Texas Real Estate Sales Agent — All Questions

An investor buys a property for $180,000 and spends $20,000 on repairs, then sells it for $230,000. What is the percentage of profit based on total cost?

• a.25% based on ignoring the repair costs when figuring total cost
• b.13% based on dividing the profit by the higher final selling price
• c.27.8% based on dividing profit by only the original purchase price
• d.15%✓

Total cost is $180,000 + $20,000 = $200,000, and profit is $230,000 - $200,000 = $30,000. Divide profit by total cost: $30,000 / $200,000 = 0.15, or 15%.

Annual property taxes are $3,650, and a 365-day year is used for proration. The seller owned the property for 90 days of the tax year before a closing, with taxes paid in arrears. What is the seller's prorated share?

• a.$3,650, charging the seller for the entire year regardless of days owned
• b.$90, charging the seller for only a single day of the tax year
• c.$1,825, charging the seller for exactly half of the annual tax bill
• d.$900✓

Daily tax is $3,650 / 365 = $10. The seller owned 90 days, so the seller's share is $10 x 90 = $900 in a taxes-in-arrears proration.

A retail tenant pays base rent of $2,000 per month plus 5% of annual gross sales over $500,000. If annual sales are $700,000, what is the total annual rent under this percentage lease?

• a.$34,000✓
• b.$10,000, counting only the percentage rent and omitting the base rent
• c.$24,000, counting only the base rent and omitting the percentage rent
• d.$59,000, applying the 5% to all sales rather than only sales over the breakpoint

Percentage rent is 5% of ($700,000 - $500,000) = 5% x $200,000 = $10,000. Add annual base rent of $2,000 x 12 = $24,000, for total rent of $34,000.

A home purchased for $250,000 is now worth $325,000. What is the percentage increase in value?

• a.30%✓
• b.13% based on dividing the gain by twice the original purchase price
• c.75% based on treating the raw dollar gain as the percentage figure
• d.23% based on dividing the gain by the new, higher value of the home

The gain is $325,000 minus $250,000, or $75,000. Divide by the original value: $75,000 / $250,000 = 0.30, or 30%.

A buyer pays 1.5 points on a loan of $320,000. How much do the points cost?

• a.$4,800✓
• b.$480 based on treating each point as one-tenth of one percent of the loan
• c.$3,200 based on treating the charge as a single point on the loan
• d.$48,000 based on treating the points as fifteen percent of the loan amount

Each point is 1% of the loan, so 1.5 points equal 1.5% of $320,000: $320,000 x 0.015 = $4,800.

A total commission of $28,800 was paid on a $480,000 sale and split 50/50 between the two brokerages. How much did the listing brokerage receive?

• a.$7,200, giving the listing brokerage only a quarter of the commission
• b.$9,600, splitting the commission three ways instead of two
• c.$14,400✓
• d.$28,800, giving the entire commission to the listing brokerage alone

The total commission of $28,800 (which is $480,000 x 6%) is split evenly, so each brokerage receives $28,800 / 2 = $14,400.

A buyer purchases a $280,000 home with 20% down and pays closing costs equal to 3% of the loan amount. What is the total cash the buyer needs at closing?

• a.$8,400, counting only the closing costs and omitting the down payment
• b.$62,720✓
• c.$56,000, counting only the down payment and omitting the closing costs
• d.$64,400, calculating the closing costs on the price rather than the loan

The down payment is $280,000 x 20% = $56,000, and the loan is $224,000. Closing costs are $224,000 x 3% = $6,720, so total cash needed is $56,000 + $6,720 = $62,720.

A borrower's gross monthly income is $6,000. Using a 28% front-end (housing) qualifying ratio, what is the maximum monthly housing payment (PITI)?

• a.$2,160, applying a 36% back-end ratio rather than the 28% housing ratio
• b.$600, applying a 10% ratio rather than the stated 28% housing ratio
• c.$840, applying a 14% ratio rather than the stated 28% housing ratio
• d.$1,680✓

Multiply gross monthly income by the ratio: $6,000 x 0.28 = $1,680, the maximum monthly PITI under a 28 percent front-end guideline.

A parcel measures 200 feet by 435.6 feet. How many acres does it contain? (One acre = 43,560 square feet.)

• a.1 acre, ignoring one of the two dimensions when computing the area
• b.0.2 acres, dividing the square footage by ten times the acre conversion
• c.20 acres, dividing the square footage by a figure one hundred times too small
• d.2 acres✓

The area is 200 x 435.6 = 87,120 square feet. Divide by 43,560 square feet per acre: 87,120 / 43,560 = 2 acres.

A buyer makes a $48,000 down payment, which is 15% of the purchase price. What is the purchase price of the home?

• a.$276,000, subtracting fifteen percent from an assumed higher price
• b.$55,200, adding fifteen percent onto the down payment amount
• c.$320,000✓
• d.$7,200, treating the down payment as the answer's fifteen percent instead

If $48,000 is 15% of the price, then price = $48,000 / 0.15 = $320,000. Checking: $320,000 x 15% = $48,000.