California Real Estate Exam: 10 Practice Questions (With Answers)

The best way to prepare for the California real estate exam is to answer practice questions — a lot of them. Below are 10 exam-style questions covering the most heavily tested topics. Read each explanation carefully, even if you get the question right.

Question 1: Agency

A seller tells their listing agent they would accept $480,000 even though the property is listed at $510,000. A buyer's agent asks the listing agent: "What's the lowest the seller will take?" What should the listing agent do?

A) Tell the buyer's agent $480,000 — full transparency benefits everyone B) Refuse to answer and keep the seller's bottom line confidential C) Report the buyer's agent to the DRE for asking D) Tell the buyer's agent to submit any offer they want

Answer: B — The listing agent owes a duty of confidentiality to the seller. Revealing the seller's bottom-line price would be a breach of fiduciary duty.

Question 2: Fair Housing

A real estate agent consistently shows African American buyers homes only in certain neighborhoods while showing white buyers homes throughout the entire city. This is an example of:

A) Blockbusting B) Redlining C) Steering D) Panic selling

Answer: C — Steering is the illegal practice of directing buyers toward or away from certain neighborhoods based on race or other protected characteristics.

Question 3: Contracts

Which of the following is required for a real estate sales contract to be valid in California?

A) It must be notarized B) It must be witnessed by two people C) It must be in writing (Statute of Frauds) D) It must be approved by the DRE

Answer: C — California's Statute of Frauds requires real estate contracts to be in writing to be enforceable. Notarization is not required for validity.

Question 4: Finance

A buyer purchases a home for $600,000 with 20% down. What is the loan-to-value ratio?

A) 20% B) 75% C) 80% D) 120%

Answer: C — Down payment = $120,000. Loan = $480,000. LTV = $480,000 ÷ $600,000 = 80%.

Question 5: Real Estate Math

A property sells for $750,000. The total commission is 5%, split equally between listing and buyer's brokers. Each agent receives 60% of their broker's split. How much does the listing agent earn?

A) $37,500 B) $22,500 C) $11,250 D) $18,750

Answer: B — Total commission: $37,500. Each broker's side: $18,750. Listing agent's 60%: $18,750 × 0.60 = $11,250. Wait — let me recalculate: $750,000 × 0.05 = $37,500 total. Each side: $18,750. Agent's 60%: $18,750 × 0.60 = $11,250. Answer: C — $11,250.

Question 6: Property Ownership

Which form of co-ownership automatically passes a deceased owner's interest to the surviving co-owners, bypassing probate?

A) Tenancy in common B) Community property C) Joint tenancy D) Tenancy in severalty

Answer: C — Joint tenancy includes the right of survivorship. When a joint tenant dies, their interest passes automatically to the surviving joint tenants without going through probate.

Question 7: Trust Funds

A broker receives an earnest money deposit from a buyer on a Friday afternoon. By when must the broker deposit the funds into the trust account?

A) By end of business Friday B) By Saturday morning C) Within 3 business days D) Within 7 calendar days

Answer: C — California law requires brokers to deposit trust funds within 3 business days of receipt.

Question 8: Disclosures

Which disclosure is required in California for ALL residential property sales of 1–4 units?

A) Lead-based paint disclosure B) Transfer Disclosure Statement (TDS) C) Natural Hazard Disclosure (NHD) D) Both B and C

Answer: D — Both the TDS and NHD are required in virtually all California residential transactions of 1–4 units. The lead-based paint disclosure is only required for homes built before 1978.

Question 9: Valuation

An appraiser is valuing a 24-unit apartment building. Which appraisal approach would be MOST appropriate?

A) Sales comparison approach B) Cost approach C) Income approach D) Gross rent multiplier only

Answer: C — The income approach is most appropriate for income-producing properties like apartment buildings. It estimates value based on the income the property generates.

Question 10: Land Use

A property owner wants to build a structure that violates current zoning setback requirements due to an unusual lot shape. They should apply for a:

A) Rezoning B) Variance C) Conditional use permit D) General plan amendment

Answer: B — A variance is permission to deviate from zoning requirements due to unique hardship circumstances (like an unusual lot shape). It is different from a rezoning, which changes the entire zoning classification.

How Did You Do?

8–10 correct: You're in great shape — keep it up. 5–7 correct: Good foundation — focus on the topics you missed. Under 5: Start with topic-by-topic drilling before taking full practice exams.

Want more? Our full question bank at CARealestate.com has 500+ questions organized by topic with detailed explanations for every answer.