Real Estate License Exam Essentials in 3 Minutes

Transcript

Every state writes its own real estate license exam, and the rules on things like disclosure forms and license requirements vary from state to state. But almost every exam shares a national portion built on the same core ideas. Learn these well and you have a foundation that carries across the whole test.

Start with agency. When you represent a client, you owe them fiduciary duties, and the classic memory aid is OLDCAR. That stands for obedience, loyalty, disclosure, confidentiality, accounting, and reasonable care. Obedience means following the client's lawful instructions. Loyalty means putting the client's interests above your own, including above your commission. Disclosure means telling the client every material fact you know. Confidentiality means protecting their private information, like how low a seller would really go. Accounting means handling client money properly, such as earnest money deposits. And reasonable care means acting with the skill a competent licensee would use.

Next, types of ownership. Fee simple absolute is the most complete ownership you can have, and it passes to your heirs. A life estate lasts only for the lifetime of a named person, and then the property goes to someone else. When two or more people own together, watch the difference between joint tenancy and tenancy in common. Joint tenancy carries the right of survivorship, so when one owner dies, their share passes to the surviving owners, not to their heirs. Tenancy in common has no survivorship, so each owner's share can be sold or left in a will, and the shares do not have to be equal.

Third, fair housing. The federal Fair Housing Act protects seven classes: race, color, religion, national origin, sex, disability, and familial status. Steering buyers toward or away from neighborhoods based on a protected class is illegal, and so is blockbusting, which means pressuring owners to sell by warning that people of a protected class are moving in. Many states and cities add more protected classes on top of these.

Finally, math. Suppose a home sells for three hundred thousand dollars with a six percent commission. That is eighteen thousand dollars total. If the listing and selling brokerages split it evenly, each receives nine thousand dollars. And if your agreement with your own broker gives you seventy percent of that side, you earn six thousand three hundred dollars. On the exam, work one step at a time and label every number.

So here is your recap. Remember OLDCAR, know survivorship separates joint tenancy from tenancy in common, name the seven federal protected classes, and break commission problems into clear steps.