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Arkansas Real Estate Exam Questions
and Answers 2025 Update 100% Correct
7 days following the termination - ANSWER-principal broker must within _____ notify the Commission of the termination, and surrender the license and card to the Commission. This automatically de-activates the license to transfer an inactive licenses to another principal broker and Commission issue the a temporary license, licensee must: - ANSWER-file a transfer application signed by the new principal broker, pay fee, and submit a statement attesting to not take listings or other proprietary property of previous broker to the new principal broker When a principal broker discontinues business operations, or is terminated by an owner
- ANSWER-must surrender the license and all licenses of employed brokers and salespersons of the firm to the Commission for conversion to inactive status, and all signage must be dismantled. executive broker - ANSWER-a licensed broker employed and supervised by a principal broker as an employee or independent contractor who can perform real estate services under the auspices of the principal broker, but who also has the authority to supervise associate brokers and salespersons. associate broker - ANSWER-licensed broker who, as an employee or independent contractor, may perform real estate services under the supervision of a principal broker or executive broker. The associate broker may not supervise any other licensee to qualify for a Arkansas license - ANSWER-Be of majority age (18 years old). Satisfy educational requirements. Satisfy experience requirements. Pass the appropriate licensing examination. Demonstrate a record of professional conduct. Provide evidence of honesty, trustworthiness and integrity. Complete a criminal history background check. Pay the appropriate fees.
requirement for brokers license - ANSWER-60 classroom hours in real estate within a 3- year period prior to the date of application, documented by the approved school or other satisfactory evidence Two years experience as a licensed Arkansas salesperson, or salesperson or broker from another state, within the four-year period preceding the date of application application procedure for initial licensure - ANSWER-for documentation evidencing fulfillment of the requirements previously identified concerning education, experience, character, age, etc submit payment for the non-refundable application fee as well as the license examination fee. requested the criminal background check may then take the license examination invalidate the results of exam and applicant must reapply an retest - ANSWER- Applicants who pass the exam must pay the license fee and Real Estate Recovery Fund fee within 90 days from the date of the examination. Failure to pay these fees will: 90 days following exam date - ANSWER-Upon successful completion of the examination, the applicant must submit the proper forms and fees to the Commission no later than a six-month extension - ANSWER-if an applicant fails one of the sections of the exam, he or she is granted a _____ re-take and pass the failed portion. misses deadline he or she must re-take the entire exam. if the examinee waits more than one year - ANSWER-he or she must re-take the exam and re-apply for the license. exempt from general portion of exam if: - ANSWER-They passed the general portion in another state, subject to Commission approval; and The passing grade for such section is no lower; and The examinee is licensed in another state at the time he or she takes the Arkansas exam. requirements for non-resident licensure are: - ANSWER-Meet the same requirements as residents; or follow commissions non-resident regulations and meet requirements such as Affiliate with a resident or non-resident principal broker licensed by the Commission etc. If a resident or non-resident licensee terminates affiliation with a principal briker - ANSWER-the person's license is terminated until such time as a re-affiliation occurs with another principal broker and the nonresident/resident places his or her license on inactive status.
principal broker - ANSWER-an individual who performs certain real estate services for another party for compensation. ultimately responsible for the company's activities, notably the activities of other licensees as well as the business's trust accounts. real estate duties not requiring license - ANSWER-Delivery of a lease application or lease. Receiving a lease or lease application for delivery to the principal broker, real estate firm, or owner. Receiving a security deposit, rent payment or related payment for delivery to the principal broker, real estate firm, or owner. Acting under the direct written instructions of the principal broker, firm or owner in: Showing a rental unit. Assisting in the execution of a preprinted lease or rental agreement containing pre- established terms. Conveying information regarding a lease transaction prepared by the principal broker, firm, or owner to any person. no more than 30 days - ANSWER-Commission may issue temporary licenses pending issuance of the permanent license, valid for __ When a licensee leaves the employment of a principal broker he/she must - ANSWER- immediately surrender his or her pocket card to the principal broker licenses of the principal broker and all licensees employed or affiliated with the principal broker - ANSWER-must be retained by the principal broker and displayed in the broker's principal place of business broker's business identification requirements are: - ANSWER-permanently attached and clear sign bearing the firm's name. Clear terms that indicate the company is in the real estate business (broker must notify the Commission of any change signage, and furnish photographs for approval) executive broker - ANSWER-the principal broker must designate an ____to be licensed at the branch as supervisor of all licensees, designation of responsibility must be submitted in writing to the Commission (may not be employed in non-real estate related field) principal broker - ANSWER-party responsible for all inflows and outflows from the branch's trust account. independent dealing - ANSWER-license law that licensees are not allowed to practice real estate independently from their principal broker or executive broker
independent dealing - ANSWER-A licensee representing themselves as a principal broker when he/ she is not, is an example of: Self dealing - ANSWER-license law that licensees in a real estate transaction on behalf of themselves, or a business entity they have an interest, must disclose that they are licensed real estate practitioners (serves to protect the public, notifies principal parties that they are more knowledgeable about real estate matters than ordinary citizens) self dealing disclosure must be - ANSWER-made in writing and prior to entering into sale or lease contract Interference with licensee relationships - ANSWER-violation of license law to improperly interfere w/ licensee's relationship w/ a principal for the purpose of obtaining a referral fee relationship interference - ANSWER-the party desiring the referral interferes to cause a referral to be paid, or cause the transaction to fail if no referral fee is to be paid (may bring civil action against the offender) reasonable cause for a referral payment - ANSWER-a cooperative or subagency relationship has been made between the licensees actual introduction - ANSWER-a referral of a principal to a licensee that occurs prior to the licensee and principal having any material discussions about a specific transaction. referral fee - ANSWER-any mutually agreed upon consideration to be paid by a licensee to any person or entity subject to disciplinary action by the Commission: (10) - ANSWER-Obtaining license via fraud; violating rules/regulations of license laws; substantial misrepresentation; inducing parties to take action based on false statements, descriptions or promises; failure to account for moneys in a timely fashion; committing or being convicted of, or pleading no lo contendere to a felony for moral turpitude, fraud, dishonesty; accepting consideration for real estate services from anyone other than the principal broker; independent dealing;false or misleading advertising;being incompetent in real estate services such that the public is endangered; paying consideration for acts which violate license laws executive broker delegations - ANSWER-Sign offer and acceptance forms. Train and supervise subordinate brokers and salespersons. Discharge administrative duties including signing and handling transfer documents. Both principal broker and executive broker - ANSWER-responsible for strict supervision of real estate activities performed by all licensees in the firm or branch
Arkansas Real Estate Foundation, Inc. - ANSWER-Trust funds in Arkansas may bear interest if the principal broker elects to follow the "Interest on Real Estate Brokers' Trust Account Program," the recipient of the interest earned by the account must be trust or escrow; federally-insured depository institution - ANSWER-All trust fund accounts must bear the terms ___ or _. The account must be within a____ Principal brokers are required to provide the Commission with a written report of each trust account, including the account's: (5) - ANSWER-Name and number, Bank name and address,Opening date. (also required to report changes affecting the trust account, including firm name changes, changes in principal broker status, and changes to or closing of the account itself) 3 days following the execution of a real estate contract - ANSWER-Trust funds received by the principal broker or designated escrow agent must be deposited into the trust account no later than. (or deposited according to written instructions of principal parties) The lender must charge 4 points to raise the interest rate ½% to 5%. The borrower must pay 4% x $50,000, or $2,000. - ANSWER-A lender wants to yield 5% on a 4.5% loan of $50,000. How many points must the lender charge, and what will this cost the borrower? monthly - ANSWER-Trust fund accounts must be reconciled ___ to bank statements in writing. 3 years - ANSWER-Reconciliations records must be made available for inspection by the Commission and kept for deposited in the trust account - ANSWER-All security deposits for leases must be _____. company trust account - ANSWER-deposits received for lease agreements in properties OWNED BY EMPLOYED LICENSEES unless specifically authorized in writing by the tenant, must be deposited in A broker may properly disburse funds from an escrow or trust account upon: (7) - ANSWER-1.Interpretation of the contract which authorizes him to hold funds. 2.Securing a written agreement signed by all parties having an interest in funds, and is separate from the contract which authorizes him to hold funds.
- At the closing of the transaction.
- Rejection of offer to purchase, sell, rent, lease, exchange, or option
- Withdrawal of offer not yet accepted to purchase, sell, rent, lease, exchange or option
- Filing an interpleader action in a court of jurisdiction. Broker must follow the orders of the court in dealing w/ the disputed trust funds.
- By the order of a court.
the receiving agent and the principal or executive broker - ANSWER-All offers received must be signed by the listing agent and the supervising broker - ANSWER-all ACCEPTANCES of offers must be signed prior to closing by (acceptances A-S) approved by an Arkansas attorney - ANSWER-All forms used to document agreements, prior to use, must be approved by a licensed Arkansas attorney obtain permission from such listing agent - ANSWER-In order for a selling agent to show or negotiate the sale of a property listed with another licensee, the selling agent must first the close of the following business day - ANSWER-Offers received by selling agents must be presented to the listing firm by Time-share estate - ANSWER-A separate estate or interest in property, except for property tax purposes. leasehold or fee interest in property devoted to time- sharing, such as a tenancy in common, time span ownership, or interval ownership, and a time- share lease. Time share instrument - ANSWER-Any document which creates or regulates time-share programs Time-share developer - ANSWER-Any person or entity engaged in selling its own time- share estates or time-share use - excluding persons who are acting solely as sales agents violations of time-share law - ANSWER-Filing false or misleading documents. Engaging in unlawful practice. Conducting false or misleading advertising. Improper handling of purchaser's funds. Violation of license laws. Failure to properly register the time-share program. conducting hearings and suspending the licenses may also revoke the registration of a time-share program in the event the developer fails to comply with the suspension - ANSWER-The enforcement powers of the Commission for violations of time-share law include Violators of time-share laws are - ANSWER-guilty of a misdemeanor and face fines up to $5,000 and one year incarceration. In addition, they may be sued in civil court and subjected to punitive damages.
cost approach - ANSWER-relies on the original cost of the property's land and improvements, the cost to reproduce or replace the property's improvements, and the degree to which the improvements have depreciated. Primarily used for properties with limited comparable data or income data, or for properties where the original cost is particularly applicable, such as brand new homes, non-income producing buildings, government properties or unique-purpose buildings. PHYSICAL DETERIORATION - ANSWER-a form of depreciation caused by the action of the physical elements, such as wind or snow, or just ordinary wear and tear. Functional obsolescence - ANSWER-a loss of value of an improvement due to functional inadequacies, often caused by age or poor design; may be curable or incurable Economic obsolescence - ANSWER-a loss of value resulting from extraneous factors that exist outside of the property itself over which an owner has little or no control. Causes might be proximity to nuisances, changes in land use or population, change in zoning Chronological Age - ANSWER-Actual age in years of the building, based on building date economic life - ANSWER-Estimated period where an improved property will yield a return over and above economic rent. In the case of an older structure, refers to the period during which the remaining improvements are depreciated for tax purposes. The period which an improvement has value in excess of its salvage value. Also called service life or useful life. Income Capitalization Approach - ANSWER-a value based on the present value of the rights to future income. This is for income generating properties. Capitalization (Cap) Rate. - ANSWER-the rate of return that an investor would demand for this investment. An investor wants to purchase a 20 unit apartment complex. Monthly, ten units rent for $900, five for $975, and five for $1,050. Vacancy and collection losses are estimated to be 5% of the potential gross income. Operating expenses are expected to be $95,850. Using a cap rate of 8%, what should he pay for the property? - ANSWER-The formula for solving for value is V= I/R To derive (annual) net income, identify potential rent, subtract out vacancy and expenses.Potential income less vacancy = gross income.Gross income - expenses = net income. solve for value by dividing net income by the cap rate. $1,527,187 value A property purchased for $3,600,000. has a gross income of $500,000 and expenses of $200,000. What is the cap rate, or rate of return for this property? - ANSWER-Net Income divided by Value = Cap Rate.Solve for net income by subtracting expenses from
gross income. Next divide net income by the value.The cap rate for this property is 8.33% An apartment complex is valued at $480,000. The property was appraised using a 10% cap rate. What is the property's net income? - ANSWER-V x R = I Value = $480,000, and the cap rate is 10%. Multiply $480,000 times 10%. Net income is $48,000. A man owns a building with 6 apartments. Three of the 6 apartments net him $200 per month and the other three net him $150 each month. For what amount should he sell the building to net 9%? - ANSWER-Income divided by Cap Rate = Value Total net income = ($200 X 3 = $600 a month X 12 =$7,200) plus ($150 X 3 = $450 a month X 12 =5,400). $7,200 + $5,400 = $12,600 total annual income. Next, divide the net income by the 9% cap rate: $12,600 / 9% = $140,000. Thus, in order to sell this property with a 9% return, the investor must sell it for $140,000. 10 Principals of Real Estate Value - ANSWER-Highest and Best Use, substitution, law of supply and demand,Regression and Progression,anticipation, conformity, Assemblage, competition, contribution, change Assemblage - ANSWER-the combining of two or more adjoining lots into one larger tract to increase their total value contribution - ANSWER-the value of any component of a property is what it gives to the value of the whole or what its absence detracts from the whole anticipation - ANSWER-Property can increase or decrease in value in expectation of something in the future such as appreciation or rezoning regression and progression - ANSWER-regression and progression occurs between dissimilar properties. This means the value of the better quality property is affected adversely by the presence of the lesser quality property and a lesser house will benefit from a larger house conformity - ANSWER-The more the properties are alike, the more they retain value ad valorem basis - ANSWER-General property taxes are levied on this basis; based on the assessed value of the property homestead - ANSWER-a parcel of real property that is owned and occupied as a family home A special assessment - ANSWER-a tax levied against specific properties that will benefit from a public improvement.
holding warehouse agencies - ANSWER-purchase a number of mortgage loans and assemble them into one or more packages of loans for resale to investors Major warehousing agencies in the Secondary Mortgage Market are: (3) - ANSWER- Federal National Mortgage Association, Fannie Mae (FNMA) Government National Mortgage Association, Ginnie Mae (GNMA) Federal Home Loan Mortgage Corporation, Freddie Mac (FHLM) Federal National Mortgage Association (FNMA) - ANSWER-Sells seasoned mortgages and deeds of trust to individual investors and financial institutions; established in 1938 for purchasing FHA loans from loan originators to provide some liquidity for government insured loans A seasoned mortgage - ANSWER-mortgage that has been in existence for some time and has a good record of repayment by the mortgagor Fannie Mae (private!!) - ANSWER-Largest purchaser in secondary market; Quasi- private corp - was government when originally formed, but is now a private corporation Fannie Mae (Federal National Mortgage Association) (fANNie buys ALL) - ANSWER- Buys FHA loans, VA loans, and conventional loans in secondary market. more; increase; decrease - ANSWER-when reserve requirements increase: lender is required to keep ___ money in reserve; interest rates ; economic effect: ____ in money available to loan; less;decrease; increase - ANSWER-when reserve requirements DECREASE: Lender is allowed to keep __ money in reserve; interest rates ; economic effect: ___ in money available to loan Discount rates - ANSWER-the rate at which the "Fed" charges banks for money more;more; slow down - ANSWER-Discount Rate Paid by Banks INCREASE - Lenders pay to borrow money; Interest Rates Charged to Consumers: The lender pays more so the consumer will be charged ; Effect on Economy:__ economy b/c fewer consumers will be able to qualify for loans less;less- down; speed up - ANSWER-Discount Rate Paid by Banks DECREASE - Lenders pay to borrow money; Interest Rates Charged to Consumers: The lender pays more so the consumer will be charged so interest rates will go __ ; Effect on Economy: __ economy b/c more consumers will be able to qualify for lower interest rate loans. the federal reserve - ANSWER-buys or sells securities or bonds to manage the nation's economy
more,decrease,sped up - ANSWER-When the Fed is buying bonds, there is __ money in the market, interest rates _, and the economy is ___ less; increase; slows - ANSWER-When the Fed is selling bonds, there is __ money available in the market, interest rates , and the economy . mortgage broker - ANSWER-A person, corporation, or firm not otherwise in banking & finance, that either provides its own funds for loans or negotiates, sells, or arranges loans for compensation. Participation financing; insurance companies - ANSWER-mortgage in which the lender participates in the income of the mortgaged property beyond a fixed return, or receives a yield on the loan in addition to the straight interest rate. ___ partner with developers To tighten the economy, the Federal Reserve would: (ssir id) - ANSWER-increases discount rates ,Sell securities, increase reserve requirements Government National Mortgage Association (GNMA) (Ginnie mae buys FHVA) - ANSWER-Buys FHA loans or VA loans. "Ginnie Mae." Ginnie Mae - ANSWER-controlled by an agency of the Department of Housing and Urban Development Tandem Plan - ANSWER-a mortgage subsidy program offered by Congress from time to time through the Government National Mortgage Association. "Ginnie" and "Fannie" work together (Maes) GNMA,GNMA, FNMA - ANSWER-Tandem Plan: ___ is authorized to purchase certain mortgages at below market interest rates so that borrowers can be granted low interest loans. __ then sells these loans at deep discounts, the discount loss being the amount of the subsidy. When these programs are available, in tandem with local mortgage lenders, administered under a under a contract with Federal Home Loan Mortgage Corporation, Freddie Mac (FHLMC) (Mac buys"C") - ANSWER-Buys conventional loans. HUD (Department of Housing and Urban Development) - ANSWER-is the regulator of Ginnie Mae and Freddie Mac (not fannie mae b/c theyre private) interest; percentage per year - ANSWER- is the amount of money that a lender charges for the use of money; always expressed as a ___ simple interest - ANSWER-type of interest charged on a mortgage loan. principal - ANSWER-loan balance
If the loan is for $150,000 at 7% interest for 30 years and the payment is $998 per month (including principal and interest), what is the principal balance after one payment? - ANSWER-1:Determine the annual amount of interest paid based on the loan balance. 2: Divide the annual amount of interest by twelve to determine the monthly interest amount.3: If the payment of $998 includes both interest and principal, then we can subtract the interest amount to determine the amount that was applied to principal.4: Now, we can apply the principal to the loan balance to get the loan balance after one payment: $150,000 - $123 = $149,877 (new balance). forclosure - ANSWER-legal process whereby the property pledged as security in the mortgage documents or the deed of trust is sold to satisfy the debt ORDER OF PAYMENT IN FORECLOSURE (4) - ANSWER-1.Cost of Sale
- Special assessment taxes, and general taxes"ad valorem", 3.The first mortgage, which is determined by the order of recording. 4.Whatever is recorded next would then be paid judicial forclosure (mortgage=judicial; MJ) - ANSWER-type of foreclosure required to foreclose a Mortgage. non-judicial forclosure - ANSWER-type of foreclosure required to foreclose on a Deed of Trust Naked Legal Title (one without possessory rights) - ANSWER-The trustee, in a Deed of Trust, holds a ______ and can claim the property without going through the courts. Equitable Right of Redemption - ANSWER-gives the borrower the right to clear up the debt prior to the foreclosure sale. right to reclaim the property forfeited due to mortgage default. Statutory Right of Redemption - ANSWER-the right of a mortgagor to redeem after a foreclosure sale under certain rules and conditions before, after (ER then SR) - ANSWER-Equitable Right is the right ___foreclosure, and the Statutory right would be ___ foreclosure. Deficiency judgment against the borrower - ANSWER-If the proceeds from the foreclosure sale are not sufficient to cover the debt, the lender can go to court and seek a GENERAL LEIN applied to borrower's assets. Deed in lieu of foreclosure - ANSWER-"friendly foreclosure" Lender and borrower agree that the lender will become the owner of the property instead of going through the formal foreclosure process. does not clear any junior liens Federal Housing Administration (FHA) (FHA Insures Loans- FHAIL) - ANSWER-insures loans on real property made by qualified or approved lending institutions
The Department of Housing and Urban Development - ANSWER-who oversees the FHA? FHA loans - ANSWER-There are no prepayment penalties allowed on FHA loans are ____. (1 word) - ANSWER-assumable (no alienation) one-time mortgage insurance premium - ANSWER-With an FHA loan, the borrower is charged a ______at closing which provides security to the lender in addition to the real estate in case of borrower default on the loan; paid by the borrower or some other party (seller). FHA, FHA Loan - ANSWER-does NOT build homes nor does it lend money itself. The term ___refers to a loan that is insured by the agency. The Veterans Administration (VA) - ANSWER-_______will guarantee that a loan made by an approved lending institution will be paid. Guaranteed Loans - ANSWER-VA Loans; guarantee repayment of loans up to a specific amount No maximum; $417,000 - ANSWER-There is____maximum VA loan but lenders will generally limit VA loans to ___. This is because lenders sell VA loans in the secondary market, which currently places a _____ limit on the loans. no down payment - ANSWER-it is usually possible for qualified veterans to obtain____ financing assume liability - ANSWER-VA requires that a veteran ___ for the loan Certificate of Eligibility - ANSWER-Veteran must first apply for a: __ in order to obtain a VA loan The VA - ANSWER-what agency will lend money in rural areas where there is no financial institution available? VA & FHA does not allow - ANSWER-prepayment penalties to be charged they pay the difference in CASH. - ANSWER-FHA and VA will allow buyer to pay more than appraised value, if __ alienation (assume) - ANSWER-FHA & VA loans cannot have an___clause in the promissory note, mortgage or deed of trust.
(M.G.I.C.) MORTGAGE GUARANTEE INSURANCE CORPORATION - ANSWER-
Largest private insurer is the appraised value for loan purposes or the sale price - ANSWER-The amount a lender will loan is generally based on_____or____ whichever is lower. loan applicant's need of financial assistance - ANSWER-A lender or investor is really not interested or concerned with the qualified buyer - ANSWER-one who has demonstrated the financial capacity and credit worthiness required to afford the asking price stable income, net worth and credit history - ANSWER-Assessing the buyers' price range depends on three basic factors: Mortgage to income ratio - - ANSWER-The ratio between the monthly housing expense and stable monthly income. debt coverage ratio - ANSWER-The ratio of annual net income to annual debt service. For example, a lender may require that a qualified corporate borrower have net income of 1.5 times the debt service of the loan being approved. items a lender will look at when deciding to qualify a property: - ANSWER-Type of property (residential, commercial, agricultural) Location Area zoning Value range Neighborhood Actual age/Effective age/Remaining economic life Condition (repairs and predications) Special clearances (code compliance, well and septic certifications etc.) Overall marketability abstract and opinion - ANSWER-full summary of all consecutive grants, conveyances, wills, records and judicial proceedings, with a statement of all recorded liens and encumbrances affecting the property and their present status. encroachments and forgeries - ANSWER-abstract does not reveal such things as chain of title - ANSWER-recorded history of matters that affect the title, such as ownership, encumbrances and liens, usually beginning with the original recorded source of the title title insurance - ANSWER-protects a policyholder against loss from some occurrence that has already happened, such as a forged deed somewhere in the chain of title, defects in title to real estate or any liens or encumbrances thereon
A loan underwriter - ANSWER-evaluates a loan application to determine the desirability of the loan; a person working for a lender who reviews a loan application and makes recommendations to the loan committee. NON-RECOURSE LOAN: - ANSWER-A loan in which the borrower is not held personally liable on the note. The lender feels confident that the property used as collateral will be adequate security for the loan. NON-RECOURSE CLAUSE - ANSWER-when included in the sale's agreement, the seller of the security is not liable if the borrower defaults. conditional approval - ANSWER-A written pledge by a lender to lend a certain amount of money to a qualified borrower on a particular piece of real estate for a specified time under specific terms. impounds - ANSWER-A fund of the buyer's money that the lender sets aside for future needs relating to the parcel of property. Most lenders require it to cover future payments of insurance and taxes. DISINTERMEDIATION - ANSWER-process of individuals investing their funds directly instead of placing money with banks, savings and loans and other savings institutions. ESTOPPEL CERTIFICATE - ANSWER-A legal doctrine by which a person is prevented from asserting rights or facts that are inconsistent with a previous position or representation made by act, conduct or silence EXCULPATORY CLAUSE - ANSWER-A clause sometimes inserted in a mortgage note in which the lender waives the right to a deficiency judgment. short sale - ANSWER-sale of a secured real property where the sale price is less than what is owed to the lender. Lenders will agree to avoid the delay and expense of a foreclosure action, because it can result in the bank owning the asset and thus carrying a Real Estate Owned (REO) property on its books. MORTGAGOR = - ANSWER-Borrower MORTGAGEE = - ANSWER-Lender debenture - ANSWER-long-term note that is NOT secured by a specific property. Deed of Trust, there are three parties involved. They are: - ANSWER- trustor,benificiary,trustee trustor - ANSWER-borrower
