Copyright 2010

OREA Ontario Real Estate Association

February 2010

All rights reserved. No part of this publication may be

reproduced, stored in a retrieval system, or transmitted in any
form, or by any means, mechanical, electronic, photocopying,
recording or otherwise, without the prior written consent of
the Ontario Real Estate Association (OREA).
The OREA Real Estate College has expanded the use of multiple choice examinations for all
registration education courses. This testing format has a number of advantages for you our
customer.

The use of scantron technology allows the College to process examination results
quickly. This provides students with added flexibility to plan their progress through the
program.

Students who answer questions incorrectly will be provided with feedback highlighting
both the chapter and topic related to these questions. This feedback is being provided to
all students for all incorrectly answered questions whether or not a passing mark was
achieved on the examination. It is important that students be made aware of all topics
which require additional review.

Changes in the real estate marketplace occur frequently and are incorporated into
course curriculum. The College is able to easily introduce new questions to ensure that
students are examined on up to date course material. Knowledge of current practices is
vital to a successful career as a real estate sales professional.

This publication has been developed as a guide to help you understand the types of multiple
choice questions and the distribution of marks which you can expect to see on OREA Real
Estate College examinations. The following information is provided for your benefit:

There are four types of multiple choice questions asked on examinations. They are
referred to as Levels 14. For each level you will find an explanation of the question
type, sample questions, correct answers and an example of the feedback should the
question not be answered correctly.

A chart showing the types of questions, number of questions on each examination,

marks per question and total marks.
Table of Contents

What is a Level 1 Question? ........................................................................................ 1

What is a Level 2 Question? ..................................................................................... 2-3
What is a Level 3 Question? ..................................................................................... 4-5
What is a Level 4 Question? ..................................................................................... 6-9

Exam Templates
Real Estate as a Professional Career...............................................................10
Land, Structures and Real Estate Trading ........................................................10
The Real Estate TransactionGeneral .............................................................10
The Residential Real Estate Transaction .........................................................10
The Commercial Real Estate Transaction ........................................................10
Real Property Law..............................................10
Principles of Appraisal ......................................................................................10
Principles of Mortgage Financing .....................................................................10
Principles of Property Management..................................................................10
Real Estate Investment Analysis ......................................................................10
Real Estate Broker Course ...............................................................................10
What is a Level 1 Question?

Questions require students to recall and demonstrate their understanding of facts and concepts.
Questions typically ask students to define, describe, identify, list, outline, recall, recognize, select,
distinguish, estimate and summarize.

Sample Questions Correct Answer Feedback

A principal's obligation to protect the agent from any

action brought against the agent in the lawful
fulfillment of the agent's duties is known as:

a. remuneration c Please Refer to Land,

b. duty of care Structures and Real Estate
c. indemnification Trading
d. delegation
Chapter 15: Trading and
Agency Relationships,

Topic: Agency
Relationships Principal
Indemnification

Identify one of the essential elements that must be

present in every contract for it to be enforceable.

a. There must be past or future consideration.

b. A seal must be present in the contract. c Please Refer to The Real
c. The acceptance of the offer must be Estate Transaction -
communicated to the offeror. General
d. The consideration must have reasonable
value. Chapter 1, Understanding
Contract Law,

Topic: Offer and

Acceptance (Mutual
Agreement)

1
What is a Level 2 Question?

Questions require students to use their knowledge of facts and understanding of concepts to solve
problems or complete a task. Questions typically ask students to apply, demonstrate, predict, prepare,
solve, distinguish, identify, illustrate, outline, calculate and select.

Sample Questions Correct Answer Feedback

1. Salesperson Lee of ABC Realty Inc. has listed a

property at a rate of 6% commission. Salesperson
Lee is compensated based on a 60/40 commission
split with the brokerage (Note: brokerage retains
the smaller portion). Salesperson Martin of XYZ
Real Estate Ltd. sells the property. All salespeople
within XYZ Real Estate Ltd. have a commission
split of 55/45 with the brokerage. The commission
distribution between listing and selling brokerages
is 50/50. The property sells for $145,000.
Calculate the amount of commission payable to
each party.

a. ABC Realty Inc.: $4,050; Salesperson Lee: c Please Refer to Real

$2,430; Estate as a Professional
XYZ Real Estate Ltd.: $1,822.50; Salesperson Career
Martin: $2,227.50
b. ABC Realty Inc.: $1,740; Salesperson Lee: Chapter 1 A Career in
$2,610; Real Estate
XYZ Real Estate Ltd.: $2,392.50; Salesperson
Martin: $1,957.50 Topic: A Career in Real
c. ABC Realty Inc.: $1,740; Salesperson Lee: Estate Salesperson
$2,610; Remuneration The
XYZ Real Estate Ltd.: $1,957.50; Salesperson Commission Sales Model
Martin: $2,392.50.
d. ABC Realty Inc.: $2,610; Salesperson Lee:
$1,740;
XYZ Real Estate Ltd.: $2,175; Salesperson
Martin: $2,175.

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 Sample Questions Correct Answer Feedback

2. Appraiser Leung is working on an appraisal for 44

Rabble Road. Leung is trying to determine the
price trend in the neighbourhood in order to make
the necessary time adjustments to comparable sold
properties. He has come across a property in the
area that sold seven months ago for $269,500 and
resold one month ago for $291,200. Based on
these two sales, what is the monthly percentage
that Leung would use when calculating time
adjustment (rounded to 2 decimal places)?

a. +1.34% a Please Refer to Land,

b. -1.24% Structures and Real
c. +1.15% Estate Trading
d. -1.06%
Chapter 10 Direct
Comparison Approach,

Topic: Adjustment
Calculations Time
Resale Analysis

3
What is a Level 3 Question?

Questions require students to review a series of questions in a case study and to use their knowledge of
facts and understanding of concepts to critique, make judgments and/or build solutions to problems.
Questions typically ask students to appraise, calculate, compare, conclude, contrast, criticize, critique,
defend, describe, evaluate, explain, interpret, justify, summarize and support.

Sample Questions Correct Answer Feedback

Tom and Ellen O'Leary and their two young daughters

have recently moved into town and have signed an
offer to lease on a house at 147 Edgeware Road for
one year, commencing February 1st.

When the offer is presented to the owners, they are

satisfied with all of the terms but make a counter offer
to the O'Learys in which they include a no pet clause
because they are concerned about any possible
damage being done to their property by a pet. The
O'Learys have no pets and do not object to the clause
being included. As a result, they accept the counter
offer, sign a lease with the owners and move into 147
Edgeware Road on February 1st.

Please answer the following three questions based on

the information provided above and in the questions
themselves.

1. It is now the 15th of June and the OLearys have

just bought a dog for their daughters. The owners
have found out and are furious. They remind the
O'Learys of the no pet clause in the lease and
demand that they get rid of the dog.

According to the Residential Tenancies Act, can

the owners legally enforce their demand that the
dog be removed from the home?

a. Yes. The OLearys are bound by their lease b Please Refer to The
which has a no pet provision and must Residential Real Estate
remove the dog. Transaction
b. No. The OLearys cannot be forced to get rid
of the dog. A no pet clause in a lease Chapter 3
agreement is void.
c. Yes. The no pet provision is valid because at Topic: Residential
the time the OLearys signed the lease, they Tenancies Act Pet
did not have a dog. Provisions
d. No. A no pet clause can only be enforced if
they had a pet at the time the lease was
signed but neglected to inform the owners of
that fact.

4
 Sample Questions Correct Answer Feedback

2. On the 20th of November, the O'Learys receive a

written notice on the approved form by mail from
the owners informing them that there is going to be
an increase in rent starting on the 1st of February
of next year.

Based on the information provided and the

provisions of the Residential Tenancies Act, are
there any problems with this notice of rent
increase?

a. No. Notice has been given more than the b Please Refer to The
required 60 days prior to the end of the lease. Residential Real Estate
b. Yes. The notice must be given to the tenant at Transaction
least 90 days prior to the end of the lease.
c. No. Provided that the amount of rent increase
does not exceed what is permitted under the Chapter 3
Act, the notice can be given as little as 30
days prior to the end of the lease. Topic: Residential
d. Yes. In order to be effective, the written notice Tenancies Act Rent
must be hand delivered to the tenant at least Increase General
60 days prior to the end of the lease. Provisions

3. On December 10th, the owners decide to sell their

property at 147 Edgeware Road and list it with
salesperson Ward of ABC Realty Inc. At 3 p.m. on
December 14th, Ward phones the O'Learys to tell
them that there will be a showing of the property at
8:30 p.m. on December 15th. The O'Learys are
not happy about this.

Based on the provisions of the Residential

Tenancies Act, do you have any concerns with this
showing?

a. Yes. Written notice is required for the showing a Please Refer to The
and the showing must take place before 8 Residential Real Estate
p.m. Transaction
b. No. Provided the showing takes place before
9:00 p.m., there is no problem. Chapter 3
c. Yes. The O'Learys are entitled to quiet
enjoyment of the property and showings for Topic: Residential
sale can only take place at the end of the Tenancies Act Landlord
lease. Right of Entry
d. No. Ward has complied with the Act by giving
the tenants 24 hours notice prior to the
showing.

5
What is a Level 4 Question?

Requires the same cognitive skills as used in level 3, except that the concepts and topic matter are
explored to a greater degree in a case study that makes use of additional questions. Questions typically
ask students to appraise, calculate, compare, conclude, contrast, criticize, critique, defend, describe,
evaluate, explain, interpret, justify, summarize and support.

Sample Questions Correct Answer Feedback

This case study explores the relationships with sellers

and buyers that brokerages and salespeople
encounter on a regular basis. You are required to
apply the common law of agency to this situation,
along with the statutory requirement of REBBA 2002,
including the Code of Ethics, and procedures followed
in the normal course of business as reflected in the
standard forms used by salespeople on a regular
basis.

Read the scenarios described below and answer the

five questions based on the scenarios. Choose the
answer that best applies the legal principles involved.

1. A salesperson is holding a Saturday Open House

on a property the salesperson has recently listed
and a young couple stop in to view the property.
After the couple complete their walk-through of the
property, they catch the attention of the
salesperson and state that they like the property
very much and would like to make an offer.

From the four choices listed below, select the first

thing the salesperson should say in response to
this young couple:

a. Have you signed any agreement to work with a Please Refer to Real
any other salesperson to find a property? Property Law
b. Before we discuss the terms of your offer, I
need you to enter into a representation Chapter 4, Agency
agreement with me. Representation,
c. "Do you have the financing in place to make a
cash offer? Topic: Agency
d. There is a lot of interest in this property and if Disclosure
you dont want to lose it, you should make an
offer as soon as possible.

6
 Sample Questions Correct Answer Feedback

2. The salesperson realizes that before proceeding

any further with this young couple, the salesperson
must ensure they understand how agency works,
the options open to them, and the services that will
be provided with each option. The salesperson
explains the various aspects of agency
relationships to the buyers.

Keeping in mind they have already stated they

want to make an offer on the property, which of the
following statements best describes how the
salesperson should now proceed?

a. The salesperson should ask them to enter into d Please Refer to Real
a representation agreement before they make Property Law
the offer.
b. The salesperson should tell them to find a Chapter 4, Agency
different salesperson who can advise them Representation
and take their offer.
c. The salesperson should arrange to have Topic: Agency Dual
another salesperson in the office take their Agency
offer.
d. The salesperson should explain to them that
the salesperson represents the seller and can
provide them with customer service and write
up their offer.

3. Assuming for now that the salesperson did decide

to enter into a representation agreement with the
buyers, which of the following statements would
now apply to the salespersons legal situation?

a. By creating multiple representations, the b Please Refer to Real

salesperson has avoided creating a conflict of Property Law
interest and this is a benefit for both the seller
and the buyer. Chapter 4, Agency
b. The salesperson must obtain the written Representation
consent of both seller and buyer for multiple
representations. Topic: REBBA 2002
c. The salespersons primary duty is to the seller Multiple Representation
client, but the salesperson must also be fair to
the buyer.
d. The sellers have already agreed to multiple
representations when they signed the listing,
so they cannot object to the salespersons
decision to also represent the buyers.

7
 Sample Questions Correct Answer Feedback

4. In fact, the buyers are not willing to commit to a

representation agreement, therefore they enter into
a customer service agreement with the salesperson
and the salesperson proceeds with discussions to
obtain the offer from them. The salesperson is
interested in making a quick and easy sale and tells
them (falsely) that there is already another offer on
the property and if they do not want to lose it, they
should make an offer with a large deposit and no
conditions.

The buyers agree to this suggestion and purchase

the property. Unfortunately, after the sale is
completed, the buyers discover a number of
defects in the condition of the property and quickly
become very unhappy with their purchase.

Which of the following statements best describes

the salespersons conduct towards them when
obtaining their offer?

a. The buyers chose not to be represented so d Please Refer to Real

there is no reason for them to complain about Property Law
the conduct of the salesperson.
b. The standard Agreement of Purchase and Chapter 4, Agency
Sale states they have had an opportunity to Representation
have a home inspection, so the salesperson is
not in any way responsible if they chose not to Topic: Agent Duties to
do so. Third Parties
c. The common law principle of buyer beware
applies to buyer customers and the buyers
have no cause to complain.
d. The salesperson owed the buyer, at the very
least, a duty of care and may have breached
this duty, as well as a duty of fairness as
required by the REBBA 2002 Code of Ethics.

8
 Sample Questions Correct Answer Feedback

5. The lawyer for the buyers writes a letter to the

salesperson and one of the claims in the letter
states that the buyers were clients when they
purchased the property and their interests should
have been adequately protected. Since the buyers
signed a customer service agreement, the
salesperson is confident there is no reason for the
buyer to claim they were represented.

Is there any basis at all for the claim the

buyers should have been protected as clients?

a. No, agency options were explained to them d Please Refer to Real

and they chose customer service. Property Law
b. No, the only way to create agency obligations
is to enter into a representation agreement. Chapter 4, Agency
c. Yes, any time a buyer makes an offer through Representation
the listing salesperson, multiple
representations is created. Topic: Agency Types of
d. Yes, the salesperson may have created a Agency Undisclosed
fiduciary relationship by giving the buyers Dual Agency
advice which the buyers acted on.

9
 Exam Templates

Real Estate as a Professional Career

Level Type of Questions # of Questions Marks per Question Total Marks

1 1 Sentence 10 1 10

2 Narrative (2-3 sentences) 45 2 90

3 Case-study 0 3 0

4 Simulation 0 3 0

Total: 55 100

Land, Structures and Real Estate Trading

Level Type of Questions # of Questions Marks per Question Total Marks

1 1 Sentence 16 1 16

2 Narrative (2-3 sentences) 33 2 66

3 Case-study 4 3 12

4 Simulation 2 3 6

Total: 55 100

The Real Estate TransactionGeneral, The Residential Real Estate Transaction,

The Commercial Real Estate Transaction, Real Property Law,
Principles of Appraisal, Principles of Mortgage Financing,
Principles of Property Management, Real Estate Investment Analysis
and Real Estate Broker Course

Level Type of Questions # of Questions Marks per Question Total Marks

1 1 Sentence 12 1 12

2 Narrative (2-3 sentences) 26 2 52

3 Case-study 7 3 21

4 Simulation 5 3 15

Total: 50 100

10
NOTES
NOTES