- Official section
- National X: Practice of Real Estate
- Broker weight
- Approximately 12 of 100 scored national questions
- Expected scored items
- The current PSI broker outline assigns about 12% of the national portion to Practice of Real Estate
National practice guide
Name the regulated conduct before naming the law
This section feels scattered until you sort questions by conduct. A neighborhood suggestion points to fair housing. A competitor lunch can become antitrust. A cold call points to telemarketing rules. A disappearing story can still be an advertisement. A deposit in an operating account points to entrusted funds. Classify first, then apply the narrow rule.
Last updated: August 1, 2026
What skill does this practice set measure?
Short answer: Build nine trigger files. For fair housing, identify protected status, covered conduct, comparison, exemption, advertising, accessibility, accommodation, and overlapping law. For worker status, apply the stated control or federal tax test without letting a label erase licensing supervision. For antitrust, look for agreement among competitors about price, territory, customers, vendors, or tied services. For Do Not Call, check registry status, the 31-day access rule, consent, inquiry or relationship, call type, and direct stop request. For digital communications, apply truth, authority, brokerage identity, fair housing, records, privacy, and platform-neutral advertising rules. For transaction money and diligence, keep funds separated and traceable, verify identity and authority, investigate red flags through the right record or specialist, and remain within competence.
Federal, Illinois, and local requirements can overlap. State and municipal law can add protected classes, disclosure duties, advertising rules, data protections, escrow procedures, call limits, and consumer remedies. The PSI outline separately marks supervisory responsibilities instructor-only in this national section. Tax classification does not cancel licensing supervision, and a client's instruction never authorizes discrimination, deception, antitrust coordination, privacy misuse, or conversion. This guide teaches exam reasoning, not legal advice for a specific outreach campaign or transaction. Sources were checked through August 1, 2026.
Ready to work the set?
These questions are original study items aligned to the published outline. They are not copied, recalled, or predicted PSI questions.
1. Two competing brokerages agree that one will serve the northern half of a county and the other will serve the southern half. What is most directly described?
- Market allocation
- Independent specialization
- Reasonable accommodation
- Title insurance
Show answer and explanation
Answer: Market allocation
The competitors agreed to divide territory and avoid competing with each other, which is market allocation.
2. Which statement about real estate commissions is most accurate?
- Federal law sets a standard percentage
- Competing firms may agree on a local minimum
- Each brokerage must determine its pricing independently
- Every listing broker must match the largest firm
Show answer and explanation
Answer: Each brokerage must determine its pricing independently
Competitor agreement about commission terms creates antitrust risk. Each brokerage must make its pricing decisions independently.
3. A homeowner directly tells a brokerage never to call again. What effect does that request have on the brokerage's established-business-relationship exception?
- It overrides the exception for future sales calls by that brokerage
- It has no effect
- It lasts only 24 hours
- It applies only to postal mail
Show answer and explanation
Answer: It overrides the exception for future sales calls by that brokerage
An entity-specific do-not-call request controls even when a business relationship might otherwise support certain live calls.
4. Which conduct is conversion rather than only commingling?
- Placing earnest money in an operating account
- Using entrusted money to pay the broker's personal credit-card bill
- Recording a receipt in the trust ledger
- Reconciling the account to bank records
Show answer and explanation
Answer: Using entrusted money to pay the broker's personal credit-card bill
The unauthorized personal use is conversion. Improper mixing without the direct use is commingling.
5. Which condition is part of the federal tax test for a licensed real estate agent to qualify as a statutory nonemployee?
- Substantially all compensation is tied to sales or output rather than hours
- The person may not hold a real estate license
- The brokerage may ignore license-law supervision
- Every payment must be an hourly wage
Show answer and explanation
Answer: Substantially all compensation is tied to sales or output rather than hours
Output-based compensation is one of the federal statutory conditions, along with licensing and the required written tax-status contract.
Which answer habits should you watch for?
- Trap
- An owner's instruction excuses housing discrimination.
- Correction
- A licensee must refuse an unlawful instruction regardless of who gave it.
- Trap
- A claimed Fair Housing Act exemption allows any advertisement.
- Correction
- Federal advertising limits and other federal, state, or local laws can still apply even when a transaction exemption is claimed.
- Trap
- Neighborhood schools, culture, or safety may be described with stereotypes.
- Correction
- Provide objective sources and property facts rather than steering through protected-class proxies or personal opinions.
- Trap
- Commissions are standard or fixed by law.
- Correction
- Brokerage fees are independently determined and negotiable, not set through competitor agreement.
- Trap
- Antitrust requires a signed contract among competitors.
- Correction
- An unlawful agreement can arise from words, understanding, or coordinated conduct without formal writing.
- Trap
- A recent inquiry always permits future calls.
- Correction
- A direct entity-specific do-not-call request overrides the relationship exception.
- Trap
- A disappearing social media story is not advertising.
- Correction
- Temporary format does not remove truth, authority, identity, fair housing, and record obligations.
- Trap
- Independent contractor means no supervision.
- Correction
- Tax treatment and licensing-law supervision use different tests and can coexist.
- Trap
- Client permission makes any email channel safe.
- Correction
- Minimize sensitive data, authenticate instructions and recipients, and use an approved secure channel.
- Trap
- Temporary deposit into the operating account is harmless.
- Correction
- Improper mixing can be commingling even if the broker intends to transfer the money later.
- Trap
- A broker may decide a disputed escrow claim based on fairness.
- Correction
- Disbursement follows the agreement, written authority, governing law, and required dispute process.
- Trap
- Due diligence requires the broker to become the technical expert.
- Correction
- The broker identifies and documents the red flag, uses reliable records, and recommends the appropriate qualified professional.
How should you reason through a difficult item?
A commission floor is still price fixing
Scenario: Three competing brokerage owners agree over lunch that none will accept a residential listing below a shared minimum commission percentage.
- The firms compete for the same brokerage business.
- A commission percentage is a price term.
- Their agreement replaces independent pricing with coordinated pricing.
Answer: The shared minimum is horizontal price fixing under the standard antitrust analysis.
A direct stop request controls
Scenario: A homeowner asked a brokerage for a market report six weeks ago. Yesterday, the homeowner told that brokerage never to make another sales call.
- The prior inquiry might otherwise support a limited exception for certain calls.
- The homeowner later made an entity-specific do-not-call request.
- That direct request overrides the brokerage's reliance on the relationship exception.
Answer: The brokerage should not place the proposed sales call.
Audience settings are part of a housing ad
Scenario: A licensee creates a rental campaign and configures the platform to exclude audience categories associated with families with children.
- The campaign promotes housing availability.
- Familial status is protected by the federal Fair Housing Act.
- The selected delivery audience affects access to the housing message just as the words and images do.
Answer: The exclusion creates a fair housing advertising and housing-access problem.
Temporary mixing remains commingling
Scenario: A broker receives earnest money after the bank's trust-account cutoff and deposits it in the operating account overnight, intending to move it the next morning.
- The deposit belongs to others and must be handled under the governing escrow rules.
- The operating account contains brokerage business funds.
- A short period of improper mixing does not become acceptable because the broker plans to correct it.
Answer: The overnight operating-account deposit is commingling, and the funds should follow the required trust process.
Worker labels do not answer every law
Scenario: A sponsored licensee has an agreement calling the licensee an independent contractor for federal tax purposes. The licensee argues that the sponsoring broker therefore has no licensing-law supervision duties.
- Federal tax classification uses a specific statutory test.
- Real estate licensing and sponsorship rules serve a different legal purpose.
- A tax label does not erase duties imposed on the sponsoring brokerage by license law.
Answer: Apply the federal tax and licensing-law tests separately rather than treating one contract label as universal.
Due diligence means verification, not guessing
Scenario: A supposed trustee signs a listing, but the vesting deed names a trust and the person provides no trust certificate or other evidence of authority.
- The record and the proposed signer's claim do not yet connect.
- A signature from an unauthorized person can undermine the transaction.
- The correct response is to obtain appropriate title and authority evidence through qualified channels.
Answer: Pause the unsupported assumption and verify the signer's authority through the relevant trust and title documentation.
How should you answer a Practice of Real Estate question?
- Name the conduct: housing choice, accessibility, worker status, competitor conduct, solicitation, advertising, privacy, entrusted money, or due diligence.
- Identify every actor and label consumer, protected person, client, competitor, vendor, worker, fund owner, and decision-maker.
- Find the trigger: protected basis, competitor agreement, registry status, report, platform promotion, sensitive data, deposit, or transaction red flag.
- Apply the narrow coverage, exemption, timing, consent, notice, documentation, and jurisdiction supplied by the facts.
- Check whether federal, Illinois, and local rules overlap rather than treating one as a replacement for all others.
- Reject instructions from owners, clients, brokers, competitors, or vendors that require illegal or deceptive conduct.
- Choose the response that is independent, consistent, documented, secure, authorized, and within the licensee's competence.
- Explain why the strongest distractor fails by identifying its missing trigger, false exception, or unauthorized shortcut.
- Fact pattern
- Housing service changes because of protected status
- Rule family
- Fair housing
- Immediate exam response
- Compare treatment and refuse discrimination
- Fact pattern
- Owner invokes an exemption
- Rule family
- Fair housing coverage
- Immediate exam response
- Test every exemption element and overlapping rule
- Fact pattern
- Broker office is inaccessible
- Rule family
- ADA and access
- Immediate exam response
- Identify public-accommodation and overlapping duties
- Fact pattern
- Competing firms discuss commission floors
- Rule family
- Antitrust
- Immediate exam response
- Do not agree; pricing must be independent
- Fact pattern
- Competitors divide neighborhoods
- Rule family
- Antitrust
- Immediate exam response
- Identify market allocation
- Fact pattern
- Consumer number appears on Registry
- Rule family
- Do Not Call
- Immediate exam response
- Verify valid permission or exception and direct requests
- Fact pattern
- Story or direct message promotes a listing
- Rule family
- Advertising
- Immediate exam response
- Apply truth, authority, identity, fair housing, and record rules
- Fact pattern
- Email includes bank or identity data
- Rule family
- Privacy
- Immediate exam response
- Minimize data and use verified secure delivery
- Fact pattern
- Earnest money reaches brokerage
- Rule family
- Funds of others
- Immediate exam response
- Deposit, document, safeguard, reconcile, and disburse lawfully
- Fact pattern
- Signer or property fact seems inconsistent
- Rule family
- Due diligence
- Immediate exam response
- Verify through authoritative records or a qualified specialist
Which outline areas does this set sample?
- Topic
- Fair Housing Act principles and exemptions
- What to know
- Covered sale and rental activity, brokerage service, owner-occupied small building, qualifying owner-sold single-family property, religious organization, private club, housing for older persons, advertising limitation, race protection, and state overlay
- Best exam move
- Treat exemptions narrowly and check the property's facts, broker involvement, advertising, protected basis, and broader law.
- Topic
- Protected classes
- What to know
- Race, color, national origin, religion, sex, familial status, disability, gender identity, sexual orientation, Illinois additions, local additions, association, perception, and retaliation
- Best exam move
- Identify the protected basis and compare housing opportunity, information, terms, service, and advertising.
- Topic
- Prohibited fair housing conduct
- What to know
- Refusal, different terms, false availability, steering, blockbusting, redlining, discriminatory advertising, harassment, retaliation, interference, unequal services, targeting, and discouragement
- Best exam move
- Find the housing decision or service that changed because of a protected characteristic.
- Topic
- Fair housing advertising
- What to know
- Words, phrases, images, symbols, targeting, audience exclusion, platform settings, neighborhood descriptions, preference, limitation, accessibility statement, equal housing message, and ordinary-reader effect
- Best exam move
- Evaluate the likely message and delivery of the ad, not merely the advertiser's claimed private intent.
- Topic
- ADA accessibility and accommodations
- What to know
- Title III, public accommodation, brokerage office, leasing office, accessible route, service counter, communication, auxiliary aid, website, barrier removal, reasonable modification, and overlap with housing law
- Best exam move
- Identify the facility, service, person, and requested access before selecting the applicable rule or combination of rules.
- Topic
- Employee and independent-contractor status
- What to know
- Control, behavior, finances, relationship, licensing, written agreement, output-based compensation, federal tax statutory nonemployee, supervision, sponsorship, actual practice, and law-specific test
- Best exam move
- Apply the test named in the question and never assume a contract label controls every statute.
- Topic
- Antitrust laws and penalties
- What to know
- Sherman Act, competitor, agreement, price fixing, commission fixing, fee floor, market allocation, customer allocation, group boycott, tying, bid rigging, independent decision, criminal penalty, civil damages, and evidence
- Best exam move
- Ask whether competitors coordinated a business decision each should make independently.
- Topic
- Do Not Call compliance
- What to know
- National Registry, 31-day access, written procedures, training, monitoring, seller-specific list, established business relationship, inquiry, express written permission, direct request, live call, prerecorded call, time, caller identity, and records
- Best exam move
- Check call type, registry status, possible exception, timing, documentation, and any direct stop request before dialing.
- Topic
- Social media and internet communication
- What to know
- Post, story, video, livestream, direct message, text, landing page, listing authority, truthful content, price, availability, brokerage identity, license status, team name, fair housing, altered image, testimonial, targeting, link, and record
- Best exam move
- Treat platform and format as delivery methods, not exemptions from advertising and fair housing duties.
- Topic
- Confidential personal information
- What to know
- Identity data, financial data, access credential, offer terms, medical information, collection, minimum necessary use, authentication, storage, encryption, transmission, recipient verification, vendor access, retention, disposal, incident, and fraud
- Best exam move
- Minimize collection and access, verify the recipient, and use an approved secure channel rather than convenient forwarding.
- Topic
- Funds of others
- What to know
- Earnest money, rent, security deposit, trust or escrow account, receipt, deposit deadline, ledger, reconciliation, authorization, dispute, disbursement, shortage, commingling, conversion, record, and audit trail
- Best exam move
- Keep entrusted funds separate, timely, documented, reconciled, and disbursed only through the agreement and governing law.
- Topic
- Transaction due diligence
- What to know
- Identity, ownership, signer authority, entity, estate, trust, power of attorney, property fact, title, disclosure, financing, deadline, permit, zoning, inspection, survey, public record, specialist, fraud warning, verification, follow-up, and documentation
- Best exam move
- Route each red flag to the authoritative record or qualified professional without guaranteeing an answer outside the licensee's competence.
- Topic
- Instructor-only supervisory subsection
- What to know
- Separate supervision responsibilities identified by PSI as instructor-only, while sponsorship and supervision can still be tested through Illinois license law and other contexts
- Best exam move
- Preserve the outline label and do not inflate the broker-tested national subsection.
What should you sort out before you begin?
- Terms
- Steering vs. blockbusting
- Difference
- Steering channels housing choice because of protected characteristics. Blockbusting induces transactions by suggesting protected-class change will harm an area or values.
- Question cue
- Directing a buyer or renter versus frightening owners into selling.
- Terms
- Redlining vs. steering
- Difference
- Redlining denies or changes financing or other real estate services based on area or protected-class composition. Steering directs a person's housing search.
- Question cue
- A service map or lending practice versus a neighborhood recommendation.
- Terms
- Disparate treatment vs. neutral policy
- Difference
- Disparate treatment intentionally changes treatment because of a protected characteristic. A facially neutral policy can require separate effect, justification, and accommodation analysis.
- Question cue
- Different rule for a protected person versus one rule with a contested outcome or required exception.
- Terms
- Price fixing vs. independent pricing
- Difference
- Price fixing is competitor agreement about commission, fee, discount, split, or another pricing term. Independent pricing is each firm deciding without competitor coordination.
- Question cue
- Let's all charge the same versus my firm set its own schedule.
- Terms
- Market allocation vs. specialization
- Difference
- Market allocation is a competitor agreement to divide territory or customers. Specialization is a firm's unilateral business focus without an agreement to avoid competition.
- Question cue
- You take the north side and we take the south versus a firm independently focuses on condos.
- Terms
- Group boycott vs. individual vendor decision
- Difference
- A group boycott coordinates refusal among competitors. One firm may independently select or reject a vendor for legitimate reasons.
- Question cue
- Several firms agree to cut off a provider versus one documented choice.
- Terms
- Employee vs. statutory nonemployee
- Difference
- Employee status depends on the applicable legal test. A qualifying licensed real estate agent can be self-employed for federal tax purposes when the statutory conditions are met.
- Question cue
- Apply the law named in the question, not one universal job label.
- Terms
- National Registry vs. entity-specific request
- Difference
- The National Registry records broad consumer choices. An entity-specific request directs a particular seller not to call and can override its relationship exception.
- Question cue
- A recent inquiry exists, but the consumer later told this brokerage to stop.
- Terms
- Commingling vs. conversion
- Difference
- Commingling improperly mixes entrusted and business or personal funds. Conversion is unauthorized use or control of another person's funds.
- Question cue
- Wrong account versus money taken, spent, withheld, or redirected without authority.
- Terms
- Confidential information vs. material property fact
- Difference
- Confidential negotiating or personal information should be protected. A known material property fact cannot be concealed merely because a client calls it confidential.
- Question cue
- Bottom-line price or account number versus recurring flood or known structural failure.
How should you review your results?
- Session
- 1. Build the fair housing map
- Focus
- Coverage, exemptions, protected classes, state additions, advertising, comparison, accommodation, and access
- Proof you are ready
- Identify the protected basis, conduct, exemption issue, and overlapping law in twelve scenarios.
- Session
- 2. Name prohibited conduct
- Focus
- Steering, blockbusting, redlining, refusal, different terms, false availability, retaliation, harassment, and interference
- Proof you are ready
- Name the violation from the conduct without relying on neighborhood stereotypes.
- Session
- 3. Detect competitor agreements
- Focus
- Price fixing, commission terms, market allocation, customer allocation, group boycott, tying, and independent decisions
- Proof you are ready
- Underline competitor, agreement, and restricted business choice in every practice fact pattern.
- Session
- 4. Audit outreach and advertising
- Focus
- 31-day Registry access, exceptions, direct requests, social media, targeting, truthful content, brokerage identity, and records
- Proof you are ready
- Approve or reject ten calls and digital promotions using a written trigger.
- Session
- 5. Protect data and classify workers
- Focus
- Minimum necessary data, authentication, secure channels, vendors, disposal, federal tax test, control, sponsorship, and supervision
- Proof you are ready
- Secure three information flows and apply two different worker-status tests without mixing them.
- Session
- 6. Trace money and diligence
- Focus
- Receipt, deposit, separation, ledger, reconciliation, authorization, dispute, identity, authority, public records, and specialist referral
- Proof you are ready
- Trace each dollar and resolve each red flag through the proper source without exceeding competence.
Do not count recognition as mastery. Close the notes and explain the rule, apply it to a new fact pattern, and identify why each distractor fails.
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Questions students ask about Practice of Real Estate Questions: Illinois Broker Exam Guide
How many Practice of Real Estate questions are on the national exam?
The PSI broker outline effective June 24, 2026 assigns approximately 12 of the 100 scored national questions to Practice of Real Estate. It is the third-largest national area after Contracts and Agency.
What topics are tested in Practice of Real Estate?
The broker outline covers fair housing principles, exemptions, protected classes, prohibited conduct and advertising; ADA accessibility; employee and independent-contractor status; antitrust; Do Not Call rules; social media and internet communication; confidential information; funds of others; and transaction due diligence.
Which subsection is marked instructor-only?
The current PSI outline marks the separate supervisory-responsibilities subsection as instructor-only. Broker candidates should still understand sponsorship and supervision where Illinois law tests them, but should not describe that subsection as part of the broker-specific 12% national allocation.
What are the federal Fair Housing Act protected classes?
The federal statutory classes are race, color, national origin, religion, sex, familial status, and disability. The current PSI outline also expressly calls out gender identity and sexual orientation. Illinois and local law add protections beyond the federal list.
What antitrust violations should I know?
Know price fixing, market or customer allocation, group boycotts, and tying arrangements. The exam usually hides the violation inside a friendly competitor conversation about commissions, territories, clients, vendors, or bundled services.
How often must a telemarketer access the Do Not Call Registry?
The FTC compliance framework requires use of a registry version downloaded no more than 31 days before the call. A consumer's direct entity-specific do-not-call request overrides an established-business-relationship exception for that seller's future sales calls.
Can a real estate licensee be a statutory nonemployee?
For federal tax purposes, a licensed real estate agent can qualify when substantially all compensation is tied to sales or output rather than hours and a written contract states the person will not be treated as an employee for federal tax purposes. Other laws use their own tests.
What is the difference between commingling and conversion?
Commingling improperly mixes money belonging to others with personal or business funds. Conversion is unauthorized use or control of another person's money, such as paying a personal bill from entrusted funds. Both are serious, but conversion involves the direct misuse.
What practice score should I target for this section?
Aim for at least 85% on unseen mixed sets and identify the regulated conduct before reading the options. You should be able to say whether the trigger is housing choice, competitor agreement, telephone solicitation, advertising, data handling, entrusted money, worker classification, or due diligence.
Are these official PSI questions?
No. These are original practice examples aligned to the current published broker outline. They are not copied or recalled live exam items. The PSI booklet and primary federal and Illinois sources were checked through August 1, 2026.
Primary sources
- PSI Illinois Candidate Information Booklet dated June 24, 2026
- United States Code, Fair Housing Act, 42 U.S.C. Chapter 45
- HUD Fair Housing Rights and Obligations
- U.S. Department of Justice, ADA Title III
- U.S. Department of Justice, Antitrust Laws and You
- Federal Trade Commission, Telemarketing Sales Rule guidance
- Internal Revenue Service, statutory nonemployees
- Illinois Administrative Code, 68 Ill. Adm. Code Part 1450
The current official outline controls the tested scope. Statutes, regulations, and official agency materials control when a general study rule and a jurisdiction-specific rule differ.
Editorial status
Checked against primary sources
The Pass Illinois editorial team last checked this guide on August 1, 2026. Every practice question is an original study item, and the source links above let you verify the rules that support the lesson.