The Complete Guide to Passing Your Real Estate Sales License Exam On the First Attempt

By Ken Lambert

A recent study of 4,306 candidates that sat for the real estate sales associate exam provided these shocking results. Those who were taking the examination for the first time (1,891) had a pass rate of 44 percent, a little below the previous year's average pass rate of 46 percent. Re-testing statistics are even worse: 72 per cent of the 2,415 sales associate candidates retaking the examination failed. Do not be one of the statistics. You can pass on the first try with the help of this book.

The book presents a clear and complete overview of all the main topics covered on the real estate salesperson examination and gives exam applicants the information and tools they need to successfully pass the exam - on the first attempt. You will improve your test taking skills by completing the included sample test. Subjects covered include real estate legal issues, encumbrances, real estate law, financing real estate purchases, leasing, escrow accounts, contracts and legal documents including leases, taxes and taxation, land descriptions, and real estate math, terms, and definitions.

Atlantic Publishing is a small, independent publishing company based in Ocala, Florida. Founded over twenty years ago in the company president’s garage, Atlantic Publishing has grown to become a renowned resource for non-fiction books. Today, over 450 titles are in print covering subjects such as small business, healthy living, management, finance, careers, and real estate. Atlantic Publishing prides itself on producing award winning, high-quality manuals that give readers up-to-date, pertinent information, real-world examples, and case studies with expert advice. Every book has resources, contact information, and web sites of the products or companies discussed.

This Atlantic Publishing eBook was professionally written, edited, fact checked, proofed and designed. The print version of this book is 288 pages and you receive exactly the same content. Over the years our books have won dozens of book awards for content, cover design and interior design including the prestigious Benjamin Franklin award for excellence in publishing. We are proud of the high quality of our books and hope you will enjoy this eBook version.

• Language: English
• Publisher: Atlantic Publishing Group Inc.
• Release date: Jun 1, 2009
• ISBN: 9781601385178

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The Complete Guide to Passing Your Real Estate Sales License Exam On the First Attempt

Everything You Need to Know Explained Simply

By Ken Lambert

The Complete Guide to Passing Your Real Estate Sales License Exam On the First Attempt: Everything You Need to Know Explained Simply

Copyright © 2009 by Atlantic Publishing Group, Inc.

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ISBN-13: 978-1-60138-129-3

ISBN-10: 1-60138-129-8

Library of Congress Cataloging-in-Publication Data

Lambert, Ken, 1974-

The complete guide to passing your real estate sales license exam on the first attempt : you need to know explained simply / by Ken Lambert.

p. cm.

Includes bibliographical references and index.

ISBN-13: 978-1-60138-129-3 (alk. paper)

ISBN-10: 1-60138-129-8 (alk. paper)

1. Real estate agents--Licenses--United States--Examinations, questions, etc. 2. Real estate business--Licenses--United States--Examinations, questions, etc. 3. Real property--United States--Examinations, questions, etc. I. Title.

HD278.L36 2008

333.33076--dc22

2008036371

LIMIT OF LIABILITY/DISCLAIMER OF WARRANTY: The publisher and the author make no representations or warranties with respect to the accuracy or completeness of the contents of this work and specifically disclaim all warranties, including without limitation warranties of fitness for a particular purpose. No warranty may be created or extended by sales or promotional materials. The advice and strategies contained herein may not be suitable for every situation. This work is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If professional assistance is required, the services of a competent professional should be sought. Neither the publisher nor the author shall be liable for damages arising herefrom. The fact that an organization or Web site is referred to in this work as a citation and/or a potential source of further information does not mean that the author or the publisher endorses the information the organization or Web site may provide or recommendations it may make. Further, readers should be aware that Internet Web sites listed in this work may have changed or disappeared between when this work was written and when it is read.

Table of Contents

Dedication

Foreword

Preface

Chapter 1: Preparing for Your Exam

Chapter 2: Real Estate Practices & Principles

Chapter 3: Real Estate Law

Chapter 4 Real Estate Finances (Mortgages)

Chapter 5: Real Estate Appraisal

Chapter 6: Math Review for the Real Estate Professional

Chapter 7: Sample Tests & Answer Keys

Chapter 8: Decreasing Anxiety & Maintaining a Positive Attitude

Conclusion

Glossary

Appendix: State Real Estate Commissions & Bureaus

Bibliography

Author Biography

Dedication

This book is dedicated to Shane and Kaleigh. You’ll both always be my special angels.

Love, Daddy

Table of Contents

Foreword

It is quite common for people who sell their homes using a real estate agent to think that being a real estate agent is easy and that it would be a great career. After all, real estate sales offers flexible hours, nice commissions when the transaction closes, and many states only require a two weeks course and a state exam. They are correct. Real estate is a great career. However, being a real estate agent is not easy.

Many states require a prospective real estate agent to master a tremendous amount of material in a short period of time. These skills include, but are not limited to, agency law, property law, contracts law, financing, appraising, surveying, and local, state, and federal laws on a variety of subjects. As a retired attorney, I know that it takes many semesters in law school to cover the same material. When we also consider that many real estate students also have another career or a family that they have to take care of, passing the real estate exam can become quite challenging.

In his book, The Complete Guide to Passing Your Real Estate Sales License Exam on the First Attempt, author Ken Salgat does an excellent job of providing all the necessary material in an easy-to-absorb manner. It also has an excellent glossary that is a great review tool. The chapter on preparing for the exam and chapter eight, which deals with decreasing anxiety and maintaining a positive attitude – information that is as important to passing the exam as the material is – are both extremely useful for first-time test takers. I would also recommend that the reader take advantage of the practice tests.

Unfortunately, when I took the real estate exam, I did not have the benefit of this book. South Carolina requires a two week course and the state exam. Even with my background as an attorney, I found covering all the material in the two weeks period to be challenging. Salgat’s book is an excellent resource for the prospective real estate exam taker.

I wish the reader all the best with their exam. Welcome to the world of real estate sales!

Winston T. Rego, ABR, e-PRO

Commercial Investment Broker

Executive Commercial Realty

Simpsonville, SC

Winston T. Rego is a Broker and real estate investor in Simpsonville, South Carolina and works exclusively with investors. He has more than doubled his own assets and his clients’ assets every year. Using ideas and techniques that he has developed to grow his own fortune, Mr. Rego assists his investor clients to acquire and sell real estate to increase their cash flow and grow their net worth and assets. All of his clients have received annual return on investment in excess of 100% while investing in low risk and stable commercial real estate.

Winston T. Rego can be contacted by e-mailing him at [e-mail].

Table of Contents

Preface

So you have made the decision to become a licensed real estate professional. Congratulations! Real estate sales is an exciting and rewarding career choice, and preparing for the licensing exam is your first step toward reaching your goals.

All 50 states and the District of Columbia require that salespersons obtain their license before practicing. The most important fact to understand is that a real estate license is governed by your individual state’s laws and regulations.

Licensing began in the early 1900s, which is a relatively short time period when taken from an historical perspective, especially considering that the real estate profession and licensing of its agents began in England before the colonists came to America.

History Behind Licensing

When the colonists from England settled in America, many had experienced a less-restrictive version of the feudal system in which the English monarchy owned all the land. The king divided it into parcels known as feuds, and he gave this land to the lords, who remained in the monarchy’s service. In turn, these lords subleased parts of the land to their subjects; thus the term landlord was begun. Over time, the monarchy did loosen its grip on the rights of property, but it still remained restrictive.

By the time of the Revolutionary War, the colonists shook off the feudal system and pursued instead the allodial system, which allowed individuals to own the land. Thus, the American Dream was born. The United States Constitution and subsequent Bill of Rights further solidified the individual’s right to own property. These important documents became the foundation of later licensing laws and regulations that govern today’s real estate profession.

A Profession Is Born

Early in our nation’s history, people lived in small communities and knew when property was transferred. When pioneers moved to new and unexplored regions, they became owners of the property by living and working on it. But by the late 1800s, American society had changed enormously — the population had grown considerably, and people moved to find new opportunities. As a result, more real estate was bought and sold, but now the buyers and sellers did not know each other, and so they needed a person they could trust to handle the transaction. They thus relied on a trusted agent who also knew the property, and most agents were lawyers or other professionals. Eventually a distinct real estate profession emerged.

In 1908, the National Association of Realtors, a trade group of the real estate industry, was founded to help set standards of conduct and to increase public confidence in the profession. By 1963, all 50 states and the District of Columbia had required salespeople and brokers to be licensed, lending further credibility to the vocation. (Note that by 1940 all states at that time required licensing; Alaska and Hawaii were not yet states.)

Table of Contents

Chapter 1

Preparing for Your Exam

The latest findings show that about 44 percent of people who take the real estate licensing examination pass the test the first time. But do not let that alarm you. You are heading in the right direction, because you purchased this book and are beginning the process of preparing for your examination.

The first step in preparing for your real estate licensing test is to find out what your home state’s licensing requirements are, because every state is different. Listed at the end of this book within the Appendix are the governing agencies for all 50 states.

Understanding Licensing Requirements

All states require that real estate salespeople are licensed to practice, and each state is governed by its own real estate law to award licenses. Additionally, every state has its own education requirements, methods of examination, and test versions, as well as age requirements, citizenship requirements, application procedures, and criminal background checks. For example, some states will require you to have pre-licensing courses, and some states will allow you simply to take the examination after you register for it — no pre-licensing courses required. That is why it is so important to check with your own state.

Examinations

Every state has its own version of the examination. Some states create their own tests, or they contract with one of the four standardized testing services. The services are: Applied Measurement Professionals (AMP), Inc.; Thomson Prometric (formerly Experior); Promissor, Inc.; and Psychological Services, Inc. (PSI). Contact these agencies directly to obtain an information packet on the exam if your state uses one of these companies. Below is the contact information for these companies.

Promissor

3 Bala Plaza West, Suite 300

Bala Cynwyd, PA 19004

610-617-9300

www.pearsonvue.com

Applied Measurement Professionals (AMP), Inc.

8310 Neiman Road

Lenexa, KS 66214-1579

800-345-6559 or 913-541-0400

www.goamp.com

Thompson Prometric

Canton Crossing

1501 South Clinton Street

Baltimore, MD 21224

866-PROMETRIC (776-6387)

443-455-8000

www.prometric.com

Psychological Services, Inc. (PSI)

3210 East Tropicana

Las Vegas, NV 89121

800-733-9267

www.psiexams.com

Regardless of whether your state contracts with a testing service or creates its own examination, the real estate topics and information you need to study are the same. The difference among the tests lies in how many questions are given for each topic. Also, you will also need to know your state’s specific real estate laws. Depending on the state, its questions may be interspersed throughout the examination, or the questions may be on the second portion of the examination. Contact your state to find out what type of test you are required to take. Then, if your state is contracted with one of these testing companies, call it as well to receive its information. That way you are sure to have the latest up-to-date materials.

If you live in a state where you are required to take a pre-licensing course, your instructors will most likely know this information and will be able to guide you as well. However, call your state to fill in any information your instructors do not have and to make sure that you have not missed anything. At a minimum, you will need to contact your state when it comes time to register for the exam.

State Questions

When you contact your state, here is a checklist to make sure you receive all information pertinent to passing your state-specific examination:

What are the requirements to become a licensed real estate agent in my state?

Which exam is given in my state?

What topics are covered on the exam?

How much does the test cost?

How do I register for the exam?

How much time am I given to take the exam?

How is the exam scored?

What is the passing score?

Am I penalized for wrong answers?

Is the exam on a computer or on paper?

What am I allowed to bring into the test with me?

How do I make arrangements for special needs? (for example, handicapped accessibility or medical needs)

Where and when is the exam given?

If allowed, what type of calculator may I use?

When do I receive my score?

What are the state-specific topics covered on the exam?

What is the format of the test? Multiple-choice? True/False? Fill-in-the blank? Essay?

Did I miss anything I need to know?

Testing Formats

There are significant differences in the states’ licensing exams. Some states have long examinations and some states have short ones, but the purpose behind all examinations remains the same: to test your knowledge and measure your understanding of real estate principles, general and state-specific.

The examination can have a variety of formats, including multiple choice questions, true or false questions, fill-in-the-blank questions, and short-answer questions. However, most states administer the multiple-choice exams exclusively.

Additionally, all tests are timed. The time allotment is determined by the state. Do not let the timing alarm you. You will learn how to master the time on your examination.

Another variation among the states is what constitutes a passing score. Some states may penalize you for a wrong answer. If they do not, then it will become extremely important for you to guess at the answer. In these cases, a blank answer is always a wrong answer, so later on this book will give tips on how to strategically guess through an educated process of elimination.

The key to passing your real estate examination will be to study the materials and master them, which will happen with the help of this book.

Difference Between Sales Agent & Broker

It is important to realize that all states have at least two license levels: one for a salesperson and one for a broker. The difference between these two designations is based on a legal definition, which, of course, varies by state law. The difference between a salesperson and a broker is contingent on level of experience and education. For example, most states require you to become a licensed salesperson first and practice in this area before you are allowed to become a broker. Also, most states require a broker to have additional educational and professional development courses before he or she can sit for the broker license.

What Is a Realtor®?

A Realtor® is a professional designation bestowed on the licensed agent by the National Association of Realtors (NAR) to its members. A Realtor® is committed to the real estate profession, maintains high education standards, and must abide by a strict code of ethics, treating all parties in the transaction honestly and fairly. Not all licensed agents are Realtors®, but every Realtor® is a licensed agent. This is not to say that if you are not a member of the NAR that you do not have ethics, because all licensed agents must abide by certain standards. However, this designation is over and above the existing requirements, and it is a way for the profession to help its members. Also, some sponsoring brokers require their agents to become a member of this professional trade group. For additional information about this designation, visit www.realtor.org.

What to Take to Your Exam

After you know your state requirements, have diligently studied the information in this book, and also know your individual state laws, it will be time to register for the exam. Procedures vary from state to state on how to register, so make sure you read and follow them carefully. For example, some states require a broker to sign your application form. Also, you likely must send in an application and fee to take the test. Your state then will send back an entry permit into the examination. The information will include where and when you are taking the exam. If there is an error, make sure you contact your state agency immediately. The same holds true if you have any additional questions.

Verify with your state agency what is allowed into your test-taking area. Find out all procedures so that you are as well prepared as possible, and also remember to find out if you are allowed to use a calculator in the exam. If so, find out what type of calculator is permitted. There may be restrictions on the type, such as graphing calculators, because data can be input into them. Neither will cell phones be permitted to be used as a calculator. But verify this information with your state agency, as it is important. You do not want to be caught without a calculator. Also check to see if you can bring additional batteries with you, or better yet, put new ones in before the exam.

Preparing for the Exam

The best way to prepare for the exam is to study. You cannot go into a real estate exam, even with taking the pre-licensing courses, and expect to pass the exam without spending some earnest study time. The tests are too difficult, and some questions are designed to confuse you. The examinations are to see how well you understand the many facets of the real estate profession, so you must study hard and master the material. Do not worry; this book will help you with the definitions, mathematics, and principles of the real estate industry.

The best way to start studying is to make a plan. It is a good idea before registering for the exam to plan on how much time you need to study. Allowing too much time can be detrimental because you might not devote effort if you think you have plenty of time. You may end up cramming for the exam at the end just to meet your test date. On the flip side, not allowing enough study time also results in rushing and cramming. So it is a fine line in how much time you may need to study. Do you need 30 days, 45 days, or 10 days? Determining how much time you may need is a personal choice. If it has been a while since you have been in school, you may want to allow extra study time, but that is entirely your choice.

One of the keys to successfully passing your real estate test will be to take the exam when you are at your peak knowledge. In other words, when you know as much as you can know about all the topics and feel confident in your ability. Take the test then, before you start forgetting information.

When you find out the dates and times the exam is given, make a plan on how you are going to fit study time into your daily calendar. Most experts advise to study every day for at least 20 minutes so that it is not overwhelming.

Tips to Manage Test Anxiety

Preparation: The number one tip to manage test anxiety is to be prepared. Knowing your subject will help you feel confident and in control of the situation. Also, taking the practice exams in this book will help you to know what to expect from the test. When you know your information and know what to expect, you will feel empowered, and this will help you to pass the exam.

Positive attitude: Managing how you think and feel internally is another component of being successful on the real estate examination. Having a positive attitude does make a difference and is a way to manage test anxiety. Pay attention to your self-talk and do not let negative messages take control of your mind. Do not let others scare or discourage you by telling you how hard the examination is. Yes, the test is difficult, but you must believe in yourself and your ability to pass. Say, I will pass this test or I can pass this exam. You can do it — on your first try.

Self-confidence: Being confident in your ability is related to a positive attitude. However, it remains a little different, because self-confidence also comes from knowing your material and being prepared for the exam. In other words, you are self-confident because you have mastered the subject. Also, picture yourself in your future real estate career — you are speaking at listing presentations, showing homes, and making sales. Practicing future success in your mind will help boost your self-confidence and keep you motivated to keep studying.

Exercise: Studies show that physical activity helps focus your mind and increases certain chemicals in the brain known to improve your mood. It also has a relaxing effect, which is important with the additional stress associated with preparing for your test. If you are currently on an exercise schedule, do not quit now; keep it up. If you are new to exercise or have not been exercising, now is a good time