MI RE Broker common mistakes
MI RE Broker · Understand the traps and how to avoid them.
Answers trust-account questions from the slogan 'never commingle' rather than from mechanics - e.g., says a broker may deposit a buyer's earnest money check into the general operating account as long as it is credited to the buyer at closing, or says commingling is fine if the broker's own funds are added only to cover a shortfall.
Prep material teaches commingling as a catchphrase, so candidates never learn the operational rules the exam actually tests: separate account, per-transaction ledgers, reconciliation cadence, disbursement authority, and record retention.
What to do instead
Build a written trust-account checklist (separate account identified as trust, individual ledger for every transaction, periodic reconciliation of book balance to bank balance, no personal or operating funds, disbursement only per contract or written agreement, records kept for the period set by Board rule) and drill both 'what is required' and 'what is prohibited' versions of each requirement.
Guesses at Michigan's numeric requirements - prelicensing clock hours, continuing-education hours and required subject mix, license term and renewal timing, advertising rules for salesperson names - using numbers carried over from other states or from older editions of study material.
Numbers look interchangeable across states and change with rule amendments, so candidates rely on recall fragments instead of a verified reference, and then lose easy points on items they actually understood conceptually.
What to do instead
Create a single one-page 'Michigan numbers' grid (hours, cycles, retention periods, fees, disclosure timing) sourced only from the licensing act and current Board rules, and review it weekly until each figure can be stated with its source, not just its value.
Handles dual-agency items by declaring dual agency illegal in Michigan, or by saying that oral disclosure plus a signed purchase agreement is sufficient consent, instead of applying Michigan's disclosed dual agency framework.
Many candidates learned agency from material written for states that prohibit or restrict dual agency, and they never separate the concepts of undisclosed dual agency (prohibited) from disclosed dual agency with informed written consent (permitted).
What to do instead
Study the Michigan disclosure form and consent requirements until you can state, in order: when the disclosure must be given, that consent must be informed and in writing from both parties, and what the licensee must do afterward (neutrality, no advocacy for either side, no disclosure of one party's confidences to the other). Rehearse the difference between dual agency and designated agency in two sentences each.
Assigns fiduciary duties to the wrong person or the wrong time - e.g., says a listing broker owes confidentiality to a buyer who is only a customer, or says confidentiality ends at closing so the broker may later reveal the seller's motivation or bottom-line price.
Candidates memorize a list of duties without attaching each duty to a specific relationship and duration, and the exam deliberately moves the same duty across relationships to test exactly that.
What to do instead
Draw a two-column table (client vs. customer) and a timeline (before agreement, during representation, after termination) and place each duty in its correct cell, noting that confidentiality obligations in Michigan can survive termination of the relationship depending on the agreement and the rules.
Solves legal-description items by arithmetic alone - computes '660 feet by 1,320 feet equals 20 acres' or adds and subtracts bearings without drawing the parcel, and ignores that monuments and recorded references control over stated distances and areas.
Word problems invite calculation, so candidates skip the sketch; then they miss overlapping calls, 'more or less' language, and the surveyor's order of precedence (monuments, then courses and distances, then area) that the item is really testing.
What to do instead
For every legal-description item, draw the parcel to rough scale on scratch paper before touching a calculator, label the point of beginning, convert all units to feet or acres first, and state the order of precedence aloud. Practice with one metes-and-bounds item, one section/subdivision item, and one acreage conversion item per study session (43,560 sq ft per acre).
Blurs deed types and interest classifications - says a quitclaim deed conveys nothing or is invalid, says a warranty deed protects against encumbrances that appear in the public record, or labels an easement 'in gross' when it benefits and runs with a neighboring parcel.
Deed names sound self-explanatory, so candidates never build the covenant-by-covenant comparison, and easement vocabulary (appurtenant vs. in gross, dominant vs. servient) is learned as isolated definitions rather than as a test applied to a fact pattern.
What to do instead
Memorize a deed matrix (quitclaim = whatever interest the grantor holds, no covenants; warranty = covenants of seisin, quiet enjoyment, and defense against lawful claims, plus statutory form language in Michigan) and a two-question easement test: does the benefit attach to a parcel or to a person, and does the burden run with the servient land? Answer both before choosing a label.
Treats contract deadlines and contingencies as advisory - tells a buyer the financing contingency still protects them after the stated date, assumes a missed inspection deadline can be cured by a phone call, or says the broker can verbally extend a closing date.
Real-world practice is informal and forgiving, so candidates import that looseness into exam fact patterns instead of applying 'time is of the essence,' written-modification, and waiver-by-conduct rules.
What to do instead
For each practice fact pattern, draw a dated timeline (acceptance, each contingency, closing, possession) and label exactly what happens on the day after each date passes. Memorize that contract terms in Michigan must be modified in a signed writing, and that a party can lose a contingency right by continuing to perform after the deadline.
Resolves earnest-money and closing-statement disputes with a default rule - says the buyer always forfeits the deposit when financing fails, or that the seller always keeps it - rather than reading the contingency language, and computes prorations without first establishing the day-of-closing convention stated in the contract.
There is no universal default that fits every contract, but candidates want one; similarly, proration errors come from picking a 30-day month or a 'seller pays through closing' habit without checking the agreement's stated method.
What to do instead
Before answering, identify in writing (a) which contingency governs, (b) who holds the funds and who may disburse them, and (c) the proration method and the party responsible for the day of closing. Practice three proration drills - taxes on a 365-day basis, rent for a partial month, and loan interest from the closing date - and show the arithmetic in the answer.
Computes Michigan property taxes as assessed or sale value times millage - assumes the buyer's taxes after closing equal the seller's current bill, or treats the state equalized value as the market value of the property.
Proposal A's split between assessed value, state equalized value, and capped taxable value is unique to Michigan and counterintuitive; candidates who learned 'assessed value equals market value' elsewhere apply that habit and skip the uncapping step that a transfer triggers.
What to do instead
Drill the sequence in order: state equalized value is 50% of true cash value; taxable value is capped year to year at the lesser of 5% or the inflation rate; a transfer uncaps taxable value in the following year, generally to the state equalized value for that year; taxes equal taxable value times total millage divided by 1,000. Work at least two numerical items where the seller's bill and the buyer's first bill differ.
Uses national rules of thumb for Michigan transfer tax and for loan math - calculates transfer tax at $1 per $1,000, taxes the assessed value instead of the sale price, forgets the county-level tax, or derives the loan amount from price minus closing costs rather than from the down payment or loan-to-value ratio.
Generic 'one dollar per thousand' shorthand is widely repeated and the Michigan rate is a per-$500 computation, so the arithmetic drifts; similarly, candidates conflate cash needed at closing with the down payment and then misstate the loan amount, points, and PITI.
What to do instead
Memorize the Michigan structure as a formula, not a phrase: state tax at $3.75 per $500 of the consideration (equivalent to $7.50 per $1,000), rounded up to the next $500 increment, plus the county tax of up to $1.10 per $1,000 where adopted, both measured by the sale price. Build one calculation sheet that runs sale price, LTV and loan amount, points, PITI, transfer tax, and prorations in a fixed order, and re-derive each line from its definition every time.