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Michigan Real Estate Salesperson Examination — Information & Free Practice

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Michigan Real Estate Salesperson Examination

Provider
PSI Services LLC
Format
Computer-based examination
Exam questions
115 scored questions, plus 1–10 unscored experimental items
Time limit
180 minutes
Passing score
80 of 115 points (published as 70%)
Exam fee
$79
Examination outline
  • I. Property Ownership (Sales 10%)
    • A. Real and personal property; conveyances
    • B. Land characteristics and legal descriptions
    • B.1. Metes and bounds method of legal property description
    • B.2. Lot and block (recorded plat) method of legal property description
    • B.3. Government survey (rectangular survey) method of legal property description
    • B.4. Measuring structures (linear and square footage)
    • B.5. Land measurement
    • C. Encumbrances and effects on property ownership
    • C.1. Types of liens and their effect on the title and value of real property
    • C.2. Easements, rights of way and licenses, including their effect on the title, value and use of real property
    • C.3. Encroachments and their effect on the title, value and use of real property
    • C.4. Potential encumbrances on title, such as probate, leases, or adverse possession
    • C.5. Property rights that may be conveyed separately from use of the land surface, such as mineral and other subsurface rights, air rights, or water rights
    • D. Types of ownership
    • D.1. Ownership in severalty/sole ownership
    • D.2. Implications of ownership as tenants in common
    • D.3. Implications of ownership in joint tenancy
    • D.4. Forms of common-interest ownership, such as Timeshares, Condominiums and Co-ops
    • D.5. Property ownership held in a trust or by an estate
    • D.6. Ownership by business entities
    • D.7. Life Estate ownership
  • II. Land use Controls (Sales 5%)
    • A. Government rights in land
    • A.1. Government rights to impose property taxes and special assessments
    • A.2. Government rights to acquire land through eminent domain, condemnation and escheat
    • B. Government controls on land use
    • C. Private controls
    • C.1. Deed conditions or restrictions on property use
    • C.2. Subdivision covenants, conditions and restrictions (CC&Rs) on property use
    • C.3. Condominium and owners’ associations regulations or bylaws on property use
  • III. Valuation (Sales 8%)
    • A. Appraisals
    • A.1. Appraisals for valuation of real property
    • A.2. Situations which require appraisal by a licensed or certified appraiser and brokerage-related actions that constitute unauthorized appraisal practice
    • A.3. General steps in appraisal process
    • B. Estimating Value
    • B.1. Economic principles and property characteristics that affect value of real property
    • B.2. Sales or market comparison approach to property valuation and appropriate uses
    • B.3. Cost approach to property valuation and appropriate uses
    • B.4. Income analysis approach to property valuation and appropriate uses
    • C. Comparative Market Analysis (CMA)
    • C.1. Competitive/Comparative Market Analysis (CMA), BPO or equivalent
    • C.2. Automated Valuation Method (AVM), appraisal valuation and Comparative Market Analysis (CMA)
  • IV. Financing (Sales 10%)
    • A. Basic Concepts and Terminology
    • A.1. Loan financing (for example, points, LTV, PMI, interest, PITI)
    • A.2. General underwriting process (e.g., debt ratios, credit scoring and history)
    • A.3. Standard mortgage/deed of trust clauses and conditions
    • A.4. Essential elements of a promissory note
    • B. Types of Loans
    • B.1. Conventional loans
    • B.2. Amortized loans, partially amortized (balloon) loans, interest-only loans
    • B.3. Adjustable-rate mortgage (ARM) loans
    • B.4. Government Loans
    • B.4.a. FHA insured loans
    • B.4.b. VA guaranteed loans
    • B.4.c. USDA/Rural Development loan programs
    • B.5. Owner financing (for example, installment or land contract/contract for deed)
    • B.6. Reverse-mortgage loans
    • B.7. Home equity loans and lines of credit
    • B.8. Construction loans
    • B.9. Rehab loans
    • B.10. Bridge loans
    • C. Financing and Lending
    • C.1. Real Estate Settlement Procedures Act (RESPA), including kickbacks
    • C.2. Truth-in-Lending Act (Regulation Z), including advertising
    • C.3. Requirements and time frames of TRID (TILA-RESPA Integrated Disclosures)
    • C.4. Equal Credit Opportunity Act
    • C.5. Lending Process (application through loan closing)
    • C.6. Risky loan features, such as prepayment penalties and balloon payments
  • V. Contracts (Sales 19%)
    • A. General Contract Law
    • A.1. General principles of contract law
    • A.2. Elements necessary for a contract to be valid
    • A.3. Effect of the Statute of Frauds
    • A.4. Offer and a contract
    • A.5. Enforceability of contracts
    • A.6. Void, voidable and unenforceable contracts
    • A.7. Bilateral and unilateral contracts
    • A.8. Nature and use of option agreements
    • A.9. Notice, delivery, acceptance and execution of contracts
    • A.10. Appropriate use, risks, and advantages of electronic signatures and paperless transactions
    • A.11. Rights and obligations of the parties to a contract
    • A.12. Possible remedies for breach or non-performance of contract
    • A.13. Termination, rescission and cancellation of contracts
    • B. Purchase and Lease Contracts
    • B.1. Addenda and amendments to contracts
    • B.2. Purchase agreements
    • B.3. Contract contingencies and methods for satisfying them
    • B.4. Leases and rental agreements
    • B.5. Lease-purchase agreements
    • B.6. Types of leases
    • C. Proper handling of multiple offers and counteroffers
  • VI. Agency (Sales 13%)
    • A. Agency and non-agency relationships
    • A.1. Agency relationships and how they are established
    • A.2. Types of listing contracts
    • A.3. Buyer brokerage/tenant representation contracts
    • A.4. Other brokerage relationships, including transaction brokers and facilitators
    • A.5. Powers of attorney and other assignments of authority
    • A.6. Conditions for termination of agency or brokerage service agreements
    • B. Agent Duties
    • B.1. Fiduciary duties of agents
    • B.2. Agent’s duties to customers/non-clients, including honesty and good faith
    • C. Agency Disclosures
    • C.1. Disclosure of agency/representation
    • C.2. Disclosure of possible conflict of interest or self-interest
  • VII. Property Disclosures (Sales 7%)
    • A. Property Condition
    • A.1. Seller’s property condition disclosure requirements
    • A.2. Property conditions that may warrant inspections or a survey
    • A.3. Red flags that warrant investigation of public or private land use controls
    • B. Environmental and Government Disclosures
    • B.1. Environmental issues requiring disclosure
    • B.2. Federal, state, or local disclosure requirements regarding the property
    • C. Disclosure of material facts and material defects
  • VIII. Property Management (Sales 3%)
    • A. Duties and Responsibilities
    • A.1. Procurement and qualification of prospective tenants
    • A.2. Fair housing and ADA compliance specific to property management
    • A.3. How to complete a market analysis to identify factors in setting rents or lease rates
    • B. Landlord and tenant rights and obligations
  • IX. Transfer of Title (Sales 6%)
    • A. Types of deeds
    • B. Title Insurance and Searches
    • B.1. Title insurance policies and title searches
    • B.2. Potential title problems and resolutions
    • B.3. Marketable and insurable title
    • C. Closing Process
    • C.1. When transfer of ownership becomes effective
    • C.2. Process and importance of recordation
    • C.3. Settlement procedures (closing) and parties involved
    • C.4. Home and new construction warranties
    • D. Special Processes
    • D.1. Special issues in transferring foreclosed properties
    • D.2. Special issues in short sale transactions
    • D.3. Special issues in probate transactions
  • X. Practice of Real Estate (Sales 12%)
    • A. Antidiscrimination
    • A.1. Federal Fair Housing Act general principles and exemptions
    • A.2. Protected classes under Federal Fair Housing Act
    • A.3. Protections against discrimination based on gender identity and sexual orientation
    • A.4. Prohibited conduct under Federal Fair Housing Act (Redlining, Blockbusting, Steering, Disparate Treatment)
    • A.5. Fair housing advertising rules
    • A.6. Americans with Disabilities Act (ADA) obligations pertaining to accessibility and reasonable accommodations
    • B. Legislation and Regulations
    • B.1. Licensees’ status as employees or independent contractors
    • B.2. Antitrust laws and types of violations, fines and penalties
    • B.3. Do-Not-Call List rule compliance
    • B.4. Proper use of Social Media and Internet communication and advertising
    • C. Duties and Responsibilities
    • C.1. Protection of confidential personal information (written, verbal or electronic)
    • C.2. Duties when handling funds of others in transactions
    • C.3. Licensee responsibility for due diligence in real estate transactions
  • XI. Real Estate Calculations (Sales 7%)
    • A. Calculations for Transactions
    • A.1. Seller’s net proceeds
    • A.2. Buyer funds needed at closing
    • A.3. Real property tax and other prorations
    • A.4. Real property transfer fees
    • A.5. PITI (Principal, Interest, Taxes and Insurance) payments estimate given loan rate and term
    • B. General Concepts
    • B.1. Equity
    • B.2. Rate of return/Capitalization rate
    • B.3. Loan-to-Value ratio
    • B.4. Discount points and loan origination fees
  • Duties and Powers of the Department and the State Board of Real Estate (Salesperson-3 Items)
    • a. General powers
    • b. Investigations, conferences, hearings, and exemptions
    • c. Penalties
  • Licensing Requirements (Salesperson-5 Items)
    • a. Activities requiring a license and exemptions
    • b. Types of licenses
    • c. Eligibility for licensing
    • d. License renewal, including continuing education
    • e. Transfer or change in license
  • Statutory Requirements Governing the Activities of Licenses (Salesperson-10 Items)
    • a. Advertising
    • b. Commissions and Specific Services for Which Fees may be charged
    • c. Disclosure/conflict of interest
    • d. Handling of contracts, documents, listing and recommendations
    • e. Handling of monies and trust accounts
    • g. Record keeping
    • h. Inducements
    • j. No disclosure duty attaches to stigmatized property
    • k. Closing responsibilities
  • Contractual Relationships (Salesperson – 5 Items)
    • a. Agency relationships available in MI
    • a.1. Transaction coordinator
    • a.2. Designated agency
    • a.3. Dual agency
    • a.4. Agency disclosures
    • b. Broker/Salesperson relationships
    • c. Service Provision Agreements (Listings, Buyer Broker)
  • Additional State Topics (Salesperson-12 Items)
    • a. Land Division Act - Public Act 591 (Disclosure of Private Road)
    • b. Michigan fair housing
    • b.1. Elliott-Larsen Civil Rights Act
    • b.2. Persons with Disabilities Civil Rights Act
    • c. Landlord Tenant Relationship Act, Truth in Renting Act
    • e. State Transfer Tax
    • f. Michigan Condominium Act
    • g. Michigan State Housing Development Authority (MSHDA)
    • h. Uniform State Anti-trust Act
    • i. Michigan Right to Farm Act (Seller’s Disclosure Required)
    • j. Changes in the Land Contract Laws (Dodd Frank Law—federal)
Examination sources

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