Texas Real Estate Exam Module 1 Questions and Answers Rated A

Texas Real Estate Exam Module 1 Questions and Answers Rated A What are the various brokerage specializations within real estate? residential, commercial, industrial, agricultural, and mixed-use. Price the amount paid for a property (sales price) Value based on objective and subjective factors. Subjective value is affected by the perception of the individual The business of bringing together people interested in making a real estate transaction is known as a brokerage The broker acts as an ____________ of the buyer or the seller (or both) in negotiating the sale, purchase, or rental of a property agent A ___________ is a license holder employed by or associated with a broker who conducts brokerage activities on behalf of the broker. sales agent The main objective of the Education Standards Advisory Committee (ESAC) is to _____________ curriculum standards, course content requirements, and instructor certification requirements. review and revise The committee consists of ________ members who have been actively practicing real estate for at least five years before appointment. seven Real estate market cycles 1. Expansion equals growth 2. Recession equals slowdown 3. Depression equals the bottom 4. Revival equals recovery Demand factors that influence real estate a) Population b) Demographics c) Employment levels d) Wage levels Economic characteristics of Real Estate Relative Scarcity, Improvements, Permanence of Investment, Area Preference Area Preference is also known as... situs Physical Characteristics of Real Estate Immobility, Indestructibility, and Nonhomogeneity Sources of law that affect the ownership and transfer of real estate US Constitution, Laws passed by Congress, state, and local legislative bodies, Common law based on past court cases, laws affecting real estate practice NAR largest real estate trade organization is the National Association of REALTORS® (NAR), founded in 1908. Only members of NAR may be called REALTORS T/F The first real estate license law was passed in California in 1919 True TREC is composed of nine members (six brokers and three public members) The TREC term length is six-year staggered terms Land is defined as the earth's surface extending downward to the center of the earth and upward to infinity Land includes the following Surface rights, Sub-Surface rights, air rights, vertical lease Vertical lease would allow the property owner to lease all three rights (mineral, surface, and air) to different tenants Personal property (chattel) All property that is not real property is movable, is not permanently attached to the land, and must be included in the purchase contract to transfer with the property. Trees, perennial shrubbery, and grasses that do not require annual cultivation and are considered real estate are known as fructus naturales Emblements, also known as Fructus industrials are annually cultivated crops such as fruit, vegetables, and grain. considered personal property An object that was once personal property that has been attached to an improvement to become real property A fixture Residential Single family, duplex, triplex, and fourplex Town houses Similar to single-family houses, Separated by a party wall (fire wall), breezeway (air space), Ownership of the land Condominium Ownership of the unit (cube of air), Undivided interest in the land, Shared interest in common elements, halls, and elevator Planned unit development (PUD) Consists of common property and improvements that are owned and maintained by an owners association (OA) Cooperative Involves units with common walls and facilities. Owns shares of stock in the cooperative. Owners receive a proprietary lease, which entitles them to occupy a particular unit in the building. Converted-use properties Factories, office buildings, hotels, schools, and churches that have been converted to residential, used as either rental or condominium units Estate tax exemption • It is the amount an individual can leave to heirs tax free. The American Taxpayer Relief Act of 2012, signed into law on January 2, 2013, permanently extended a $5 million per person estate tax exemption indexed to inflation ($5.6 million in 2018). For estates that exceed $5.6 million per person, assets over that amount will be taxed at a 40% rate. Capital gains tax exemption Occupied as a principal residence for at least two of the five years. Up to $500,000 for a primary family residence. Up to $250,000 for a primary single-person residence Long-term capital gains tax rates: a) 20% (in the upper brackets, above 39.5%), b) 15% (in the 25%, 28%, 33%, or 35% brackets), or c) 0% (in the 10% and 15% brackets) through 2016. HO-A policies provide limited actual cash value coverage of the home and its contents. HO-A amended policies provide more extensive coverage than the base HO-A policy but less coverage than an HO-B. HO-B policies, the most common homeowners policies, provide replacement cost coverage for most types of damage to the real property, except claims specifically excluded in the policy. HO-C policies provide the most extensive coverage but are more expensive than other types of policies. Flood insurance is typically purchased _________ from a standard homeowners policy for any one-unit to four-unit dwelling not existing in a floodplain area and not having more than one previous flood loss in excess of 1,000 separately The principal/client could be a seller, landlord, buyer, and/or a tenant. The broker is the agent/fiduciary the one who is employed by the principal/client. Four statutory agency positions 1. Seller's agent2.Subagent3. Buyer's agent4.Intermediary A broker who lists the property for sale or lease represents the owner as a _________ , usually through a written listing agreement seller's agent A broker who acts as a _________ represents the owner in cooperation with the listing broker; a subagent is not sponsored by or associated with the listing broker. subagent A broker who acts as a __________ represents the buyer, usually through a written buyer representation agreement buyer's agent A broker must agree to act as an _____________ if agreeing to represent both a buyer and a seller in a transaction. Each party to the transaction must give written consent to the broker's acting as an intermediary intermediary Express agency Intentions of the parties is expressly given to each other via a written listing agreement or buyer agreement Implied agency Occurs when, through the actions of the license holder, the consumers believe their interest is being protected Agency by ratification "After the fact," an agent who obtains a purchase contract for a property that has not been listed might be considered an agent by ratification if the seller subsequently ratified, or agreed to, the contract. The special agency is created when an agent is authorized to perform a particular act without the ability to bind the principal (in an advisory capacity only) General agency The relationship between the broker of record and a license holder, through a written agreement, known as an ICA (Independent Contract Agreement). The Civil Rights Act of 1866 The act prohibits any discrimination based on race in the sale and rental of all property. There are no exceptions to this federal act. Federal Fair Housing Act/Civil Rights Act of 1968 Protected classifications in the sale and rental of residential property Added in 1988, it protects any family with children under the age of 18. It also includes pregnant women and those fighting for child custody Complaints under the federal Fair Housing Act may be filed to HUD or TWC Discrimination of persons with disability is _________ sources of housing discrimination complaints. one of the largest Redlining refusing to offer or limiting loans in certain areas because of crime rates or the ethnic background of its residents COMMUNITY REINVESTMENT ACT Passed in 1977 by Congress. Requires that lenders serve their local communities first Canons of Professional Ethics and Conduct are Fidelity,Integrity,Competency, Consumer Protection Notice,Discriminatory practices, and Information About Brokerage Services Broker A person who, in exchange for a commission or other valuable consideration or with the expectation of receiving a commission, performs for another person one of the following acts Acts of a Broker List, Lease, Buy, Exchange, Auction, Negotiate, Sell Comparative Market Analysis (CMA) is not referred to as an appraisal and must be given when listing a property, assisting a buyer when making an offer, or submitting an offer to the seller. Broker Lawyer Committee is composed of 13 members,Six brokers, six Texas attorneys, and one general member Broker Lawyer Terms Six-year term,Six straight years for the general member A person who acts as a broker or sales agent without a license can face a Class A misdemeanor or fine of 4,000