Illinois Real Estate Exam
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Question 1 of 5.
A seller is offering his property for sale in as-is condition. A buyer enters into a contract with the seller and has the home inspected. The inspection reveals a latent defect known to, but not disclosed by, the seller. The buyer
A. can void the contract due to the seller's failure to disclose the latent defect.
B. can reduce the contract sales price by the cost of correcting the defect
C. must go through with the purchase because the house is being sold as is.
D. can force the seller to correct the defect
Explanation: A seller’s failure to disclose a known latent defect allows the buyer to void the contract, despite the as-is condition. Choices B, C, and D are incorrect as they don’t address the seller’s duty to disclose.
Question 2 of 5.
A feature of joint tenancy with survivorship is that
A. it provides for the disposition of personal possessions.
B. a corporation can be a joint tenant.
C. the surviving joint tenant(s) acquire the property free and clear of any liens against the deceased.
D. it eliminates probate.
Explanation: Joint tenancy with survivorship means that upon the death of one tenant, their interest automatically passes to the surviving tenant(s), bypassing probate. Choice A is incorrect because joint tenancy deals with real property, not personal possessions. Choice B is incorrect as corporations cannot be joint tenants due to their perpetual existence. Choice C is incorrect because liens against the deceased may still affect the property.
Question 3 of 5.
What type of mortgage loan is likely to be tied to a publicly available index that is mutually acceptable to the lender and the borrower?
A. Renegotiable rate mortgage.
B. Graduated payment mortgage.
C. Adjustable rate mortgage.
D. Freddie Mac.
Explanation: An adjustable rate mortgage (ARM) has an interest rate tied to a publicly available index, which adjusts periodically. Choice A is incorrect because renegotiable rate mortgages are less common and not specifically tied to public indexes. Choice B is incorrect as graduated payment mortgages have fixed rates with increasing payments. Choice D is incorrect because Freddie Mac is not a loan type but a government-sponsored entity.
Question 4 of 5.
An owner has decided to sell a home. The home currently has a one-car garage. All the recent sales comps in the neighborhood have two-car garages. After checking with contractors, the owner finds that expanding the garage to accommodate a second car would cost $12,000. When performing a comparative market analysis for this property, a broker would make what kind of an adjustment?
A. Add to the value of the owner's home.
B. Subtract from the value of owner's home.
C. Add to the sales price of recent sales comps.
D. Subtract from the sales price of recent sales comps.
Explanation: In a comparative market analysis, the subject property (with a one-car garage) is less desirable than comps with two-car garages. Thus, its value is adjusted downward by the cost of adding a second garage ($12,000). Choice A is incorrect because adding to the value would overstate the property’s worth. Choices C and D are incorrect as adjustments are made to the subject property’s value, not the comps’ sales prices.
Question 5 of 5.
Which of the following items would be prorated at closing with the credit going to the seller?
A. accrued interest on an assumed mortgage
B. prepaid property taxes
C. earnest money
D. unearned rent collected in advance
Explanation: Prepaid property taxes are a seller’s expense already paid for a period extending beyond the closing date, so the seller receives a credit for the unused portion. Choice A is incorrect because accrued interest is a buyer’s responsibility. Choice C is incorrect as earnest money is not prorated but held in escrow. Choice D is incorrect because unearned rent benefits the buyer, not the seller.
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