Common Mistakes Candidates Make on the Kentucky Real Estate Exam

Candidates frequently fail to memorize critical KREC timelines. For example, failing to know that a licensee must report a change of residential address to the Commission within ten (10) days, or that a broker must retain records for a minimum of five (5) years, will cost you easy points.

Mistake 2: Confusing Kentucky Agency Laws and Disclosures

Agency law is a cornerstone of the Kentucky exam, and KREC has very strict rules regarding when and how agency relationships must be disclosed. A common mistake is confusing the Consumer Guide to Agency Relationships with the Agency Consent Agreement.

Scenario: The Open House Trap

Imagine a scenario on the exam where a prospective buyer walks into your open house and starts chatting about the weather. Do you need to hand them a Consumer Guide? No. However, if that buyer starts discussing their budget, their urgent need to move, or asks you to write an offer, you must provide the Consumer Guide to Agency Relationships before receiving confidential information or entering into a contract.

Furthermore, candidates often misunderstand Kentucky's specific rules on Dual Agency and Designated Agency. Remember that in Kentucky, Dual Agency is perfectly legal provided there is informed, written consent from all parties via the Agency Consent Agreement.

Mistake 3: Fumbling the Math (Especially Prorations and LTV)

Math anxiety causes many candidates to rush through calculation questions, leading to unforced errors. On the PSI exam, you will encounter questions on property taxes, commission splits, and loan calculations.

A frequent error occurs when calculating Loan-to-Value (LTV) ratios. Candidates often use the purchase price instead of the appraised value when the two numbers differ. Rule of thumb: The lender will always base the LTV on the purchase price or the appraised value—whichever is lower. For a deeper dive into these specific calculations, review our guide on Kentucky loan-to-value and down payment calculations.

Practical Math Example: Proration

When calculating prorations (like property taxes paid in arrears), candidates often forget to check if the question specifies a 360-day (statutory) year or a 365-day (calendar) year.

• Formula: Annual Tax / 365 = Daily Rate.
• Mistake to avoid: Miscounting the days the seller owns the property. In Kentucky exam questions, the seller is typically responsible for the day of closing unless the question explicitly states otherwise. Read the prompt carefully!

Mistake 4: Mishandling Escrow and Trust Account Timelines

Handling other people's money is the most highly regulated aspect of real estate practice. The exam will aggressively test your knowledge of KREC's escrow account rules. A classic mistake is confusing the timeline for the sales associate with the timeline for the principal broker.

According to 201 KAR 11:105:

• A sales associate must hand over earnest money to their principal broker "without unreasonable delay."
• The principal broker must deposit the earnest money into the escrow account within three (3) business days of the creation of an executory contract (when the offer is accepted and signed by all parties).

Test questions will try to trick you by asking when the broker must deposit the money if they receive it on a Friday. Remember to count business days, excluding weekends and federal holidays.

Mistake 5: Misunderstanding Property Management and Lease Rules

Property management is a growing field in Kentucky, and KREC tests candidates on the legalities of handling tenants and leases. Candidates often mistakenly apply general national landlord-tenant laws instead of Kentucky's Uniform Residential Landlord and Tenant Act (URLTA)—which is only adopted by certain cities and counties in Kentucky, but its principles are heavily tested.

A frequent error is misunderstanding how security deposits must be handled. In Kentucky, security deposits must be placed in a separate, dedicated account, and the tenant must be informed of the account's location. Failing to do so means the landlord forfeits the right to keep any portion of the deposit. To brush up on the nuances of leasing, check out our article on Kentucky lease types and terms.

Mistake 6: Neglecting Federal Laws That Overlap with State Practice

While state laws are vital, candidates often forget that federal laws are tested with practical, scenario-based questions. Fair Housing and the Americans with Disabilities Act (ADA) are prime examples. A common mistake is failing to recognize which commercial properties require ADA modifications, or confusing a "readily achievable" modification with an "undue burden."

Questions might present a scenario where a real estate brokerage (a place of public accommodation) must make its office accessible. If you aren't familiar with these federal overlays, you will lose points. You can review these critical federal requirements in our guide to ADA compliance in real estate.

Mistake 7: Falling for PSI's "EXCEPT" and "NOT" Questions

Finally, the most frustrating mistakes are purely test-taking errors. The PSI exam is notorious for using negative phrasing.

Example: "All of the following are duties of a listing agent EXCEPT:"

Candidates reading too quickly will see the first true statement, select it, and move on, completely missing the word "EXCEPT." To avoid this, physically mouth the words as you read them, or use your finger on the screen to trace the sentence. Always read all four options before making your selection.

Frequently Asked Questions

What is the passing score for the Kentucky real estate exam?

The exam is divided into two sections. To pass, you must score at least a 70% (56 out of 80 questions) on the National portion, and at least a 75% (30 out of 40 questions) on the Kentucky State-specific portion.

If I fail one portion of the exam, do I have to retake both?

No. If you pass one portion (e.g., National) but fail the other (e.g., State), you only need to retake the portion you failed. However, you must pass the remaining portion within four months of your first attempt, or you will have to retake the entire exam.

Are calculators allowed during the PSI exam?

Yes, but with strict limitations. You are allowed to bring a basic, silent, non-programmable calculator that does not have an alphabetic keyboard or paper-tape printing capabilities. Your smartphone cannot be used as a calculator.

How heavily is KRS Chapter 324 tested on the state portion?

KRS Chapter 324 and 201 KAR Chapter 11 make up the vast majority of the 40 state-specific questions. You should expect heavy testing on licensing requirements, disciplinary actions, escrow management, and KREC's specific agency disclosure rules.

How long are my exam results valid in Kentucky?

Once you successfully pass both the National and State portions of the exam, you have exactly sixty (60) days to apply for your Kentucky real estate license. If you miss this window, your exam results will expire, and you will have to test again.