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Nevada Real Estate Practice Exam

120 questions · National portion pass mark 60/80 · Nevada state portion pass mark 30/40 · portions scored independently

Free from agentexamcoach.com — original practice questions, not real exam items.

1. Which of the following is a physical characteristic of land?
- A. Location
- B. Zoning classification
- C. Highest and best use
- D. Soil quality
2. A property owner fails to pay property taxes and the government seizes the property. What is the process called?
- A. Escheat
- B. Eminent domain
- C. Zoning variance
- D. Tax foreclosure
3. What is the term for a type of covenant that restricts the use of a property and is typically found in a subdivision's governing documents?
- A. CC&R
- B. Easement
- C. Lien
- D. Encumbrance
4. Which of the following is an example of a physical characteristic of land?
- A. Location
- B. Zoning classification
- C. Economic value
- D. Topography
5. A property owner installs a fence that encroaches on a neighboring property. What is this an example of?
- A. Easement
- B. Eminent domain
- C. Lien
- D. Encroachment
6. A property owner installs a fence that encroaches onto the neighboring property. What is this an example of?
- A. Easement
- B. CC&R
- C. Lien
- D. Encroachment
7. A property description that uses reference points such as 'beginning at the northwest corner of the property' is an example of what type of legal description?
- A. Lot-block description
- B. Plat description
- C. Government survey description
- D. Metes and bounds description
8. What is the effect of a lien on a property's title?
- A. It increases the property's value
- B. It decreases the property's value
- C. It has no impact on the property's title
- D. It provides a creditor with a claim against the property
9. A built-in oven in a home is considered what type of property?
- A. Personal property
- B. Real property
- C. Chattel
- D. Fixture
10. What is the effect of an easement on a property's value?
- A. It always increases the property's value
- B. It always decreases the property's value
- C. It has no impact on the property's value
- D. It may increase or decrease the property's value, depending on the circumstances
11. A city passes a zoning ordinance that prohibits the construction of new billboards within city limits. What type of governmental power is being exercised?
- A. Eminent domain
- B. Taxation
- C. Escheat
- D. Police power
12. What is the purpose of a title search?
- A. To determine the value of the property
- B. To collect property taxes
- C. To prepare the deed for recording
- D. To identify any encumbrances or title defects
13. What is the purpose of recording a deed?
- A. To transfer title to the grantee
- B. To establish a chain of title
- C. To pay off any outstanding liens
- D. To provide constructive notice to potential buyers
14. A title search reveals a defect in the chain of title. What is the purpose of title insurance in this situation?
- A. To guarantee the buyer's priority against later purchasers
- B. To provide constructive notice to potential buyers
- C. To create a contract between the buyer and seller
- D. To protect the buyer against losses due to defects in title
15. A freehold estate is characterized by what feature?
- A. Right to possess for a fixed term
- B. Right to sell the property
- C. Right to lease the property
- D. Right to possess for an indefinite period
16. Which of the following types of deeds conveys the greatest warranty of title?
- A. General Warranty Deed
- B. Special Warranty Deed
- C. Quitclaim Deed
- D. Deed of Trust
17. A property owner sells their property to a buyer, but the deed is not recorded. What is the effect on the buyer's title?
- A. The buyer has no title to the property
- B. The buyer's title is invalid
- C. The buyer's title is valid and protected
- D. The buyer's title is valid, but not protected against later purchasers
18. A bundle of rights includes the right to:
- A. Use, sell, and gift the property, but not lease it
- B. Lease, sell, and gift the property, but not use it
- C. Use, sell, gift, and lease the property
- D. None of the above
19. What is the purpose of a chain of title?
- A. To provide a history of the property's ownership
- B. To establish the property's value
- C. To identify any liens or encumbrances on the property
- D. To verify the property's boundaries
20. What type of estate is created when a landlord leases a property to a tenant for a specific period of time?
- A. Freehold estate
- B. Life estate
- C. Fee simple estate
- D. Leasehold estate
21. A broker is asked to perform a BPO, or Broker Price Opinion. What is the primary purpose of a BPO?
- A. To determine the market value of a property for lending purposes
- B. To provide a detailed appraisal report for tax purposes
- C. To conduct a thorough inspection of a property's condition
- D. To estimate the likely sales price of a property for a client
22. What is the purpose of the sales comparison approach in appraising a property?
- A. To estimate the value of a property based on the cost of replacing it
- B. To estimate the value of a property based on its potential income
- C. To estimate the value of a property based on its original purchase price
- D. To estimate the value of a property by comparing it to similar properties that have recently sold
23. A real estate agent is asked to perform a Broker Price Opinion (BPO) for a client. What is the primary purpose of a BPO?
- A. To provide a detailed appraisal report
- B. To facilitate a property inspection
- C. To determine the highest and best use of a property
- D. To estimate the market value of a property for a lender or investor
24. A Broker Price Opinion (BPO) is typically used for which purpose?
- A. To provide a detailed, comprehensive appraisal of a property's value.
- B. To identify potential defects or needed repairs in a property.
- C. To determine the property's potential for renovation or redevelopment.
- D. To provide a quick, informal estimate of a property's value for use in marketing or pricing decisions.
25. Which approach to value considers the cost to acquire or construct a property, including land and improvements?
- A. Sales Comparison Approach
- B. Hybrid Approach
- C. Income Approach
- D. Cost Approach
26. A Broker Price Opinion (BPO) is typically prepared by a
- A. Licensed appraiser
- B. Lender
- C. Attorney
- D. Real estate broker or sales agent
27. Which approach to value considers the potential gross income of a property?
- A. Sales Comparison Approach
- B. Cost Approach
- C. Residual Approach
- D. Income Approach
28. What type of depreciation occurs when a property's design or features become outdated or less desirable?
- A. Physical depreciation
- B. Economic depreciation
- C. External depreciation
- D. Functional depreciation
29. A property appraiser is using the sales comparison approach to estimate the value of a property. What principle is being applied?
- A. Substitution
- B. Progression
- C. Regression
- D. Conformity
30. Which approach to value would be most appropriate for a unique, custom-built property?
- A. Sales comparison approach
- B. Hybrid approach
- C. Income approach
- D. Cost approach
31. Functional depreciation refers to a loss in value due to
- A. Physical deterioration of the property
- B. Changes in market conditions
- C. External factors such as environmental hazards
- D. Inadequate design or layout
32. A buyer makes an offer on a property with a contingency for financing. The seller responds with a counteroffer that changes the price. What is the effect of the seller's counteroffer on the buyer's original offer?
- A. The buyer's original offer is still pending
- B. The buyer's original offer is rejected
- C. The counteroffer is a new offer that must be accepted by the seller
- D. The counteroffer terminates the buyer's original offer
33. An agent's failure to disclose their agency relationship to a buyer or seller can result in
- A. Termination of the agency relationship
- B. Loss of the agent's license
- C. A lawsuit for damages
- D. All of the above
34. What is the OLD CAR acronym used for in real estate agency?
- A. Obligations, Loyalty, Disclosure, Accountability, Reasonableness
- B. Obedience, Loyalty, Disclosure, Accounting, Records
- C. Obligations, Loyalty, Disclosure, Accounting, Records
- D. Obedience, Loyalty, Disclosure, Accountability, Reasonableness
35. A buyer and seller enter into a contract with a contingency for inspection. If the buyer discovers a major defect during the inspection, what can they do?
- A. Terminate the contract and receive a refund of earnest money
- B. Request the seller to repair the defect
- C. Waive the contingency and proceed with the transaction
- D. All of the above
36. A buyer hires a real estate agent to represent them in a transaction. What is the agent's fiduciary duty of obedience?
- A. To act in the best interest of the seller
- B. To disclose all known defects in the property
- C. To negotiate the highest price possible
- D. To follow the instructions of the buyer
37. A buyer makes an offer on a property with a $10,000 earnest money deposit. The seller countered with a higher price. What happens to the original offer?
- A. It becomes a counteroffer
- B. It is still valid
- C. It is rejected
- D. It terminates
38. What fiduciary duty requires an agent to act in the best interests of their principal, even if it means sacrificing their own interests?
- A. Obedience
- B. Accounting
- C. Disclosure
- D. Loyalty
39. What type of agent is authorized to perform a specific task on behalf of the principal, such as purchasing a property?
- A. General agent
- B. Limited agent
- C. Universal agent
- D. Special agent
40. A buyer and seller enter into a contract, but the buyer fails to perform. What is the seller's remedy in this situation?
- A. Rescission
- B. Specific performance
- C. Damages
- D. All of the above
41. What is the effect of a breach of contract by the buyer on the earnest money deposit?
- A. The buyer forfeits the deposit to the seller
- B. The seller must refund the deposit to the buyer
- C. The deposit is held in escrow until the dispute is resolved
- D. The buyer may recover the deposit plus damages from the seller
42. A buyer's agent is working with a client to purchase a property. What type of agent is the buyer's agent in this scenario?
- A. General agent
- B. Buyer's representative
- C. Universal agent
- D. Special agent
43. A buyer's agent has a duty of loyalty to their client. What does this mean in practice?
- A. The agent must always recommend the lowest-priced properties
- B. The agent must always disclose their commission to the buyer
- C. The agent must always advise the buyer to make an offer on the first property they see
- D. The agent must act in the best interests of the buyer and put their needs above all else
44. A buyer's agent is working with a buyer to purchase a property. What is the agent's fiduciary duty of confidentiality?
- A. To disclose all information about the buyer to the seller
- B. To keep all information about the seller confidential
- C. To disclose all information about the seller to the buyer
- D. To keep all information about the buyer confidential
45. A seller's agent breaches their fiduciary duty to the seller by failing to disclose a known defect in the property. What is the seller's remedy?
- A. The seller can sue the agent for damages
- B. The seller can terminate the listing agreement
- C. The seller can seek specific performance of the contract
- D. The seller can only recover their earnest money
46. A seller breaches a contract to sell their property, and the buyer sues for specific performance. What is the likely outcome?
- A. The seller will be required to pay damages to the buyer
- B. The seller will be able to avoid the contract altogether
- C. The seller will be able to negotiate a new contract
- D. The seller will be required to sell the property to the buyer
47. A buyer signs a contract to purchase a property, but later discovers a material defect. What remedy is available to the buyer if the seller refuses to repair or credit the defect?
- A. Specific performance
- B. Rescission
- C. Damages
- D. All of the above
48. A real estate agent is handling a transaction and is required to provide the buyer with certain disclosures. Which of the following is a disclosure that the agent is required to provide under RESPA?
- A. A disclosure of the property's appraisal value
- B. A disclosure of the buyer's credit score
- C. A disclosure of the seller's financial information
- D. A Good Faith Estimate of settlement costs
49. A sales agent is working with a seller who wants to sell their property 'as-is'. The sales agent
- A. must disclose all known defects in the property to potential buyers
- B. is not required to disclose any defects in the property because the seller is selling 'as-is'
- C. should recommend that the seller hire a home inspector to identify any potential issues
- D. can only disclose defects that are visible to the naked eye
50. A group of real estate agents agrees to fix their commission rates at a certain percentage. This practice may be a violation of
- A. the Fair Housing Act
- B. RESPA
- C. the ADA
- D. antitrust laws
51. Which of the following is a requirement for a real estate agent's trust account?
- A. The account must be interest-bearing
- B. The account must be in the name of the agent
- C. The account must be in the name of the agent's broker
- D. The account must be non-interest-bearing
52. A real estate agent is contacted by a potential client who is on the national Do-Not-Call registry. The agent has never done business with the client before. What should the agent do?
- A. Call the client to discuss their real estate needs
- B. Send the client an email to discuss their real estate needs
- C. Ignore the client's request and continue to market to them
- D. Add the client's number to the agent's internal do-not-call list
53. A real estate agent is handling client funds in a trust account. What is the agent's primary responsibility regarding these funds?
- A. To commingle the funds with the agent's own money
- B. To use the funds for business expenses
- C. To deposit the funds into a non-interest-bearing account
- D. To keep the funds separate from the agent's own money and use them only for the client's benefit
54. A real estate agent is helping a client find a home in a specific neighborhood. The client mentions that they don't want to live near people of a certain racial group. What should the agent do?
- A. Tell the client that they cannot discriminate based on race
- B. Show the client homes in other neighborhoods
- C. Ignore the client's request and show them homes in the desired neighborhood
- D. Refuse to work with the client
55. A real estate agent is handling a transaction where the buyer is paying $500,000 for a property. The agent's broker requires the agent to deposit the buyer's earnest money into a trust account. Why is this required?
- A. To ensure the agent gets paid their commission
- B. To comply with federal tax laws
- C. To facilitate the transfer of ownership
- D. To protect the buyer's funds from being commingled with the agent's personal funds
56. A real estate agent is handling a transaction and is required to deposit the buyer's earnest money into a trust account. What is the primary reason for this requirement?
- A. To protect the agent's commission
- B. To comply with RESPA
- C. To prevent the seller from accessing the funds
- D. To ensure that the buyer's funds are properly accounted for
57. A real estate agent is handling a transaction and holds earnest money in a trust account. What is the agent's responsibility regarding the trust account?
- A. To use the account for personal expenses
- B. To commingle personal funds with client funds
- C. To ignore trust account requirements
- D. To maintain accurate records and account for all transactions
58. A property is considered stigmatized if it has a history of:
- A. Environmental hazards such as asbestos or lead-based paint
- B. Prior ownership by a famous person
- C. A nearby industrial site
- D. A murder or other violent crime occurring on the property
59. A seller of a single-family residence built in 1965 must provide which of the following disclosures to the buyer?
- A. Seller's Disclosure Notice and a lead-based paint disclosure
- B. Only a Seller's Disclosure Notice
- C. Only a lead-based paint disclosure
- D. No disclosures are required
60. A seller fails to disclose a material defect in the property's foundation. What is the buyer's recourse?
- A. Sue for specific performance
- B. Terminate the contract and recover earnest money
- C. Request a price reduction
- D. Pursue a claim for damages
61. What is the primary difference between a material defect and a stigmatized property?
- A. A material defect is a physical problem, while a stigmatized property has a psychological impact
- B. A material defect is a psychological issue, while a stigmatized property has a physical problem
- C. A material defect is only relevant to the property's value, while a stigmatized property is relevant to the buyer's personal preferences
- D. A material defect is disclosed by the seller, while a stigmatized property is not
62. Radon is detected in a property during an inspection. What is the seller's responsibility regarding this environmental hazard?
- A. The seller must remove the radon
- B. The buyer is responsible for removing the radon
- C. The seller is not responsible for disclosing the presence of radon
- D. The seller must disclose the presence of radon to the buyer
63. A seller of a property built in 1950 must provide which federal disclosure to the buyer?
- A. Lead-based paint disclosure
- B. Asbestos disclosure
- C. Radon disclosure
- D. Mold disclosure
64. A seller of a single-family home built before 1978 must provide a specific federal disclosure to the buyer regarding what potential hazard?
- A. Asbestos
- B. Radon
- C. Mold
- D. Lead-based paint
65. A property is located in a flood zone, but the seller does not disclose this information to the buyer. What can the buyer do?
- A. Sue the seller for damages
- B. Rescind the contract
- C. Obtain flood insurance
- D. Do nothing
66. Which of the following is NOT a type of environmental hazard that may be present in a residential property?
- A. Asbestos
- B. Radon
- C. Mold
- D. Termites
67. A buyer is obtaining a mortgage with a loan-to-value ratio of 82%. What is the likely result regarding private mortgage insurance?
- A. The lender will pay the PMI
- B. The buyer will not be required to pay PMI
- C. The seller will pay the PMI
- D. The buyer will be required to pay PMI
68. What is the main difference between a conventional loan and an FHA loan?
- A. Conventional loans are insured by the government, while FHA loans are not
- B. FHA loans have stricter credit score requirements
- C. Conventional loans have higher down payment requirements
- D. FHA loans are insured by the government, while conventional loans are not
69. A borrower is closing on a home purchase and is presented with a Closing Disclosure form. What is the primary purpose of this form?
- A. To disclose the loan amount and interest rate to the borrower
- B. To disclose the property value and appraisal to the borrower
- C. To disclose the lender's credit score requirements to the borrower
- D. To summarize the final terms and costs of the loan, including the loan amount, interest rate, and closing costs
70. A borrower obtains a conventional loan with a loan-to-value ratio of 85%. What is the likely consequence of this high LTV ratio?
- A. The borrower will pay a lower interest rate
- B. The borrower will not be required to pay private mortgage insurance
- C. The borrower will be eligible for a larger loan amount
- D. The borrower will be required to pay private mortgage insurance
71. Which type of loan is guaranteed by the Department of Veterans Affairs and offers favorable terms to eligible veterans?
- A. FHA loan
- B. USDA loan
- C. Conventional loan
- D. VA loan
72. A borrower is purchasing a home with a 10% down payment. What type of insurance will they be required to pay?
- A. Flood insurance
- B. Title insurance
- C. Homeowners insurance
- D. Private mortgage insurance (PMI)
73. What is the purpose of Private Mortgage Insurance (PMI) in a home loan?
- A. To protect the borrower from default
- B. To reduce the loan's interest rate
- C. To pay property taxes
- D. To insure the lender against default when the LTV exceeds 80%
74. A lender charges 3 discount points on a $240,000 loan. One point equals 1% of the loan amount. What is the cost of the points?
- A. $9,600
- B. $14,400
- C. $720
- D. $7,200
75. Annual property taxes are $8,300. Using a 365-day year, the seller is responsible for 109 days. What is the seller's prorated share?
- A. $2,478.63
- B. $3,160.82
- C. $5,821.37
- D. $2,513.06
76. A home sells for $180,000 with a 5% commission and no other closing costs. What does the seller net?
- A. $9,000
- B. $180,000
- C. $169,200
- D. $171,000
77. A lender charges 1 discount point on a $290,000 loan. One point equals 1% of the loan amount. What is the cost of the points?
- A. $5,800
- B. $290
- C. $1,450
- D. $2,900
78. A commercial property has a net operating income of $52,000 and the market cap rate is 8%. Using the income approach, what is its estimated value?
- A. $4,160
- B. $325,000
- C. $520,000
- D. $650,000
79. A home sells for $350,000 with a 7% commission and no other closing costs. What does the seller net?
- A. $325,500
- B. $24,500
- C. $350,000
- D. $322,000
80. A tenant paid $2,400 rent for the full month. The sale closes on day 16 of a 30-day month. How much unearned rent must the seller credit the buyer at closing?
- A. $1,200.00
- B. $1,280.00
- C. $1,279.00
- D. $1,120.00
81. The Nevada Real Estate Commission has the power to impose which of the following sanctions on a licensee found guilty of misconduct?
- A. Suspension of the licensee's real estate license
- B. Revocation of the licensee's real estate license
- C. A fine of up to $10,000
- D. All of the above
82. A Nevada real estate salesperson wishes to change their broker association. What must they do?
- A. Notify the Division immediately
- B. Notify their current broker only
- C. Wait until their license renewal
- D. No notification is required
83. A Nevada licensee represents a buyer in a transaction and wants to also represent the seller. What must the licensee obtain from both parties?
- A. A written listing agreement
- B. A waiver of the duty of loyalty
- C. A disclosure of the licensee's commission split
- D. A CONSENT TO ACT
84. A Nevada real estate salesperson must provide which document to the client at the earliest reasonable opportunity to explain the duties owed by the licensee?
- A. Duties Owed by a Nevada Licensee
- B. Seller's Real Property Disclosure Form
- C. Resale Package
- D. Waiver of Liability
85. A Nevada real estate salesperson is working with a buyer who has already received the 'DUTIES OWED BY A NEVADA LICENSEE' disclosure. What is the salesperson's responsibility regarding this disclosure?
- A. To provide the disclosure again at the initial interview
- B. To provide a written confirmation of the agency relationship
- C. To obtain a waiver of the agency relationship
- D. To confirm that the buyer has already received the disclosure
86. What is the purpose of the confirmation of the agency relationship in a Nevada real estate transaction?
- A. To establish a dual agency relationship
- B. To inform clients of the duties owed by a Nevada licensee
- C. To obtain waiver of the agency relationship
- D. To confirm the client's understanding of the agency relationship
87. A Nevada licensee represents a seller in a transaction. The buyer wants to negotiate directly with the seller. What is required?
- A. A written waiver from the seller
- B. A signed CONSENT TO ACT from the seller
- C. A written request from the buyer to the Nevada Real Estate Division
- D. A signed authorization from the seller to negotiate directly with the buyer
88. When must a Nevada real estate salesperson confirm the agency relationship with a client or customer?
- A. At the initial meeting
- B. When the client or customer requests it
- C. At the closing of the transaction
- D. Before preparing an offer to purchase
89. A Nevada salesperson is working with a buyer who wants to purchase a property. What must the salesperson do to confirm the agency relationship with the buyer?
- A. Provide the buyer with a copy of the 'DUTIES OWED BY A NEVADA LICENSEE' disclosure form
- B. Obtain a written acknowledgement from the buyer of the agency relationship
- C. Explain the benefits of working with a real estate agent to the buyer
- D. Disclose the salesperson's commission to the buyer
90. A Nevada licensee is working with a buyer and a seller in the same transaction. Can the licensee authorize the buyer to negotiate directly with the seller?
- A. Yes, with the seller's consent
- B. Yes, without the seller's consent
- C. No, the licensee must be present during all negotiations
- D. No, the licensee can only authorize the buyer to negotiate with the seller's agent
91. A Nevada real estate salesperson receives a client's earnest money deposit. What must the salesperson do with these funds?
- A. Deposit them into the salesperson's personal bank account
- B. Give them to the client's lender
- C. Use them to pay for marketing expenses
- D. Deliver them to the broker for deposit into the broker's trust account
92. A Nevada real estate salesperson receives a payment from a client for services rendered. What must the salesperson do with the payment?
- A. Deposit it into their own account
- B. Keep it as their own commission
- C. Use it to pay business expenses
- D. Give it to the broker
93. What type of opinion requires a license to provide in Nevada, but does not require a full appraisal?
- A. Broker price opinion
- B. Comparative market analysis
- C. Appraisal
- D. Inspection report
94. A Nevada real estate salesperson is preparing a broker price opinion (BPO) for a client. What is the primary purpose of a BPO?
- A. To determine the market value of a property for a loan
- B. To provide a detailed inspection of the property
- C. To estimate the cost of repairs to the property
- D. To negotiate a sale price between buyer and seller
95. What must a Nevada real estate salesperson do with client monies, such as earnest money deposits, received in the course of a transaction?
- A. Commingling them with personal funds is acceptable
- B. Deposit them into the salesperson's personal account
- C. Give them to the buyer or seller to hold
- D. Deposit them into the broker's trust account
96. A Nevada real estate salesperson is asked to prepare a broker price opinion (BPO) for a client. What is the primary purpose of a BPO?
- A. To determine the property's market value for a sale
- B. To advise the client on the best price to offer
- C. To compare the property to similar properties in the area
- D. To estimate the property's value for a lender
97. A Nevada real estate salesperson is subject to a disciplinary action for converting client funds. What may be the source of reimbursement for the client's loss?
- A. The broker's errors and omissions insurance
- B. The salesperson's personal assets
- C. The client's own insurance
- D. The Real Estate Education, Research and Recovery Fund
98. What must a Nevada real estate salesperson do when creating a broker price opinion (BPO) for a client?
- A. Charge the client a fee for the BPO without the broker's approval
- B. Provide the BPO to the client without the broker's review
- C. Only provide a BPO if they have an appraisal license
- D. Ensure the BPO is supervised and approved by their broker
99. In Nevada, a real estate salesperson's compensation for services rendered must be paid through which of the following?
- A. The salesperson directly
- B. The client directly
- C. The state real estate commission
- D. The salesperson's broker
100. Which of the following is a requirement for a Nevada real estate salesperson's advertisement?
- A. The advertisement must include the salesperson's home phone number
- B. The advertisement must include the salesperson's personal email address
- C. The advertisement must include the salesperson's social security number
- D. The advertisement must identify the broker
101. A Nevada real estate licensee is acting as a principal in a transaction, what must the licensee disclose to the other parties?
- A. The licensee's commission rate
- B. The common-interest community fees
- C. The property's defects or conditions
- D. The licensee's role as a principal
102. What is the consequence of a seller's failure to disclose known defects or conditions of the residential property in Nevada?
- A. The buyer can terminate the contract
- B. The seller is liable for any damages
- C. The transaction is voidable
- D. All of the above
103. In Nevada, which of the following is a required disclosure for sellers of residential property?
- A. The property is located in a flood zone
- B. The property has a pending lawsuit
- C. The property has a history of termite infestation
- D. All of the above
104. What must be provided to a buyer in a common-interest community in Nevada?
- A. Seller's Real Property Disclosure Form
- B. Residential Disclosure Guide
- C. Environmental Impact Statement
- D. Common-Interest Community Resale Package
105. A buyer of a condominium unit in Nevada should receive which of the following from the seller or the common-interest community?
- A. A copy of the property's appraisal report
- B. A market analysis of the property
- C. A list of nearby schools
- D. The resale package/certificate
106. What type of disclosure is required for environmental hazards in Nevada?
- A. Seller's Real Property Disclosure Form
- B. No disclosure is required
- C. Common-Interest Community Disclosure
- D. Environmental Disclosure Form
107. What type of disclosure is required for a property that was previously used as a methamphetamine lab?
- A. Environmental disclosure
- B. Seller's Real Property Disclosure Form
- C. Common-Interest Community Resale Certificate
- D. None of the above
108. What must a Nevada real estate licensee do when representing more than one party in a transaction?
- A. Obtain written consent from all parties
- B. Disclose their representation of multiple parties to the other parties
- C. Provide a copy of the Seller's Real Property Disclosure Form to all parties
- D. Notify the Nevada Real Estate Division
109. In Nevada, who is responsible for preparing the settlement statement in a real estate transaction?
- A. The broker
- B. The salesperson
- C. The lender
- D. The title company
110. A Nevada real estate transaction involves a cash sale with no financing contingency. What is the typical timeline for the buyer to deliver the earnest money deposit?
- A. Within 24 hours of contract execution
- B. At the time of closing
- C. Within 10 days of contract execution
- D. Within 3 days of contract execution
111. A Nevada real estate salesperson charges an advance fee to a client. What is the salesperson required to do?
- A. Deposit the fee into the broker's trust account
- B. Use the fee to pay for marketing expenses
- C. Split the fee with the broker
- D. Provide a written disclosure to the client
112. A buyer and seller have signed a purchase agreement, and the buyer has deposited earnest money into the broker's trust account. What is the next step regarding the earnest money?
- A. The salesperson should hold the earnest money until the transaction closes
- B. The broker should commingle the earnest money with their personal funds
- C. The seller should be given the earnest money as a deposit
- D. The earnest money should be held in the broker's trust account until the transaction closes or is terminated
113. A Nevada broker enters into a buyer representation agreement with a client. What is the primary purpose of this document?
- A. To establish the sales price of a property
- B. To transfer ownership of a property
- C. To secure financing for the buyer
- D. To define the scope of services to be provided by the broker
114. A Nevada salesperson represents a buyer in a transaction. What is the primary purpose of the buyer representation agreement?
- A. To establish the sales price of the property
- B. To transfer ownership of the property
- C. To disclose known defects in the property
- D. To define the terms of the brokerage relationship
115. In Nevada, how long does a buyer typically have to review and approve the title report and inspection reports before closing?
- A. 1 day
- B. 5 days
- C. The timeframe is negotiated between the buyer and seller
- D. 10 days
116. A Nevada real estate salesperson is preparing a settlement statement for a residential transaction. What information must be included on this statement?
- A. The sales price of the property
- B. The buyer's financing terms
- C. The seller's net proceeds
- D. All of the above
117. A Nevada real estate salesperson prepares a residential purchase agreement. What is the primary purpose of including a financing contingency in this contract?
- A. To ensure the seller can obtain financing for the sale
- B. To specify the terms of the seller's financing for the buyer
- C. To allow the seller to back out of the contract if the buyer's financing falls through
- D. To provide the buyer with an opportunity to secure financing for the purchase
118. A Nevada real estate salesperson is required to maintain records of all conversations and negotiations with clients and other parties in a transaction. What is the primary purpose of this requirement?
- A. To create a record of all transactions for tax purposes
- B. To facilitate communication between parties
- C. To enable the broker to review the salesperson's work for errors
- D. To provide evidence of the salesperson's activities in case of a dispute
119. What is a key factor in determining the value of a water right in Nevada?
- A. The amount of water allocated to the right
- B. The purpose for which the water is used
- C. The location of the water source
- D. The age of the water right
120. What is a Nevada salesperson's responsibility regarding a property's water rights?
- A. To verify the water rights with the state
- B. To recommend a water rights expert to the buyer
- C. To ensure the water rights are included in the sale
- D. To disclose the existence of water rights to the buyer

Answer key

1. D 2. D 3. A 4. D 5. D 6. D 7. D 8. D 9. D 10. D 11. D 12. D 13. D 14. D 15. D 16. A 17. D 18. C 19. A 20. D 21. D 22. D 23. D 24. D 25. D 26. D 27. D 28. D 29. A 30. D 31. D 32. D 33. D 34. D 35. D 36. D 37. D 38. D 39. D 40. D 41. A 42. D 43. D 44. D 45. A 46. D 47. D 48. D 49. A 50. D 51. D 52. D 53. D 54. A 55. D 56. D 57. D 58. D 59. A 60. D 61. A 62. D 63. A 64. D 65. A 66. D 67. D 68. D 69. D 70. D 71. D 72. D 73. D 74. D 75. A 76. D 77. D 78. D 79. A 80. D 81. D 82. A 83. D 84. A 85. D 86. D 87. D 88. D 89. A 90. A 91. D 92. D 93. A 94. A 95. D 96. D 97. D 98. D 99. D 100. D 101. D 102. D 103. D 104. D 105. D 106. D 107. A 108. A 109. D 110. D 111. D 112. D 113. D 114. D 115. D 116. D 117. D 118. D 119. A 120. D

Explanations

1. D — Soil quality is a physical characteristic of land, as it refers to the composition and properties of the soil itself.
2. D — Tax foreclosure is the process by which the government seizes a property due to non-payment of property taxes.
3. A — A CC&R, or Covenants, Conditions, and Restrictions, is a type of covenant that restricts the use of a property and is typically found in a subdivision's governing documents.
4. D — Topography is a physical characteristic of land, referring to the natural features and shape of the land.
5. D — An encroachment occurs when a property owner's improvement, such as a fence, extends onto a neighboring property without permission.
6. D — An encroachment occurs when a property owner's improvement, such as a fence, extends onto neighboring property without permission.
7. D — This type of description uses measurements and reference points to define the boundaries of a property, which is characteristic of a metes and bounds description.
8. D — A lien provides a creditor with a claim against the property, which can affect the property's marketability and value.
9. D — A built-in oven is a fixture because it is attached to the real property, making it a part of the home.
10. D — An easement can either increase or decrease a property's value, depending on the specific terms and circumstances of the easement.
11. D — The city is exercising its police power to regulate land use for the health, safety, and welfare of its citizens.
12. D — A title search is conducted to identify any encumbrances or title defects that may affect the buyer's ownership of the property.
13. D — Recording a deed provides constructive notice to potential buyers and protects the grantee's priority against later buyers.
14. D — Title insurance protects the buyer against losses due to defects in title, including errors or omissions in the chain of title.
15. D — A freehold estate is defined as an estate where the owner has the right to possess the property for an indefinite period, unlike a leasehold estate which has a fixed term.
16. A — A general warranty deed conveys the greatest warranty of title, as it guarantees the grantor's title against all claims, whereas a special warranty deed only guarantees against claims arising during the grantor's ownership.
17. D — The deed is valid between the parties, but recording is necessary to protect the buyer's title against later purchasers.
18. C — A bundle of rights includes the right to use, sell, gift, and lease the property, among other rights.
19. A — A chain of title is a record of the sequence of owners of a property, which helps to establish the property's ownership history and ensure that the title is clear and marketable.
20. D — A leasehold estate is created when a landlord leases a property to a tenant for a specific period of time, giving the tenant the right to use and occupy the property.
21. D — A BPO is an estimate of the likely sales price of a property, typically performed by a broker for a client, such as a lender or potential buyer.
22. D — The sales comparison approach estimates the value of a property by comparing it to similar properties that have recently sold, taking into account factors such as location, size, and amenities.
23. D — A BPO is used to estimate the market value of a property for a lender or investor, typically in a non-traditional lending or investment scenario.
24. D — A BPO is a quick, informal estimate of a property's value, often used by real estate agents or brokers to help price a property for sale or to provide a rough estimate of value for marketing purposes.
25. D — The Cost Approach estimates a property's value by calculating the cost to acquire the land and construct the improvements, then adjusting for depreciation.
26. D — A BPO is an estimate of a property's value prepared by a real estate broker or sales agent, often for use in lending decisions or other transactions.
27. D — The Income Approach estimates the value of a property based on its potential to generate income, such as rental income from an apartment building.
28. D — Functional depreciation refers to the loss in value due to a property's outdated design, poor layout, or lack of desirable features.
29. A — The sales comparison approach is based on the principle of substitution, which states that a buyer will pay no more for a property than the cost of acquiring a similar property with the same utility.
30. D — The cost approach to value is most appropriate for unique, custom-built properties, as it estimates the value of the property based on the cost to replicate or replace it.
31. D — Functional depreciation refers to a loss in value due to inadequate design or layout, such as a house with a poorly designed floor plan.
32. D — A counteroffer terminates the original offer, and the buyer must decide whether to accept, reject, or make another counteroffer.
33. D — An agent's failure to disclose their agency relationship can result in termination of the agency relationship, loss of the agent's license, and a lawsuit for damages.
34. D — The OLD CAR acronym represents the fiduciary duties of obedience, loyalty, disclosure, accountability, and reasonableness that an agent owes to their principal.
35. D — The buyer can terminate the contract and receive a refund of earnest money, request the seller to repair the defect, or waive the contingency and proceed with the transaction.
36. D — The agent's fiduciary duty of obedience requires them to follow the lawful instructions of the buyer, as long as they are within the scope of the agency agreement.
37. D — A counteroffer terminates the original offer, requiring the buyer to accept, reject, or make another counteroffer.
38. D — The fiduciary duty of loyalty requires an agent to act in the best interests of their principal, even if it means sacrificing their own interests, and to avoid conflicts of interest.
39. D — A special agent is authorized to perform a specific task on behalf of the principal, such as purchasing a property.
40. D — The seller may seek rescission to cancel the contract, specific performance to force the buyer to perform, or damages to compensate for the buyer's breach.
41. A — If the buyer breaches the contract, the buyer may forfeit the earnest money deposit to the seller, depending on the contract terms.
42. D — A special agent is authorized to represent the client in a specific transaction or matter, such as purchasing a property.
43. D — The duty of loyalty requires an agent to act in the best interests of their client, and put their needs above all else, including the agent's own interests.
44. D — The agent's fiduciary duty of confidentiality requires them to keep all information about the buyer confidential, unless authorized to disclose it.
45. A — If an agent breaches their fiduciary duty, the principal can sue the agent for damages.
46. D — Specific performance is a remedy that requires the breaching party to perform their obligations under the contract, in this case, to sell the property to the buyer.
47. D — The buyer may seek various remedies, including specific performance, rescission, or damages, depending on the circumstances and the terms of the contract.
48. D — RESPA requires the agent to provide the buyer with a Good Faith Estimate of settlement costs, which includes an estimate of the costs associated with the transaction.
49. A — The sales agent must disclose all known defects in the property to potential buyers, regardless of whether the seller is selling 'as-is', to comply with the requirements for disclosure.
50. D — Antitrust laws prohibit price-fixing and other anti-competitive practices. Agreeing to fix commission rates may be considered a violation of these laws.
51. D — A real estate agent's trust account must be non-interest-bearing, as interest-bearing accounts can create a conflict of interest.
52. D — The agent should add the client's number to their internal do-not-call list, as the client has opted out of receiving unsolicited calls.
53. D — When handling client funds in a trust account, the agent has a fiduciary duty to keep the funds separate from the agent's own money and use them only for the client's benefit.
54. A — The agent should inform the client that they cannot discriminate based on race, as it is a protected class under the Federal Fair Housing Act.
55. D — Real estate agents are required to deposit client funds into a trust account to protect those funds from being commingled with the agent's personal funds and to ensure that the funds are used for their intended purpose.
56. D — The primary reason for depositing earnest money into a trust account is to ensure that the buyer's funds are properly accounted for and protected until the transaction is complete.
57. D — The agent is responsible for maintaining accurate records and accounting for all transactions in the trust account.
58. D — A stigmatized property is one that has a psychological or emotional impact on potential buyers, such as a history of a murder or other violent crime, which can affect the property's value or marketability.
59. A — The seller must provide both the Seller's Disclosure Notice and a lead-based paint disclosure for a pre-1978 property.
60. D — A buyer can pursue a claim for damages if a seller fails to disclose a material defect, as this is a breach of the seller's disclosure obligations.
61. A — A material defect refers to a physical problem with the property, such as a structural issue or needed repair, while a stigmatized property has a psychological impact, such as a history of murder or other traumatic event, that may affect its desirability but not its physical condition.
62. D — The seller must disclose the presence of radon to the buyer, as it is an environmental hazard that can affect the property's value and the buyer's health.
63. A — The federal lead-based paint disclosure is required for properties built before 1978.
64. D — The federal disclosure requirement specifically targets lead-based paint in homes built before 1978 to protect buyers from its health risks.
65. A — The buyer can sue the seller for damages if the seller fails to disclose known information about the property, including flood zone information.
66. D — While termites can cause significant damage to a residential property, they are not typically considered an environmental hazard in the same category as asbestos, radon, and mold, which can pose health risks to occupants.
67. D — The buyer will be required to pay private mortgage insurance because the loan-to-value ratio exceeds 80%.
68. D — FHA loans are insured by the Federal Housing Administration, which provides a guarantee to the lender in case of default, while conventional loans are not insured by the government.
69. D — The Closing Disclosure form is required to summarize the final terms and costs of the loan, including the loan amount, interest rate, and closing costs, so the borrower can review and understand the loan terms before closing.
70. D — With a loan-to-value ratio above 80%, the borrower is likely to be required to pay private mortgage insurance to protect the lender against default.
71. D — A VA loan is guaranteed by the Department of Veterans Affairs and offers favorable terms to eligible veterans, including lower interest rates and lower or no down payment requirements.
72. D — Since the borrower is putting down less than 20%, they will be required to pay private mortgage insurance (PMI).
73. D — PMI protects the lender against default when the loan-to-value ratio exceeds 80%, not the borrower.
74. D — 3 points = 3% of $240,000 = $7,200.
75. A — Daily tax = $8,300 ÷ 365 = $22.74. Seller's share = $22.74 × 109 = $2,478.63.
76. D — Commission = $180,000 × 5% = $9,000. Net = $180,000 − $9,000 = $171,000.
77. D — 1 point = 1% of $290,000 = $2,900.
78. D — Value = NOI ÷ cap rate = $52,000 ÷ 8% = $650,000.
79. A — Commission = $350,000 × 7% = $24,500. Net = $350,000 − $24,500 = $325,500.
80. D — Daily rent = $2,400 ÷ 30 = $80.00. The buyer owns the property for the 14 remaining days, so the credit = $80.00 × 14 = $1,120.00.
81. D — The Nevada Real Estate Commission has the authority to impose various sanctions, including suspension or revocation of a license and fines, on a licensee found guilty of misconduct.
82. A — Nevada licensees must give the Division timely notice of certain events, including a change of broker association.
83. D — The licensee must obtain a CONSENT TO ACT from both parties to represent more than one party in the transaction.
84. A — The 'Duties Owed by a Nevada Licensee' is the mandatory agency-relationship disclosure in Nevada.
85. D — If a buyer has already received the 'DUTIES OWED BY A NEVADA LICENSEE' disclosure, the salesperson is not required to provide it again, but should confirm that the buyer has already received it.
86. D — The confirmation of the agency relationship is used to confirm the client's understanding of the agency relationship.
87. D — The seller must provide written authorization to the licensee to allow direct negotiation with the buyer.
88. D — A Nevada real estate salesperson should confirm the agency relationship with a client or customer before preparing an offer to purchase, as this is a critical step in establishing the scope of the agency relationship.
89. A — The 'DUTIES OWED BY A NEVADA LICENSEE' disclosure form is used to confirm the agency relationship and inform the client of the duties owed by the licensee.
90. A — In Nevada, a licensee can authorize the buyer to negotiate directly with the seller, but only with the seller's consent, which must be obtained in writing.
91. D — Client monies, such as earnest money deposits, must be delivered to the broker for deposit into the broker's trust account to avoid commingling and conversion.
92. D — The salesperson must give the payment to the broker, as all compensation flows through the broker.
93. A — A broker price opinion requires a license to provide in Nevada, but does not require a full appraisal.
94. A — The primary purpose of a BPO is to determine the market value of a property, often for use in lending decisions.
95. D — Nevada law requires that client monies be handled through the broker's trust account to prevent commingling and conversion.
96. D — A BPO is typically used to estimate a property's value for a lender or other third-party purposes.
97. D — The Real Estate Education, Research and Recovery Fund may reimburse a client for losses due to a licensee's fraud or misrepresentation, including conversion of client funds.
98. D — In Nevada, BPOs must be supervised by the broker to ensure accuracy and compliance with regulations.
99. D — Nevada salespersons are paid through their broker, as the broker is responsible for supervision and oversight.
100. D — Nevada requires that advertisements identify the broker, as compensation flows through the salesperson's broker.
101. D — When a Nevada real estate licensee is acting as a principal in a transaction, the licensee must disclose their role as a principal to the other parties.
102. D — The consequence of a seller's failure to disclose known defects or conditions of the residential property in Nevada can result in the buyer terminating the contract, the seller being liable for damages, or the transaction being voidable.
103. D — Sellers of residential property in Nevada are required to disclose known defects or conditions, including environmental hazards, lawsuits, and other material facts.
104. D — Nevada requires the resale package/certificate to be provided to a buyer in a common-interest community, which includes information about the community's governing documents and fees.
105. D — The resale package/certificate provides important information about the common-interest community, including fees, assessments, and governance documents.
106. D — Nevada requires disclosure of environmental hazards, such as lead-based paint or methamphetamine contamination, through a specific environmental disclosure form.
107. A — In Nevada, sellers of properties that were previously used for certain illegal activities, such as methamphetamine labs, must disclose this information to buyers as part of an environmental disclosure.
108. A — When representing more than one party in a transaction, a Nevada real estate licensee must obtain written consent from all parties, which is known as a Consent to Act.
109. D — The title company is typically responsible for preparing the settlement statement, which outlines the terms of the transaction, including the purchase price, closing costs, and any credits or debits.
110. D — In Nevada, the buyer typically has 3 days to deliver the earnest money deposit after the contract is executed.
111. D — In Nevada, a salesperson who charges an advance fee must provide a written disclosure to the client, as advance fees are regulated in the state.
112. D — The earnest money should be held in the broker's trust account until the transaction closes or is terminated.
113. D — The buyer representation agreement outlines the terms of the relationship between the broker and the buyer, including the services to be provided and the compensation to be paid.
114. D — The buyer representation agreement outlines the terms of the brokerage relationship, including the scope of services, duration, and compensation.
115. D — While the timeframe can be negotiated, 10 days is a common period for the buyer to review these reports.
116. D — A settlement statement in Nevada must include the sales price of the property, the buyer's financing terms, the seller's net proceeds, and other relevant details to ensure an accurate accounting of the transaction.
117. D — The primary purpose of a financing contingency is to provide the buyer with an opportunity to secure financing for the purchase, allowing them to back out of the contract if they are unable to obtain financing.
118. D — The primary purpose of maintaining records of all conversations and negotiations with clients and other parties in a transaction is to provide evidence of the salesperson's activities in case of a dispute.
119. A — The amount of water allocated to a water right is a key factor in determining its value, as it directly affects the water's usefulness and scarcity.
120. D — The salesperson must disclose the existence of water rights to the buyer.