1. Under Rule 1260-02-.39, a commission earned by an affiliate while working under a principal broker may be paid after the affiliate
Answer & explanation
Answer: B. Rule 1260-02-.39 allows payment of commissions earned while affiliated even after the licensee transfers, retires, is in broker release, lets the license expire or dies.
2. In addition to suspension or revocation, the Commission may discipline a broker by
Answer & explanation
Answer: A. Section 62-13-312(c) allows TREC to order a broker downgraded to affiliate broker status, in addition to or instead of other discipline. TREC cannot award damages to complainants or set commissions.
3. 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).
4. 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.)
5. A managing broker appoints Licensee A as designated agent for a seller and Licensee B as designated agent for a buyer of the same property. The managing broker is
Answer & explanation
Answer: C. Section 62-13-406(a) provides that a managing broker is not a dual agent when each designated agent represents only one party in the transaction.
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. 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).
8. A listing where the seller may sell themselves without owing commission, but only the listing broker among agents is protected, is:
Answer & explanation
Answer: B. In an exclusive agency listing, the seller pays no commission on a self-sale, but the listing broker is protected if any broker sells it. (Reclassified to section 6 / CORE.)
9. 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%.
10. 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.
11. From whom may a Tennessee affiliate broker accept a commission for brokerage acts?
Answer & explanation
Answer: A. Section 62-13-312(b)(11) makes it a ground for discipline for an affiliate broker to accept a commission or valuable consideration from anyone other than the affiliated broker. Disclosure does not cure this.
12. 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.
13. A buyer purchases a $300,000 home with a $60,000 down payment. What is the loan-to-value (LTV) ratio?
Answer & explanation
Answer: B. Loan = $300,000 - $60,000 = $240,000; $240,000 / $300,000 = 80% LTV. (20% is the down payment percentage.)
14. 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.)
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. Which statement about the makeup of the Tennessee Real Estate Commission is correct?
Answer & explanation
Answer: B. Under §62-13-201, seven members must have been principally engaged as Tennessee brokers or affiliate brokers for at least five years, and two must be outside brokerage, finance and development. All are appointed by the governor, not elected by licensees.
17. 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.
18. 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.
19. Under an open listing, the seller owes a commission to:
Answer & explanation
Answer: C. Open listings are non-exclusive; only the procuring broker is paid, and the owner owes nothing for a self-sale.
20. 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.
21. Which of the following is outside the authority of the Tennessee Real Estate Commission?
Answer & explanation
Answer: D. Section 62-13-204 states that nothing in the Act allows the Commission to set fees or commissions, and members would forfeit their licenses if fee-setting resulted from Commission action. Suspension, civil penalties and rulemaking are all core Commission powers.
22. A licensee persuades a buyer to break a signed contract so the licensee can sell the buyer a different home and earn a larger commission. This is
Answer & explanation
Answer: B. Section 62-13-312(b)(10) lists inducing any party to a contract, sale or lease to break it for the purpose of substitution, where motivated by the licensee's personal gain, as a ground for discipline.
23. A member of the Tennessee Real Estate Commission is appointed for a term of
Answer & explanation
Answer: C. Section 62-13-201 sets five-year terms, and a member may not be reappointed to succeed himself or herself for more than one full term. Three years is a common term in other states, which makes it a tempting distractor.
24. How many members serve on the Tennessee Real Estate Commission?
Answer & explanation
Answer: A. T.C.A. §62-13-201 creates a nine-member Commission appointed by the governor. Seven is tempting because seven of the nine must be licensees, but the two consumer members bring the total to nine.
25. A consumer suing a licensee who intends to seek payment from the Recovery Account must notify the Commission in writing
Answer & explanation
Answer: D. Section 62-13-208(e) requires written notice to the Commission within 30 days of commencement of the action. Failure to comply with the section waives the claimant's rights against the account.
Sources
Source verification pending. Confirm current requirements with your state regulator.