Real estate contract and agency questions are rarely difficult because of arithmetic. They are difficult because one word can change the legal relationship: offer or counteroffer, client or customer, executory or executed, void or voidable, exclusive right-to-sell or exclusive agency.
This focused national real estate Contracts and Agency practice quiz contains 50 original multiple-choice questions for US salesperson licensing-exam preparation. It covers contract formation, enforceability, offer and acceptance, contingencies, earnest money, breach and remedies, agency creation and termination, confidentiality, fiduciary-type duties, listing agreements, disclosure and common transaction scenarios.
The topic is worth studying separately. In Pearson VUE's current National/General Exam Content Outline for Salespersons, Real Estate Contracts and Agency accounts for 16 scored items on the 80-item general portion in participating jurisdictions. The outline specifically includes contract types, required elements, performance, the Statute of Frauds, electronic signatures, sales contracts, agency relationships and licensee obligations.
Want to test yourself? Select one answer for each question and avoid opening the optional answer explanations while you play. When you reach the end, tap “See Answers & My Score” to reveal all correct answers, explanations, and your final result automatically.
- ✔ Express, implied, unilateral and bilateral contracts
- ✔ Valid, void, voidable, unenforceable, executed and executory contracts
- ✔ Offers, counteroffers, expiration and acceptance
- ✔ Earnest money, contingencies, options and installment contracts
- ✔ Breach, rescission, compensatory and liquidated damages
- ✔ Agency relationships, principals and creation or termination of agency
- ✔ Loyalty, confidentiality, accounting, disclosure and reasonable care
- ✔ Exclusive right-to-sell, exclusive agency, open and net listings
- 1. Contract Types, Validity & Enforceability (Q1–10)
- 2. Offers, Sales Contracts, Performance & Remedies (Q11–22)
- 3. Agency Relationships, Creation & Termination (Q23–34)
- 4. Licensee Duties, Disclosure & Conflicts (Q35–44)
- 5. Listings & Mixed Contracts-and-Agency Scenarios (Q45–50)
- Frequently Asked Questions
1. Contract Types, Validity & Enforceability (Q1–10)
CONTRACT FUNDAMENTALSStart with the distinctions that appear repeatedly on national licensing exams: express vs implied, unilateral vs bilateral, executory vs executed, and valid vs void, voidable or unenforceable.
1. Which element is generally required for a valid real estate contract?
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Correct Answer: B — A valid contract generally requires competent parties, mutual agreement, consideration, a lawful objective, and genuine consent. Additional formalities may apply under state law or the Statute of Frauds, but notarization and full payment are not universal validity requirements.
2. A buyer and seller clearly state their agreement in a signed purchase contract. What type of contract is this?
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Correct Answer: B — An express contract is created when the parties state their agreement in words, either orally where permitted or in writing. A signed purchase agreement is a classic example of an express contract.
3. A homeowner promises to pay a broker a stated fee only if the broker produces a buyer under an open listing. Which contract classification best describes the promise?
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Correct Answer: D — A unilateral contract involves a promise exchanged for performance. Under an open listing, the owner typically promises compensation to the broker who performs by producing the buyer under the agreed terms.
4. A buyer and seller sign a purchase agreement, but closing has not yet occurred and both still have obligations to perform. The contract is best described as:
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Correct Answer: A — An executory contract has obligations that remain to be performed. Once all contractual duties have been completed, the contract is executed.
5. Which situation most clearly makes an agreement void from the beginning?
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Correct Answer: A — A contract with an illegal purpose is generally void because the law will not recognize an agreement whose objective is unlawful.
6. How is a voidable contract different from a void contract?
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Correct Answer: A — A voidable contract is generally effective unless a protected party elects to avoid it. A void contract is not legally enforceable from the beginning.
7. What is the main purpose of the Statute of Frauds in a typical real estate sales context?
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Correct Answer: D — The Statute of Frauds generally requires specified agreements involving interests in real estate to be evidenced by a writing signed by the party to be charged. Exact state requirements vary.
8. Which statement about electronic signatures in real estate transactions is most accurate at the national-exam level?
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Correct Answer: B — Electronic signatures can have legal effect under applicable electronic-transactions laws. They do not eliminate other legal requirements for a valid or enforceable contract.
9. What does the phrase “time is of the essence” generally mean in a contract?
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Correct Answer: A — When time is of the essence, timely performance of stated obligations is considered material. Missing a required deadline can have contractual consequences, subject to the agreement and applicable law.
10. Which statement best distinguishes a valid contract from an unenforceable contract?
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Correct Answer: C — An agreement may otherwise appear valid yet be unenforceable because a legal requirement has not been met—for example, a writing requirement under the Statute of Frauds.
2. Offers, Sales Contracts, Performance & Remedies (Q11–22)
SALES CONTRACTSThese questions focus on offer and counteroffer, expiration, earnest money, contingencies, equitable title, options, installment contracts, rescission and damages.
11. A seller receives a buyer's offer for $420,000 and responds, “I will sell for $430,000 instead.” What is the seller's response?
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Correct Answer: C — Changing a material term of an offer generally creates a counteroffer rather than an acceptance. The counteroffer typically rejects the original offer and proposes new terms.
12. A seller signs and accepts a buyer's offer, but the buyer has not yet been notified of the acceptance. At the national-exam level, why can communication matter?
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Correct Answer: B — Contract formation requires mutual agreement. The exact moment acceptance becomes effective can depend on contract terms and state law, but communication of acceptance is a core exam concept.
13. A buyer makes an offer that states it will expire at 5:00 p.m. Friday. The seller attempts to accept it Saturday morning. What is the likely result?
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Correct Answer: C — An offer generally terminates when its stated expiration time passes. A later attempted acceptance is ineffective unless the offer is renewed or a new agreement is formed.
14. What is earnest money most commonly intended to demonstrate in a real estate purchase transaction?
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Correct Answer: B — Earnest money is commonly used as a good-faith deposit under a purchase agreement. Its treatment if a transaction fails depends on the contract and applicable law.
15. A purchase agreement is contingent on the buyer obtaining specified financing by a stated date. If the buyer makes the required good-faith effort but cannot obtain qualifying financing, what is the contingency designed to do?
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Correct Answer: B — A financing contingency makes the buyer's obligation dependent on the stated financing condition. If the condition is not satisfied and the buyer follows the contract's requirements, the agreement may permit termination without the same consequences as an unexcused breach.
16. What is equitable title in a typical real estate sales contract?
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Correct Answer: A — Under the doctrine of equitable conversion recognized in many jurisdictions, a buyer under a binding sales contract may hold equitable title while the seller retains legal title until closing. State law can affect the doctrine's application.
17. Which statement best describes an option contract?
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Correct Answer: B — An option gives the option holder a contractual right to act within a stated time without imposing the same purchase obligation as a bilateral sales contract until the option is exercised.
18. In an installment sales contract or contract for deed, which general description is most accurate?
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Correct Answer: A — In a contract for deed, the seller finances the transaction and commonly retains legal title until the buyer satisfies the contract. Rights, remedies, disclosures and foreclosure procedures vary significantly by state.
19. What is rescission?
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Correct Answer: D — Rescission ends or unwinds a contract and generally seeks to restore the parties as nearly as possible to their positions before the contract.
20. What are compensatory damages intended to do?
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Correct Answer: B — Compensatory damages are intended to compensate for actual loss caused by a breach. Availability and calculation depend on contract terms and applicable law.
21. A purchase contract states in advance that the seller may retain a specified deposit as damages if the buyer defaults, subject to applicable law. This is an example of:
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Correct Answer: A — A liquidated-damages clause specifies an agreed amount or formula for damages in the event of breach. Enforceability depends on applicable law and whether the provision is a valid estimate rather than an impermissible penalty.
22. A buyer asks a real estate licensee to draft a complicated custom legal clause that goes beyond filling in an approved form. What is the safest national-exam response?
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Correct Answer: C — Real estate licensees should avoid the unauthorized practice of law. They may complete authorized forms within their scope, but complex legal drafting should be referred to qualified legal counsel.
3. Agency Relationships, Creation & Termination (Q23–34)
AGENCY RELATIONSHIPSAgency questions test who the client is, how representation is created, how it ends, and what happens to confidential or negotiating information once a licensee represents a principal.
23. What is an agency relationship in a real estate transaction?
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Correct Answer: D — Agency arises when one person or entity—the agent—is authorized to act for another—the principal. The relationship creates duties and authority defined by law, agreement and the circumstances.
24. Which relationship is an example of express agency?
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Correct Answer: A — Express agency is created by an explicit agreement, such as a listing or buyer-representation agreement, subject to state requirements.
25. What is implied agency?
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Correct Answer: C — Implied agency may arise from the conduct and circumstances of the parties. Because unintended agency can create obligations, licensees should clearly disclose whom they represent and comply with state agency law.
26. A seller tells a listing broker, “You are authorized to market this property and negotiate offers within the authority stated in our agreement.” The seller is the:
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Correct Answer: B — The person who authorizes an agent to act on their behalf is the principal. In a seller-representation agreement, the seller is the broker's principal or client.
27. Which event generally terminates an agency relationship?
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Correct Answer: B — Agency can terminate through events such as expiration, completion of the purpose, mutual agreement, revocation where permitted, renunciation, or certain events involving the parties or property. Details vary by law and contract.
28. What normally happens to an agency relationship when its stated objective has been fully accomplished?
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Correct Answer: D — Completion of the purpose for which the agency was created is a common method of termination, although some duties—such as confidentiality—may survive depending on law and the agreement.
29. Why is it important for a licensee to disclose whom the licensee represents?
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Correct Answer: D — Clear agency disclosure helps prevent confusion about whom the licensee represents and what duties are owed. Specific timing and disclosure forms vary by state.
30. A broker represents the seller. A prospective buyer who is not the broker's client asks whether the seller would accept substantially less than the listing price. What should the broker do?
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Correct Answer: C — An agent generally owes loyalty and confidentiality to the client while also owing statutory and common-law duties such as honesty and disclosure of material facts to other parties. The seller's confidential negotiating position should not be revealed without authority.
31. A buyer's agent learns that the buyer would be willing to pay $25,000 above the current offer. The seller's agent asks how high the buyer will go. What should the buyer's agent generally do?
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Correct Answer: D — The buyer's willingness to pay more is generally confidential information within the agency relationship. The agent should protect the client's negotiating position unless disclosure is authorized or legally required.
32. Which duty generally requires an agent to place the client's lawful interests ahead of the agent's own interests within the scope of the agency?
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Correct Answer: D — Loyalty requires an agent to act in the client's interests within the lawful scope of the agency and to avoid undisclosed conflicts and self-dealing.
33. Which fiduciary-type duty is most directly involved when a broker promptly delivers a client's earnest-money check to the proper escrow holder and keeps accurate records?
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Correct Answer: A — Accounting involves safeguarding and properly handling money, property and documents entrusted to the agent. Escrow rules themselves vary by jurisdiction.
34. A seller instructs the listing agent not to disclose a known latent defect that state law requires to be disclosed. What should the agent do?
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Correct Answer: C — An agent's duty of obedience extends only to lawful instructions. A client cannot require a licensee to violate disclosure or licensing laws.
4. Licensee Duties, Disclosure & Conflicts (Q35–44)
LICENSEE OBLIGATIONSThis section applies agency duties to realistic transaction problems: known defects, misrepresentation, conflicts of interest, professional competence, offer presentation and fair housing.
35. A listing agent knows the basement floods after heavy rain, but the defect is not obvious during a showing. At the national-exam level, what is the safest principle?
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Correct Answer: B — Licensees generally must not conceal known material facts and must comply with applicable property-disclosure law. Exact disclosure duties differ by jurisdiction.
36. A licensee tells a buyer, “This roof will definitely last another 25 years,” despite having no inspection or expertise to support the statement. What risk does this create?
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Correct Answer: A — Unsupported factual assurances can create misrepresentation risk. Licensees should distinguish known facts from opinions and should recommend appropriate experts when the matter is outside their expertise.
37. A broker wants to buy a listed property for the broker's own account. What is the key agency concern?
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Correct Answer: A — A broker's personal interest can create a conflict with the client. Full disclosure and compliance with applicable conflict-of-interest rules are essential.
38. Why should a licensee avoid giving tax advice outside the licensee's competence?
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Correct Answer: D — Real estate licensees should work within their scope of expertise. Complex tax, legal, engineering or environmental questions should be referred to qualified professionals.
39. A seller's agent receives a written offer from a buyer. The seller has not instructed the agent otherwise in a lawful manner. What is the agent generally expected to do?
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Correct Answer: C — Agents generally have a duty to present offers promptly as required by law and the agency agreement. The agent should not substitute personal preferences for the client's decision.
40. A licensee represents a buyer and discovers a property appears to have significant foundation cracking. What is the best response?
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Correct Answer: D — The licensee should identify relevant observed concerns without pretending to have expertise they do not possess. Referral to qualified professionals and compliance with disclosure obligations is the safer approach.
41. Which action best reflects an agent's duty of reasonable care and diligence?
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Correct Answer: C — Reasonable care and diligence require the agent to use the competence and attention reasonably expected in performing the agency. It does not require guaranteeing market outcomes.
42. A buyer asks the seller's agent, “Are you representing me too?” The agent represents only the seller. What should the agent do?
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Correct Answer: A — Agency roles should be clear. A seller's agent should not mislead an unrepresented buyer into believing the agent is acting as the buyer's fiduciary.
43. What is the central concern when one brokerage or licensee represents both sides of a transaction where dual agency is permitted?
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Correct Answer: C — Dual agency can create significant conflicts because one agent's traditional duties to two clients may be difficult to reconcile. Rules differ widely, so required disclosure and informed consent are state-specific.
44. A client asks the agent to discriminate against prospective buyers based on a protected characteristic. What should the agent do?
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Correct Answer: B — An agent must not obey unlawful instructions. Federal, state and local fair housing laws prohibit discriminatory conduct in covered housing transactions.
5. Listings & Mixed Contracts-and-Agency Scenarios (Q45–50)
LISTINGS & MIXED PRACTICEFinish with listing-agreement distinctions and mixed questions that combine contract status, contingencies and the difference between national principles and state-specific licensing rules.
45. Under an exclusive right-to-sell listing, when is the broker generally entitled to the agreed commission if the property sells during the listing term?
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Correct Answer: A — An exclusive right-to-sell listing generally provides for compensation if the property sells during the listing term regardless of who produces the buyer, subject to the agreement and applicable law.
46. How does an exclusive agency listing generally differ from an exclusive right-to-sell listing?
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Correct Answer: D — An exclusive agency listing gives one broker the exclusive agency but commonly allows the owner to avoid the brokerage fee if the owner alone produces the buyer. Exact terms control.
47. What is an open listing?
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Correct Answer: D — An open listing is nonexclusive. Multiple brokers may attempt to find a buyer, and compensation generally goes to the broker who earns it under the terms of the listing.
48. Why can a net listing create a conflict-of-interest concern?
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Correct Answer: C — A net listing can put the broker's financial interest in tension with the seller's interest and is restricted or prohibited in some jurisdictions. Candidates should check their state rules.
49. A buyer and seller have reached agreement on price, but the buyer's inspection contingency is still open. Which statement is most accurate?
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Correct Answer: C — A contract can be binding while containing contingencies. The contingency establishes a condition or right that must be handled according to the contract.
50. A real estate candidate is studying for a state license exam that uses a national/general portion. What is the best way to use a national Contracts & Agency practice set?
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Correct Answer: B — National/general practice is useful for shared principles, but licensing law, agency disclosure, escrow handling, approved forms and other rules differ by jurisdiction. The state's current candidate bulletin and official sources remain essential.
Review the relationship before choosing the answer. On agency questions, first identify who the client or principal is. On contract questions, identify the stage of the transaction: offer, counteroffer, acceptance, contingency, performance or breach. That simple two-step check eliminates many tempting distractors.
Frequently Asked Questions
How many Contracts and Agency questions are on the national real estate salesperson exam?▾
Pearson VUE's National/General Exam Content Outline for Salespersons, effective January 2025 or later in participating jurisdictions, assigns 16 scored items to Real Estate Contracts and Agency. The exact exam used in your state may differ, so check your current candidate bulletin.
What does the national Contracts and Agency section cover?▾
The Pearson VUE outline includes contract types, elements of a valid contract, contract performance and breach, the Statute of Frauds, electronic signatures, sales contracts, offers and counteroffers, earnest money, contingencies, options, agency relationships, creation and termination of agency, and licensee obligations.
Is an exclusive right-to-sell listing the same as an exclusive agency listing?▾
No. An exclusive right-to-sell listing generally entitles the broker to the agreed compensation if the property sells during the listing term under the agreement, regardless of who finds the buyer. An exclusive agency listing commonly preserves the owner's right to sell without owing the broker if the owner alone produces the buyer. State law and the actual agreement control.
Does every state use the same agency rules?▾
No. Agency disclosure, dual agency, transaction brokerage, designated agency, escrow handling, forms and other licensing rules vary by jurisdiction. National practice should be combined with the current state candidate bulletin and official state law.
What is the Statute of Frauds in real estate?▾
At a general exam level, the Statute of Frauds requires certain agreements involving interests in real property to be evidenced by a signed writing to be enforceable. Exact requirements and exceptions vary by state.
Are these official Pearson VUE or state licensing exam questions?▾
No. These are independently written study questions from MCQsQuestions.com. They are not official Pearson VUE, PSI, or state licensing examination questions and are not endorsed by those organizations.
Independent educational practice: These questions are original study material and are not official Pearson VUE, PSI, Realtor association or state licensing-exam questions. Real estate contract, agency and licensing laws vary by jurisdiction. This quiz is for exam preparation and general education, not legal advice. Use your current state candidate bulletin and official licensing-agency materials as the final authority.
