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Agent's 2025 Exam Elaborations for Real Estate
Mastery.
A Current Updated Exam Study Guide 2025/
Amortization - ansThe repayment of a loan principle over time Arrears - ansPayment for an item or service after it's received Down Payment - ansThe initial payment made when buying something on credit, a ____________ is paid directly by the buyer to the seller Proration - ansThe allocation or distribution of an annual expense across smaller chunks of time Acreage - ansA unit of measurement used to determine the size of land; 1 acre = 43560 square feet Appraisal - ansThe value of property, based on factors determined by a certified appraiser General data - ansInformation about the area surrounding a property, this could include the city, region, and neighborhood in which the property is situated Specific Data - ansInformation regarding the property itself Limited Appraisal - ansA simple, abbreviated version of a regular appraisal Market Value - ansThe price for which a property would sell if offered openly under normal conditions. This refers to the economic principle, it's the price that a buyer and seller would probably accept Appraised Value - ansRefers to the value given by a licensed appraiser during the mortgage origination process. Appraisers are chosen by the lender but paid for by the homebuyer. Assessed Value - ansRefers to the value placed on a property by a governmental unit for use in levying annual real estate taxes Loan-to-Value Ratio (LTV) - ansThe limit on the value of a loan, usually a certain percentage of the home's appraised value or sales price, whichever is lower Subject Property - ansThe property that is being evaluated in any given appraisal Highest and Best Use - ansWhat is achieved when a property is used for the most appropriate purpose with the highest returns Principle of Anticipation - ansThe present value of a property is affected by the anticipated income or utility that property will give to the property owner Principle of Contribution - ansA property's overall value is made of the combined value of each of its parts Principle of Substitution - ansThe value of something is effected by the cost of getting a similar (substitute) item elsewhere Principle of Change - ansThe condition of a property, the desirability of its location, and the market in which it exists can always change Principle of Conformity - ansValues are the highest when houses in a neighborhood look roughly the same Principle of Regression - ansLower value properties surrounding a subject property are can drag down the value of a property Principle of Progression - ansHigher value properties of a subject property can bump of the value of a property Sales Comparison Approach - ansDetermining value by comparing the subject property to similar properties ("comps") that have sold recently. It's most commonly used for single family residences. Cost Approach - ansDetermining value by considering how much the same property would cost to build brand new at current prices (replacement cost), then adjusting for depreciation Income Approach - ansDetermining value by considering how much income the property would generate when used as rental property
Agent's 2025 Exam Elaborations for Real Estate
Mastery.
A Current Updated Exam Study Guide 2025/
Depreciation - ansThe loss of value because of obsolescence or deterioration Functional Obsolescence - ansLoss of value because a property's function or appearance has gone out of style or has been replaced by a more appealing version External Obsolescence - ansLoss of value caused by negative forces outside the property which are beyond the control of the owner (unfavorable changes in the environment or market) Deterioration - ansLoss of value caused by physical wear and tear over time Chronological age - ansThe literal age of a property; a home built 30 years ago has a ________________ age of 30 Effective Age - ansAn estimated age that is influenced by the updates and quality of maintenance of the property; a 30 year house that has been well cared for might have an effective age of 15 Reconciliation - ansWhen an appraiser compares estimates using different techniques (cost approach, sales approach, and/or income approach) and comes to a single number for value Appraisal Report - ansa report from a licensed appraiser that sums up a property's market value based on collected data Appraisal Review - ansa review of the appraisal report to make sure the appraisal meets the lender's standards Desk Review - ansWhen a lender carries an appraisal review at the desk (as opposed to sending someone to the field) to make sure the original appraisal is accurate Field Review - ansWhen a third party appraiser is sent back out to the property to check the validity of the first appraisal Fair Market Value - ansThe price for which a property will sell if offered openly under normal market conditions Subject Property - ansThe property that is subject of the CMA Comparative Market Analysis - ansAlso known as a CMA, this is a report generated by a license holder that compares prices of recently sold homes (comparables) in order to estimate the fair market value of a similar property (the "subject property") Government Sponsored Enterprises - ansPublicly traded institutions that were created by Congress to provide liquidity, stability, and affordability to the mortgage market General Agricultural Mortgage Corporation - ansA government-sponsored enterprise (GSE) providing a secondary market for agricultural and rural mortgage loans; also known as Farmer Mac Depository Lenders - ansInstitutions that make mortgage loans from funds derived from their customers' savings accounts Saving Associations - ansSpecialize in long-term residential loans; primary function is to promote thrift and home ownership Federal Home Loan Bank System - anseleven private, wholesale regional U.S. banks chartered to regulate member organizations, set reserve requirements establish discount rates, and provide insurance or depositors Federal Deposit Insurance Corportation - anscreated by Congress in 1933 to insure deposits, supervise financial institutions, make large financial institutions resolvable, and manage receiverships Commercial Banks - ansdesigned to be sage depositories and lenders for a multitude of commercial banking activities, relying mainly on demand deposits (checking accounts) for their basic supply of funds
Agent's 2025 Exam Elaborations for Real Estate
Mastery.
A Current Updated Exam Study Guide 2025/
Texas Bootstrap Loan Program - ansa self-help housing construction program that provides very low-income families (owner-builders) an opportunity to purchase or refinance real property on which to build new housing or repair their existing homes Veterans Land Loan Program - ansa program that gives Texas veterans the opportunity to borrow up to 150000 to purchase land at competitive interest rates while typically requiring a minimum 5% down payment for tracts of one acre or more, only one of its kind in the nation Targeted Area - ansa census tract in which 70% or more of the families have incomes that are 80% or less of the statewide median income or an area of chronic economic distress Federal Reserve - ansthe nation's central bank operates to maintain sound credit conditions, help counteract inflationary and deflationary trends, and create a favorable economic climate Federal Funds Rate - ansrate banks charge other banks to lend money - the Fed indirectly controls this rate Discount Rate - ansrate the Fed charges banks to lend money - the Fed directly controls this rate Prime Rate - ansrate banks charge their most credit-worthy customers. This rate is strongly influenced by the federal funds rate and discount rate Open market operations (OMOs) - ansthe purchase and sale of securities in the open market by a central bank Graduated Payment Mortgage - ansa fixed-rate mortgage that has a lower initial interest rate in its first years, but includes gradual increases each year Bridge Loan - ansshort-term loans used to transition from one loan to another, can connect borrower from their current construction loan to their eventual mortgage loan (or present home to their new home) Wraparound Loan - anslike a bridge loan, enables a borrower to obtain additional financing from a second lender without paying off the first loan - gives borrower new, increased rate at higher interest rate and assumes payment of existing loan Subprime Mortgage - ansa mortgage with an interest rate higher than the rates of prime mortgages due to the higher risk associated with a less qualified borrower Predatory Lending - ansthe act of a lender putting their welfare above that of their borrowers Three-Day Right of Rescission - ansthe right of a borrower via Regulation Z of the Truth in Lending Act to rescind the transaction within three days by notifying the lender Equal Credit Opportunity Act (ECOA) - anslaw prohibiting discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or use of public assistance Usury Laws - anslaws that limit interest rates Police Power - ansa government's constitutional right to regulate an individuals conduct or property to protect the health, safety, welfare, and morals of the community Zoning - ansthe division of land within a jurisdiction into separate districts within which uses are permitted, prohibited, or permitted with conditions Variance - anspermission granted by the government so that property may be sued in a manner not allowed by the current zoning Building Codes - anssets of regulations pertaining to building design, materials, safety, sanitation, and structure Eminent Domain - ansthe power of government or public entity to take private property for public use without consent of the property's owner Condemnation - ansthe governmental act of seizing private land through exercise of power of eminent domain
Agent's 2025 Exam Elaborations for Real Estate
Mastery.
A Current Updated Exam Study Guide 2025/
Escheat - ansthe legal doctrine by which the decedent's property will pass to the state without their consent if that individual dies without a will, a surviving spouse, lineal descendants, or other known heirs Interstate - ansdescribes someone who dies without a will; their estate will be distributed to surviving heirs according to the law of descent Deed Restrictions - ansnon-governmental limitations that control the land's use Property Report - ansdocument that contains all essential info about a property, such as distance over paved roads to nearby communities, number of homes currently occupied, soil conditions, affecting foundations and septic systems, type of title a buyer will receive, and existence of liens Remediation - ansthe reversing or stopping of environmental damage, such as mold remediation Comprehensive Environmental Response, Compensations, and Liability Act (CERCLA) - ans1980 act that created a process for identifying potential responsible parties of environmental damage and ordering them to take responsibility for the cleanup action Property Manager - ansa real estate license holder who oversees the day-to-day operation of a property for its owner Resort Homes - ansa home in which the owner usually does not live in on a full-time basis, and the length of ownership as compared to a residential home is usually much shorter Investment Property - ansa property purchased primarily or exclusively for investment purpose rather than as a place to live Improvements - ansany permanent attachment to land that increases its value or increases its useful life. That would include building, private roads, planted trees, etc. Ranch - ansland that has been designated for raising grazing lifestock REO (Real Estate Owned) - ansa property that is owned by a lender as a result of foreclosure and a failure to find a third-party buyer at a foreclosure auction Short Sale - ansthe sale of a property, with permission of the lender, for less that the balance of the mortgage loan; normally occurs when the borrower is no longer able tomake their mortgage payments and hopes to avoid foreclosure proceedings Reserve Auction - ansan auction in which a seller reserves the right to accept or reject the highest bid within a predetermined time Absolute Auction - ansalso known as a no-reserve auction, it is an auction in which there is no reserve or restriction on price Minimum Bid Auction - ansan auction in which a minimum acceptable sale price (reserve), disclosed or not, is set Foreclosure - ansthe legal process by which a lender takes possession of a property when a borrower (mortgagor) fails to make their obligated mortgage payments Acceleration Clause - ansa clause that allows the lender to require full payment of the loan under certain conditions Investment - ansthe implementation of money to realize profit or gain, usually with an understanding that some degree of risk may be involved Rate - ansa percentage ratio of the amount of profit or loss to the original cost of investment Return - ansthe numeric amount of profit Rate of Return - ansthe percentage gain (loss) on the cost investment over a period of time Gross Rent Multiplier (GRM) - ansthe ratio of the price of investment property to its annual rental income before considering expenses like taxes and insurance, etc.
Agent's 2025 Exam Elaborations for Real Estate
Mastery.
A Current Updated Exam Study Guide 2025/
Mortgage-Backed Securities - ansasset-backed securities, where the underlying asset is a single mortgage or a bundle of mortgages that serve to back the securities Secondary Mortgage Market - ansthe environment in which mortgage lenders sell home loans they originate to government agencies or investment bankers Collateralized Mortgage Obligations (CMOs) - anscollateralized debt obligations (CDOs) that are made up of bundles or pools of mortgage-backed securities (MBS) created by government agencies or investment banks and issued as investment-grade bonds, almost all CMOs are REMICs Tranches - ansMortgage-backed securities that are sold to investors at different risk levels and classes Real Estate Mortgage Investment Conduit (REMIC) - ansa special propose vehicle (SPV) that holds commercial and residential mortgages in trust, assembles said mortgages into pools based on risk, and then issues bonds (securities) on these pools to sell to investors on the secondary mortgage market Illegal Target Marketing - ansadvertisement by a housing provider in niche publications that target specific ethnic or religious groups to the exclusion of the general public Leasehold Estate - ansa type of property interest allowing tenants to occupy and use a property they do not own; contains a reversionary right Freehold Estate - ansan estate in land in which ownership will last for an indeterminate duration Reversionary Interest - ansrefers to an estate wherein, upon the death of the life estate owner, full ownership reverts to the original fee simple owner; also known as a reversionary right Estate for Years - ansa leased possession of property for a certain, specific period of time; also known as a tenancy for years Periodic Estate - anshas a fixed lease period, meaning that the lease is automatically renewed at the end of each lease period until the landlord or tenant acts to terminate it' also known as periodic tenancy Estate at Will - answhen a tenant is occupying a property with the landlord's knowledge and consent, but without a formal lease agreement Tenancy at Sufferance - ansoccurs when a tenant remains in possession of the property beyond their lease's terms, without the consent of the landlord Holdover Tenant - anstenant in a tenancy at sufferance Competent - anshaving the mental capacity to participate in legal proceedings or transactions, including being of lawful age to enter into a contract Offer and Acceptance - ansthe mutual agreement of all parties to a lease to consent to all terms contained within the contract and to perform according to those terms Consideration - ansthe benefit that one party bestows upon the other, such as rent Lease Term - ansthe initial rental period from commencement to expiration, the duration of the lease Covenant of Quiet Enjoyment - ansthe right of a tenant to possession and quiet enjoyment of the premises without any disturbance from the landlord Discharge - ansto terminate the lease agreement Sublease/sublet - ansoccurs when the tenant of a property leases to a subtenant either in place of or in addition to the tenant Actual Eviction - ansthe process by which a tenant is expelled from a property
Agent's 2025 Exam Elaborations for Real Estate
Mastery.
A Current Updated Exam Study Guide 2025/
Constructive Eviction - anstermination of the lease in circumstances where the landlord intentionally failed to provide required repairs or maintenance to such a degree that the premises are considered unusable Gross Lease - anslease in which the tenant pays a simple, flat rent every month Net Lease - anslease in which the (usually commercial) tenant pays a base rent rate plus property taxes Double-Net Lease - ansany net lease that requires a tenant to pay a base rent, property taxes, and insurance Triple-Net Lease - ansany leasehold that requires a tenant to pay a base rent, property taxes, insurance, and maintenance expenses Percentage Lease - anstype of (usually commercial) lease in which the tenant pays a base rent amount and a percentage of their business profits to the landlord Variable Lease - ansa leasehold agreement in which the base rent changes Graduated Lease - ansvariable lease agreement in which the amount of rent increases at fixed future dates Index Lease - ansvariable lease agreement that allows for graduated increase of rent at periodic intervals, with increases relative to some economic indicator, such as the Consumer Price Index Ground Lease - anslease of bare, undeveloped land Oil and Gas Lease - ansgrants the exclusive right to extract any oil or gas from the ground beneath a property Lease Purchase Agreement - anslease in which part of a tenant's rent is applied to the purchase price of the property, and the title to the property transfers upon full payment of the stated sale price Sale and Leaseback Agreement - ansagreement in which a business owner sells their interest in a property and then leases it back at the same monthly rate, usually from an investor owner and, in doing so, frees up capital for other business ventures Property Managers - anslicensed real estate professionals who manage all types of property; from homes and duplexes to office and industrial complexes, shopping centers, apartment buildings, and condominiums REO Property - ansshort for "Real Estate Owned"; refers to bank-owned properties that have been through the foreclosure process Rent Roll - ansa report of all the data about a rental property, including tenant identities, rent rates, lease terms, and outstanding balances Operating Budget - ansa budget created from taking anticipated revenues and expenses and then planning for the long-term goals of the property owner Capital Expenditures - ansfunds used by a company to acquire or upgrade physical assets like property, industrial buildings, or equipment Noncompeting Clause - anssection of commercial lease that gives a tenant the exclusive right to operate their business without any competition in the same property Occupational Safety and Health Administration (OSHA) - ansthe government agency charge with the task of ensuring that employers are responsible for providing safe and healthful workplaces for their employees Deed - ansthe legal document that transfers a title of real estate from one party to another General Warranty Deed - ansdeed that provides the greatest protection for the buyer
Agent's 2025 Exam Elaborations for Real Estate
Mastery.
A Current Updated Exam Study Guide 2025/
Conventional Life Estate - ansa type of freehold life estate created by a deed or will that lasts for the duration of the tenant's life Legal Life Estate - ansa type of freehold life estate created by an act of law; e.g. a Texas homestead Pur Autre Vie - ans"For the life of another"; a type of freehold life estate that grants someone ownership of a property for the duration of another person's life Remainder - ansrefers to the estate that will pass to another party at the death of the person upon whom the life estate is based Reversion - ansthe portion of an estate that will return to the original grantor when a life estate has ended Reversionary Interest - ansrefers to an estate wherein, upon the death of the life estate owner, full ownership reverts to the original fee simple owner, also known as a reversionary right Remainderman - ansrefers to recipient of the remainder, either the grantor who set up the life estate or a designated third party Estate for Years - ansa leased possession of property for a certain, specific period of time; also known as tenancy for years Hereditament - ansAny property, whether real or personal, that is capable of being inherited Testate - ansdescribes the state of having an existing will at an individual's time of death Intestate - ansdescribes the state of NOT having a will at an individual's time of death Testator - ansa party who makes a will Devise - ansthe gift of real property by will Devisee - ansa person who receives real property by will Legacy/Bequest - ansa gift of personal property Legatee - ansthe person receiving a gift of personal property Alienation - ansthe process and act of transferring property from one party to another Voluntary Alienation - ansthe method by which property is transferred from the current owner to another party either by sale or gift Involuntary Alienation - anstransfer of title to property without the owner's consent, usually carried out by operation of law Inverse Condemnation - answhen the government has over-regulated a property (via restrictions permitting, etc.) so that it can't be fairly used and has virtually eliminated any use of the property Adverse Possession - ansinvoluntary transfer of title from an owner who does not use or inspect their land for a number of years to another person who has some claim to the land and takes possession Closing - ansthe final step in executing a real estate transaction in which consideration is paid and ownership of the property is transferred Option Money - ansa payment that the prospective buyer makes to the seller in exchange for the exclusive option to terminate the sales contract within a specified period of time (known as the "option period") without penalty; also known as the option fee Promissory Note - ansagreement to repay per the terms of the loan Escrow - ansa process in which funds and/or financial documents are held by a third party on behalf of the other two parties in the real estate transaction Closing Agent - ansthe representative of the title insurance company; ususally conducts closing
Agent's 2025 Exam Elaborations for Real Estate
Mastery.
A Current Updated Exam Study Guide 2025/
Doctrine of Relation Back - ansthe principle that something done today will be treated as if it were done earlier; often applies to actions associated with the escrow process in real estate transactions Real Estate Settlement Procedures Act (RESPA) - ansan act designed to protect consumers from predatory lending and educate them about closing and settlement services Closing Disclosure - ansalso known as the closing statement, it is a form used to itemize services and fees charged to the borrower by the lender when applying for a real estate loan Deceptive Trade Practices Act (DTPA) - ansthe primary consumer protection law in Texas designed to prevent service providers from using false and misleading statements or deceptive practices Earnest Money - ansa deposit made to the seller showing the buyer's good faith in reads to the future performance of a sale's contract Double-Net Lease - ansAny net lease that requires a tenant to pay a base rent, property taxes, and insurance Actual Notice - ansDirect or first hand knowledge Constructive notice - ansAssumption of knowledge because that knowledge is in the public record Easement in Gross - ansA legal right to use another individual's land for as long as the owner owns the land or until the holder of the easement dies RESPA - ansProtects consumers from abusive settlement practices and provides them with information pertinent to all settlement costs CFPB (Consumer Financial Protection Bureau) - ansAdministers the Interstate Land Full Disclosure act 5280 feet - ans1 mile Net Operating Income - ansSubtract the operating expenses from the effective gross income Codicil - ansUsed to modify a will Net Operating Income - ansThe pre-tax amount of income after all necessary expenses have been taken out Habendum Clause - ansA clause that addresses rights, protections, and limitations for the grantee ADA - ansEnacted in 1990 - identified and protected disabilities Debit - ansA charge Investment gain - ansAn increase in property value due to active and purposeful developments or improvements Federal Home Loan Bank - ansConsists of 11 district banks Package Mortgage - ansIncludes not only real estate but also all personal property and appliances installed on the premises LLCs - ansMost common forms for syndicates to take Income Approach - ansFinding the amount of income a property could make over a year while also referencing the sale of other rental properties in the area Restrictive covenants - ansNon-governmental limitations that control how buyers of lots in residential subdivisions use their land What private mortgage insurance protects - ansThe outstanding balance loaned by the mortgagee Effective Gross Income - ansThe total annual income the rental property produces after subtracting vacancy losses and adding miscellaneous income.
Agent's 2025 Exam Elaborations for Real Estate
Mastery.
A Current Updated Exam Study Guide 2025/
A developer - ansDevelops unimproved land prior to resale or lease A subdivider - ansDivides unimproved land into smaller parcels for resale or lease TALCB (Texas Appraiser Licensing & Certification Board) - ansregulates real estate appraisers. Through TALCB, Texas appraisers and appraisal management companies (AMC) are approved, trained, licensed, and regulated. SPV (Special Purpose Vehicle) - ansA limited corporate entity created with a specific objective TRID - ansTruth in Lending Act- RESPA integrated disclosures RESPA stands for - ansReal Estate Settlement Procedures Act
