Prepare for your Real Estate Principles course exam with these practice questions and answers. This guide covers property rights, contracts, financing principles, agency law, and real estate mathematics.
Q: Broker’s Price Opinion (BPO)
Answer: A broker’s price opinion is the process used by a hired sales agent to determine the potential selling price or estimated value of a real estate property
Q: Closing
Answer: The completion of a real estate transaction in which the buyer receives ownership and the seller receives the contract amount
Q: Comparative Market Analysis (CMA)
Answer: A report comparing the prices of sold homes that are similar to the subject property (called comparables), created by a license holder to help the seller or buyer determine the market value
Q: Seller’s Market
Answer: a market condition in which the number of properties for sale does not meet the demand (number of people looking to buy)
Q: Buyer’s Market
Answer: relatively low demand for real estate in the area (it will take 6 months or more to sell a house)
Q: Agent
Answer: A person who acts on behalf of someone else
Q: Seller’s Disclosure Notice
Answer: A document filled out by the seller concerning any defects in the improvements on the property
Q: Subagent
Answer: A license holder from one office who represents the seller through cooperation with the listing broker of another company
Q: Material Fact
Answer: Any fact that is significant or essential to the transaction
Q: Principle
Answer: the individual who authorizes another person to act on their behalf
Q: Intermediary Relationships
Answer: occur when the same real estate office is representing both the seller and the buyer as clients in the same transaction
Q: Third Party
Answer: the individual with whom the agent and principal enter into real estate negotiations. The third party is also sometimes referred to as the customer
Q: Agency Relationship Disclosure
Answer: Agency relationships should be disclosed at first contact
Q: Community Reinvestment Act
Answer: Helps commercial banks and savings associations meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods
Q: Redlining
Answer: The illegal act of a lender denying mortgages in certain areas of town
Q: Home Mortgage Disclosure
Answer: Federal act that requires lenders to disclose specific lending information, which HUD then uses to map lending patterns
Q: Texas Real Estate License Act (TRELA)
Answer: A law that governs the licensing, education, and activities of real estate license holders practicing brokerage in this state
Q: Texas Real Estate Commission (TREC)
Answer: A group of nine people appointed by the governor and confirmed by the state senate that are to set policy and rules from the real estate license act
Q: Texas Occupation Code
Answer: The Texas Real Estate License Act is Chapter 1101 of the:
Q: TREC’s purpose
Answer: oversee the licensing, education requirements, and ethical standards of practice for real estate sales professionals and real estate inspectors within the State of Texas
Q: TREC’s authority
Answer: adopt and enforce rules for governing real estate practitioners.
Q: Chapter 1101
Answer: The law which imposes a code of ethics and standard of conduct on members of the commission
Q: Commisioners
Answer: responsible for informing employees of their conduct expectations and responsibilities
Q: Annually
Answer: How often will real estate professionals be formally evaluated in the workplace?
Q: Bilateral Contract
Answer: An agreement in which both parties give consideration and promise to perform the actions specified in a contract
Q: Unilateral Contract
Answer: An agreement in which one party promises to perform and the other party accepts this promise, requiring only one party to act
Q: Executed Contract
Answer: a contract that has been fully performed on both sides
Q: Executory Contract
Answer: A contract that is not completely executed or performed
Q: Addenda
Answer: Documents containing additional terms, information, or obligations that are attached to a contract
Q: Four Corners Doctrine
Answer: A legal concept stating that the court can only consider information that appears within the four corners of the documents
Q: Amendment
Answer: Changes or makes modifications to an already agreed upon contract
Q: Approved
Answer: Promulgated
Q: Agency Relationship Forms
Answer: TREC has chosen not to create contracts that establish agency relationships
Q: TAR
Answer: other than your brokerage, you can get legal buyer representation forms from
Q: An Attorney
Answer: may also create a buyer representation form on behalf of the property owner
Q: One to Four Family Residential Contract
Answer: the standard contract form and is used for the sale of single-family residential properties
Q: lease with option to buy
Answer: a contract in which the buyer can lease a property for a period of time (usually a year) and then have an option to buy the property at the end of the lease period
Q: right of first refusal
Answer: an agreement with an owner in which they would have the opportunity to buy the property before any other buyers’ offers are considered
Q: four corners doctrine
Answer: a legal concept that states that the court can only consider what appears within the four corners of the documents
Q: Homestead
Answer: A property that a person or family owns and occupies as their primary residence
Q: Separate Property
Answer: Property owned by either spouse prior to the marriage or by gift or inheritance during the marriage
Q: State Constitutional Homestead Rights
Answer: protects homeowners from claims by creditors being made against their homes, preventing any eviction by these creditors
Q: Federal Tax Liens
Answer: The Homestead Act does not protect homeowners from this type of lien
Q: Urban Environment
Answer: In this type of environment, only 10 acres is protected
Q: Rural Environment
Answer: In this type of environment, 200 acres are protected for a family and 100 acres are protected for a single person