Free TREC Consumer Protection Questions and Answers

Question 1

A buyer purchases a furnished condominium apartment as an investment. The document that evidences the buyer's ownership of the furniture is a?

Accepted Answer

Bill of sale

Answer

A bill of sale is a legal document that serves as proof of transfer of ownership for personal property. In the context of a furnished condominium, the furniture is considered personal property, not real property. Therefore, a bill of sale would be used to evidence the buyer's ownership of the furniture, separate from the deed which transfers ownership of the real estate.

Question 2

The appropriate time for a selling broker to explain the agency relationship to a prospective buyer is?

Accepted Answer

at their initial meting

Answer

In Texas, real estate licensees are required to provide the "Information About Brokerage Services" (IABS) form at the first substantive dialogue with a prospective buyer, seller, landlord, or tenant. This initial meeting is the appropriate time to explain the agency relationship, ensuring the client understands the roles and responsibilities of the agent and the various types of agency available before any confidential information is exchanged or specific services are provided.

Question 3

A lot was purchased as an investment for $10,500 and sold a year later at a loss of 20%. If the owner paid a 10% commission, what was the owner's net loss on the sale

Accepted Answer

$2,940
10500X.20= 2,100
8400X.10=840
2,100+840=2,940

Answer

To calculate the net loss, first determine the loss on sale: $10,500 * 20% = $2,100. The sale price was then $10,500 - $2,100 = $8,400. Next, calculate the commission paid on the sale price: $8,400 * 10% = $840. Finally, the total net loss is the sum of the loss on sale and the commission: $2,100 + $840 = $2,940.

Question 4

A license holder is showing a home built in 1972 to buyers who notice paint flaking on the woodwork. How should the license holder proceed

Accepted Answer

advise the prospective buyers to get a lead based paint inspection

Answer

Homes built before 1978 are presumed to have lead-based paint, which can pose significant health risks, especially to children. The presence of flaking paint in a home built in 1972 strongly suggests the potential for lead-based paint. A license holder has a responsibility to advise buyers of this potential hazard and recommend a lead-based paint inspection or risk assessment, as required by federal law (HUD/EPA disclosure rules).

Question 5

The commission earned by a listing broker on a sale of property is established by?

Accepted Answer

Agreement between the seller and the broker

Answer

Real estate commissions are not set by law, market conditions, or property tax assessments. Instead, they are always negotiable and established through a mutual agreement between the seller (or buyer, depending on the representation agreement) and their real estate broker. This agreement is typically outlined in a listing agreement or buyer representation agreement.

TREC - Texas Real Estate Commission Practice Test

TREC - Texas Real Estate Commission Practice Test

Free TREC Consumer Protection Questions and Answers