1. A licensee found guilty of three or more violations may be treated as a repeat offender, and the Commission may:
Answer & explanation
Answer: D. Three or more violations (or one action with multiple counts) can make the licensee a repeat offender subject to lifetime revocation.
2. A NJ licensee is indicted on a criminal charge. The licensee must notify the Real Estate Commission within:
Answer & explanation
Answer: A. Licensees must report criminal convictions, indictments, formal charges, or discipline in another state to the Commission within 30 days.
3. Under NJ Real Estate Commission rules, a commission rebate may be paid by:
Answer & explanation
Answer: A. Only a licensed broker may give a rebate, and only to a buyer of residential property - not to sellers or tenants. Salespersons and broker-salespersons cannot provide rebates.
4. 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%.
5. The NJ Pinelands Commission has how many members?
Answer & explanation
Answer: D. The Pinelands Commission has 15 members: seven appointed by the Governor, one by the U.S. Secretary of the Interior, and one from each of the seven Pinelands counties.
6. Which statement about the composition of the NJ Real Estate Commission is correct?
Answer & explanation
Answer: B. Two of the eight commissioners are public members who cannot hold licenses. The state-agency employee receives no compensation, and the president is elected by majority vote of the commissioners themselves.
7. 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.
8. Under NJ's Statute of Frauds (N.J.S.A. 25:1), a broker can enforce a claim to a commission only if:
Answer & explanation
Answer: D. NJ requires the broker's authority and the commission amount or rate to be in writing for a commission to be enforceable.
9. Under the Code of Ethics, commission disputes between REALTORS associated with different firms are generally resolved through:
Answer & explanation
Answer: B. Article 17 requires REALTORS to mediate or arbitrate contractual and specific non-contractual disputes with other REALTORS through the association.
10. A salesperson earns $6,000 on a $150,000 sale. What was the commission rate?
Answer & explanation
Answer: B. Rate = commission / sale price = $6,000 / $150,000 = 0.04 = 4%.
11. On a $250,000 loan, how much is 2 discount points?
Answer & explanation
Answer: A. 1 point = 1% of the loan. 2 points = 0.02 x $250,000 = $5,000.
12. 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.
13. An investment property with NOI of $63,000 sells for $900,000. What is the capitalization rate?
Answer & explanation
Answer: C. Cap rate = NOI / value = $63,000 / $900,000 = 0.07 = 7%.
14. 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).
15. 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.
16. When a broker appoints one salesperson to represent the seller and another salesperson in the same office to represent the buyer, this is:
Answer & explanation
Answer: B. Designated agency assigns separate agents within one brokerage; the broker is still a dual agent and written consent is required.
17. 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.
18. 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.
19. 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.
20. 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.
21. A final decision of the NJ Real Estate Commission may be appealed to the:
Answer & explanation
Answer: D. Final Commission decisions are reviewable by the Appellate Division of the NJ Superior Court.
22. The rules and regulations adopted by the New Jersey Real Estate Commission to regulate licensees are found in:
Answer & explanation
Answer: D. The Administrative Code (N.J.A.C. 11:5) contains the regulations approved and modified by the Commission. N.J.S.A. 45:15 is the statute enacted by the legislature; the Code of Ethics binds only REALTORS.
23. Which of the following is NOT a responsibility of the NJ Real Estate Commission?
Answer & explanation
Answer: C. The REC licenses, regulates, disciplines and administers the Guaranty Fund, but it does not give legal advice; legal questions belong with an attorney.
24. 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.
25. A borrower paid $3,150 in points on a $210,000 loan. How many points were paid?
Answer & explanation
Answer: A. Points = cost / loan = $3,150 / $210,000 = 0.015 = 1.5 points (1 point = 1% of the loan).
Sources
Source verification pending. Confirm current requirements with your state regulator.