Principles of Real Estate 1

Appraisal is the business of:

Appraisal is the business of:

Providing a professional opinion of the value of real property.

A professional association whose local affiliates own and operate MLS systems throughout the United States is the :

NAR

A license holder was tried in a state district court on a complaint arising from a real estate transaction. The courts rule that, among other violations, that the defendant had violated the Texas Real Estate License Act. This decision of the judge was based upon:

Statutory Law

Rights that are associated with the ownership of real property are often referred to as the owner's:

Bundle of Rights

Surface, subsurface and air rights are said to be:

Severable

Air rights are commonly leased or conveyed in:

Cell tower leases, Condominiums, Outdoor Advertising (ALL THE ABOVE)

In order to be valid, a lease must have which of the following requirements?

Competent parties (lessor & lessee), Consideration (Rent), Legal Purpose (ALL THE ABOVE)

If a landowner sues the government in order to force it to buy his/her land, this is called ______.

Inverse Condemnation

Releases can terminate _____.

Easements

Under some circumstances, the _____ paid on a mortgage may be tax-deductible.

interest

Homeowners insurance can protect the policyholders from unexpected losses, including _____

Fire, Vandalism, Personal liability (ALL THE ABOVE)

_____, also known as homeowners insurance can cover losses related to the main structure, contents, and outbuildings of a private residence.

Hazard

The Chandlers have listed their home with Reba whose eye-catching billboards along the interstate proclaim her to be her brokerage's "Top Agent of the Year." The Chandler's home is two stories, and at 1,817 square feet shares a party wall on the north side of the home which separates it from their next-door neighbor's home. The homeowner's association controls the exterior of the home, including the upkeep of the 12 x 14 patch of grass in the gated back area, for a $428 maintenance fee paid quarterly. The Chandlers, who have lived in the home for the last four years, are leaving because Mr. Chandler's job is moving to another city and his company said if he wants to keep his job, he'd better move too. Reba advises the couple to list their property at $358,000, which she thinks is a fair market value for the area. The Chandlers agree with her, but they are secretly worried that they may have to pay capital gains tax on the sale of the home. They will be making quite a bit on the sale as they bought the house in a down market, which has since rebounded healthily, for $149,900 with 40% down.

When Reba lists the Chandler's home in the MLS, she would categorize it as a ___________.

Townhome

The Chandlers have listed their home with Reba whose eye-catching billboards along the interstate proclaim her to be her brokerage's "Top Agent of the Year." The Chandler's home is two stories, and at 1,817 square feet shares a party wall on the north side of the home which separates it from their next-door neighbor's home. The homeowner's association controls the exterior of the home, including the upkeep of the 12 x 14 patch of grass in the gated back area, for a $428 maintenance fee paid quarterly. The Chandlers, who have lived in the home for the last four years, are leaving because Mr. Chandler's job is moving to another city and his company said if he wants to keep his job, he'd better move too. Reba advises the couple to list their property at $358,000, which she thinks is a fair market value for the area. The Chandlers agree with her, but they are secretly worried that they may have to pay capital gains tax on the sale of the home. They will be making quite a bit on the sale as they bought the house in a down market, which has since rebounded healthily, for $149,900 with 40% down.

If the Chandlers sell the home at this time, is it likely that they will have a capital gains tax obligation?

No, as long as the gain does not exceed $500,000, assuming that they are filing a joint return.

The Chandlers have listed their home with Reba whose eye-catching billboards along the interstate proclaim her to be her brokerage's "Top Agent of the Year." The Chandler's home is two stories, and at 1,817 square feet shares a party wall on the north side of the home which separates it from their next-door neighbor's home. The homeowner's association controls the exterior of the home, including the upkeep of the 12 x 14 patch of grass in the gated back area, for a $428 maintenance fee paid quarterly. The Chandlers, who have lived in the home for the last four years, are leaving because Mr. Chandler's job is moving to another city and his company said if he wants to keep his job, he'd better move too. Reba advises the couple to list their property at $358,000, which she thinks is a fair market value for the area. The Chandlers agree with her, but they are secretly worried that they may have to pay capital gains tax on the sale of the home. They will be making quite a bit on the sale as they bought the house in a down market, which has since rebounded healthily, for $149,900 with 40% down.

The capital gain on the sale of the home may be exempt from capital gains if the home was the primary residence of the Chandlers for:

2 of the last 5 years

The Chandlers have listed their home with Reba whose eye-catching billboards along the interstate proclaim her to be her brokerage's "Top Agent of the Year." The Chandler's home is two stories, and at 1,817 square feet shares a party wall on the north side of the home which separates it from their next-door neighbor's home. The homeowner's association controls the exterior of the home, including the upkeep of the 12 x 14 patch of grass in the gated back area, for a $428 maintenance fee paid quarterly. The Chandlers, who have lived in the home for the last four years, are leaving because Mr. Chandler's job is moving to another city and his company said if he wants to keep his job, he'd better move too. Reba advises the couple to list their property at $358,000, which she thinks is a fair market value for the area. The Chandlers agree with her, but they are secretly worried that they may have to pay capital gains tax on the sale of the home. They will be making quite a bit on the sale as they bought the house in a down market, which has since rebounded healthily, for $149,900 with 40% down.

If the Chandlers ask Reba for advice about what specific costs they can count as sales expenses when determining their income tax, it would be best for Reba to:

Refer the Chandlers to reputable CPAs so they can get good advice

A property is owned by two unmarried individuals without right of survivorship. The form of ownership is most likely:

Tenancy in Common

Three co-owners wish to divide their undivided interests in a property into individually owned tracts of land. This process is known as a(n)______________ .

Partition

Dwayne and Beth, each single persons, own a parcel of land as joint tenants. Beth has a will leaving her entire estate to her brother, Jason. Upon Beth's death, her interest in the land passes to:

Dwayne, because he is a joint tenant

In real estate, a buyer or seller is considered an agent's customer until he or she becomes a(n) ______.

Client

The agreement between a broker and a client is most often a(n) __________ agency relationship.

Special

The broker and his or her associates are most often in a(n) __________ agency relationship.

General

Agent Ryan is the top-producing agent at XYZ Realty because he is the only agent sponsored by XYZ's broker, Bradley. Ryan comes from California and has only just received his Texas Real Estate License. Though he aced the national and state exams (Thanks Champions School of Real Estate!) with ease, there is one concept that still has him a little confused. No, it's not real estate math, it's Intermediary. In California, disclosed dual agency is a statutory agency position, so he's used to that process. In the two months that Ryan has been at XYZ, he has not had to think about Intermediary until Delia walks through the door. Delia tells Ryan that she wants to see three properties that she saw on XYZ's website. Ryan panics a little inside because he took the listings in Broker Bradley's name himself and he doesn't want to mess up his first Intermediary transaction. Delia signs a Buyer's Representation Agreement with Ryan, and they leave the office together that day for property showings.

Ryan can show Delia homes listed with XYZ Realty and other brokers in the market if:

Delia has given written Intermediary consent

Agent Ryan is the top-producing agent at XYZ Realty because he is the only agent sponsored by XYZ's broker, Bradley. Ryan comes from California and has only just received his Texas Real Estate License. Though he aced the national and state exams (Thanks Champions School of Real Estate!) with ease, there is one concept that still has him a little confused. No, it's not real estate math, it's Intermediary. In California, disclosed dual agency is a statutory agency position, so he's used to that process. In the two months that Ryan has been at XYZ, he has not had to think about Intermediary until Delia walks through the door. Delia tells Ryan that she wants to see three properties that she saw on XYZ's website. Ryan panics a little inside because he took the listings in Broker Bradley's name himself and he doesn't want to mess up his first Intermediary transaction. Delia signs a Buyer's Representation Agreement with Ryan, and they leave the office together that day for property showings.

If Delia decides to purchase a home that is listed by XYZ Realty, which of the following is TRUE?

The sale would be completed according to the rules for Intermediary without Appointments

Agent Ryan is the top-producing agent at XYZ Realty because he is the only agent sponsored by XYZ's broker, Bradley. Ryan comes from California and has only just received his Texas Real Estate License. Though he aced the national and state exams (Thanks Champions School of Real Estate!) with ease, there is one concept that still has him a little confused. No, it's not real estate math, it's Intermediary. In California, disclosed dual agency is a statutory agency position, so he's used to that process. In the two months that Ryan has been at XYZ, he has not had to think about Intermediary until Delia walks through the door. Delia tells Ryan that she wants to see three properties that she saw on XYZ's website. Ryan panics a little inside because he took the listings in Broker Bradley's name himself and he doesn't want to mess up his first Intermediary transaction. Delia signs a Buyer's Representation Agreement with Ryan, and they leave the office together that day for property showings.

If Broker Bradley hires another agent and appoints that agent to represent the seller, this would be called:

Intermediary with Appointments

To be eligible to obtain a real estate license in Texas, a person must be at least _________ at the time of application.

18 Years Old

The commission may adopt rules in the public's best interest that require license holders to use contract forms prepared by the ___________ and adopted by the commission.

Texas Real Estate Broker-Lawyer Committee

Sarah gets a job as a sales representative for Galaxy Custom Homes. She will be working in the new Galaxy model home park and will be limited to selling Galaxy homes only. Sarah will:

be exempt from the requirement to be licensed

If an alleged ethics violation is reported to the NAR, a hearing panel will convene to hear testimony and presentation of evidence, decide whether a violation of the association's code of ethics occurred, and order which of the following disciplinary actions?

Fine, Probation, Supervision or revocation (ALL THE ABOVE)

For a case involving a consumer, TREC's presiding officer is required to appoint a(n) _______, consisting of three Commission members who will determine whether a person's license to practice should be suspended temporarily.

Disciplinary Panel

The _________ must be displayed in a prominent location in each place of business a broke maintains.

Consumer Protection Notice CN 1-2

The Civil Rights Act of 1866 essentially prohibited discrimination based upon __________.

Race or Color

________ was added to federal fair housing as a protected class in 1974.

Sex

Attempting to induce panic selling in a neighborhood for financial gain is known as ________.

Blockbusting

A legal description that contains the words "Beginning at a point" is a ________.

Metes and bounds description

The reference point of the Government Survey System grid is known as a(n) _______

Initial Point

One acre of land contains __________.

43,560 square feet

While listing the property with a licensed sales agent, the seller asks, "Who sets real estate commission rates?" The correct response would be:

There is no standard rate, and different brokers can charge different fees.

Julie, a sales agent at Acme Realty, obtained a listing on Seller Sam's property on Oak Street. The following week, Julie was found to be mentally incompetent and was admitted to the state mental hospital in Rusk. Given Julie's unfortunate status, what is the effect on the listing with Seller Sam?

The listing agreement is unaffected because it is an agency agreement between Seller Sam and the broker.

Seller Steve listed his property with City Realty, Acme Realty, and Countrywide Realty all at the same time. After signing the listing agreements, Steve continued to run for sale by owner ads on Craigslist. The type of listing agreement Steve signed with the various companies is a(n):

Open Listing

The Statute of Frauds applies to:

Contracts for the sale of real estate, Listing agreements, Buyer Representative Agreements (ALL THE ABOVE)

Consideration is defined as ________.

Something given in exchange for a promise

You can use the acronym ___________ to remember the five essential elements of a valid and enforceable contract.

COLIC

Martin's home was listed for $209,500 and the listing agent received three offers within a short period of time. The first offer was far too low for Martin's taste at $197,500. The second offer, at $199,900, came with a contingency that the buyer sell his home before the contract could close. Martin decides to accept the third offer of $200,000 from Guy, whose offer is closer to Martin's bottom line. Also to Martin's liking is that the offer has no contingency for sale of other property because Guy is currently renting an apartment month to month. Martin and his agent also like the fact that Guy is willing to put down 80% cash on the deal. There is one catch, however. Guy is inheriting some money from his grandmother's estate. The parties have agreed to allow Guy six weeks to secure financing since he has not yet received his inheritance money from the estate and his financing preapproval is based on a sizable downpayment.

The six-week deadline has passed, and Guy has not yet secured financing. He claims he has not even tried yet because there has been a delay in receiving his inheritance, which he claims will be received in about a week. Guy states that he is not sure he still wants to buy the property. If Guy defaults on the contract, the seller has all of the courses of action available to him EXCEPT:

(a) The seller can choose to accept the buyer's earnest money as liquidated damages, releasing all parties from any further obligation
(b) File a court action seeking an order of the court for specific performance
(c) File a court action seeking monetary damages
(ALL THE ABOVE)

EXCEPT:

(d) If Guy cannot obtain financing and still wants to purchase the property, the seller has to accept the 80% down payment as partial performance of the contract

Martin's home was listed for $209,500 and the listing agent received three offers within a short period of time. The first offer was far too low for Martin's taste at $197,500. The second offer, at $199,900, came with a contingency that the buyer sell his home before the contract could close. Martin decides to accept the third offer of $200,000 from Guy, whose offer is closer to Martin's bottom line. Also to Martin's liking is that the offer has no contingency for sale of other property because Guy is currently renting an apartment month to month. Martin and his agent also like the fact that Guy is willing to put down 80% cash on the deal. There is one catch, however. Guy is inheriting some money from his grandmother's estate. The parties have agreed to allow Guy six weeks to secure financing since he has not yet received his inheritance money from the estate and his financing preapproval is based on a sizable downpayment.

If Guy secures financing and learns he can buy a $190,000 property without the inheritance, which of the following is TRUE about renegotiating the sales contract?

The seller is under no obligation to renegotiate the sales price and may still seek legal remedies against Guy if he does not complete the sale

Martin's home was listed for $209,500 and the listing agent received three offers within a short period of time. The first offer was far too low for Martin's taste at $197,500. The second offer, at $199,900, came with a contingency that the buyer sell his home before the contract could close. Martin decides to accept the third offer of $200,000 from Guy, whose offer is closer to Martin's bottom line. Also to Martin's liking is that the offer has no contingency for sale of other property because Guy is currently renting an apartment month to month. Martin and his agent also like the fact that Guy is willing to put down 80% cash on the deal. There is one catch, however. Guy is inheriting some money from his grandmother's estate. The parties have agreed to allow Guy six weeks to secure financing since he has not yet received his inheritance money from the estate and his financing preapproval is based on a sizable downpayment.

If Guy's mother decides to become a co-borrower and co-owner of a home, it would make the most sense for the parties to have a contract _________.

Novation