PRINCIPLES OF REAL ESTATE 2 FINAL EXAM PREP 2025/2026 ACCURATE QUESTIONS WITH CORRECT DETAILED ANSWERS || 100% GUARANTEED PASS <RECENT VERSION>

PRINCIPLES OF REAL ESTATE 2 FINAL EXAM PREP 2025/2026 ACCURATE QUESTIONS WITH CORRECT DETAILED ANSWERS || 100% GUARANTEED PASS &lt;RECENT VERSION&gt; 1. The Principle of _________________ states that the value of the property in question is decreased by the value of surrounding properties. - ANSWER Regression 2. The evidence of debt and personal promise to repay that debt is called: - ANSWER a note 3. A point is: - ANSWER 1% of the loan amount 4. Broker Bob negotiates a commission of 5.5% on a $325,000 listing. The selling broker will receive 60% of the commission. If the property sells for list price, how much will Broker Bob pay the selling broker? - ANSWER $10,725.00 5. When an individual dies testate: - ANSWER Property will pass to his heirs at probate 6. How many square feet are in one acre of land? - ANSWER 43,560 7. When a grantor transfers title to a grantee but retains some rights in the land, this is called a: - ANSWER reservation 8. An agreement that allows a tenant the right to match or better any offer the landlord may receive on the property before the property will be sold to someone else is: - ANSWER Right of first refusal 9. John's property measures 1,720 feet by 594 feet. How many acres does John have? - ANSWER 23.45 10. A promise in a deed stating the grantee will be entitled to uninterrupted use of the property is: - ANSWER The covenant of quiet enjoyment 11. Typically discovered during the title commitment process, pending lawsuits affecting a particular piece of property are commonly referred as _____ - ANSWER Lis pendens 12. A buyer who wants to insure that he is receiving good title should request: - ANSWER A general warranty deed 13. Some of the tax advantages of investing in real estate are: - ANSWER Tax-sheltered income, Favorable capital gains tax treatment, Deferred taxation on exchanges 14. Which of the following are considered benefits of the pre-qualification / pre approval process? - ANSWER The buyer's agent can avoid showing properties that the buyer cannot afford, The buyer's agent has a better understanding of the buyer's ability to pay, Buyers are able to be more realistic when setting their pricing goals 15. The two largest issuers of REMICs are: - ANSWER Fannie Mae and Freddie Mac 16. Alienation is: - ANSWER A change of ownership of real property 17. The U.S. Government retains the following rights in land EXCEPT: - ANSWER allodial 18. Some of the reasons for investing in real estate include: - ANSWER A higher than average rate of return, The ability to leverage, A hedge against inflation 19. Appreciation is the _________________ increase in the value of a parcel due to market forces. - ANSWER passive 20. The two types of Real Estate Investment Trusts are: - ANSWER Equity and mortgage 21. _________ is the loss in desirability of the style, layout or function of an element of a property over time. - ANSWER Functional obsolescence 22. The secondary market: - ANSWER Is funded by investors 23. Which of the following is true of the TREC Buyer's Temporary Residential Lease: - ANSWER It is used only when the buyer occupies the property for no more than 90 days prior to the closing, It is promulgated by the Texas Real Estate Commission, It requires that the subject property may only be used for residential purposes 24. Which of the following government rights in land includes the right to regulate and control the way land is used? - ANSWER Police power 25. Because land was originally owned by the government, title to land in the U.S. can be traced back to its original owner, which is referred to as the ____ - ANSWER Sovereignty of the soil 26. For a valid and properly prepared deed to transfer or convey title, it: - ANSWER Must be delivered and accepted 27. External obsolescence is: - ANSWER Depreciation based on factors outside the property 28. When a lending institution becomes the owner of a property through foreclosure, the property becomes an asset of the company, and is classified as: - ANSWER Real Estate Owned 29. The type of loan most likely to contain a release clause, allowing the borrower to obtain partial releases of specific lots by making required lump sum payments is: - ANSWER Blanket Mortgage 30. In 2016, taxes on Don Mark's home were paid in full and amounted to $1,468. He sold the home to Chuck Harris and closed the sale on August 29, 2017. What was the prorated tax amount, using a statutory year and prorating through the day of closing? $974.40 $966.25 $982.56 $1,096.71 - ANSWER $974.40 Step 1: Calculate the charge per day: $1,468 taxes/year ÷ 360 days in a statutory year = $4.077 taxes/ day. Step 2: Calculate the period: January + February + March + April + May + June + July = 7 months × 30 days in a statutory month = 210 days + 29 days in August = 239 days in the proration period. Step 3: Multiply the charge per day by the time period: $4.077/day × 239 days = $974.40 tax proration. 31. The seller and the listing agent agree to put the home on the market for $275,000, and at the same time agree to a 5.25% commission. The buyer and the buyer agent negotiate the home price to $260,000. How much commission is paid? $16,500 $14,437 $13,650 $13,000 - ANSWER $13,650 commission is paid on negotiated sales price, NOT listing price 32. The listing agent recommends placing a home on the market for $450,000, paying a 6% commission - 2.5% going to the selling (buyer's) agent. The sellers like the price but refuse to pay more than 5.5% commission (and approve 2.5% to the agent bringing the buyer). Meanwhile, a buyer signs a buyer agent agreement that states the buyer agent's compensation will be equal to one-half of the total amount of commission paid (a 50-50 commission split). The buyer and the seller negotiate the final sales price at $420,000. How much will the buyer agent receive? $11,250, all from the commission $11,550, all from the commission $10,500, all from the commission $11,550 ($10,500 from the commission, plus $1,050 from the buyers) - ANSWER 33. Eight years ago the homeowner purchased the property for $500,000. The market in that price range has basically been stagnant since then, and the owner now tells his sales agent (working on a 5.5% commission) he wants to sell the property and at least break even. How much should he list it for? $527,500, the original cost plus commission $500,000 (commission cannot be counted as part of the transaction) $500,000 (commission is a separate transaction that later can be a tax deduction) Comfortably above $500,000 to allow for buyer negotiation - ANSWER $527,500, the original cost plus commission The seller is assuming a buyer would pay the asking price. A more accurate number would include the original down payment, interest paid on eight years of payments, factoring in the value of any improvements and subtracting the mortgage interest deduction 34. The seller offers to take back a second mortgage of $25,000 at a simple interest rate of 4.5%. The loan is amortized over 10 years. How much is the buyer paying on the second? $185.50 per month $217.70 per month $257.00 per month $289.25 per month - ANSWER $217.70 per month The $25,000 second mortgage is divided into 120 monthly payments spread over a 10-year period ($208.33 per month). A simple interest charge of 4.5% is added to each payment, bringing the total monthly payment to $217.70. 35. A home is listed at $525,000 but is only appraised at $490,000. How much are annual property taxes, based on $3.00 per $100 valuation? $15,750 (based on the list price of the home) $3.00 for every $100 of the eventual sales price $15,750 (based on the list price of the home), with any overage rebated once the sales price is final $14,700 (based on the appraised value of the property) - ANSWER $14,700 36. A real property appraisal will contain an analysis of each of the following, EXCEPT a) Improvements to the Site b) Site Description c) Neighborhood description d) Personal property - ANSWER Personal property 37. Under RESPA rules, residential closings must be performed using what? - ANSWER the standard Closing Disclosure closing statement 38. Lenders will required that a buyer who is taking out a mortgage on the property have an _____ performed to ensure that the home is worth the loan amount being requested. - ANSWER Appraisal 39. The _____ agent is responsible for ensuring that the closing follows the terms agreed to by the parties in the sales contract. - ANSWER Escrow 40. The ______ is used to determine whether or not the information in the sales contract concerning the property's boundaries is accurate. - ANSWER Survey 41. Unless the buyer waives the home inspection ______, the property will be inspected. - ANSWER Contingency 42. According to the TREC Property Inspection Report, (REI 7-5), the inspector is looking at the following systems: structural systems, electrical systems, HVAC systems, plumbing systems, appliances and ______ systems. - ANSWER Optional 43. Pending lawsuits that can affect property title are called: - ANSWER Lis Pendens