Texas Real Estate Sales Agent — All Questions

The most common method an appraiser uses to value a single-family home is the:

• a.Sales comparison (market) approach✓
• b.Income capitalization approach
• c.Assessed value approach
• d.Gross rent multiplier only

The sales comparison approach values a home by comparing it to recent sales of similar nearby properties, with adjustments for differences. The income approach is used mainly for investment property, and the cost approach for special-purpose or new construction.

The appraisal approach that estimates value based on the cost to rebuild the improvements, minus depreciation, plus land value, is the:

• a.Income approach
• b.Gross income approach
• c.Sales comparison approach
• d.Cost approach✓

The cost approach estimates value as the current cost to construct the improvements new, less accrued depreciation, plus the value of the land. It is most useful for new or special-purpose properties with few comparable sales.

The income capitalization approach is MOST appropriate for valuing:

• a.An income-producing apartment building✓
• b.A historic monument
• c.A brand-new custom home
• d.A vacant lot

The income approach converts a property's expected net operating income into value using a capitalization rate, making it ideal for rental and commercial properties. Owner-occupied homes are usually valued by the sales comparison approach.

The principle of 'progression' in valuation states that a property's value tends to:

• a.Stay fixed regardless of the neighborhood
• b.Decrease when improvements are added
• c.Equal exactly its construction cost
• d.Increase when surrounded by higher-value properties✓

Under progression, a lower-valued home benefits from being located among higher-valued homes. The opposite principle, regression, holds that a higher-valued home may be dragged down by surrounding lower-valued properties.

The federal Fair Housing Act prohibits discrimination in housing based on all of the following protected classes EXCEPT:

• a.Sex, disability, and familial status
• b.Religion and national origin
• c.The buyer's occupation or income source in general✓
• d.Race and color

The federal Fair Housing Act protects race, color, religion, national origin, sex, disability, and familial status. General occupation is not a federally protected class, though some state or local laws add protections; requirements can change.

'Steering' is a prohibited fair housing practice in which an agent:

• a.Directs prospective buyers toward or away from neighborhoods based on a protected class✓
• b.Charges different commissions to different sellers
• c.Refuses to make any loan
• d.Advertises a property online

Steering unlawfully channels buyers toward or away from particular areas based on race, national origin, or another protected class. It limits housing choice and violates fair housing law.

'Blockbusting' refers to the illegal practice of:

• a.Setting minimum square footage requirements
• b.Requiring flood insurance
• c.Refusing to rent to families with children
• d.Inducing owners to sell by suggesting that people of a certain protected class are moving into the area✓

Blockbusting involves persuading owners to sell, often at a loss, by exploiting fears about the entry of a protected group into the neighborhood. It is prohibited under fair housing laws.

A lender's illegal refusal to make loans in certain neighborhoods based on their racial or ethnic composition is called:

• a.Redlining✓
• b.Steering
• c.Puffing
• d.Subordination

Redlining is the discriminatory denial of loans or insurance in specific areas based on the makeup of the residents rather than the applicant's qualifications. It is a violation of fair housing and fair lending laws.

Under federal law, sellers and landlords of most housing built before which year must provide a lead-based paint disclosure?

• a.1950
• b.1988
• c.2000
• d.1978✓

Federal law requires lead-based paint disclosure for most residential housing built before 1978, when residential lead paint was banned. Sellers must provide a disclosure and pamphlet and allow the buyer an opportunity to test.

A naturally occurring radioactive gas that can seep into homes and is a common environmental concern in real estate is:

• a.Formaldehyde
• b.Radon✓
• c.Lead
• d.Asbestos

Radon is an odorless, radioactive gas that can accumulate in homes and poses a health risk, and testing is common in some regions. Mitigation systems can reduce indoor radon levels.

A homestead exemption in Texas primarily provides a homeowner with:

• a.A guaranteed sale price
• b.Protection of the home from certain creditors and a reduction in property taxes✓
• c.Exemption from all federal taxes
• d.Free title insurance

The Texas homestead exemption shields a primary residence from many creditors and reduces the taxable value for property tax purposes. Specific dollar amounts and rules are set by law and can change.

In property management, the manager's primary fiduciary duty is to:

• a.Protect the owner's investment and maximize its return within the law✓
• b.Set rents below market to fill vacancies quickly
• c.Personally guarantee rent payments
• d.Favor tenants over the owner

A property manager acts as the owner's agent and must protect and enhance the owner's investment while complying with the law. This includes prudent management of income, expenses, and maintenance.

A lease in which the tenant pays a fixed rent and the landlord pays most property expenses such as taxes and insurance is a:

• a.Ground lease
• b.Net lease
• c.Percentage lease
• d.Gross lease✓

In a gross lease, the tenant pays a flat rent and the landlord covers most operating expenses, common in residential rentals. In a net lease, the tenant pays some or all of those expenses in addition to base rent.

A 'percentage lease' is most commonly used for:

• a.Single-family homes
• b.Government office buildings only
• c.Vacant agricultural land
• d.Retail stores, where rent is partly based on sales✓

A percentage lease charges base rent plus a percentage of the tenant's gross sales, aligning the landlord's income with the tenant's business performance. It is typical in shopping centers and retail settings.

The Americans with Disabilities Act (ADA) generally requires that:

• a.Only new construction comply with any rules
• b.Landlords pay for tenants' medical care
• c.All homes be wheelchair accessible
• d.Public accommodations remove barriers and provide reasonable accessibility✓

The ADA requires places of public accommodation, such as commercial and business facilities, to be accessible and to remove barriers where readily achievable. Separate fair housing rules address reasonable accommodations in residential housing.

Depreciation caused by outdated design, poor floor plan, or obsolete features within the property is called:

• a.Appreciation
• b.Physical deterioration
• c.Functional obsolescence✓
• d.Economic (external) obsolescence

Functional obsolescence is a loss in value from features that are outdated or poorly designed, such as a two-bedroom house with one tiny closet. It arises from conditions within the property rather than external forces.

Loss in property value caused by negative factors outside the property, such as a new highway creating noise, is called:

• a.Physical deterioration curable by repair
• b.External (economic) obsolescence✓
• c.Accrued appreciation
• d.Functional obsolescence

External or economic obsolescence is a loss in value from factors outside the property boundaries, such as nearby nuisances or a declining local economy. It is generally considered incurable by the owner because the cause is off-site.

A comparative market analysis (CMA) prepared by a sales agent to help price a listing is:

• a.An estimate of value based on comparable sales, not a formal appraisal✓
• b.A legally certified appraisal
• c.Required by federal law for every sale
• d.A guarantee of the final sales price

A CMA uses recent comparable sales and market data to help an agent and seller set a competitive list price, but it is not a formal appraisal. Only a licensed or certified appraiser can perform an appraisal for lending purposes.

The Texas Seller's Disclosure Notice is required by:

• a.the federal Fair Housing Act's advertising provisions according to the standard practice followed throughout the industry
• b.TREC rules that apply only to commercial buildings
• c.the buyer's mortgage lender at the closing table
• d.Texas Property Code Section 5.008, for most sales of residential property with not more than one dwelling unit✓

Section 5.008 of the Texas Property Code requires sellers of most residential real property with not more than one dwelling unit to give the buyer a written notice of the property's condition. Certain transfers are exempt.

The Seller's Disclosure Notice in Texas is:

• a.a binding guarantee that the property has no defects of any kind
• b.an optional form that sellers may skip in every residential transaction
• c.a document that must be prepared and certified by a licensed appraiser
• d.based on the seller's actual knowledge and is not a warranty or a substitute for inspections✓

The disclosure reflects the seller's actual knowledge of the property's condition; it is not a warranty and does not replace the buyer's own inspections. Buyers should still hire inspectors before closing.

If a Texas seller fails to provide the required Seller's Disclosure Notice on or before the effective date of the contract:

• a.the seller owes an automatic ten-thousand-dollar fine to TREC
• b.the buyer may terminate the contract for any reason within seven days after receiving the notice✓
• c.the buyer must still close on the property with no remedy at all according to the standard practice followed throughout the industry
• d.the sale automatically becomes void and cannot be revived

Under Section 5.008, if the notice is delivered late, the buyer may terminate the contract for any reason within seven days after receiving it. This protects buyers who did not have the disclosure before contracting.

Which transfer is generally EXEMPT from the Texas Seller's Disclosure Notice requirement?

• a.A typical resale of an occupied three-bedroom suburban home
• b.A sale by a trustee in a foreclosure or by an executor administering a deceased owner's estate✓
• c.A standard sale between two unrelated private individuals
• d.A sale of a previously lived-in condominium unit

Section 5.008 exempts certain transfers, including foreclosure/trustee sales, transfers by an executor or administrator of an estate, transfers between co-owners or spouses, and new residences never previously occupied. Ordinary resales of used homes are not exempt.

Federal law requires that buyers of most housing built before 1978 receive:

• a.a radon mitigation completion certificate signed by a contractor in essentially every residential and commercial transaction alike
• b.a written asbestos removal guarantee from the seller
• c.the EPA/HUD pamphlet 'Protect Your Family From Lead in Your Home'✓
• d.a FEMA flood elevation certificate for the structure

The federal lead-based paint rule requires sellers and landlords of most pre-1978 housing to give buyers the lead pamphlet, a disclosure form, and any known information about lead hazards. Lead paint was banned for residential use in 1978.

Under the federal lead-based paint rule, buyers of most pre-1978 homes must be given:

• a.a written guarantee that no lead is present in the home
• b.a 10-day period (unless waived) to conduct a lead-based paint inspection or risk assessment✓
• c.a thirty-day free warranty covering all painted surfaces
• d.a three-day right to rescind any signed purchase contract in essentially every residential and commercial transaction alike

The rule gives buyers a 10-day opportunity (which may be shortened or waived by mutual agreement) to conduct a lead-based paint inspection or risk assessment before becoming obligated. It does not guarantee the home is lead-free.

Asbestos is best described as:

• a.a naturally occurring radioactive gas that seeps in from soil
• b.lead-based paint that was applied to walls before 1978
• c.a material once used in insulation and flooring that poses a health risk when its fibers become airborne✓
• d.a type of mold that grows on damp basement surfaces

Asbestos was widely used in insulation, floor and ceiling tiles, and other building materials, and it can cause serious lung disease when disturbed fibers become airborne. Intact, undisturbed asbestos is often managed in place rather than removed.

Indoor mold growth in a home is most commonly caused by:

• a.excess moisture and water intrusion✓
• b.chipping and peeling of old lead-based paint
• c.leaking underground storage tanks on the site
• d.the presence of naturally occurring radon gas

Mold needs moisture to grow, so leaks, flooding, and high humidity are the usual causes. Controlling water intrusion and drying affected areas are the keys to preventing and remediating mold.

A potential source of soil and groundwater contamination that buyers of a former gas station or farm should investigate is:

• a.the residence homestead tax exemption
• b.an appurtenant easement benefiting the parcel
• c.a shared party wall between two buildings
• d.an underground storage tank (UST)✓

Underground storage tanks, common at former fuel stations and farms, can leak and contaminate soil and groundwater, creating cleanup liability. Buyers of such sites often conduct environmental assessments to check for tanks.

The federal 'Superfund' law, known as CERCLA:

• a.governs the content and format of TREC contract forms
• b.can impose liability for hazardous-substance cleanup on current and past property owners✓
• c.sets the maximum real estate commissions that brokers may charge even when the buyer and seller would clearly have preferred a different arrangement
• d.requires flood insurance on every home in the United States

The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) can impose strict, and sometimes retroactive, cleanup liability on current and former owners and operators of contaminated property. This makes environmental due diligence important.

Recent additions to the Texas Seller's Disclosure Notice require sellers to disclose:

• a.the exact commission rate the listing agent will earn
• b.the amount of the buyer's mortgage loan pre-approval
• c.the seller's personal credit score and debt balances
• d.whether the property is located in a 100-year floodplain or has previously flooded✓

Texas has expanded the Seller's Disclosure Notice to require flood-related disclosures, such as whether the property is in a floodplain or has flooded before. These help buyers understand flood risk and insurance needs.

In appraisal, 'highest and best use' refers to:

• a.the most expensive improvement an owner could build regardless of zoning
• b.whichever use the current seller happens to prefer at the time
• c.the legally permitted, physically possible, and financially feasible use that yields the highest value✓
• d.whatever the property is currently being used for in every case

Highest and best use is the reasonably probable use that is legally permissible, physically possible, financially feasible, and maximally productive. It sets the framework an appraiser uses to estimate value.

The appraisal principle of substitution holds that:

• a.a buyer will pay no more for a property than the cost of an equally desirable substitute✓
• b.land can never be valued separately from its improvements
• c.a property's value must always equal its original construction cost
• d.older homes are always worth more than newly built homes

The principle of substitution states that a prudent buyer will not pay more than the cost of acquiring an equally desirable substitute property. It underlies the sales comparison approach to value.

The principle of conformity suggests that:

• a.unique, one-of-a-kind homes always command the highest possible price
• b.value decreases as a neighborhood becomes more uniform over time
• c.conformity among nearby properties has no effect on market value
• d.a property reaches maximum value when it conforms in size and style to surrounding properties✓

Under the principle of conformity, properties tend to achieve maximum value when they are similar in style, size, and use to those around them. Homes that are very different from their neighbors may be harder to value or sell.

The principle of contribution explains why:

• a.the principle applies only to commercial and not residential property
• b.every dollar spent on remodeling adds exactly one dollar of value
• c.an improvement adds value based on its contribution to the whole, which may differ from its cost✓
• d.land always contributes more value than any improvements do

The principle of contribution holds that a component's value is measured by how much it adds to the total property value, not by what it cost. Over-improvements may cost more than the value they contribute.

The appraisal principle of anticipation states that value is influenced by:

• a.the seller's personal emotional attachment to the home
• b.the expectation of future benefits from owning the property✓
• c.the original purchase price the seller paid decades earlier
• d.the total number of prior owners the property has had

Anticipation holds that value is created by the expectation of future benefits, such as income, appreciation, or amenities. Buyers pay for what they expect to receive going forward.

Under the principle of supply and demand, property prices tend to:

• a.depend only on the construction cost of the improvements
• b.stay completely constant regardless of market conditions
• c.rise when demand exceeds available supply and fall when supply exceeds demand✓
• d.be set entirely by the local government's tax office

Supply and demand strongly influence real estate prices: scarce supply with strong demand pushes prices up, while excess supply with weak demand pushes prices down. Real estate markets are also local and cyclical.

Depreciation caused by ordinary wear and tear, weathering, and the aging of the structure is called:

• a.physical deterioration✓
• b.functional obsolescence caused by outdated design
• c.economic appreciation resulting from market growth
• d.external obsolescence caused by off-site factors

Physical deterioration is loss in value from wear and tear, aging, and the elements. It may be curable (such as repainting) or incurable (such as major structural aging), depending on cost versus value added.

Depreciation is considered 'curable' when:

• a.the defect can never be repaired under any circumstances
• b.the cost to repair the item is less than the value the repair adds✓
• c.the property being appraised is brand-new construction
• d.the cause of the loss is located entirely off the property regardless of the particular county in which the property is located

A curable item is one where the cost to fix it is justified by the value it restores or adds. If repair costs exceed the added value, the depreciation is considered incurable.

A gross rent multiplier (GRM) is calculated by:

• a.subtracting operating expenses from the property's gross income
• b.multiplying the tax rate by the property's assessed value
• c.dividing a property's sales price by its rental income✓
• d.dividing net operating income by the market capitalization rate

The GRM equals sales price divided by rent (monthly or annual, applied consistently). It is a quick screening tool for income property, though the income capitalization approach using net operating income is more precise.

Which statement about valuation tools is correct?

• a.A broker price opinion (BPO) is the same thing as a certified appraisal even when the buyer and seller would clearly have preferred a different arrangement
• b.A CMA and a formal appraisal are legally identical documents
• c.Only a licensed or certified appraiser may perform an appraisal used for a federally related mortgage loan✓
• d.Any sales agent may perform an appraisal for a bank's loan file

Appraisals used for federally related mortgage loans must be prepared by a licensed or certified appraiser following USPAP. A CMA or BPO by a real estate agent helps with pricing but is not a formal appraisal.

In the sales comparison approach, if a comparable property has a feature superior to the subject (such as an extra garage), the appraiser will:

• a.ignore the difference between the two properties entirely
• b.subtract value from the comparable's sale price✓
• c.adjust the value of the subject property upward to match
• d.add value to the comparable's sale price instead

Appraisers adjust the comparables, not the subject. When a comparable is superior, its price is adjusted downward (subtracted) so it better reflects the subject; when a comparable is inferior, its price is adjusted upward.

The 'assessed value' of a property is:

• a.the amount that a lender will always agree to finance
• b.always exactly equal to the property's most recent sales price according to the standard practice followed throughout the industry
• c.a figure set informally by the property's listing agent
• d.the value used for property tax purposes, which may differ from market value✓

Assessed value is the value assigned by the taxing authority (the appraisal district in Texas) for calculating property taxes. It can differ from market value or the appraised value used for lending.

Before a Texas property manager begins managing an owner's rental, the parties should sign:

• a.a listing agreement whose purpose is to sell the property
• b.a lease that names the property manager as the tenant
• c.a property management agreement that establishes the manager as the owner's agent✓
• d.a deed that transfers title of the property to the manager

A property management agreement creates the agency relationship, defines the manager's authority and compensation, and sets out duties. The manager acts as the owner's fiduciary in operating the property.

Rents and security deposits a Texas property manager collects on the owner's behalf must generally be kept:

• a.in a separate trust or escrow account, not commingled with the manager's own funds✓
• b.mixed together with the brokerage's general operating money
• c.as loose cash stored in a safe at the management office
• d.in the manager's personal checking account for everyday convenience

Client funds such as rents and deposits must be held in a proper trust or escrow account separate from the manager's own money. Commingling trust funds with personal or business funds is a violation.

Under the Texas Property Code, a landlord must generally refund a residential security deposit (less lawful deductions):

• a.within just seven days of the tenant's move-out date
• b.within six months after the lease was first signed
• c.within 30 days after the tenant surrenders the premises✓
• d.only if the tenant files a lawsuit to demand it

A Texas landlord must refund the security deposit, minus any lawful deductions, within 30 days after the tenant surrenders the premises, typically when a forwarding address is provided. Wrongful retention can expose the landlord to penalties.

Under the Texas Property Code, a residential landlord generally must:

• a.make a diligent effort to repair conditions that materially affect health or safety after proper notice✓
• b.renovate the entire unit every single year regardless of condition unless the parties specifically negotiate a written exception beforehand
• c.pay all of the tenant's monthly utility bills for them
• d.provide free cable television service to every tenant

Texas landlords have a statutory duty to make a diligent effort to repair conditions that materially affect the physical health or safety of an ordinary tenant, once the tenant gives proper notice and is not delinquent in rent.

The difference between an assignment and a sublease of a lease is that:

• a.a sublease transfers ownership of the entire building to another
• b.a sublease transfers part of the tenant's interest, while an assignment transfers the entire remaining term✓
• c.the two terms mean exactly the same thing in practice
• d.only an assignment requires the tenant to continue paying rent

In an assignment, the tenant transfers the whole remaining leasehold interest to another party; in a sublease, the tenant transfers only part of it and retains a reversionary interest. Leases often restrict both without the landlord's consent.

Under Texas law, a landlord generally may NOT:

• a.retaliate against a tenant for making a good-faith complaint about needed repairs✓
• b.enforce a valid no-pets clause that is written in the lease
• c.collect a lawful security deposit at the start of the lease
• d.require that rent be paid on the first day of each month

Texas prohibits retaliation, such as raising rent, decreasing services, or evicting, against a tenant who in good faith exercises a legal right like requesting repairs. Legitimate lease terms and deposits remain enforceable.

To lawfully remove a Texas tenant who has defaulted, a landlord must generally:

• a.change the locks and remove the tenant's belongings immediately as a matter of long-standing real estate custom and common-law tradition
• b.file a forcible detainer (eviction) suit in justice court after giving proper notice to vacate✓
• c.personally escort the tenant off of the property by force
• d.shut off the tenant's utilities to force them to leave

Texas requires landlords to use the legal eviction process, starting with a written notice to vacate and, if needed, a forcible detainer suit in justice court. 'Self-help' evictions such as lockouts or utility shutoffs are unlawful in most cases.

In a typical Texas closing, the title company:

• a.represents the buyer in the transaction as their attorney
• b.guarantees to the buyer that their loan will be approved
• c.acts as a neutral escrow agent that holds funds and documents and issues the title policy✓
• d.personally sets the final sales price of the property

In Texas, the title company commonly serves as the neutral escrow and settlement agent, holding earnest money and closing funds, preparing settlement statements, and issuing title insurance. It does not represent either party as an advocate.

Under the TILA-RESPA Integrated Disclosure (TRID) rule, the lender must deliver the Closing Disclosure to the borrower:

• a.only if the borrower specifically requests to see it
• b.on the day of closing, right at the settlement table
• c.at least three business days before consummation (closing) of the loan✓
• d.no sooner than thirty days after the closing has occurred because the governing statute is generally understood to require that result

TRID requires that the borrower receive the Closing Disclosure at least three business days before consummation, giving time to review final loan terms and costs. Certain significant changes can restart the three-day period.

At closing, 'proration' refers to:

• a.dividing shared expenses such as property taxes fairly between buyer and seller as of the closing date✓
• b.the process of recording the new deed at the courthouse
• c.the lender's final approval of the buyer's mortgage loan
• d.the buyer's final walkthrough inspection before closing

Proration allocates ongoing costs like property taxes, HOA dues, and prepaid items between buyer and seller based on the closing date. Because Texas taxes are paid in arrears, the seller typically credits the buyer for taxes accrued during the seller's ownership.

A title commitment issued before a Texas closing is:

• a.a document showing the current state of title and the conditions under which the title company will insure it✓
• b.the deed that actually transfers ownership to the buyer
• c.a survey drawing that maps the property's boundary lines
• d.the buyer's loan application submitted to the mortgage lender

A title commitment (or commitment for title insurance) discloses the current condition of title, including liens, easements, and exceptions, and states the requirements to issue the policy. Buyers should review it carefully before closing.

After a Texas closing, the deed is typically:

• a.returned to the seller for the seller's own records
• b.filed with TREC rather than the county clerk's office according to the standard practice followed throughout the industry
• c.recorded in the county real property records to give public (constructive) notice of the new ownership✓
• d.kept secret and hidden away by the new buyer

Recording the deed in the county real property records provides constructive notice of the transfer and protects the buyer's priority against later claims. Recording is not required to make the deed valid between the parties, but it is strongly advisable.

When the buyer becomes entitled to take possession of the property is:

• a.specified in the contract, commonly upon funding and closing unless the parties agree otherwise✓
• b.a matter that is never addressed in the sales contract so long as the transaction is closed through a licensed brokerage firm
• c.whenever the buyer personally decides to move in
• d.always exactly thirty days after the closing date

Possession is a contract term; in Texas it is commonly delivered upon funding and closing, but the parties may agree to a temporary lease (leaseback or buyer possession before closing). The contract's possession provision controls.

A lender financing a home purchase will typically require the buyer to provide at closing:

• a.a flood certificate for the home regardless of its location
• b.a life insurance policy taken out on the seller
• c.proof of a paid hazard (homeowner's) insurance policy✓
• d.a written warranty covering the seller's used furniture

Lenders require evidence of a paid hazard (homeowner's) insurance policy to protect the collateral against loss. Flood insurance is required only when the property lies in a designated special flood hazard area.

In a Texas purchase with financing, two title policies may be issued. The distinction is that:

• a.title insurance mainly covers future physical damage to the home in essentially every residential and commercial transaction alike
• b.the lender's (mortgagee) policy protects the lender, while the owner's policy protects the buyer's equity✓
• c.the owner's policy actually protects the real estate agent
• d.both policies exclusively protect the seller of the property

A mortgagee (loan) policy protects the lender up to the loan balance, while an owner's policy protects the buyer's interest. Title insurance covers losses from covered pre-existing title defects, not future physical damage.

A Texas homeowner who believes the appraisal district has overvalued their home for tax purposes may:

• a.sue TREC directly to recover money damages for the error
• b.protest the appraised value before the county appraisal review board✓
• c.demand that the seller issue a brand-new corrected deed
• d.refuse to pay any property tax without facing any penalty according to the standard practice followed throughout the industry

Texas property owners may protest their appraised value to the county appraisal review board (ARB) by the statutory deadline. A successful protest can lower the taxable value and the resulting tax bill.

Compared with many other states, Texas funds local government by:

• a.collecting a high state personal income tax on residents
• b.charging a special statewide sales tax on every home sale according to the standard practice followed throughout the industry
• c.assessing a federal land tax on all real property owners
• d.relying heavily on local property (ad valorem) taxes, since Texas has no state personal income tax✓

Because Texas has no state personal income tax, local governments depend heavily on ad valorem property taxes to fund schools and services. This makes property tax rates and exemptions especially important to buyers.

To comply with fair housing law, a Texas property manager screening rental applicants must:

• a.steer families with children toward ground-floor units only
• b.reject applicants based on their national origin or religion
• c.apply the same lawful rental criteria to all applicants regardless of protected class✓
• d.prefer applicants without children to keep the property quieter

Fair housing law requires consistent, nondiscriminatory screening: the same lawful criteria (such as income and credit standards) must apply to everyone, regardless of race, familial status, national origin, or other protected classes.

A core duty of a Texas property manager to the owner is to:

• a.pay for all major repairs out of the manager's own pocket
• b.purchase the property outright if it fails to rent quickly
• c.personally guarantee that the property will never have a vacancy
• d.provide the owner with regular accounting reports of income and expenses✓

As the owner's agent, the property manager must account for funds and provide regular financial reports of income and expenses. The manager operates the property in the owner's best interest but does not guarantee results or pay the owner's expenses personally.

In a net lease, unlike a gross lease:

• a.the landlord pays every single operating expense of the property
• b.the tenant automatically becomes the owner after just one year
• c.no rent whatsoever is charged to the tenant during the term
• d.the tenant pays base rent plus some or all property expenses such as taxes, insurance, and maintenance✓

In a net lease the tenant pays base rent plus certain property expenses (taxes, insurance, and/or maintenance), which in a triple-net lease include all three. In a gross lease, the landlord covers most operating expenses out of the rent.

After applying the sales comparison, cost, and income approaches, an appraiser will:

• a.reconcile the approaches by weighing their reliability to reach a final opinion of value✓
• b.discard all three approaches and rely on the tax value instead
• c.use only the single highest of the three value indications
• d.simply average the three resulting numbers together every time in essentially every residential and commercial transaction alike

Reconciliation is the appraiser's analysis of the strengths and relevance of each approach to arrive at a final opinion of value. It is a weighing of reliability, not a mechanical average of the three figures.

Appraisers in the United States are generally required to follow USPAP, which stands for:

• a.the United States Property Assessment Program run by the IRS
• b.the Uniform Standards of Professional Appraisal Practice, the ethical and performance standards for appraisers✓
• c.the Universal Sales Price Adjustment Protocol used in closings
• d.the Underwriting Standards for Property Appraisal Lending by banks

USPAP sets the recognized ethical and performance standards for appraisers in the United States. Appraisals for federally related transactions must comply with USPAP.

A Texas sales agent prepares a comparative market analysis (CMA) primarily to:

• a.help the seller set a competitive list price using recent comparable sales✓
• b.determine the property's official tax assessment for the county
• c.serve as a legal substitute for the buyer's home inspection
• d.certify the property's value for a federally related mortgage loan unless the parties specifically negotiate a written exception beforehand

A CMA uses recent comparable sales and current market conditions to help an agent and seller choose a competitive list price. It is a pricing tool, not a certified appraisal or a substitute for an inspection.