Free Rhode Island Math Practice Test — LicenseIQ

Question 1

An investment property with NOI of $63,000 sells for $900,000. What is the capitalization rate?

Accepted Answer

Cap rate = NOI / value = $63,000 / $900,000 = 0.07 = 7%.

Question 2

A broker received a 4.2% commission totaling $12,600. What was the sale price?

Accepted Answer

Sale price = commission / rate = $12,600 / 0.042 = $300,000.

Question 3

A rectangular lot is 100 ft by 150 ft. How many square feet is it?

Accepted Answer

Area = length x width = 100 x 150 = 15,000 square feet. (250 is the sum of two sides.)

Question 4

A buyer purchases a $275,000 home with an 80% LTV loan and pays 2.5 discount points. What do the points cost?

Accepted Answer

Loan = $275,000 x 0.80 = $220,000; points = $220,000 x 0.025 = $5,500. ($6,875 wrongly applies points to the price.)

Question 5

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?

Accepted Answer

Area = (40 x 30) + (20 x 15) = 1,200 + 300 = 1,500 sq ft; 1,500 x $185 = $277,500.

Question 6

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?

Accepted Answer

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.

Question 7

A house with only one bathroom and very small closets in a market expecting more suffers from:

Accepted Answer

Functional obsolescence is outdated design or layout inside the property. External obsolescence comes from outside the property and is usually incurable.

Question 8

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?

Accepted Answer

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.

Question 9

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?

Accepted Answer

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.

Question 10

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?

Accepted Answer

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.

Question 11

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?

Accepted Answer

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.

Question 12

One discount point equals what percentage of the loan amount?

Accepted Answer

One point = 1% of the loan amount (not the purchase price), paid to lower the interest rate.

Question 13

When a broker appoints one salesperson to represent the seller and another salesperson in the same office to represent the buyer, this is:

Accepted Answer

Designated agency assigns separate agents within one brokerage; the broker is still a dual agent and written consent is required.

Question 14

A seller says, 'I will pay any broker a 5% commission if they bring me a buyer.' This promise creates a(n):

Accepted Answer

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.

Question 15

A rectangular parcel measures 330 feet by 660 feet. How many acres does it contain?

Accepted Answer

Area = 330 x 660 = 217,800 sq ft; 217,800 / 43,560 = 5 acres.

Question 16

When may a broker apply escrowed earnest money to the commission?

Accepted Answer

Rule 2.18 allows the commission to be taken only at or after closing.

Question 17

A new highway interchange built next to a residential subdivision lowers home values. This is:

Accepted Answer

Loss in value caused by factors outside the property boundaries is external obsolescence.

Question 18

Annual taxes are $3,650. Using a 365-day year, what is the daily proration amount?

Accepted Answer

$3,650 / 365 = $10 per day. (The course's default convention is a 360-day year; this question specifies 365.)

Question 19

A buyer purchases a $300,000 home with a $60,000 down payment. What is the loan-to-value (LTV) ratio?

Accepted Answer

Loan = $300,000 - $60,000 = $240,000; $240,000 / $300,000 = 80% LTV. (20% is the down payment percentage.)

Question 20

How are commissions paid when a team closes a sale?

Accepted Answer

Rule 2.21 says commissions are paid to individual team members. A team leader's single-member LLC may collect money only for shared expenses, and teams cannot keep escrow accounts.

Question 21

A broker appointed to the Real Estate Commission must have held a Rhode Island broker license for at least how long before appointment?

Accepted Answer

Broker members must have been licensed in Rhode Island for at least five years. Ten years is the separate state citizenship requirement for all appointees.

Question 22

Absent a written agreement to the contrary, how soon must a principal broker pay a commission owed to an affiliated licensee after receiving it?

Accepted Answer

Rule 2.21 requires payment within ten calendar days of the principal broker's receipt, unless otherwise agreed in writing. Thirty days is the deadline for a termination accounting.

Question 23

How many members does the Governor appoint to the Rhode Island Real Estate Commission?

Accepted Answer

Section 5-20.5-12 calls for nine appointed members, with at least one from each county. Eleven is tempting because the attorney general and DBR director also sit as ex officio voting members, but they are not appointees.

Question 24

Within what time must a fair housing charge be filed with the Commission for Human Rights?

Accepted Answer

A sworn written charge must be filed within one year.

Question 25

When a principal broker appoints a designated client representative, what happens to the principal broker's liability for that licensee's breaches?

Accepted Answer

Section 5-20.6-5(h) says the appointment does not limit the principal broker's liability for the designated representative's breaches.

Rhode Island real estate math practice test

1. An investment property with NOI of $63,000 sells for $900,000. What is the capitalization rate?

2. A broker received a 4.2% commission totaling $12,600. What was the sale price?

3. A rectangular lot is 100 ft by 150 ft. How many square feet is it?

4. A buyer purchases a $275,000 home with an 80% LTV loan and pays 2.5 discount points. What do the points cost?

5. 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?

6. 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?

7. A house with only one bathroom and very small closets in a market expecting more suffers from:

8. 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?

9. 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?

10. 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?

11. 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?

12. One discount point equals what percentage of the loan amount?

13. When a broker appoints one salesperson to represent the seller and another salesperson in the same office to represent the buyer, this is:

14. A seller says, 'I will pay any broker a 5% commission if they bring me a buyer.' This promise creates a(n):

15. A rectangular parcel measures 330 feet by 660 feet. How many acres does it contain?

16. When may a broker apply escrowed earnest money to the commission?

17. A new highway interchange built next to a residential subdivision lowers home values. This is:

18. Annual taxes are $3,650. Using a 365-day year, what is the daily proration amount?

19. A buyer purchases a $300,000 home with a $60,000 down payment. What is the loan-to-value (LTV) ratio?

20. How are commissions paid when a team closes a sale?

21. A broker appointed to the Real Estate Commission must have held a Rhode Island broker license for at least how long before appointment?

22. Absent a written agreement to the contrary, how soon must a principal broker pay a commission owed to an affiliated licensee after receiving it?

23. How many members does the Governor appoint to the Rhode Island Real Estate Commission?

24. Within what time must a fair housing charge be filed with the Commission for Human Rights?

25. When a principal broker appoints a designated client representative, what happens to the principal broker's liability for that licensee's breaches?

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