NCREC-Broker-N NC Real Estate Broker National Questions and Answers

The primary mortgage market is where loans are originated. Lenders such as commercial banks, credit unions, mortgage bankers, and savings institutions interact directly with borrowers. The Federal Home Loan Mortgage Corporation (Freddie Mac) and Federal National Mortgage Association (Fannie Mae) operate in the secondary market, purchasing existing loans. The Federal Housing Administration (FHA) insures loans but does not lend directly. Therefore, the correct answer is A.

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In the rectangular (government) survey system, north-south lines (called principal meridians and range lines) and east-west lines (called base lines and township lines) intersect to form squares known as townships. Townships are 6 miles by 6 miles and are further divided into 36 sections. Therefore, the correct answer is D – townships.

A "seller's market" occurs when demand exceeds supply , resulting in strong buyer competition. The most common real-world effect is multiple offers on listed properties , intensifying competition and giving sellers leverage. This matches option B . The definitions in NCREC study guides, textbooks, and appraisal resources all align with this scenario.

According to 21 NCAC 58A .0104(a), a written agency agreement in North Carolina must include the broker’s license number and a definite expiration date. These are required by the Commission to ensure regulatory clarity and accountability. A broker protection clause is optional and negotiated between parties. Automatic renewal clauses are prohibited in listing agreements. Therefore, the correct and required component is the broker’s license number.

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TILA-RESPA Integrated Disclosure rules (TRID) require that the Closing Disclosure be delivered to the consumer no later than 3 business days before consummation of the loan. This mandates a three-business-day review period for borrowers before finalizing the loan—making option B correct.

The seller’s net proceeds are the total credits due to the seller (such as the sale price) minus all debits (such as mortgage payoff, commissions, taxes, and other closing costs). Therefore, the formula is:

Net Proceeds = Seller's Credits − Seller's Debits.

Correct answer: D.

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According to the NCREC Broker National (Broker-N) guidelines and the Federal Telephone Consumer Protection Act (TCPA), a real estate business may continue to contact a former client for up to 18 months after the conclusion of a transaction under the established business relationship exception, even if the client is on the National Do Not Call Registry. The NCREC’s official materials affirm this 18-month contact window.

Under North Carolina contract law, a real estate contract becomes binding at the moment the final acceptance is communicated to the offering party (or their agent). In this case, that happened on Friday morning when the listing agent communicated the seller’s acceptance to the buyer’s broker. Delivery of the documents is not required for formation of the contract; communication is sufficient.

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Steering is the illegal practice of guiding prospective buyers toward or away from certain neighborhoods based on race, ethnicity, religion, or other protected characteristics. Even if the request comes from the buyer, complying with such directions violates the Fair Housing Act. The correct answer is D — steering.

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A bill of sale is the legal instrument used to transfer ownership of personal property—such as a tractor—from one party to another. While a deed is used for real property, and a personal property addendum may list included items in a real estate contract, the actual transfer of ownership for non-real items like equipment requires a bill of sale. Therefore, the correct answer is D.

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In the income approach to real estate valuation, the formula used is:

Value = Net Operating Income (NOI) ÷ Capitalization Rate

This method estimates the value of an income-producing property based on its ability to generate income. Using this formula, you divide the NOI by the cap rate to find the value. Gross income is not used without adjustments, and multiplication or inverting the formula is incorrect. Therefore, the correct answer is B.

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NCREC rules allow a broker to be affiliated with more than one firm or broker-in-charge at the same time, but only with the express written consent of both BICs. This is often the case when brokers want to work in both commercial and residential markets or split their time between geographic locations. Therefore, the correct answer is A.

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An exclusive agency listing agreement gives the listing brokerage the exclusive right to market the property, but if the seller personally finds the buyer (e.g., a co-worker), no commission is owed. In contrast, an exclusive right to sell agreement would entitle the brokerage to a commission regardless of who finds the buyer. Therefore, the correct answer is A.

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A fully amortizing loan is one in which the borrower makes equal monthly payments over the loan term, with a portion of each payment applied to interest and the remainder to principal. By the end of the loan term, the entire balance is paid off. Therefore, the correct answer is A — fully amortizing.

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Under North Carolina agency rules, dual agency is permissible only if written informed consent is secured from both parties, and typically involves designated agency to avoid conflict of interest. Bernie could serve as the designated agent for the seller (listing), and Mei could serve as the designated agent for the buyer, each separately representing their client while the brokerage acts as dual agent at the firm level Option C accurately reflects this legal structure. Option A (non-designated dual agency) is rarely allowed, B leaves Bernie unrepresented for seller, and D improperly places one agent on both sides.

Under the NCAR/NCBA Standard Form 2-T, if the buyer terminates the contract during the due diligence period and provides written notice, they are entitled to a full refund of the earnest money deposit. However, the due diligence fee is non-refundable unless the seller breaches the contract. Therefore, the correct answer is B.

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Mold requires moisture to grow and is most commonly found in damp environments such as basements, bathrooms, and areas with water damage. Not all mold is toxic, and the presence of mold is not specifically listed on the NC Residential Property and Owners’ Association Disclosure Statement (though it may be disclosed as a material fact). Therefore, the correct answer is D.

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An Alienation Clause—also known as a due-on-sale clause—gives the lender the right to demand full repayment of the loan if the borrower transfers ownership or sells the property without the lender’s consent. This clause is standard in most modern mortgage agreements to protect the lender's interest.

Step 1: Calculate Gross Scheduled Income

6 units × $2,500/month × 12 months = $180,000

Step 2: Deduct Vacancy Loss (4%)

$180,000 × 0.04 = $7,200

Effective Gross Income = $180,000 − $7,200 = $172,800

Step 3: Add Other Income

$172,800 + $3,000 (advertising fees) = $175,800

Step 4: Subtract Operating Expenses (ignore debt service)

$175,800 − $40,000 = $135,800

Note: Net Operating Income (NOI) excludes debt service.

Correct answer: C

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Under NCREC rules, the Working With Real Estate Agents Disclosure must be presented and reviewed with a prospective buyer or seller at the first substantial contact. “Substantial contact” occurs when conversations begin to include personal, financial, or confidential information. It does not have to be tied to signing an agreement or making an offer. Therefore, the correct answer is B.

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When using more than one approach to value (sales comparison, cost, and income), an appraiser must reconcile the results, weighting each method based on its relevance to the subject property. The original purchase price and average of all comps are not directly used in determining value. The cost to update may factor into adjustments but is not a primary valuation method. Therefore, the correct answer is D.

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Under North Carolina law, a property manager acts as a general agent for the property owner and owes fiduciary duties—including loyalty, obedience, accounting, and full disclosure—to the owner. While managers must comply with fair housing and other tenant-related laws, their primary duty is to the owner of the property.

North Carolina license law requires brokers to ensure their client receives a detailed closing statement. Even if the attorney or settlement agent prepares the statement, the broker must review it for accuracy and notify all parties of any errors. Failure to do so may result in disciplinary action.

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According to North Carolina law, brokers are not required to disclose psychological stigmas such as death, illness, or belief in haunting. However, the manufacture of methamphetamine is a material fact due to health and safety hazards and must be disclosed. Therefore, answer B is correct.

NC brokers are bound by an affirmative duty to both discover and disclose material facts to all parties in a transaction, not just their clients. This includes facts they know or should reasonably know, such as structural defects, zoning violations, or environmental issues. This duty exists regardless of whom the broker represents. Therefore, option A is correct.

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The four economic characteristics necessary for real property to have value are:

Demand: There must be a desire or need for the property.

Utility: The property must serve a purpose or satisfy a need.

Scarcity: There must be a limited supply of similar properties.

Transferability: The ownership rights must be transferable from one party to another.

These four components form the acronym DUST and are foundational in property valuation. The correct answer is A.

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An appurtenant easement involves two properties: the dominant tenement (the one that benefits from the easement) and the servient tenement (the one that is burdened by the easement). In this case, Morgan benefits from the easement (dominant tenement), and Julie’s land must allow access (servient tenement). Therefore, Julie’s land is correctly identified as the servient tenement.

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Redlining refers to the illegal practice by lenders of denying loans or altering loan terms based on the racial or ethnic composition of a neighborhood. This violates federal fair housing laws and is discriminatory in nature. Blockbusting involves inducing sellers to sell by suggesting that a minority group is moving in; steering involves directing buyers to or from neighborhoods based on race; boycotting is an antitrust violation. Therefore, C is the correct answer.

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A defeasible fee estate (specifically, a fee simple determinable or fee simple subject to a condition subsequent) is one that may be voided if a specific condition is violated or a required event does not occur. In this case, the condition is that the church cannot build a parking lot. If it does, ownership may revert to the grantor. Therefore, the correct answer is B.

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The FHA (Federal Housing Administration) does not lend money directly to borrowers. Instead, FHA-insured loans are funded by approved private lenders such as banks, mortgage companies, or credit unions. The FHA insures the loan to protect the lender from default risk. HUD oversees the FHA but does not provide the funds. Fannie Mae is part of the secondary market. Therefore, the correct answer is A.

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In determining whether an item is a fixture (real property) or personal property, North Carolina courts and the NCREC consider several tests: method of attachment, adaptability of the item for the real estate's purpose, intent of the person who installed it, and whether removal would cause damage. The cost of the item is irrelevant to whether it is a fixture or not. Therefore, the correct answer is B.

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Any change to the terms of a binding real estate contract must be made in writing and signed by all parties. In this case, the original Offer to Purchase and Contract remains valid, and the parties are modifying the terms (adjusting the sales price due to damage). This should be documented using a formal amendment. Therefore, the correct answer is C.

A variance is an exception to a zoning ordinance granted by the local zoning board when strict enforcement would cause undue hardship due to unique property conditions. In this case, the lot is too narrow for the minimum width requirement, but the buyer can seek a variance to proceed legally. A nonconforming use applies to existing properties that no longer comply after zoning changes. Therefore, the correct answer is D.

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Per the North Carolina Real Estate Commission statutes , the Commission consists of 7 members , a majority of whom must be active real estate brokers. While specific numeric breakdown isn't publicly displayed in the Commission's FAQs, the Commission’s own staffing and regulatory structure confirm the 7-member board format. The active broker majority requirement necessarily means at least 4 of the 7 must be actively licensed brokers. Therefore, C (7 members) is the correct answer.