Modern Real Estate Practice in Texas, 16th Edition
Getting a Real Estate License
Modern Real Estate Practice in Texas, 16th Edition, is designed to prepare you for a career in real estate. However, before you can become a broker or salesperson, you must obtain a license. Passing the real estate licensing examination is an integral part of the requirements for becoming licensed. The exam is designed to test your knowledge of real estate laws, principles, and practices.
APPLYING TO TAKE THE EXAM
To be eligible for a license, an individual must be a citizen of the United States or a lawfully admitted alien, be at least 18 years of age, and be a legal resident of Texas at the time of filing the application. An applicant must satisfy the commission as to his or her honesty, trustworthiness, integrity, and competency. Competency is judged solely on the basis of an examination. Honesty, trustworthiness, and integrity of an applicant are, in part, evaluated by criteria contained in TREC rules 535.52 and 541.1. Included among the many offenses for which the commission may deny a license application are pleading guilty or nolo contendere to or a conviction of offenses involving fraud and misrepresentation, forgery, and falsification of records, including providing false or misleading information to the commission. TREC rules can be obtained at www.trec.texas.gov; choose the Forms, Laws, & Contracts tab.
Getting approval to take the exam
After you have completed your education requirements, go to the TREC website and download the Application for Inactive Salesperson License form under the Licenses: Apply/Renew tab. Just complete the form online and pay the fees shown on the application form (currently $163, which includes the application fee, $20 for the Real Estate Center, and $10 for the real estate recovery trust account.) There is an additional $20 fee for mailing a paper application rather than filing online. Evidence of successful completion of your education via credit transcript or certificate should be submitted with your application. If you file online, scan and send education documents electronically or fax them to TREC. If you mail a paper application, submit paper copies of all course completion documents with your application.
The Commission will send you a letter of eligibility, including an ID number, which is your permit to schedule the examination; you will take the exam; and once you have successfully passed it, TREC will send you an inactive salesperson license. Before you will be eligible to practice real estate brokerage, however, you must be sponsored by an active real estate broker. You will submit to TREC a Salesperson Sponsorship Form, and TREC will issue an active salesperson license. If you have already chosen a sponsoring broker at the time you apply to take the examination and want to expedite the process for getting an active license, you may submit both forms at the same time.
Fingerprints
All applicants for a license must submit a set of fingerprints to the commission or to the Texas Department of Public Safety for purposes of conducting a criminal history check [§1101.3521]. Refer to the TREC website for the procedures for submitting fingerprints and to TREC Rule 535.101 for the current amounts for all fees.
Selecting a broker
You must have a broker-sponsor before you can begin the practice of real estate, as described above. Your license will be mailed to that broker and you will be working under that broker’s license and supervision. Because selection of a broker-sponsor is crucial to your success in real estate, several suggestions for that process are listed in the following:
§ Select four or five different brokers to interview:
o Study real estate ads in the paper or online.
o Visit open houses and talk to Realtors® in each office.
o Ask friends and relatives about past dealings with Realtors®.
o Select an area you want to work in; see who is most active there.
o Think through what you’ll ask during an interview, and anticipate their questions.
§ Consider your appointment interview as both the broker’s considering you and your considering the broker. Tell the broker what you have to offer the firm.
§ Ask questions during the interview. Possible questions include the following:
o What is the firm’s history?
o Does the broker foresee the firm being sold or merged in the near future?
o What is the firm’s image? (Ask this of friends, acquaintances, and agents in the office as well as the broker.)
o What is the total sales volume of the company? What does that represent in terms of market share?
o How is the sales volume distributed among agents (i.e., how many agents are responsible for how much production)?
o Does the brokerage specialize in certain types of properties, price ranges, geographic areas, or clients?
o What is the broker’s experience?
o What is the broker’s current role at the firm? Does he or she still actively sell?
o Is someone (broker, manager, legal counsel) available to answer questions about contracts and transactions? At what times is that person available?
o What is the desk- and phone-duty opportunity/obligation?
o What are the open house opportunities (to sit in for someone else)?
o What training opportunities are available and who provides them? Who pays for them?
o How often does the firm schedule sales meetings, who runs them, and is attendance mandatory?
o What advertising does the brokerage do? What are the opportunities for agents to participate and how much does that cost?
o What types of promotional literature are available for marketing?
o Does the firm offer other real estate–related services (mortgage, title, etc.) and how do those programs work?
o What support staff or services are provided to agents? Who pays for them?
o What technology and Web resources are offered by the firm?
o What is the company policy about personal assistants?
o What is the commission split?
o Do I owe the company a commission if I buy a FSBO or sell my own home?
o Is a minimum number of transactions expected each month?
o May I have a copy of the policy manual before I make a decision? (Pay close attention to the policy regarding “pending sales” should you later decide to leave the firm.)
o Who pays what expenses—desk fees, MLS and association fees, transaction fees in a franchise, technology fees, business cards, stationery, signs, sign riders, telephone? (Realize that, as an independent contractor, you are paid on commission only and need three to six months’ living expenses set aside before you begin—to allow for the time it takes to list a property, market it, and close it. As an independent contractor, you furnish your own car, gas, and insurance. In addition, there may be $3,000 or more in start-up costs, among them, licensing fees, MLS and association fees, business cards, and sign riders.)
§ Think about your personality, preferred market area, and the office atmosphere. Meet other agents in the office and talk with them about the real estate business. Do they have a positive attitude about the firm and real estate in general?
§ Select the office you think you will “fit into” the best.
Making an appointment to take the examination
After you have received the letter of eligibility from TREC to take the examination, you can schedule an appointment to take the exam. You will make an appointment with Pearson Vue, an independent testing company that administers the Texas Real Estate Licensing Examination; registration may be completed by telephone, fax, Internet, or standard mail. You will have your choice of testing at one of the many testing centers located throughout the state of Texas. The current fee for taking the license examination is $54, although it is subject to change. The examination must be passed within one year after the license application is filed with TREC (S.B. 747, 2011).
WEB LINK @ www.pearsonvue.com
Candidate Handbook
A Candidate Handbook contains important information to assist you in scheduling and taking your examination. You may download it at any time from the Pearson Vue website. The Candidate Handbook includes
· guidelines for taking the examination;
· test center locations;
· how to make an appointment to take the examination;
· check-in procedures at the examination and required identification;
· computerized testing procedures;
· tips for preparing for the examination; and
· a detailed content outline, references for study, and sample questions.
WHAT TO EXPECT FROM THE EXAM
Salesperson and broker candidates are given separate examinations. The salesperson exam consists of 110 questions in two parts: Real Estate General Theory (80 questions) and Texas State-Specific Law and Regulations (30 questions). The broker exam has 120 questions with 80 in the theory section and 40 in the Texas law and regulations section. In most instances, the items on the broker exam cover the same topics as the sales exam but are more difficult. There are five to ten “pretest” questions included on each exam, but those answers are not scored. They are used by Pearson Vue as a means of testing those questions for future use. If you have comments about exam questions, you may enter them on the computer keyboard during the examination.
All exams are “closed book.” No study materials, notes, purses, backpacks, briefcases, or similar materials may be carried into the examination room. Calculators are permitted while taking the exam; they must be silent, battery-operated, nonprogrammable, and paperless without alphabetic keyboards or communication capabilities. Scratch paper is provided. The questions are entirely multiple-choice in format, with four answer choices for each question. The exam must be completed within the allotted time of 240 minutes, which should be ample if you are adequately prepared.
You must pass both parts of the exam to qualify for your real estate license. Candidates who fail one part of the exam have to retake only the section they failed. If both parts of the examination are not passed within one year after the date on which the application for a license was filed, the candidate must make a new application to TREC, including the payment of all fees.
TAKING THE EXAMINATION
You will take your examination on a computer. The system is very simple to use, even for candidates with no previous typing or computer experience. You have an opportunity to practice using the system before beginning your exam. The time used for practice is not counted in the time available for the actual exam.
Items on the examinations are confidential and copyrighted material. If a school or another applicant asks you to reveal examination material, you should refuse. Any disclosure of test questions is prohibited and can result in denial of licensure and/or civil or criminal prosecution.
The minimum passing score for each part of the salesperson examination is 70 percent; for the broker examination, 75 percent. As soon as you complete your test, you will receive a report indicating your score, whether you passed or failed, and your strengths and weaknesses in various content areas of the exam. You should keep your printed score reports as confirmation of having completed the examinations. Examination results are transmitted electronically to TREC every night. If the examination is passed and all other requirements for licensure are satisfied, the applicant can expect TREC to print a license the next business day. Passing the examination, however, does not authorize the applicant to act as a licensee. For the salesperson license, you must first apply for an active license under the sponsorship of an active real estate broker. For either the salesperson or broker license, you may not begin your practice until the license certificate is received.
If you fail one or more parts of your exam, you will receive instructions for rescheduling and retaking the examination. Before retaking the test, applicants are advised to study—based on the information contained in the examination analysis given at the examination site.
Just about anything you have studied in this book, in agency, in contracts, and in finance may be included on the exam; and all real estate subject matter is “fair game.” The following section reflects the most recent outline for the Pearson Vue Texas exam, effective September 2, 2014. For a further breakdown of each topic, go to the “Content Outline” in the Candidate Handbook at the pearsonvue.com website.
EXAMINATION OUTLINES
National Exam Content Outline for Brokers
The national portion of the real estate exam is made up of eighty (80) scored items, which are distributed as noted in the following content outline. Approximately ten percent (10%) of the scored items on the national examination will involve mathematical computations.
The national examination also contains five (5) pretest items that are not counted toward the score. These items are used to gather statistics on performance and to help assess appropriateness for use on future examinations. Because pretest items look exactly like items that are scored, candidates should answer all the items on the examination.
I. REAL PROPERTY CHARACTERISTICS, DEFINITIONS, OWNERSHIP, RESTRICTIONS, AND TRANSFER (9 items)
A. Definitions, descriptions, and ways to hold title
1. Elements of real and personal property
2. Property description and area calculations
3. Estates in real property
4. Forms of ownership, rights, interests, and obligations
B. Land use controls and restrictions
1. Government controls
2. Private controls — covenants and restrictions
3. Private controls —mortgage (deed of trust) and liens
C. Transfer/alienation of title to real property
1. Voluntary
2. Involuntary
3. Protections
4. Partition/severance (voluntary or involuntary)
5. Deeds and warranties: validity, types, and covenants
6. Title and title insurance
II. PROPERTY VALUATION AND APPRAISAL (9 items)
A. Market Analysis/Broker Price Opinion
1. Definition and Purpose
2. Process
3. Requirements
B. Appraisal
1. Definition and Purpose
2. Process
3. Requirements
4. Three approaches to value
C. Investment analysis
1. Application of principles
2. Math calculations
3. Commercial-Investment property types
III. CONTRACTS AND RELATIONSHIPS WITH BUYERS AND SELLERS (17 items)
A. Contract elements
1. Authority
2. Validity
3. Void/voidable
4. Enforceable/unenforceable (Statute of Frauds)
5. Unilateral/bilateral
6. Executory/executed
B. Contracts with buyers and sellers
1. General purpose/definition of listing