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newSchoolWorks.com › VoTechWorks › Business & Cross-Cutting › Real Estate & Property Management › Certification Exam Preparation: State RE Salesperson License & IREM CPM › Lesson 2
BUS-REAL58-09 · Lesson 2 · 12 clock hours · theory

Targeted Domain Review — State RE Salesperson Exam

Objective. Students review all major State RE Salesperson exam content domains through instructor-led explanation, worked examples, and focused practice sets, with emphasis on domains identified as weak in the diagnostic.

⚠ Pending professional review

This lesson, its worked examples and its practice questions has not yet been verified by a credentialed professional in the field or by a certification or approval body. It is a study draft and may contain errors. Do not use it as instructions for work on a job site or on live equipment. Always follow your instructor, your supervising professional, and current official references and regulations.

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Why Domain Review Matters

The State Real Estate Salesperson Exam tests knowledge across several distinct content areas, called domains. Licensing boards design the exam this way because a licensed salesperson must be competent in every domain — not just the ones that feel comfortable. A strong score in contracts will not compensate for failing the fair housing section. This lesson systematically walks through all seven major domains so you can identify gaps, sharpen rules, and build the retrieval speed the timed exam demands.

Without a passing score on the state licensing exam, you cannot legally represent buyers or sellers, collect a commission, or work under a broker's supervision. There is no workaround. Treat every domain as equally important.

Domain 1: Real Estate License Law

License law governs who may practice real estate, under what conditions, and what conduct is prohibited. Key rules include: a salesperson must work under a licensed broker and may not operate independently; licenses must be kept current and renewed on the schedule set by your state; and performing licensed activities without a valid license is a violation that can result in criminal penalties. Common exam questions test definitions of licensee categories, grounds for license suspension or revocation, and required disclosures at the time of first contact with a consumer.

Domain 2: Agency and Fiduciary Duties

Agency describes the legal relationship between a licensee and the party they represent. A fiduciary owes the client the duties commonly summarized as loyalty, obedience, disclosure, confidentiality, accountability, and reasonable care. Know which duties survive the end of an agency relationship (confidentiality and accounting). Dual agency — representing both buyer and seller — is heavily tested; it requires informed written consent from both parties in most states. Common misconceptions: a licensee is not automatically the buyer's agent just because they show the buyer a home; and a seller's agent owes honesty but not full fiduciary loyalty to the buyer.

Domain 3: Contracts and Disclosures

A valid contract requires offer, acceptance, consideration, legal purpose, and competent parties. Real estate contracts must generally be in writing to be enforceable under the Statute of Frauds. Key contract types tested include purchase agreements, option contracts, and listing agreements. An option contract requires the seller to keep an offer open for a specified time in exchange for consideration paid by the buyer; the buyer has the right but not the obligation to purchase. Required disclosures vary by state but typically include material defects, lead-based paint (for pre-1978 homes, per federal law), and agency relationships.

Domain 4: Property Ownership and Land Use

This domain covers forms of ownership (joint tenancy, tenancy in common, community property where applicable), types of estates (fee simple, life estate, leasehold), and encumbrances such as easements, liens, and deed restrictions. Land use topics include zoning classifications, variances, nonconforming uses, and eminent domain. Exam questions often test the right of survivorship — present in joint tenancy but not tenancy in common — and the difference between a general lien (against all property of a debtor) and a specific lien (against a particular property).

Domain 5: Valuation Principles and Comparative Market Analysis (CMA)

The three approaches to value are the sales comparison approach, the cost approach, and the income approach. Salesperson exams focus primarily on the sales comparison approach as used in a CMA. Adjustments are made to comparable properties, not to the subject property: if a comparable has a feature the subject lacks, subtract value from the comparable; if the subject has a feature the comparable lacks, add value to the comparable. Appraisals are performed by licensed or certified appraisers; salespersons prepare CMAs, not formal appraisals.

Domain 6: Financing Concepts, Loan Types, and the Closing Process

Key financing terms include loan-to-value ratio (LTV), debt-to-income ratio, amortization, points, and earnest money. Loan types tested include conventional, FHA-insured, and VA-guaranteed loans, each with different down payment and qualification standards — know the general distinctions without memorizing figures that change with policy. At closing, the HUD-1 or Closing Disclosure shows credits and debits for buyer and seller. Prorations — dividing ongoing expenses such as property taxes between buyer and seller based on the closing date — appear frequently as math problems.

Domain 7: Fair Housing Law

The federal Fair Housing Act prohibits discrimination in the sale, rental, or financing of housing based on race, color, national origin, religion, sex, familial status, and disability. Steering (directing buyers toward or away from neighborhoods based on protected class), blockbusting (inducing panic selling), and redlining (denying services to geographic areas based on protected class) are all illegal. Some states add protected classes beyond the federal list; know your state's additions. Reasonable accommodations and modifications for persons with disabilities are required under the Act.

How to Use This Review Session

For each domain, complete the 15-question practice set before discussing answers. When you miss a question, do not just note the right answer — identify the rule you misapplied or the term you confused. Write that rule in plain language on your Rule Card. The 50-question timed set at the end simulates actual exam pacing. If you score below 70% on any domain set, access the LMS question bank for that domain before Lesson 3; additional practice is assigned, not optional.

Key terms9

Fiduciary dutyA legal obligation of loyalty, care, and good faith owed by a licensee to the client they represent; includes loyalty, obedience, disclosure, confidentiality, accountability, and reasonable care.
Dual agencyA situation in which a single licensee or brokerage represents both the buyer and the seller in the same transaction; requires informed written consent from both parties in most states.
Option contractA contract in which a seller agrees to keep an offer to sell open for a specified period in exchange for consideration paid by the buyer; the buyer has the right but not the obligation to purchase.
Loan-to-value ratio (LTV)The ratio of the loan amount to the appraised value or purchase price of a property, whichever is lower; expressed as a percentage and used by lenders to assess risk.
ProrationThe division of an ongoing expense or income item — such as property taxes or prepaid rent — between buyer and seller based on each party's share of the closing period.
SteeringThe illegal practice of directing prospective buyers or renters toward or away from particular neighborhoods based on their membership in a protected class under fair housing law.
Comparative Market Analysis (CMA)An estimate of a property's likely sale price prepared by a licensee using recent sales of similar nearby properties; distinct from a formal appraisal, which must be performed by a licensed or certified appraiser.
Statute of FraudsA legal doctrine requiring certain contracts, including most real estate contracts, to be in writing and signed to be enforceable in court.
Right of survivorshipA feature of joint tenancy under which a deceased owner's interest passes automatically to the surviving co-owners rather than through the deceased's estate; not present in tenancy in common.

Worked examples4

1. A home is listed at $320,000. The buyer makes a down payment of $48,000. What is the loan-to-value ratio (LTV)?
  1. Step 1 — Find the loan amount: $320,000 − $48,000 = $272,000.
  2. Step 2 — Divide the loan amount by the property value: $272,000 ÷ $320,000 = 0.85.
  3. Step 3 — Convert to a percentage: 0.85 × 100 = 85%.
Answer: The LTV is 85%.
2. A listing agreement states the broker earns a 6% commission on the sale price of $275,000. The listing broker and selling broker split the commission 50/50. The selling salesperson receives 60% of the selling broker's share. How much does the selling salesperson receive?
  1. Step 1 — Calculate total commission: $275,000 × 0.06 = $16,500.
  2. Step 2 — Calculate each broker's 50% share: $16,500 × 0.50 = $8,250.
  3. Step 3 — Calculate the selling salesperson's 60% of the selling broker's share: $8,250 × 0.60 = $4,950.
Answer: The selling salesperson receives $4,950.
3. A seller prepaid annual property taxes of $3,600 for the full calendar year. The sale closes on September 30. Using a 360-day year and 30-day months, how much does the buyer owe the seller as a proration credit?
  1. Step 1 — Calculate the daily tax rate: $3,600 ÷ 360 days = $10 per day.
  2. Step 2 — Determine the number of days the buyer owns the property in the tax year. Closing is September 30; the buyer owns the property for October, November, and December = 3 months × 30 days = 90 days.
  3. Step 3 — Calculate the buyer's share of taxes: 90 days × $10 = $900.
  4. Step 4 — Because the seller already paid the full year, the buyer owes the seller $900 as a credit at closing.
Answer: The buyer owes the seller a proration credit of $900.
4. A comparable home sold for $350,000. It has a two-car garage; the subject property has a one-car garage. The market value of the extra garage space is $8,000. What is the adjusted sale price of the comparable?
  1. Step 1 — Identify the direction of adjustment: the comparable has a superior feature (larger garage), so it must be adjusted downward.
  2. Step 2 — Apply the adjustment: $350,000 − $8,000 = $342,000.
Answer: The adjusted sale price of the comparable is $342,000.

The math in this lesson1

Learners compute loan-to-value ratio and 6% sales commission splits for exam questions.
7.RP.3
Brush up in the math halls at newSchoolWorks.com:
In class: Participate in an instructor-led rotating review of each State RE Salesperson exam domain (real estate law and license law, agency and fiduciary duties, contracts and disclosures, property ownership and land use, valuation principles and comparative market analysis, financing concepts including loan types and the closing process, and fair housing law); for each domain, instructor presents key rules, common question formats, and frequent misconceptions, then students complete a 15-question domain-focused practice set and discuss wrong answers as a class. · Work in pairs on a 'Rule Card' activity: for each domain, pairs write one index card summarizing the single most commonly tested rule or calculation (e.g., commission splits, loan-to-value ratio math, option contract requirements) in their own words, then present the card to another pair for peer correction before cards are collected by the instructor for accuracy review. · Complete a 50-question crossover practice set that mixes all State RE Salesperson domains under timed conditions (1.5 minutes per question), then self-score and annotate each wrong answer with a one-sentence explanation of the correct rule, using course notes and the state real estate license law reference provided.
Materials: State real estate license law statutory reference (provided as course handout, jurisdiction-specific); instructor-prepared domain review slide decks; domain-focused practice question sets (15 questions each, 7 domains); blank index cards; 50-question mixed practice set with answer key; course textbooks from Courses 2–5 (Licensing Law, Contracts, Valuation, Leasing) as reference.
Check: Domain-focused 15-question sets scored and discussed in class; Rule Cards reviewed by instructor for factual accuracy; 50-question timed mixed set scored and annotated wrong answers reviewed by instructor; students scoring below 70% on any domain set are flagged and assigned additional self-study practice questions from the LMS question bank before Lesson 3; pass standard: 70% or above on the 50-question mixed timed set.

Practice check8

Answer each question, then check it. Nothing is recorded; this is your own practice.

Real Estate License Law
1. A real estate salesperson negotiates a purchase agreement directly with a buyer without working under a licensed broker. Which of the following best describes this situation?
Agency and Fiduciary Duties
2. A buyer's agent learns that their client is willing to pay $20,000 more than the listing price if necessary. Sharing this information with the seller's agent would violate which fiduciary duty?
Contracts and Disclosures
3. A buyer pays $500 to a seller to keep a property off the market for 30 days while the buyer decides whether to purchase. This arrangement is best described as:
Property Ownership and Land Use
4. Two sisters purchase a rental property together with equal shares. One sister dies and leaves her share to her son in her will. Who now owns the property?
Valuation Principles and Comparative Market Analysis
5. When preparing a CMA, a comparable property sold for $400,000 and lacks a feature the subject property has. What is the correct adjustment procedure?
Financing Concepts, Loan Types, and the Closing Process
6. A borrower purchases a home for $200,000 and makes a $30,000 down payment. What is the loan-to-value ratio?
Fair Housing Law
7. A licensee tells a prospective buyer that a particular neighborhood is 'changing' and suggests the buyer look in a different area, based on the racial composition of the neighborhood. This conduct is best described as:
Financing Concepts, Loan Types, and the Closing Process
8. A seller prepaid annual property taxes of $2,400 for the full year. The transaction closes on June 30 using a 360-day, 30-day-month calendar. How much does the buyer owe the seller at closing as a tax proration?
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