Arkansas Real Estate Practice Exam
(Free Questions & Answers)

Explanation

The Arkansas Real Estate Commission (AREC) is the state agency that regulates real estate licensees, enforces license law, and protects the public in Arkansas.

Explanation

In a seller agency relationship, the broker and their licensees are the fiduciary agents of the seller, meaning their primary duties — loyalty, confidentiality, obedience, disclosure, accounting, and reasonable care — are owed to the seller.

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The Statute of Frauds requires real estate contracts to be in writing and signed by the parties to be enforceable. Oral real estate contracts are not enforceable in Arkansas.

Explanation

In a lien theory state like Arkansas, the borrower retains legal title to the property. The lender does not hold title — instead, the mortgage creates a lien (security interest) on the property until the loan is paid off.

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Arkansas allows a homestead exemption of up to $2,500 off the assessed value of a qualifying owner-occupied primary residence, reducing the property tax burden.

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The sales comparison approach (also called the market data approach) estimates a property's value by comparing it to recently sold similar properties in the same market, making adjustments for differences.

Explanation

The federal Fair Housing Act prohibits discrimination based on 7 protected classes: race, color, national origin, religion, sex, familial status, and disability (handicap). Additional classes may be protected at the state or local level.

Explanation

Title insurance protects the policyholder against losses arising from defects in title that existed before (and were undiscovered at) the time the policy was issued — such as prior liens, forged documents, or undisclosed heirs.

Explanation

Total commission = $175,000 × 0.06 = $10,500. Split 50/50: $10,500 ÷ 2 = $5,250 each. To solve this, multiply the relevant values: $175,000 at 6%.. The correct answer is $5,250.. This is a common calculation on the Arkansas real estate exam.

Explanation

A variance is official permission granted by a zoning board to deviate from current zoning requirements due to unique hardship. A conditional use permit allows a use that is not standard in the zone but is permitted under specific conditions.

Explanation

The Residential Lead-Based Paint Hazard Reduction Act (Title X) requires sellers and landlords of pre-1978 housing to disclose known lead-based paint hazards and provide the EPA pamphlet 'Protect Your Family From Lead in Your Home.' Buyers receive a 10-day period to conduct a lead inspection.

Explanation

Arkansas requires 60 hours of approved pre-license education for salesperson applicants before they are eligible to take the state licensing exam.

Explanation

Dual agency occurs when a broker (or brokerage) represents both the buyer and the seller in the same transaction. In Arkansas, dual agency is permitted only with written informed consent from all parties.

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Notarization is not required for a real estate contract to be valid (though it is required for deed recording). The essential elements are: offer and acceptance, consideration, legal capacity, legal purpose, and in Arkansas, written form.

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Arkansas uses both mortgages and deeds of trust as security instruments for real estate loans. Deeds of trust involve three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.

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Joint tenancy includes the right of survivorship — when one owner dies, their interest passes automatically to the surviving co-owner(s) without going through probate.

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The cost approach is most useful for special-purpose properties (churches, schools, government buildings) where there are few comparable sales, or for new construction. It estimates value as land value plus depreciated cost of improvements.

Explanation

Steering is the illegal practice of guiding (steering) buyers or renters toward or away from certain neighborhoods based on their race, religion, or other protected characteristics.

Explanation

A lender's (mortgagee's) title insurance policy protects the lender up to the outstanding loan amount if a title defect emerges. It does not protect the buyer's equity; a separate owner's policy is needed for that.

Explanation

Net = Sale Price × (1 − commission rate). $150,000 = Sale Price × 0.94. Sale Price = $150,000 ÷ 0.94 = $159,574 (rounded to the nearest dollar).

Explanation

A legal nonconforming use (also called a grandfathered use) is a property use that predates current zoning regulations and is allowed to continue even though it no longer conforms, typically subject to the condition that it not be expanded or rebuilt if destroyed.

Explanation

The EPA recommends mitigating radon when levels reach 4 pCi/L (picocuries per liter) or higher. Radon is the second leading cause of lung cancer in the United States.

Explanation

The Arkansas real estate exam has 130 questions with a 4-hour time limit. Candidates must achieve a passing score of 70% or higher.

Explanation

Full disclosure to the opposing party is not a fiduciary duty — in fact, an agent must protect confidential information about their client. Fiduciary duties include loyalty, obedience (to lawful instructions), confidentiality, disclosure (to the client), accounting, and reasonable care.

Explanation

A counteroffer legally rejects the original offer and creates a new offer. The original offer is extinguished; the buyer is now free to accept, reject, or counter the seller's new proposal.