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REAL ESTATE TEST 1, REAL ESTATE TEST 2, REAL ESTATE TEST 3, REAL ESTATE
STUDY QUESTIONS WITH CORRECT ANSWERS
“Under TREC regulations, the prohibition of referral fees and rebates without prior approval
from the client does NOT apply to which of the following? - CORRECT ANSWER
Compensation from settlement companies"
"Which of the following is a unilateral contract? - CORRECT ANSWER Elvira paid Desmond
$1,000 to give her two weeks to decide if she will buy his home at their agreed price."
"A business entity may not act as a broker unless: - CORRECT ANSWER The entity's
designated broker is a licensed individual broker in active status and on record as in good standing." "Desmond's property was assessed at $295,000, appraised at $315,000, listed at $329,000 and sold
for $319,000. What is the market price of Desmond's home? - CORRECT ANSWER $319,900"
"The Texas information About Brokerage Service (ABS) is best described by which of these
options? - CORRECT ANSWER A mandatory form that contains a full disclosure of the actual
representation agreement and is only intended for use with active clients." "A real estate license owes ALL parties at least the minimum duties of which of these following
sets of choices? - CORRECT ANSWER Fair dealing and honestly, loyalty, confidentiality and
obedience." "Which of the following is NOT an acceptable advertisement for a rental property under fair
housing laws? - CORRECT ANSWER Quiet community for single professionals with strong
English language skills."
"To be enforceable, a liquidated damages statement in a sales contract must do which of these? -
CORRECT ANSWER Clearly state the exact nature of damages for which the liquidated
damages would be appropriate." "A party who has paid for the option to purchase a home by a set time and a set price has what
further obligation in the contract? - CORRECT ANSWER Purchase the property by he agreed
time and at the agreed price." "Seraphina is buying a new home for $354,000. She has already put 20% down and owes the balance, plus the $400 escrow fee, five months of the annual $3600 annual property taxes and $900 annual insurance premium, as well as one week of the $280 utility bills for the month. How
much does she need to bring to the closing? - CORRECT ANSWER $286,100"
"Which of these lists accurately describes the economic characteristics of land? - CORRECT
ANSWER immobility, indestructibility, nonhomogeneity"
"Which of these is a legal method for terminating a contract agreement? - CORRECT
ANSWER Rescission and restitution"
"Which of these lists BEST describes the various forms of "wetlands" found in Texas? -
CORRECT ANSWER cat tails and standing water tidal, salt marshes along the coast seasonal
prairie wetlands in the valleys, mossy ferns in the hills and mountains" "What is required for a broker to "specialize" in a specific type of real estate or real estate
transaction in Texas? - CORRECT ANSWER No special certification is required, but the
broker must be trained and competent in the area in which they hold themselves out to be a "specialist"" "______________zoning regulations are regulations that restrict the density in a targeted area through a variety of building-specific measures, including such concepts as floor-area-ratios
(FAR), setback requirements, and open space requirements. - CORRECT ANSWER Bulk"
"In which of these situations is it most likely that a buyer holds an "equitable title" to the
property, but not actual title? - CORRECT ANSWER In an owner-financed land sale contract"
"A client wants to purchase 160 acres in Township x's SW section. Which of the following
descriptions would fit their interest best? - CORRECT ANSWER The SW 1/4 of the NE of
Section 35" "Desmond performed a comparative market analysis (CMA) for Seraphina using three homes sold within the previous few weeks all of which were very closely comparable to Seraphina's (the subject property"). comp A is 2750 sq. ft. and sold or $275,000; Comp B is 2550 sq ft and sold for $269,000 sq ft. selling for $287,500. Based on the price sq. ft. of these sales, what is the recommended starting listing price for Seraphins 2800 sq. ft. home? (Choose most appropriate
range) - CORRECT ANSWER $280,000 -$290,000."
"Angelina owns numerous properties that she sells, rents, and leases. Which of the following
agreements would NOT be required to be in writing under the Statute of Frauds - CORRECT
ANSWER Has mad an offer to purchase to which Angelina has agreed."
"The Commission will remove a broker's license from inactive status if the broker - CORRECT
ANSWER Does not act as a sponsoring broker for six months pays the required fee and submits
an application.." "A borrower is most likely to encounter "abusive" prepayment penalties in which of these types
of loans? - CORRECT ANSWER Subprime loans"
"What kind of timeline does a "periodic" tenancy generally follow? - CORRECT ANSWER
Whatever is determined by the parties."
"Economic obsolescence generally is the result of which of these? - CORRECT ANSWER
External factors" "Property managers/management companies must keep records how long after the transaction
for which the record was made is terminated? - CORRECT ANSWER 3 years"
"Desmond of Diogenes Realty has a signed buyer's representation agreement with Seraphina. To
which parties described here does he owe disclosure of the fact that he represents Seraphina? -
CORRECT ANSWER The seller's agent"
"Which of the following lists represents the duties property performed by an unlicensed
assistant? - CORRECT ANSWER Scheduling appointments, filing and maintaining records,
placing signs and other similar forms of advertising" "Desmond is selling a two-story home that is 30 feet deep with parallel front and back walls of 60 feet. On the ground floor only, there are extensions on both ends forming triangles off the 30' ends with a 15' length at the center. How many feet can Desmond accurately state that this home provides? A) 4, B) 3, C) 4,
D) 3,600 - CORRECT ANSWER A"
"A listing agent's primary duties in the seller's disclosures is which of the following? A) To assist in the completion of the seller's disclosure, ensure that all filled in, and sign off on the disclosure with the seller B) To guide the seller through the disclosure, directing them in which sections to leave blank, and ensure that they reveal no damaging information C) Be certain the seller performs the disclosure, that they do it honestly, and that they know what types of information needs to be disclosed
D) To perform the disclosure, make a complete disclosure to the seller of what is being disclosed,
and get the seller's sign off on the disclosure - CORRECT ANSWER C"
"An important effect of a counteroffer to remember is that it not only modifies the terms of the previous offer/counteroffer, it also does which of the following? A) Prohibits additional counteroffers B) Automatically kicks in a back-up offer C) Resurrects the previous counteroffer if rejected
D) Rejects the previous offer/counteroffer - CORRECT ANSWER D"
"In Texas, the home loan borrower holds which of the following? A) Virtual title B) Actual title C) A lien on the property
D) Equitable title - CORRECT ANSWER B"
"Select the BEST option describing circumstances under which a real estate agent is exempted from certain telephone solicitations? A) The call is generated by an automated system; the transaction will not require a face-to-face meeting to make payment; and the consumer has not previously informed the caller that they don't want to sell B) The call is generated by an automated system; the transaction will not require a face-to-face meeting to complete and make payment; and the consumer has previously informed the caller that they don't want to receive sales calls from the caller C) The call is not generated by an automated system; the transaction will require more than one face-to-face meeting to reach an agreement; and the consumer has not previously informed the caller that they don't want to sell their home D) The call is not generated by an automated system; the transaction will require a face-to-face
meeting to co - CORRECT ANSWER D"
"Which of these groups of "ratios" BEST describes those that the FHA is concerned with when determining an individual's eligibility for an FHA-insured loan? A) Loan-to-Debt, Debt-to-Household Expense, and Loan Value to Income B) Loan-to-Value, Debt-to-Expenses, and Household Income to Value C) Loan-to-Debt, Debt-to-Income, and Household Income to Expense
D) Loan-to-Value, Debt-to-Income, and Household Expense to Income - CORRECT ANSWER
D"
"Predatory lending is BEST described by which of the following? A) Misleading or fraudulent practices by a real estate employee when referring another real estate employee to a lender
"Desmond is acting as property manager for Seraphina. Their property management agreement states that all security deposits will be help in trust by Seraphina and Desmond will not be responsible for them. However, Desmond still receives the deposits initially. Unless otherwise stated by the property management agreement, when must Desmond transmit the deposits to Seraphina? A) By the end of the month in which the deposit was received B) By the end of the week in which the deposit was received C) Within 10 days of receiving from the tenant
D) Within 3 business days of receiving the deposits from the tenant - CORRECT ANSWER A"
"Disadvantages for the seller in an owner/seller financing situation include which of these? A) Can retain control and title of the property B) Receipt of proceeds is spread out over the length of the contract C) Buyer may be difficult to qualify with a lender
D) Repossession of the property due to default is more difficult - CORRECT ANSWER B"
"Gaps and gores are indicators of which of the following? A) Land targeted by the local jurisdiction as strong candidates for eminent domain claims by the jurisdiction B) Land targeted by the local jurisdiction as protected from any eminent domain claims by the jursdiction C) Unintentional spaces left between properties
D) Intentional spaces left between property - CORRECT ANSWER C"
"Which of the following financing methods is most likely to include a prepayment penalty? A) A conventional loan B) A government-insured loan C) A subprime loan
D) A seller-financed sale (loan) - CORRECT ANSWER A"
"What document can be used to detail the rights and privileges of the title holder besides a deed? A) purchase and sales agreement B) Promissory note C) Mortgage
D) Bill of Sale - CORRECT ANSWER D"
"Which of the following is NOT an encumbrance on real property? A) A first mortgage B) An easement C) A mechanic's lien
D) A license - CORRECT ANSWER A"
"Brokerages need to set their own commission rated and fee rates independent of any other brokerages as a risk management protection from which of these antitrust violations? A) Price-fixing B) Boycotting C) Monopolies
D) Product-tying - CORRECT ANSWER A"
"Which of the following selections most likely would be considered to be a material factor to a buyer who is clear that gardening is their passion, they intend to run a boutique nursery, and rely on public transportation for most of their local travel? A) The nearest bus stop is two blocks away B) There is a competing nursery in the retail center a mile away C) There is no built-in sprinkler system in the yard
D) Home businesses are prohibited in this community - CORRECT ANSWER D"
"The four "common unities" of a joint tenancy are which of these combinations? A) Time, equitable, interest, title, and enjoyment B) Title, time, interest, and possession C) Time, common interest, claim of right, and possession
D) Title, cost, interest, and principal - CORRECT ANSWER B"
"The method of valuation sometimes referred to as appraisal by summation, which bases the value estimate off of the cost required to replace the property with a new one, is better known as the: A) Market comparison approach B) Income approach C) Comparative Sale Approach
D) Cost Approach - CORRECT ANSWER D"
"What agency duties are owed by the sales agent to their supervising broker? A) All fiduciary duties unless in conflict with a client's best interest B) Standard fiduciary duties owed by an agent to a principal C) All non-fiduciary duties owed to all parties, plus the duties of loyalty and obedience
D) Non-fiduciary duties owed by an agent to all parties - CORRECT ANSWER B"
"If the commission proposes to deny, suspend, or revoke a person's license or certificate of registration, the person is entitle to a hearing conducted by which of these agencies? A) The Texas Real Estate Commission (TREC) B) The Texas Association of Realtors C) The State Office of Administrative Hearings
D) The Dept. of Housing and Development (HUD) - CORRECT ANSWER C"
"The gross income multiplier is a property valuation method that looks at values as a multiple of which of these? A) The income generated by a property in a quarter (3 months) B) The income generated by a property in a year C) The income generated by a property in a week
D) The income generated by a property in a month - CORRECT ANSWER B"
"Which of the following actions does NOT call for immediate cancellation of a licensee's listing on the MLS? A) At closing of sale of the home B) At the point the parties mutually consent to terminate the listing agreement C) At the expiration date of the listing
D) A client's notice of intent not to renew a listing agreement - CORRECT ANSWER D"
"Section 535.146 Chapter N of the Texas Administrative Code deals specifically with which of the following? A) Trust money and trust accounts B) Advertising real property C) Changing sponsoring brokers
D) Fair housing practices - CORRECT ANSWER A"
"The only acceptable method in Texas for representing both sides of a transaction is which of these forms of representation? A) Disclosed dual agency B) Intermediary brokerage C) Undisclosed dual agency
D) Statutory dual agency - CORRECT ANSWER B"
"A business entity may not act as a broker unless: A) The entity's designated broker is a licensed individual broker in active status and good standing according to the commission's records B) An unlicensed representative of the entity sits for, and successfully completed, the license examination C) A representative of the entity has attended the required training courses
D) The entity has received an exemption waiver from the Commission - CORRECT ANSWER
A"
"Which of the following scenarios most likely results in an unenforceable contract? A) Seraphina gave Desmond a $10,000 deposit to purchase a specific home in Desmond's development, but was under a court order guardianship to manage her finances at the time B) Desmond sold Seraphina a used car unaware that she was only 17 at the time. Seraphina made her payments on time then paid off the loan on her 18th birthday
C) Seraphina gave Desmond a $10,000 deposit to purchase one of the homes in Desmond's development, but which home would be purchase was never specified D) Desmond agreed to a six-month lease for a rental space owned by Seraphina, but nothing was
ever put into writing - CORRECT ANSWER A"
"Which of the following information known to a seller would the seller be obligated to disclose in Texas? A) A death on a property caused by some feature or natural condition of the property B) A death on the property caused by negligent or reckless actions taken by the deceased party C) A death of a previous resident from AIDS?HIV-related issues
D) A suicide that took place on the property - CORRECT ANSWER A"
"Which of these practices engenders the most common threat to venturing into the unauthorized practice of law for a real estate licensee? A) negotiating the price for a client B) writing their own or altering contracts C) explaining agency relationships to a client
D) making minor handwritten notes signed and initialed by all parties - CORRECT ANSWER
B"
"The _ is a consumer protection act passed by Congress to keep shady land dealers from preying on potential home buyers A) Interestate land sales full disclosure act B) Sherman Antitrust Act C) TILA-RESPA Act
D) Federal Trade Commission Section 5 - CORRECT ANSWER A"
"Under which of the following conditions is a landlord allowed to discriminate against a family with children who qualify in all other ways? A) When the rest of the complex is populated by mostly quiet, single, professionals B) When the housing is recognized by HUD as senior housing C) When the number of family members equal the maximum occupancy D) When the other residents object and threaten to move because of the potential noise and
inconvenience of children - CORRECT ANSWER B"
""Subjective value" of a property is BEST summarized by which of these sets of criteria? A) Based on location issues such as proximity of schools, proximity of retail and services, and access to utilities B) Based on convenience issues such as number of bedrooms, proximity of schools, and utility access C) Based on personal feelings, taste, and/or opinions
D) $3115 - CORRECT ANSWER B"
"Tyler was renting an apartment from Priya on a month-to-month rental agreement with payment due on the first of each month. On the 15th of the month, Tyler gives his notice of intent to terminate the agreement on the last day of that month (30th). Under Texas law, with no other agreement between the parties, what day does the agreement actually terminate? A) The 15th (day of notice) B) The 30th (per Tyler's notice) C) The 16th of the next month
D) The 30th of the following month - CORRECT ANSWER C"
"Improvements to property are considered to be which of the economic characteristics of land? A) Scarcity B) Fixity C) Modifications
D) Situs - CORRECT ANSWER C"
"Which of these sets of activities represents activities that are appropriate for unlicensed assistants to perform? A) Scheduling appointments for closing; signing listing agreements; placing signs, billboards, websites and other similar form of advertising; running open houses B) Scheduling appointments; filling and maintaining records; placing signs and other similar forms of advertising C) Scheduling appointments for and showing properties; creating and approving advertising; running open houses; overseeing MLS listings D) Scheduling appointments; handling closings; placing signs and other similar forms of
advertising; running specials and rebate offers - CORRECT ANSWER B"
"Which of these sets of items BEST reflects changes made to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) by the 1986 Superfund Amendment and Reauthorization Act (SARA)? A) encouraging more citizen participation; move authority to override state laws; increased local jurisdiction roles; diminished priority of health issues; reduced funds B) increased priority of health issues; better coordination with other laws; less authority and fewer options; decreased state roles; encouraging more citizen participation; reduced funds C) added authority and settlement options; increased federal role; increased priority of economic impact; encouraging more small business owner participation; more staff D) better coordination with other laws; added authority and settlement options; increased state
roles; increased priority of health issues; encouraging more citizen participation; more money -
CORRECT ANSWER D"
"Select the set pf "characteristics" best describing the economic characteristics of land.
A) Scarcity, stitus, fixity, modification B) scarcity, indestructibility, stitus, immobility C) nonhomogeneity, scarcity, immobility, modification
D) nonhomogeneity, indestructibility, immobility - CORRECT ANSWER A"
"Select the list that most clearly represents only voluntary forms of "alienation" of property A) escheat, inheritance, gift B) escheat, foreclosure, gift C) sale, condemnation, foreclosure
D) sale, gift, inheritance - CORRECT ANSWER D"
"One major advantage for a property manager to cultivate a relationship with a single property maintenance crew is which of the following? A) Workers familiar with the property may be more flexible in negotiating their rates and overlooking other problems B) Workers with whom you are familiar are easier to discipline and give frequent directions, and otherwise control their actions C) Workers you know are always better than the workers you don't know D) Workers familiar with the property will be better prepared to spot existing problems and
suggest potential improvements in a proactive manner - CORRECT ANSWER D"
"In addition to a Certificate of Eligibility, what are the other two primary considerations for a Veterans Administration home loan guarantee? A) Credit score over 550 and a job B) Sufficient credit and adequate income C) Personal references and an honorable discharge
D) Adequate credit score and strong rental history - CORRECT ANSWER B"
"In most circumstances, violations of lead-based disclosures by a seller and their agent could only result in which of the following? A) Permanent loss of license B) Cancellation of sale C) Jail time
D) Criminal and civil penalties - CORRECT ANSWER D"
"Which of these would not be a legitimate form of covenant, condition, or restriction (CCR)? A) Whether there can be a home-based business B) What colors and landscaping can be used C) Where and how to park Rvs and other wehicles
D) Who is allowed to live there - CORRECT ANSWER D"
"Select the executed contract from the following choices
C) $224,
D) $277,550 - CORRECT ANSWER A"
"Which of the following lists best describes the most common forms of terminating agency relationships? A) Completion, rescission, judicial intervention, acts of the parties B) Consummation, expiration, violation of law, acts of third parties C) Consummation, rescission, operation of law, acts of third parties
D) Completion, expiration, operation of law, acts of the parties - CORRECT ANSWER D"
"Texas is a lien theory state which means that in a real property transaction, which of the following is true? A) Actual and equitable title is held by a third-party trustee B) The borrower holds actual title and the lender has a lien against the real property C) The borrower holds actual title; a third party trustee holds a lien, and the lender holds equitable title on the real property D) The borrower holds equitable title only; a third-party trustee holds actual title, and the lender
holds a lien on the real property - CORRECT ANSWER B"
"Which of these lists best represents acceptable reasons for suspending or revoking a real estate license? When a licensee: A) Engages in dishonest dealing, fraud, unlawful discrimination, or a deceptive act; practices puffery in advertising; acts in error; demonstrates unorthodox methods B) Unintentionally publishes incorrect listing location; acts in bad faith; demonstrates uncooperativeness; fails to successfully market and sell a listing C) Engages in dishonest dealing, fraud, unlawful discrimination, or a deceptive act; makes a misrepresentation; acts in bad faith; demonstrates untrustworthiness D)Unintentionally republishes a misrepresentation; acts in blind faith; demonstrates
untrustworthiness; fails to successfully market and sell a listing - CORRECT ANSWER C"
"Under the Texas fair housing laws, an aggrieved consumer who believes that they have been a victim of illegal discrimination has several avenues of complaint, and must do which of the following? A) Must file any complaint with all of the potential governing agencies B) File their complaint within one year of the date that the alleged discriminatory action took place C) Complain to the Texas and National Associations of Realtors
D) Report it to the local police department - CORRECT ANSWER B"
"Which of the following agreements most likely would not be a voidable contract? A) Desmond agrees to provide an essential life service, such as an apartment, to emancipated 17- year-old Elvira
B) Armand, although under a court-appointed guardianship, agreed to buy a car from 30-year-old Elvira C) Desmond agrees to sell his car to 17-year-old Elvira D) Desmond sells a duplex to Seraphina who was under a temporary court-enforced
guardianship - CORRECT ANSWER A"
"A broker is responsible for any reasonable actions taken by their supervised licensees, even if in error, through which of these concepts? A) General liability B) Vicarious liability C) Limited liabiliry
D) Strict liability - CORRECT ANSWER B"
"Owner was forced to sell their property to pay off liens (in order of priority) of $250,000, $32,500, $125,000 and $5,450. The property sold for $410,00. How much did each creditor receive? A) $248,250, $32,274.5, $124,125, $ B) $250,000, $32,500, $125,000, $5, C) $250,000, $32,500, $125,000, $2,
D) $215,000, $32,200, $120,000, $4,500 - CORRECT ANSWER C"
"A salesperson may require, sign, and present a broker price opinion or comparative market analysis for the salesperson's sponsoring broker, but the salesperson must do which of the following? A) Provide proof that their sponsoring broker supervised the entire process, step by step B) Show that they have previously preformed broker price opinions of comparative market analyses that have been used and validated by licensed appraisers C) Complete three hours of continuing education on preparation of broker price opinions and comparative market analyses D) Submit the broker price opinion or comparative market analysis in the broker's name and the
broker is responsible for it - CORRECT ANSWER D"
"A person who gives or accepts any portion, split, or percentage of a charge for real estate settlement services is in violation of RESPA regulation in any case except in which of these circumstances? A) The buying client provides their written approval B) Actual services are provided C) Both buyer and seller provide written approval
D) The selling client gives their written approval - CORRECT ANSWER C"
"Which of these lists of natural resources best describes those subject to local subsurface rights? A) Gas, soil, and minerals
D) Supervise the sales agent closely with daily contract and close oversight of all of the sales
agent's activities - CORRECT ANSWER C"
"The TREC-approved promulgated forms initially are developed by which of the following groups? A) The NAR Code of Ethics Committee B) The state legislature of Texas C) The Broker-Lawyer Committee
D) The commissioners - CORRECT ANSWER C"
"Which of these things is not a function of an exclusive right-to-sell agreement? A) Guaranteeing the listing agent a commission in the event of a successful sale B) Preventing the seller from finding their own buyer and paying no commissions C) Allowing the listing agent to price the property as though it was a net listing D) Providing agents who are members of the multiple listing service that the property is posted
on, along with how much commission is being offered - CORRECT ANSWER C"
"The three-hour Texas Association of Realtors (TAR) Residential and Leasing Property Management Agreement course is required as part of which of the following? A) Texas real estate salesperson licensing B) Texas Residential Property Manager certification C) Texas real estate broker licensing
D) Texas Residential Leasing Specialist certification - CORRECT ANSWER B"
"An individual who owns a property "in severalty" most likely holds which of these forms of ownership? A) Fee simple defeasible B) Joint tenancy C) Tenancy in common
D) Fee simple absolute - CORRECT ANSWER D"
"Which of the following examples is the most likely to be a unilateral contract agreement? A) Elmer gave Seraphina $1000 so that she would not sell her property for 30 days, giving Elmer the option to purchase it at their agreed price before the 30 days are up B) Seraphina agrees to sell her property to Elmer must provide proof that he can afford the deal C) Elmer has a life estate on Seraphina's property, but when Elmer passes on the property reverts to Seraphina if she is still alive, or a "remainderperson" to be names by Seraphina in her will D) Elmer has a signed agreement with Seraphina to purchase her home, but first it must past
inspections - CORRECT ANSWER A"
"The mission of the Texas Mold Assessment and Remediation Rules (TMARR) program is to:
A) To ensure the persons conducting mold assessment and remediation services in Texas are property trained and licensed and are following at least the minimum standards B) To educate and assist all homeowners in identifying and eliminating any mold issues through do-it-yourself methods C) To eliminate all mold issues, particularly those in the coastal waterway system D) To provide an online clearinghouse resource for identifying mold types and targeting
communities in greatest need for the state's mold elimination initative - CORRECT ANSWER
A"
"The party referred to as the "testator" in a will is which of the following? A) Party making the will B) Attorney assisting in the making of the will C) Party receiving benefits from the will
D) Party selected to administrate the will - CORRECT ANSWER A"
"Select the physical characteristic of land concept that is described as generally no two pieces of land are identical. A) Immobility B) Indestuctibility C) Nonhomogeneity
D) Modification - CORRECT ANSWER C"
"Which of the following is not a potential cloud on a title? A) A license B) An ex-spouse's claim of ownership C) An easement
D) A lien - CORRECT ANSWER A"
"The primary function in the real estate industry of the secondary mortgage market is which of the following? A) Insuring loans in the primary mortgage market B) Funding of non-conventional loans with private mortgage insurance C) The trading of mortgage-backed securities (MBSs)
D) Providing funds for second mortgages on privately owned single family dwellings -
CORRECT ANSWER C"
"At a 90% loan-to-value, how much of a down payment would be required for a home selling at its appraised value of $400,000? A) $40, B) $80, C) $4,
D) $20,000 - CORRECT ANSWER A"
