Something of value exchanged between contracting parties, required for a contract to be legally binding.
Why Consideration matters on the exam
This term belongs to Contracts. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Consideration
Every Freehold question shows why the right answer is right — and cites its source.
A large brokerage wants to open a satellite space in a different city solely to display marketing materials, with no licensees working from that location and no transactions conducted there. Is this space typically treated as a licensed branch office?
Yes, any space bearing the brokerage's name must always be separately licensed
No location outside the main office ever needs consideration under license law
Only franchise brokerages must license marketing-only spaces
It depends on state rules, but many jurisdictions do not require branch licensing where no licensed activity occurs
Show answer & explanation
It depends on state rules, but many jurisdictions do not require branch licensing where no licensed activity occurs — Branch office licensing requirements generally hinge on whether licensed real estate activity occurs at the location, so rules vary for space used only for marketing display.
Source: PSI National Real Estate Exam Content Outline — Broker Supplement
Under designated agency, the two designated licensees representing the buyer and seller respectively generally may NOT:
Each negotiate on behalf of their own respective client
Communicate privately with their own client about that client's negotiating strategy
Present any incoming offers to their own client for that client's own consideration
Share confidential information about their respective clients with one another
Show answer & explanation
Share confidential information about their respective clients with one another — Even though both designated agents work at the same firm, they must keep their respective clients' confidential information separate from one another to preserve each client's undivided loyalty.
Source: PSI National Real Estate Exam Content Outline §5 General Principles of Agency
Which of the following is NOT required for a valid real estate sales contract?
An earnest money deposit
Mutual agreement between the parties
Legally competent parties
Consideration
Show answer & explanation
An earnest money deposit — A valid contract requires offer and acceptance, consideration, legally competent parties, and a lawful purpose. Earnest money is customary evidence of good faith but is not legally required for validity.
Source: PSI National Real Estate Exam Content Outline §7 Contracts
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