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Real PSI Questions and Answers | Latest Version | 2025/2026 | Correct & Verified
What is the purpose of a "home inspection" in real estate transactions?✔✔ To assess the condition of a property, identifying any defects or issues before the sale is finalized.
What does the term "arm’s length transaction" mean?✔✔ A transaction in which both parties act independently and have no relationship, ensuring fair market value.
What is a "broker's commission"?✔✔ The fee paid to a broker for facilitating a real estate transaction, typically calculated as a percentage of the sale price.
What is "title insurance" used for?✔✔ To protect against losses arising from defects in the title of a property, such as disputes over ownership.
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What does the term "equity" mean in relation to real estate?✔✔ The difference between the current market value of a property and the outstanding mortgage balance.
What is a "contingency" in a real estate contract?✔✔ A condition that must be met for the contract to be valid, such as the buyer securing financing or the property passing an inspection.
What does the term "appraisal" refer to in real estate?✔✔ The process of estimating the market value of a property based on various factors, including its condition and comparable sales.
What is "pre-approval" for a mortgage?✔✔ A process where a lender evaluates a borrower’s creditworthiness and determines the amount they are eligible to borrow before a property is found.
What is the difference between "fixed-rate mortgage" and "adjustable-rate mortgage"?✔✔ A fixed-rate mortgage has a constant interest rate throughout the life of the loan, while an adjustable-rate mortgage can change based on market conditions. 2 / 3
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What is the role of a "title company" in real estate transactions?✔✔ A company that ensures the title of the property is clear and helps facilitate the closing process, including issuing title insurance.
What does the term "short sale" mean in real estate?✔✔ A sale of property where the sale price is less than the amount owed on the mortgage, and the lender agrees to accept the lower price.
What is a "deed of trust"?✔✔ A document that secures a loan by transferring legal title of a property to a trustee, who holds it until the debt is repaid.
What is a "foreclosure"?✔✔ The legal process by which a lender takes possession of a property due to the borrower’s failure to make required payments on the mortgage.
What is meant by "escrow" in a real estate transaction?
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