California DRE Salesperson Exam Questions
With 100% Verified Answers.
What is the concept of "fee simple" ownership? - answer✔The most complete form of ownership
in real estate, providing full possessory rights and responsibilities for an indefinite duration.
Define "leasehold estate." - answer✔A tenant's right to occupy real estate during the term of the
lease, typically without ownership of the property.
What are restrictive covenants? - answer✔Private agreements that restrict the use of real estate in
some way, often placed by developers or property owners.
Explain "adverse possession." - answer✔A method of acquiring title to real property by
possession for a statutory period under certain conditions.
What is "eminent domain"? - answer✔Government's power to take private property for public
use with just compensation to the owner.
What does "zoning" regulate? - answer✔Regulations for land use, specifying what types of
buildings and uses are permitted in different areas
Describe "easements." - answer✔Rights to use the property of another for specific purposes,
such as utilities or access.
What is a "variance" in zoning? - answer✔An exception to zoning laws granted to a property
owner, allowing for use that deviates from current zoning requirements.
What are the types of agency relationships in real estate? - answer✔Seller's agency, buyer's
agency, dual agency, and transaction brokerage.
What is the "duty of loyalty" in fiduciary responsibilities? - answer✔Requires the agent to act
solely in the best interest of their principal.
Define "dual agency." - answer✔Occurs when a real estate agent represents both the buyer and
the seller in the same transaction, with both parties' consent.
What is required for agency disclosure in California? - answer✔Agency disclosure must be
provided before entering into an agency relationship and must be acknowledged in writing by the
parties involved.
What does "OLD CAR" stand for in fiduciary duties? - answer✔Obedience, Loyalty, Disclosure,
Confidentiality, Accounting, and Reasonable care.
What is the "duty of care" in fiduciary responsibilities? - answer✔Requires the agent to provide
competent and diligent service to their principal.
What is a Comparative Market Analysis (CMA)? - answer✔An informal estimate of market
value by comparing similar properties that have recently sold in the area.
Explain the "Sales Comparison Approach". - answer✔Estimates property value by comparing it
to similar properties that have recently sold.
What is "cost approach" in appraisal? - answer✔Determines property value by calculating the
cost to replace or reproduce the improvements minus depreciation plus land value.
Define "income approach" in property valuation. - answer✔Estimates the value of income-
generating properties based on the present value of future income streams.
What does "DUST" stand for in characteristics of value? - answer✔Demand, Utility, Scarcity,
and Transferability.
What is "highest and best use"? - answer✔The most profitable legal use of a property, resulting
in the highest value.
What is an "amortization schedule"? - answer✔A table detailing each periodic payment on a
loan, showing the amounts going towards principal and interest.
Explain "private mortgage insurance (PMI)." - answer✔Insurance that protects the lender against
losses if a borrower defaults on a conventional loan with a down payment less than 20%.
What is an "adjustable-rate mortgage (ARM)"? - answer✔A mortgage with an interest rate that
may change periodically based on changes in a corresponding financial index.
Define "loan-to-value ratio (LTV)." - answer✔The ratio of the loan amount to the appraised
value or purchase price of the property, whichever is lower.
What is a balloon payment? - answer✔A large payment due at the end of a loan term after a
series of smaller periodic payments.
Explain "equity" in real estate. - answer✔The difference between the current market value of a
property and the outstanding balance of any mortgages on the property.
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