welcome to the 2021 texas real estate
exam
this test has 60 questions with
explained answers that will help you
prepare for the test
before we get started we want to tell
you about our free real estate exam
cheat sheet
that is packed with tips to help you
pass the exam on your first try
you can get it by clicking the first
link in the description now let's get
started
question one how much time is given to
pass the texas salesperson exam
a two hours b three hours c
four hours d five hours
the correct answer is c four
hours candidates will be given 240
minutes or four hours
total includes state and national
portion to complete the examination
question two how many hours of
pre-licensing education do you need in
texas
a 100 hours b 130 hours
c 160 hours d 180 hours
the correct answer is d 180 hours
these 180 hours consist of the following
six
30 hour courses principles of real
estate 1
principles of real estate 2 law of
agency
law of contracts promulgated contract
forms and real estate finance
question 3 how old do you have to be in
texas to obtain a real estate license
a 25 years old b 21 years old
c 20 years old d 18 years old
the correct answer is d
18 years old you must be at least 18
years of age
you must be either a u.s citizen or a
lawfully admitted alien
meet trec's qualifications for honesty
trustworthiness and integrity
question four biff is hired by owner
gilligan to oversee a residential
property complex
including supervising complex employees
and maintenance
but he has limited authority biff is the
a
lessee b property manager
c leasing agent d managing agent
the correct answer is b property manager
a property manager oversees the property
on behalf of the owner
and is typically required to oversee
employees and maintenance and protect
the interest of
and obtain the optimum financial return
for the property owner
who employs the manager a lsc is the
tenant of a property pursuant to a lease
a leasing agent is retained by a
property owner to locate tenants for the
owner's building
a managing agent has more power than a
property manager
including the ability to use their
judgment and discretion
in matters affecting the property
question five
paula enters into a contract for the
purchase of jordan's home
paula applies for a mortgage the
contract requires her to get a document
from her mortgage lender stating that
the lender will be loaning her the
necessary funds
what is that document called a an
assurance
b a promissory note c a commitment
d a letter of approval the correct
answer is
c a commitment a commitment is a
document from a mortgage lender stating
that the lender will be loaning the
purchaser or borrower the necessary
funds
the promissory note contains the
borrower's promise to repay the debt
and the manner and frequency of payment
example monthly via check
the note also contains the principal
balance owned and the interest rate
a letter of approval may refer to a
pre-approval letter issued by the lender
to show potential sellers that the
borrower may be approved for a loan for
a particular amount
question six rowland a broker
arranges a sale and opens escrow
before escrow closes his license is
revoked by the department of real estate
dre what happens to roland's commission
a roland's commission goes to the real
estate education research and recovery
fund
b the seller does not have to pay any
commission
c the commission is split between the
buyer and seller
d roland gets his commission the correct
answer
is d roland gets his commission
the broker's commission is earned when a
ready willing and able buyer is found
thus since the broker was licensed at
the time he procured a buyer as
contracted for
he is able to collect his fee question 7
the blank prohibits an employer from
discriminating against a person with a
disability
seeking employment based on their
disability a
civil rights act of 1964
b americans with disabilities act ada
c civil rights acts of 1866
and 1870 d unruh law
the correct answer is b
americans with disabilities act ada
the americans with disabilities act ada
protects against discriminatory conduct
against a person seeking
employment question 8 salesperson sally
advertised in a newspaper
that anyone who bought a home through
her services would receive a free home
appliance valued up to 500
such an advertisement is a
illegal under any conditions b
legal provided the chance to win is
disclosed
c legal provided full disclosure is made
to all
interested parties d illegal
since the value exceeds 300
the correct answer is c
legal provided full disclosure is made
to all interested parties
disclosure is key to most such questions
provided everyone is made aware of the
promotion and its terms
this is a perfectly acceptable business
practice question nine
a prohibition against a for sale sign in
a residential neighborhood
a is permitted provided it applies to
everyone in the neighborhood equally
b violates the fifth amendment
c violates the first amendment
d violates the 14th amendment
the correct answer is c
violates the first amendment
prohibiting the display of for sale
signs is a violation of the first
amendment
freedom of speech right and prohibits
the free flow of truthful commercial
information
a homeowners association hoa
may impose reasonable rules about the
posting of a for sale sign
though cannot prohibit it
question 10 a newspaper advertisement is
considered
blind when it a doesn't include the
property address
b contains misleading information
c doesn't state the sales price
d fails to state the fact the advertiser
is a broker or
agent and does not include their
department of real estate
dre license number the correct answer is
d fails to state the fact the advertiser
is a broker or agent
and does not include their department of
real estate dre
license number the lack of licensee
identification creates the blind ad
question 11 if a group of brokers agreed
to divide a market area or set
commission rates it would
a be a cooperative business practice
b create an extra protection for
consumers
c violate real estate law
d violate antitrust law the correct
answer is
d violate antitrust law
any restraint of trade is a federal
anti-trust
violation question 12 any suggestion by
a licensee
that the racial makeup of a neighborhood
is changing to induce panic selling is
an example of
a blockbusting b steering
c redlining d usury
the correct answer is a
blockbusting blockbusting
also known as panic selling is the
prohibited practice of inducing a person
to offer a dwelling for sale
by creating fear over the changing
demographics within the neighborhood
question 13 the uniform commercial code
which pertains to a bulk sale transfer
exists primarily for the protection of
a creditors b buyers
c sellers d customers
the correct answer is a creditors
creditors need protection from those who
might attempt to walk away from their
debt
obligations question 14 when purchasing
a business
the buyer needs to be certain a
certificate of clearance has been issued
by the
a secretary of state sos
b department of business and
transportation
dbt c alcoholic beverage control
a b c d state board of equalization
s-b-o-e the correct answer is
d state board of equalization sboe
the certificate of clearance issued by
the state board of equalization
sboe assures the buyer of a business
opportunity that any taxes do have been
paid
question 15 a good example of an implied
contract is
a an agent is told by a potential seller
that he'd like the agent to do a market
analysis
b a tenant staying despite not paying
rent
c after a written lease expires rent is
paid and the check
cashed d a tenant communicating that
they expect the full deposit back
because the landlord did not ever note
damage to the property
the correct answer is c
after a written lease expires rent is
paid and the check
cashed the owner shows through his
actions that the contract is still valid
even though it is now simply implied
question 16
which of the following is not true
regarding a contract of sale
a it must be signed by all parties
b it must be notarized c
pre-printed contracts are acceptable
d it is acceptable to refer to a
document that is in the public record
if the property description is very
complex
the correct answer is b
it must be notarized
signatures on a contract of sale do not
have to be notarized
the other options are all true regarding
contracts of sale
pre-printed contracts are typically used
in residential transactions
and if something is not desired not
applicable
both parties need to initial the
alterations they make
question 17 deed restrictions and
easements on a property are considered
blank when written
into the deed a a turnaround investment
b a consideration c a bad investment
d exceptions and reservations the
correct answer is
d exceptions and reservations
exceptions and reservations are
restrictions or limitations
explicitly described in the deed
question 18
in a real estate transaction the blank
is the current owner of the property
and is conveying his or her property to
someone else
a grantor b guarantor
c agent d landlord
the correct answer is a grantor the
grantor grants a piece of property to
the grantee to complete a transfer of
real estate
question 19 substituting a new
obligation for an existing one
with the intent to cancel the latter is
called
a novation b latches
c assignment d execution
the correct answer is a
novation novation is when a new contract
is used to replace the initial contract
question 20 why are net listings
generally frowned upon
in the real estate industry a the broker
typically takes a smaller than average
commission
b all of these c they drive down the
prices of homes for sale
d they can lead to brokers taking
advantage of property owners
the correct answer is d they can lead to
brokers taking advantage
of property owners in a net listing
the seller names a price they want for
their property and any amount above that
sale price goes to the broker
net listings are frowned upon in many
states and illegal in others
because they can lead to brokers not
acting in the best interest of the
seller
for example if a seller wanted 150
000 for their home and there was an
offer for 152
000 in a net listing the broker may be
tempted to not accept the offer
because his commission on the sale would
be relatively small
question 21 a seller's broker sold a
property to a buyer
four months later when the first rains
of the season began
the buyer discovered significant roof
leaks the buyer sued both the seller and
the broker for the cost of repairs
the seller sued the broker in the same
action since the seller had informed the
broker
numerous times that the building needed
a new roof
the broker's testimony in court revealed
the broker was aware of the leaky roof
but had not mentioned it to the buyer
since the issue of the leaking roof was
not mentioned by the buyer
what is the most likely result of the
court action
a on the basis of the principle of
caveat emptor
the buyer is not entitled to recover
from either the broker or the seller
b the buyer may recover from the broker
but the seller would not be liable c
the buyer may recover from the seller
but the broker would not be liable
d the buyer may recover from both the
seller and the broker
further the seller would recover in the
suit against the broker
the correct answer is d
the buyer may recover from both the
seller and the broker
further the seller would recover in the
suit against the broker
the lack of disclosure between the
broker and the buyer causes the broker
to be the responsible party
therefore the buyer may recover from
both the seller and the broker
further the seller may also recover from
the broker since the broker was informed
of the leaky roof by the seller
and did not disclose it to the buyer in
actual practice
the seller would have disclosed the
leaky roof in the transfer disclosure
statement
tds question 22 a real estate broker
takes listing
on a residential property the broker
likes the property and chooses to buy it
in the name of a separate investment
company he owns
which of the following statements is
most correct
a the broker has failed to serve the
client's best interest and cannot
collect a fee
b the broker may offer to purchase the
property
but must first disclose to the seller
that they are the buyer
c the broker may purchase the property
but may only accept half of his agreed
to fee
d the broker need not disclose his
interest in the investment property
so long as he is not the sole owner of
it the correct answer is
b the broker may offer to purchase the
property
but must first disclose to the seller
that they are the buyer
disclosure is the critical point in this
question there is nothing wrong with
purchasing the property
provided the broker makes full
disclosure to the client and receives
their consent
question 23 subprime loans are usually
an option for
a people with great credit who want to
remove any interest payment entirely
b people with subpar credit and come
with a lower interest rate
c people with great credit who get a
lower interest rate
d people with subpar credit and come
with a higher interest rate
the correct answer is d
people with subpar credit and come with
a higher interest rate
subprime loans carry a higher interest
rate because the bank lender feels they
carry greater risk of full repayment
question 24 most real estate loans deal
with simple interest
the formula for which is a rate times
monthly payment equals annual interest
b annual interest times monthly payment
equals rate
c rate times loan balance equals annual
interest
d none of these the correct answer is
c rate times loan balance equals annual
interest
the annual interest in a simple interest
setup is the balance of the loan
multiplied by the interest rate
note from our real estate expert when
taking the real estate exam you may need
to choose from a group of answers in
which none of them is the answer you
might have in mind
when this happens find an answer that is
correct and choose that one
in this case you might have been
thinking that i equals prt
i equals principal times rate times time
and that would be correct but it is not
one of the choices
be ready for confusing questions like
this one when you take this test
question 25 a buyer of a common interest
development
cid is entitled to receive all except
copies of
a a homeowner warranty b
the governing conditions covenants and
restrictions
cc and ours c the homeowners association
hoa bylaws d
the hoa's financial statement the
correct answer is
a a homeowner warranty
a buyer of a condominium or property in
a planned urban development
pud has the right to receive copies of
all the association and subdivision
information and documents
a homeowner warranty is an insurance
policy that is purchased separately by
the buyer
question 26 under no circumstances may a
real estate broker misrepresent a
material fact to a buyer
if they do the broker faces a
disciplinary action by the department of
real estate dre
b criminal action c civil action
d any of the above the correct answer is
d any of the above a material fact is
one that affects the value and
desirability of a property
as such the failure to disclosure is a
significant breach of the broker's
fiduciary duty to their client
if the failure to disclose rises to the
level of fraud or deceit
the broker may be subject to civil or
criminal penalties depending on the
nature of the misconduct
question 27 it is least likely to be a
violation of the real estate law for a
broker to pay a portion of the
commission to an
a unlicensed assistant b
a sales person working for another
broker c
unlicensed person who obtained the
listing
d buyer or seller in the transaction
the correct answer is d
buyer or seller in the transaction
paying a portion of their commission to
a buyer or seller in a transaction is
allowable
provided full disclosure is made to all
parties
each of the other answer selections is
against the law
question 28 gradual liquidation through
periodic payments of principal
and interest is called a a reverse
annuity mortgage
b an amortized loan c a heloc
d a takeout loan the correct answer is
a an amortized loan
amortized loans are the norm in most
residential real estate and gradually
lower the owed amount through monthly
payments to principal and interest
question 29 how does an arm mortgage
differ from a fixed rate mortgage
a the fixed rate will always be the most
fiscally smart choice
b arm stands for adjustable rate
mortgage
whose rate may vary with changes in
interest rates
c there is no difference d
upon default the borrower must give up
his or her left or right arm
the correct answer is b
arm stands for adjustable rate mortgage
whose rate may vary with changes in
interest rates
fixed rate mortgages are locked in at
the same rate for the life of the loan
while arm mortgages have a rate that can
float or ride
market rates question 30 a latino real
estate agent working in a hispanic
neighborhood
informed current owners they should move
out because another ethnic group is
moving into the area
this conduct is an example of all of the
following except
a blockbusting b panic selling
c a legal practice but an ethical
d an illegal practice the correct answer
is
c a legal practice but unethical
discrimination can occur among any
protected group
here's an example of a question that can
cause confusion simply by the structure
of answer choice c
if the act is illegal answer choice d
then it cannot be legal regardless of
being classified as ethical or not
question 31 when the agent and the
principal
agree that the agent will represent the
principle it is called
a express agency b
implied agency c principal
agency d representative
agency the correct answer is
a express agency
with express agency both the agent and
principal must come to a verbal or
written agreement about representation
question 32 when the agent and the
principal have not officially agreed
that the agent will represent the buyer
but their actions imply this it is
called
a implied agency b alter
agency c insinuated agency
d express agency the correct answer is
implied agency legally if both parties
have taken actions toward a sale
then the agent and principal have
entered into an implied
agency question 33 when a principal
doesn't stop an agent from going beyond
his or her normal
line of duties this is called a agency
by alteration
b agency by fair use c
agency by association d
agency by estoppel the correct answer is
d agency by estoppel
agency by estoppel is created when
agents perform duties outside of what
they would normally do
though related to what their initial
task was question 34
when an agreement is formed between an
agent and a principal after a sale is
confirmed this is called
a agency by restitution b agency by
ratification
c agency by prior agreement
d agency by foreclosure the correct
answer is
b agency by ratification
if an agent sells a piece of property
without any contract or permission from
the principal
the principal may create an agency by
ratification by approving the sale
anyway question 35 when an agent is
invested in a project
outside his or her agent status this is
called
a agency coupled with an interest
b agency impetus c
agency coupled with a principle d
agency turnaround the correct answer is
a agency coupled with an interest
agency coupled with an interest is when
an agent invests time or money in a
property
and also agrees that before doing so he
or she will be the agent
but one is not conditional on the other
question 36
when a broker is given the right to
collect the commission no matter who
sells a property
this is an a secondary right to sell
listing
b exclusive right to sell listing
c primary right to sell listing
d executive right to sell listing the
correct answer is
b exclusive right to sell listing
an exclusive right to sell listing is
very straightforward
the broker is given the exclusive right
to sell a property
and will collect the commission if
someone else sells it question 37
when a homeowner reserves the right to
sell his or her own property
but offers the exclusive right for only
one agent this is an
a exclusive agency listing b
executive agency listing c homeward
agency listing
d homebound agency listing the correct
answer is
a exclusive agency listing
an exclusive agency listing is almost
identical to an exclusive right to sell
listing
except the homeowner can sell the
property themselves and not have to pay
a fee to the agent
question 38 when a property owner wishes
to use multiple agents to sell a
property this is an
a open listing b agent listing
c owner operator listing d
exclusive listing the correct answer is
a open listing an open listing is also
called a non-exclusive or general
listing and is not
exclusive question 39 when a broker is
hired to sell a property for a minimum
price
then keep anything over that price this
is an
a open listing b closed listing
c blowout listing d net listing
the correct answer is d net listing
net listings are illegal in many states
while some other states require that the
amount of commission a broker can earn
is percentage based and negotiated
before the sale
question 40 blank were put in place to
make sure that property buyers
rights are protected a broker agency
agreements
b buyer agency agreements
c anti-trust agency agreements
d primary agreements the correct answer
is
b buyer agency agreements
as real estate buyers became aware that
most agents were protecting the seller's
interest
buyer agency agreements were created to
protect buyers interest
question 41 which deed is used to
release rights to property
in an effort to obtain clear title a
warranty deed b reconveyance deed
c quit claim deed d bargain and sale
deed
the correct answer is c quit claim deed
there is no warranty afforded with a
quit claim deed and the grantor gives up
all rights to the property
in a bargain and sale deed the grantor
does maintain that he or she
has an interest in the property a
re-conveyance deed is used when a
borrower homeowner is released from a
mortgage
records will show that the mortgage has
been paid off question 42
what is the term for restrictions
easements or liens that give others
rights to a property
a joint tenancy b as
cheat c encumbrances
d emblems the correct answer is
c encumbrances
encumbrances give land use rights to
others besides the owner
such as right of ways question 43
blank is the right to acquire ownership
of private real estate for public use
a severance b imminent domain
c attachment d as cheat
the correct answer is b
imminent domain when a government agency
or a private entity needs land for
public use
they access private land through
imminent domain question 44
blank is the right of the government to
acquire property when the owner dies
into state and has no heirs eligible to
inherit the property
a as cheat b claimancy
c severance d imminent domain
the correct answer is a is cheat
when a property owner dies without a
will or survivors
the state assumes title through as cheat
question 45
upon sale the instrument that conveys
ownership rights to personal property is
a blank
and that dealing with real property is a
blank a
land sales contract deed b
deed land sales contract c
deed bill of sale d bill of sale
deed the correct answer is d
bill of sale deed a bill of sale
transfers title to personal property
and a deed transfers title to real
property question 46
as is the case with most homes what is
the term for pledging something as
security for a loan without the
necessity of giving it up
a freehold estate b security agreement
c leaseback agreement d
hypothecation the correct answer is
d hypothecation hypothecation allows a
property owner to use the property as
security for the loan
while still being able to occupy it what
is a right to use another's land
called a implement
b easement c estoppel
d as cheat the correct answer is
b easement easements such as party walls
connecting adjoining dwellings allow
others the right to use another's land
question 48 blank are annual crops
planted on real property
but are considered personal property a
implements b recreation
c reversions d bargain and sale
deed the correct answer is
a implements usually for agricultural
easements
emblems or crops that are considered
personal property while still being
attached to the land
question 49 what is the most desirable
deed that provides the greatest amount
of protection for the grantee
a bargain and sale deed b
warranty deed c quit claim deed
d trustee deed the correct answer is
b warranty deed when a warranty deed is
given the grantee is protected from any
person who claims it
and any liens against the property by
the grantor question 50
an estate that is of indefinite duration
is called a blank estate
a non-freehold b freehold
c leasehold d reversion
the correct answer is b freehold
the only type of estate without
constraints on duration
is a freehold estate question 51
most appraisers work a for the property
owner on a fee-for-service basis
b for the real estate agency on a
fee-for-service basis
c independently on a fee-for-service
basis
d for the real estate agency on a
retainer
the correct answer is c
independently on a fee for service basis
to avoid conflicts of interest most
appraisers work independently on a
fee-for-service basis
question 52 the property being appraised
is called
a the object property b the valuation
property c the adjunct property
d the subject property the correct
answer is
d the subject property the subject
property refers to the property being
appraised
question 53 an appraisal will not help
you with
a imminent domain b estate valuation
c fair market interest d mortgage
approval
the correct answer is c fair market
interest
an appraisal is usually performed on a
piece of property to help with buying
selling eminent domain estate valuation
exchanges of ownership mortgage approval
property and other taxes
and various court proceedings question
54
location is a important in determining
property value b unimportant in
determining property value
c the only factor in determining
property value
d irrelevant in determining property
value
the correct answer is a important in
determining property value
location is one of many factors in
determining property value
and may be the most important question
55
the location of a piece of property a
can both increase and decrease its value
b does not affect its value c
can increase its value d can decrease
its value
the correct answer is a can both
increase and decrease its value
the location of a piece of property can
both increase and decrease its perceived
value
as the many factors surrounding that
location fluctuate
including school districts crime rates
traffic
access to employment and many more
question 56
heavy vehicle traffic will a affect the
value of property based on whether it is
residential or commercial
b increase the value of property c
decrease the value of property d
not affect the value of property the
correct answer is
a affect the value of property based on
whether it is residential or
commercial vehicle traffic can affect
the value of property
as generally less traffic is desired
around residential property
while more of certain types of traffic
is desired around commercial property
generally businesses prefer high traffic
if it is of the type to bring additional
customers to them
types of traffic that would not be
appreciated by businesses
would include traffic produced by
neighboring manufacturing businesses
junkyards and car dealers question 57
the change in value of a piece of
property based in its location
is not affected by a hazards and
nuisances
b proximity to transportation
c amenities and services d
pass performance the correct answer is
d pass performance
location affects the value of property
through the following factors
access to employment amenities and
services
hazards and nuisances nearness to
transportation
neighborhood compatibility safety
schools and traffic
question 58 fair market value cannot be
established unless a transaction is
considered
a recorded b free of probate
c unilateral d arms length
the correct answer is d arm's length
an arm's length transaction is one where
both parties are free of duress and
potential conflicts of interest
only in an arm's length transaction can
the agreed upon value be considered fair
market
question 59 value in use is
a added property value based on a
specific person using it for a specific
purpose
b the value of using a property that
anyone can benefit from financially
c added property value based on a
government sanction
allowing it to be used for general
purposes d
added property value based on a typical
person using it for a typical purpose
the correct answer is a
added property value based on a specific
person using it for a specific purpose
value in use is an added property value
unavailable to the typical buyer
because it's for a specific person using
it for a specific purpose
question 60 a public walkway within a
condominium community
a needs to be at least five feet wide
b must be made of concrete c
exist in a common area d is maintained
by individual owners
the correct answer is c exist in a
common area
can you visualize exceptions that would
make answer selections a
and b incorrect for instance some
walkways may be narrower than five feet
or made of asphalt
answer choice d cannot be correct as the
homeowner's association
hoa within a condominium community is
responsible for the maintenance of
common areas and facilities
thus c is the best option as public
walkways
always exist in a common area in an hoa
community
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