Principles, Property, and Land Use Practice Question

Question

A salesperson notices a possible compliance problem for the Michigan Real Estate Salesperson Exam involving cost approach and agency and trust-money compliance. Which statement is most accurate for exam purposes? (Item 177)

Answer choices

1. A. Combine land value with replacement cost less depreciation in a way that fits Michigan exam practice.
2. B. A licensee may give legal conclusions instead of recommending qualified legal advice when uncertain.
3. C. A verbal understanding always replaces a written real estate requirement.
4. D. The safest practice is to avoid written documentation so fewer questions are raised later.

Correct Answer

A. Combine land value with replacement cost less depreciation in a way that fits Michigan exam practice.

Explanation

The correct answer is A because cost approach requires candidates to combine land value with replacement cost less depreciation. The Michigan reference keeps the scenario tied to state licensing practice, while the other options rely on unsafe assumptions about oral custom, escrow, client preference, independent licensee authority, or ignoring written duties.

Question details

• Difficulty: easy
• Domain: Principles, Property, and Land Use
• Objective: cost approach

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