-9.5?
Answer & explanation
Answer: D. IC 22-9.5-6-1 sets a one-year deadline from when the practice occurred or terminated, whichever is later.
8. Which statement about the two citizen members of the Commission is correct?
Answer & explanation
Answer: B. Citizen members must be Indiana residents who have never been in the real estate business except as consumers. They are at-large seats, not district seats.
9. A listing agreement in which the broker earns a commission regardless of who sells the property is a(n):
Answer & explanation
Answer: B. In an exclusive right-to-sell listing, the listing broker earns a commission no matter who procures the buyer, even the owner. (Reclassified to section 6 / CORE.)
10. A seller wants to net $300,000 and agrees to a net listing that caps the commission at 6% of the sale price. The home sells for $322,000. What commission does the broker company earn?
Answer & explanation
Answer: D. The excess over the net is 322,000 − 300,000 = $22,000. The cap is 0.06 × 322,000 = $19,320. The broker earns the smaller amount, $19,320, and the seller receives 322,000 − 19,320 = $302,680. $22,000 ignores the required maximum.
11. 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.
12. A 275-gallon heating oil tank costs $168 to fill at $4.20 per gallon. The buyer will credit the seller for the oil remaining in the tank. What is the credit?
13. On the $20,000 commission above, the listing broker keeps 50% and pays 50% to the buyer's broker. How much does the buyer's broker receive?
Answer & explanation
Answer: D. $20,000 x 0.50 = $10,000 to the buyer's broker.
14. What is the maximum civil penalty the Commission may impose for each violation under the general professional sanctions statute?
Answer & explanation
Answer: A. IC 25-1-11-12 allows a civil penalty of up to $1,000 for each violation, considering the licensee's ability to pay. $10,000 is the first-offense fair housing cap, a different statute.
15. Annual taxes are $3,650. Using a 365-day year, what is the daily proration amount?
Answer & explanation
Answer: D. $3,650 / 365 = $10 per day. (The course's default convention is a 360-day year; this question specifies 365.)
16. Which event causes the Indiana Real Estate Commission to take custody of a broker company's trust accounts?
Answer & explanation
Answer: C. IC 25-34.1-4-5(c) lists death of a sole proprietor, termination of the company, or expiration, revocation, or suspension of the company license.
17. A broker company wants to pay a broker's commission directly to an LLC the broker formed. This is permitted if the LLC is owned
Answer & explanation
Answer: D. IC 25-34.1-3-4.5 permits payment to a business entity owned solely by the broker, or by the broker and an unlicensed spouse. That entity does not need a broker company license.
18. A respondent with one prior adjudicated discriminatory housing practice within five years faces what maximum civil penalty after a commission hearing?
Answer & explanation
Answer: A. IC 22-9.5-6-15 caps penalties at $10,000 with no prior, $25,000 with one prior within five years, and $50,000 with two or more within seven years.
19. A home sells for $400,000 with a 5% total commission. What is the total commission?
Answer & explanation
Answer: B. $400,000 x 0.05 = $20,000.
20. A buyer purchases a home for $425,000 with a loan of $361,250. What is the LTV?
Answer & explanation
Answer: B. LTV = loan / price = $361,250 / $425,000 = 0.85 = 85%. (15% is the down payment percentage.)
21. A broker earned a $15,750 commission on a $450,000 sale. What was the commission rate?
Answer & explanation
Answer: A. Rate = commission / sale price = $15,750 / $450,000 = 0.035 = 3.5%.
22. A lender offers a 95% LTV loan. The buyer has $18,000 for the down payment. What is the maximum purchase price?
Answer & explanation
Answer: A. At 95% LTV the down payment is 5% of price. Price = $18,000 / 0.05 = $360,000; loan = $342,000.
23. Besides a call by the chair, how can a meeting of the Indiana Real Estate Commission be required?
Answer & explanation
Answer: D. IC 25-34.1-2-3 says the Commission meets on the call of the chair or at the written request of seven members. A majority of current members is a quorum.
24. A listing company offers a cooperative commission. To whom must it be paid?
Answer & explanation
Answer: C. 876 IAC 8-1-9 requires the offered share to be paid to the selling broker and never directly to a broker associated with that selling broker.
25. Who appoints members of the Indiana Real Estate Commission?
Answer & explanation
Answer: C. Each member is appointed by the governor under IC 25-1-6.5. IPLA staffs the Commission but does not appoint it.
Sources
Source verification pending. Confirm current requirements with your state regulator.