Free Practice Questions for Real Estate Maryland-Real-Estate-Salesperson Exam

Net Operating Income (NOI) is the income remaining after deducting operating expenses from the property’s operating income. In appraisal (income approach) and investment analysis, the standard relationships are:

Potential Gross Income (PGI) = income at full occupancy (before vacancies and collection loss).

Effective Gross Income (EGI) = PGI minus vacancy/collection loss plus other income.

Under sub-agency, a cooperating broker or licensee assists the listing broker in selling the property and represents the seller as a sub-agent of the listing broker.

A key drawback is that the listing broker is legally responsible for the sub-agent’s actions because the sub-agent owes fiduciary duties to the same principal (the seller).

Any misrepresentation, negligence, or violation by the sub-agent can expose the listing broker to disciplinary action or civil liability.

This is why many Maryland brokers now prefer buyer agency over sub-agency.

Reference (Maryland Source):

– Maryland 60-Hour Principles and Practices Course, Agency Relationships and Sub-Agency section.

– Business Occupations and Professions Article §17-534.

A key tax advantage of owning income-producing real property is depreciation, which allows investors to deduct a portion of the property’s cost basis (excluding land) over its useful life for tax purposes. This non-cash expense can shelter rental income and reduce taxable income. By contrast, insurance expenses and transfer taxes are ordinary expenses/costs (not advantages), and taxable gains are a potential liability upon disposition, not a benefit.

In Maryland practice, standard residential contracts (e.g., the Maryland REALTORS® Residential Contract of Sale) require parties to initial and date each page. This page-by-page acknowledgment demonstrates that both buyer and seller reviewed and consented to the specific terms on every page, reducing disputes over omitted or altered provisions. Final signatures execute the agreement, but initials and dates on each page evidence assent to the entire document as presented.

In Maryland, agency is established by an express, written brokerage agreement that identifies the client, defines the scope of services, and sets compensation terms and required disclosures. Who pays compensation does not determine agency; payment can come from any party or through the cooperative compensation system (e.g., MLS offers) without changing whom the licensee represents. Implied agency is not an acceptable substitute for the required written agreement in Maryland.

For recordation in Maryland, a deed must be acknowledged (typically before a notary or other authorized officer). Acknowledgment authenticates the grantor’s execution of the instrument, satisfying recording requirements. “Conveyed” and “transferred” describe the act of alienation, not the statutory prerequisite to recording; “verified” is not the recording standard.

A package loan (package mortgage) finances both real property and personal property (chattels) together in a single loan—common with new homes that include appliances or furnishings. A blanket loan covers multiple parcels; a wrap-around is junior financing that “wraps” an existing loan; “security” is not a loan type but a general concept.

A complaint against a real estate licensee in Maryland must be filed with the Maryland Real Estate Commission (MREC).

The complaint can be submitted online via the Commission’s official website or by mail using the form provided by the MREC.

The Commission investigates alleged violations of the Real Estate Brokers Act, including misconduct, ethical breaches, or failure to comply with license law.

Complaints are not handled by the brokerage or individual agents.

The Closing Disclosure (CD) is a federally required document under the TILA-RESPA Integrated Disclosure Rule (TRID).

It must be provided to the borrower at least three business days prior to closing and itemizes loan terms, fees, and total closing costs.

The Loan Estimate (LE) is given earlier in the process—within three business days of loan application—while the Closing Disclosure confirms final figures.

Maryland licensees must understand both forms as part of the Closing and Settlement Procedures portion of their coursework.

Reference (Maryland Source):

– Maryland 60-Hour Principles and Practices Course, Closing Procedures and Federal Disclosure Requirements section.

– TILA-RESPA Integrated Disclosure Rule (TRID), 12 C.F.R. §1026.19(f).

In the sales comparison approach, after making market-supported adjustments to comparable sales, the appraiser engages in reconciliation—a professional judgment process that weighs the quality and relevance of each comparable (e.g., similarity, extent and reliability of adjustments, data verification) and does not simply average the indicated values.

Bracketing is a selection technique (choosing comps slightly superior and inferior to the subject), and conformity is an appraisal principle (value is maximized when properties are similar). Neither is the final weighing process.