Free Michigan Real Estate Practice Exam

Q1.A home is appraised at $320,000. The listing agent says comparable sales in the neighborhood average $315,000. Which value is MOST relevant when setting the listing price?

• A.The appraised value of $320,000
• B.The comparable sales average of $315,000
• C.The tax-assessed value of the property
• D.The original purchase price paid by the seller

Q2.Under RESPA Section 8, a mortgage lender offers a broker's office free marketing materials and co-branded advertising in exchange for the broker directing buyers exclusively to that lender. Which statement MOST accurately describes this arrangement?

• A.The arrangement is permissible as long as the broker discloses it verbally to each buyer at the time of referral.
• B.The arrangement violates RESPA Section 8 because the free marketing materials constitute a thing of value given in exchange for referrals of settlement service business.
• C.The arrangement is lawful provided the lender and broker execute a written affiliated business arrangement disclosure under RESPA.
• D.The arrangement is permissible because marketing support is not considered compensation under federal law.

Q3.Familial status protection under the FHA covers:

• A.Households with one or more children under 18, pregnant individuals, and anyone in the process of obtaining legal custody
• B.Only married couples with children
• C.Only families that are biologically related
• D.Only households with US citizen children

Q4.A state real estate board is reviewing the license renewal application of a salesperson who was recently found to have violated the Equal Credit Opportunity Act (ECOA, 15 U.S.C. § 1691) by advising a lender to deny a loan application because of the applicant's national origin. Which statement BEST describes the board's authority in this situation?

• A.The board may deny the renewal application because the conduct reflects a lack of honesty and trustworthiness required of licensees, even though ECOA enforcement is primarily a federal matter
• B.The board must renew the license because ECOA violations are exclusively enforced by the Consumer Financial Protection Bureau (CFPB) and the board has no jurisdiction
• C.The board may only act after the salesperson has been convicted of a criminal offense related to the ECOA violation
• D.The board must wait for the federal court to issue a final judgment before it can consider the violation in the renewal process

Q5.What minimum period does § 32-2175 specify for the property manager's financial records?

• A.At least three years
• B.At least 90 days
• C.Exactly one year
• D.No stated period

Q6.A broker is supervising a newly licensed salesperson who is representing a buyer. The salesperson learns that the seller's property has tested positive for lead-based paint hazards but fails to provide the buyer with the federally required Lead-Based Paint Disclosure and EPA pamphlet before the buyer signs the purchase agreement on a pre-1978 home. Who bears primary regulatory liability under the Residential Lead-Based Paint Hazard Reduction Act?

• A.Only the salesperson, because the disclosure duty is the agent who has direct client contact.
• B.Only the seller, because the disclosure obligation originates with the property owner.
• C.Both the broker and the salesperson, because federal law imposes the disclosure obligation on agents and their supervising brokers.
• D.The transaction coordinator, because they are responsible for assembling the closing package.

Q7.A Michigan licensed broker maintains a branch office where three affiliated salespersons operate. Under the Michigan Occupational Code (MCL 339.2512), which of the following statements correctly describes the broker's statutory supervisory obligations regarding that branch office?

• A.The broker must designate a licensed associate broker or broker to act as branch manager and ensure the branch office license is conspicuously displayed at that location.
• B.The broker may permit a salesperson to manage the branch office provided the salesperson has at least two years of active licensure experience.
• C.Branch offices do not require a separate license as long as all transaction records are maintained at the main office.
• D.The broker is only responsible for supervising salespersons if they are engaged in residential real estate transactions.

Q8.Under the federal Residential Lead-Based Paint Hazard Reduction Act, property managers renting pre-1978 housing must provide prospective tenants with:

• A.An EPA-approved lead hazard information pamphlet and disclosure of any known lead-based paint hazards
• B.A complete lead abatement report performed by a certified contractor
• C.A written guarantee that the property is free of all lead-based paint
• D.A security deposit waiver in lieu of lead disclosure

Q9.At closing, the seller's real estate taxes for the current year have not yet been paid. The taxes are $3,600 annually, and the closing date is April 30 (using a 360-day year and 30-day months). How should this item appear on the settlement statement?

• A.A debit to the buyer and a credit to the seller for $1,200
• B.A debit to the seller and a credit to the buyer for $1,200
• C.A debit to the buyer only for $1,200
• D.A debit to the seller only for $1,200

Q10.A person with a physical disability requests permission to install a grab bar in their bathroom in a rental apartment. Under the Fair Housing Act, the landlord must:

• A.Install the grab bar at the landlord's own expense
• B.Allow the modification at the tenant's expense and may require restoration upon move-out
• C.Deny the request if it would permanently alter the property
• D.Allow the modification only if the tenant has a physician's letter on file

Q11.A borrower obtains a $200,000 loan at 6% annual interest. If the monthly payment is $1,199.10, how much of the first payment goes toward principal?

• A.$1,000
• B.$199.10
• C.$1,199.10
• D.$600

Q12.In a real estate purchase contract, what is the legal effect of a condition precedent that fails to occur?

• A.The contract becomes voidable at either party's option
• B.The contract remains valid but performance is delayed
• C.The parties' obligations under the contract are discharged
• D.The contract becomes an option contract

Q13.Who may a designated broker authorize to sign or transfer funds from a PM trust account under the statutory conditions?

• A.Any outside vendor
• B.A licensee or qualifying unlicensed natural person directly employed by the PM firm
• C.Any tenant who pays rent
• D.Only the property owner

Q14.A Michigan homeowner sells a residence built in 1978. Under both federal law and Michigan practice, which of the following disclosure obligations applies to this transaction?

• A.The seller must provide a lead-based paint inspection report paid for at the seller's expense before listing the property
• B.The seller must disclose known lead-based paint hazards and provide the EPA-approved pamphlet, and the buyer must be given a 10-day opportunity to conduct a risk assessment
• C.The listing broker must attach a lead-based paint addendum only if the buyer is under age 18 or has children under age 6
• D.Lead-based paint disclosure is required only for properties built before 1950, so no special disclosure applies to a 1978 home

Q15.What is the primary difference between a conventional loan and an FHA loan?

• A.Conventional loans have higher interest rates than FHA loans
• B.Conventional loans require mortgage insurance while FHA loans do not
• C.FHA loans can only be used for investment properties
• D.FHA loans are insured by the government while conventional loans are not