Free Online Real Estate Practice Salesperson Exam 2025

Commingling refers to the illegal act of mixing client funds, such as earnest money, with the broker’s personal or business funds. Trust funds must be kept in a separate account.

Unless specifically directed in writing by the seller, a real estate agent must present every offer received, including those that are below asking price or received after initial negotiations.

Most states mandate that the broker's license number or firm name must appear in all advertising to maintain accountability and ensure transparency.

Blockbusting is an illegal practice where real estate agents incite property sales by stoking fears that property values will decline due to demographic changes.

Refusing to sell, rent, or negotiate based on a person’s religion violates the Fair Housing Act and is considered unlawful housing discrimination.

The Fair Housing Act of 1968 makes it unlawful to discriminate in housing based on race, color, religion, sex, national origin, familial status, or disability.

Contract law offers civil remedies for breach such as compensatory damages or specific performance. Criminal penalties, however, are not remedies for breach of contract.

The statute of frauds is a legal principle that requires certain contracts, including those for the sale of real estate, to be in writing to be legally enforceable.

A counteroffer automatically terminates the original offer because it introduces new terms. The original offer is no longer valid once a counteroffer is made.

A contract signed under duress—meaning one party was threatened or coerced—is considered voidable by the coerced party. They have the right to rescind the agreement.

A bilateral contract involves mutual obligations—each party makes a promise that binds them legally, such as in a purchase agreement where the buyer agrees to pay and the seller agrees to transfer title.

An addendum is an additional document added to an existing contract to include new terms or modify existing ones. It must be signed by all parties to be enforceable.

The buyer can pursue a lawsuit for specific performance, asking the court to compel the seller to go through with the sale as agreed in the contract.

Novation is the legal process of replacing an existing contract with a new one, transferring all obligations and releasing the original party from liability.

Notarization is not a required element for a valid contract. Essential elements include mutual agreement, consideration, lawful purpose, and competent parties.

This is subagency, where the licensee works with the buyer but owes fiduciary duties to the seller, usually under a listing agreement with the seller.

The duty of accounting survives termination of the agency. The agent remains responsible for properly handling and accounting for client funds and property.

A licensee must provide an Agency Disclosure Form at the first substantive contact, which informs the buyer of the agent’s role and potential relationships.

The exclusive right to sell listing gives the broker maximum protection. The broker earns a commission even if the seller finds a buyer independently.

A subagent works on behalf of the listing agent and represents the seller, even while interacting directly with the buyer in a transaction.

Dual agency arises when one brokerage or licensee represents both the buyer and the seller in the same transaction. It requires informed consent from both parties.

Loyalty is a fiduciary duty that requires agents to put the client’s interests above their own and avoid conflicts of interest during representation.

Police power is the government’s constitutional authority to regulate private property for the public’s safety, health, morals, and general welfare.

Zoning regulations are created and enforced by local government authorities—typically city or county governments—to guide land use within their jurisdictions.

Appurtenances refer to rights or privileges associated with real property that pass with the land, such as easements, water rights, and improvements.

Scarcity refers to limited supply and is an economic characteristic. Physical characteristics of land include immobility, indestructibility, and uniqueness.

The rectangular (government) survey system uses principal meridians and base lines to divide land into townships and sections, primarily in western U.S. states.

Fixtures, such as a ceiling fan that has been permanently attached to the property, are considered real property and transfer with the title unless otherwise agreed.

Transfer tax is generally paid by the seller at closing, although the responsibility can be negotiated in the sales contract or dictated by local custom.

An encumbrance is a claim or liability that affects the title or use of the property. It can include liens, easements, or deed restrictions that may limit the owner's rights.

Recording a deed gives constructive notice to the public of the ownership change. This protects the new owner’s legal interest and establishes priority over later claims.

A deed is the formal legal document used to transfer title or ownership of real property from one person to another. It must be signed and delivered to be effective.

A general warranty deed provides the highest level of protection to the buyer, as it guarantees clear title and full ownership rights from all previous owners, not just the grantor.

To find the broker’s commission: 2.5% of $350,000 equals 0.025 × $350,000, which results in $8,750 earned in commission.

Property tax is calculated by multiplying the assessed value by the tax rate. 1.5% of $180,000 equals 0.015 × $180,000 = $2,700 in annual property taxes.

To find the interest rate: divide the annual interest by the loan amount. $1,200 ÷ $12,000 = 0.10, or 10% interest per year.

With an 80% loan-to-value (LTV) ratio on a $300,000 property, the loan amount is 0.80 × $300,000 = $240,000. The remaining $60,000 would be the buyer’s down payment.

To calculate the broker’s commission: 6% of $250,000 equals 0.06 × $250,000, resulting in a commission of $15,000.

A comparative market analysis (CMA) is used primarily to help sellers set a competitive asking price. It evaluates the prices of recently sold, similar properties in the same area to estimate market value.

Functional obsolescence occurs when a property's layout, features, or design are outdated or less desirable by current market standards, which can diminish the property's overall value and appeal.

For unique, non-income-producing properties like churches, the cost approach is most appropriate because comparable sales and income data are often unavailable.

The cost approach determines property value by estimating the cost to rebuild the structure using current materials and labor, then subtracting depreciation and adding land value.

The sales comparison approach is based on the principle of substitution: a buyer will not pay more for a property than for a similar, comparable one.

Adjustable-rate mortgages (ARMs) feature interest rates that adjust periodically based on a financial index, plus a margin, after an initial fixed period.

The loan-to-value (LTV) ratio helps lenders measure the risk associated with the loan. A higher LTV means more risk and may trigger higher rates or mortgage insurance.

FHA loans are designed to help borrowers with limited credit history and small down payments by offering flexible underwriting and lower initial costs.

This is a fully amortized loan, which is structured so that equal monthly payments over the loan term pay off both the interest and the principal.

An acceleration clause in a mortgage permits the lender to demand immediate repayment of the entire loan balance if the borrower defaults on the loan terms.

FHA loans benefit borrowers by allowing lower down payments—typically as low as 3.5%—making homeownership more accessible despite the need for mortgage insurance.

VA loans are guaranteed by the U.S. Department of Veterans Affairs. FHA loans are insured by HUD. Conventional loans are neither insured nor guaranteed.

Only actively licensed real estate professionals directly involved in a transaction may receive compensation or referral fees related to that transaction.

The Agency Disclosure form must be presented to prospective clients at the first substantive contact, before any confidential information is shared.

Earnest money must be returned to the buyer if a contract is terminated lawfully or if the transaction fails to close under the contract terms.

The Arkansas Real Estate Commission may impose fines, suspend, or revoke licenses of agents found to violate real estate laws or engage in misconduct.

Revealing confidential client information without written consent is a clear violation of Arkansas real estate law and can result in license sanctions.

A principal broker is legally responsible for the supervision, compliance, and professional conduct of all licensees operating under their license.

Failing to disclose one’s license status when buying property for personal use can be deemed deceptive conduct, violating ethical and licensing rules, potentially leading to disciplinary action.

A buyer agency agreement must clearly define the agency relationship, outline the broker’s duties, and specify the terms of compensation to ensure legal enforceability.

The Arkansas Real Estate Recovery Fund protects the public by reimbursing individuals who suffer financial losses due to fraudulent or dishonest acts by licensees.

Any person negotiating the sale, purchase, or lease of real property for another party and for compensation must hold an active real estate license in Arkansas.

Continuing education must be completed by licensees annually prior to their license renewal deadline to ensure active status and legal compliance.

Dual agency in Arkansas is permitted only if both parties give informed written consent, acknowledging the agent represents both sides with potential limitations on advocacy.

Under Arkansas law, only licensed attorneys are authorized to draft legal documents like deeds. Real estate licensees must not prepare these documents unless they are also attorneys.

Arkansas law mandates disclosure of known material facts that could affect a buyer's decision, including the presence of nearby registered sex offenders.

Ministerial acts are routine, administrative tasks that do not involve the exercise of professional judgment or discretion, such as setting appointments or providing publicly available information.

The Agency Disclosure form must be presented before the client signs any contract or agreement, to ensure they are fully informed about the agent’s role and obligations.

The principal broker holds legal responsibility for supervising all licensees in the office, including compliance with laws, trust fund handling, and advertising.

Applicants must be at least 18 years old and a U.S. citizen or legal resident. Additional requirements include completing pre-license education and passing the licensing exam.

The applicant has the right to file a written appeal to the Arkansas Real Estate Commission for reconsideration, as part of due process.

If the seller does not respond by the deadline, the buyer’s offer automatically expires and has no legal effect. A new offer would be required to proceed.

This is known as “commingling,” and it is a prohibited practice that violates fiduciary duties and can result in disciplinary action.

The licensee must notify the Arkansas Real Estate Commission, return their current license certificate, and apply for reissuance under the new broker to maintain compliance.

Failure to renew the license on time results in the license becoming inactive. Continued practice while inactive can lead to fines and additional penalties.

Four out of the five commissioners must have held a broker’s license for at least five years prior to appointment, ensuring industry expertise on the Commission.

The Commission is composed of five members appointed by the Governor, as outlined in state regulatory provisions.

A principal broker is required to maintain at least one designated trust or escrow account for handling client funds, as mandated by state law. Failure to do so may lead to license suspension.

Yes. The Commission has statutory authority to issue subpoenas as part of investigations or disciplinary proceedings related to licensee conduct.

Agents must disclose in writing that they are licensed, typically in the purchase agreement. This disclosure ensures transparency and avoids any conflict of interest in the transaction.

Unlicensed individuals are prohibited from discussing property details. They must promptly refer the inquiry to a licensed real estate agent to comply with license law and avoid unauthorized practice.

The broker must deposit the earnest money into a separate trust or escrow account, not commingled with personal or business funds. This is required to fulfill fiduciary duties and prevent potential disciplinary action for mishandling client funds.