TEXAS REAL ESTATE UPDATED EXAM PAPER 2026
QUESTIONS AND ANSWERS SURE A+
✔✔property taxes - ✔✔"ad valorem" taxes (according to value)
-unpaid taxes create automatic lien (highest priority) on the property
✔✔special assessment - ✔✔taxes levied on property to pay for public improvements
✔✔escheat - ✔✔if an individual dies without a will or surviving spouse, their property will
pass to the state
✔✔water rights - ✔✔-riparian rights: flowing water
-littoral rights: lakes or oceans
-transferred by deed or conveyance
✔✔market value - ✔✔the price a willing seller will sell for, and the price a willing buyer
will pay, when neither is acting under exceptional pressure
✔✔characteristics of value (DUST) - ✔✔-demand
-utility
-scarcity
-transferability
✔✔Comparative Market Analysis (CMA) - ✔✔an informal system for establishing the
value of real property which works by comparing the prices of recently sold, pending,
and currently-for-sale homes that are similar in size and features to the subject property
✔✔appraisal - ✔✔an estimate of present value
-an opinion
-appraisers most often asked to determine market value
✔✔approaches to appraisal - ✔✔-market or sales comparison approach
-income approach
-cost approach
✔✔market or sales comparison approach - ✔✔comparisons with known sales in the
same area
✔✔income approach - ✔✔property value = net operating income / capitalization rate
(rate of return)
✔✔cost approach - ✔✔value = land value + building replacement cost - depreciation
-example: an appraiser has been asked to determine the market value of a home
significantly older than all the other homes in the neighborhood
,✔✔types of depreciation - ✔✔-physical deterioration
-functional obsolescence
-economic/external obsolescence
✔✔principles of value - ✔✔-highest and best use
-substitution
-conformity
-increasing and decreasing returns
-regression
-competition
-change
-anticipation
✔✔reconciliation - ✔✔when an appraiser combines their findings from several
approaches for the final report
✔✔mortgage - ✔✔a pledge of real property as security for a promissory note
-mortgagor borrows the money, mortgagee is the lender
✔✔Deed of Trust - ✔✔a special purpose deed that conveys title to a neutral third party,
with the understanding that title will be returned to the original owner once certain
conditions are met
-can be used when property is offered for security on an outstanding debt, creating a
security device similar to a mortgage
-used in Texas instead of a traditional mortgage
-contains a "power of sale" clause that results in a quick foreclosure
-involves 3 parties: trustor/mortgagor (borrower/buyer), beneficiary (lender), trustee
(third party)
-foreclosure under the Deed of Trust ends when the trustee delivers Trustee's Deed to
the buyer
✔✔mortgage clauses - ✔✔-due-on-sale/alienation
-acceleration
-prepayment, release
✔✔due-on-sale/alienation clause - ✔✔the balance of the secured debt becomes due if
the property is sold by the mortgagor without the mortgagee's approval
✔✔acceleration clause - ✔✔in the event of default the whole amount of the principal
becomes due and payable
✔✔prepayment clause - ✔✔the mortgagor can pay the entire amount or the stated
amount prior to the due date in the note
, ✔✔release clause - ✔✔when specific amounts of repayment are reached, as set forth in
the contract, individual parcels of land may be released from the mortgage (they
become encumbered)
✔✔foreclosure - ✔✔the legal process instituted by a trustee, lien holder or creditor, after
a debtor's default on his payments
✔✔equitable redemption - ✔✔at any time up to the moment of the foreclosure the
borrower has the right to step in and pay what he owes and reinstate the mortgage
✔✔government loan programs - ✔✔FHA, VA
✔✔Federal Housing Administration (FHA) loan - ✔✔primary purpose is to aid in home
financing by insuring the loan
-protects the lender
-paid for by the borrower
-requires an approved appraisal
✔✔Veterans Administration (VA) loan - ✔✔guarantees repayment of the loan (for at
least the top 25% of the loan)
-lenders call this a 75/25 ratio
-the guarantee is free to the vet and protects the lender
-veteran must obtain a Certificate of Eligibility from the VA (must have served 181 days
of active duty and must have been honorably discharged)
- needs $0 down payment, the loan is assumable, and may be prepaid without penalty
-Certificate of Reasonable Value (CRV) must meet or exceed the sale price (if not the
vet may cancel the sale, pay the difference between price and appraisal, or ask the
seller to renegotiate)
-interest rates set by market conditions
✔✔amortized - ✔✔paid off in portions over time
✔✔primary market - ✔✔where individuals borrow
✔✔secondary market - ✔✔where lenders go for money
- 3 main agencies: Fannie Mae, Ginnie Mac, Freddie Mac
✔✔Truth in Lending Act (TILA) - ✔✔allows consumers to understand the true cost of
borrowing money
-implemented by Regulation Z
-covers consumer credit for all real estate loans regardless of value, and for non-real
estate loans up to $25,000
-PITI not needed in an advertisement to comply with Regulation Z
QUESTIONS AND ANSWERS SURE A+
✔✔property taxes - ✔✔"ad valorem" taxes (according to value)
-unpaid taxes create automatic lien (highest priority) on the property
✔✔special assessment - ✔✔taxes levied on property to pay for public improvements
✔✔escheat - ✔✔if an individual dies without a will or surviving spouse, their property will
pass to the state
✔✔water rights - ✔✔-riparian rights: flowing water
-littoral rights: lakes or oceans
-transferred by deed or conveyance
✔✔market value - ✔✔the price a willing seller will sell for, and the price a willing buyer
will pay, when neither is acting under exceptional pressure
✔✔characteristics of value (DUST) - ✔✔-demand
-utility
-scarcity
-transferability
✔✔Comparative Market Analysis (CMA) - ✔✔an informal system for establishing the
value of real property which works by comparing the prices of recently sold, pending,
and currently-for-sale homes that are similar in size and features to the subject property
✔✔appraisal - ✔✔an estimate of present value
-an opinion
-appraisers most often asked to determine market value
✔✔approaches to appraisal - ✔✔-market or sales comparison approach
-income approach
-cost approach
✔✔market or sales comparison approach - ✔✔comparisons with known sales in the
same area
✔✔income approach - ✔✔property value = net operating income / capitalization rate
(rate of return)
✔✔cost approach - ✔✔value = land value + building replacement cost - depreciation
-example: an appraiser has been asked to determine the market value of a home
significantly older than all the other homes in the neighborhood
,✔✔types of depreciation - ✔✔-physical deterioration
-functional obsolescence
-economic/external obsolescence
✔✔principles of value - ✔✔-highest and best use
-substitution
-conformity
-increasing and decreasing returns
-regression
-competition
-change
-anticipation
✔✔reconciliation - ✔✔when an appraiser combines their findings from several
approaches for the final report
✔✔mortgage - ✔✔a pledge of real property as security for a promissory note
-mortgagor borrows the money, mortgagee is the lender
✔✔Deed of Trust - ✔✔a special purpose deed that conveys title to a neutral third party,
with the understanding that title will be returned to the original owner once certain
conditions are met
-can be used when property is offered for security on an outstanding debt, creating a
security device similar to a mortgage
-used in Texas instead of a traditional mortgage
-contains a "power of sale" clause that results in a quick foreclosure
-involves 3 parties: trustor/mortgagor (borrower/buyer), beneficiary (lender), trustee
(third party)
-foreclosure under the Deed of Trust ends when the trustee delivers Trustee's Deed to
the buyer
✔✔mortgage clauses - ✔✔-due-on-sale/alienation
-acceleration
-prepayment, release
✔✔due-on-sale/alienation clause - ✔✔the balance of the secured debt becomes due if
the property is sold by the mortgagor without the mortgagee's approval
✔✔acceleration clause - ✔✔in the event of default the whole amount of the principal
becomes due and payable
✔✔prepayment clause - ✔✔the mortgagor can pay the entire amount or the stated
amount prior to the due date in the note
, ✔✔release clause - ✔✔when specific amounts of repayment are reached, as set forth in
the contract, individual parcels of land may be released from the mortgage (they
become encumbered)
✔✔foreclosure - ✔✔the legal process instituted by a trustee, lien holder or creditor, after
a debtor's default on his payments
✔✔equitable redemption - ✔✔at any time up to the moment of the foreclosure the
borrower has the right to step in and pay what he owes and reinstate the mortgage
✔✔government loan programs - ✔✔FHA, VA
✔✔Federal Housing Administration (FHA) loan - ✔✔primary purpose is to aid in home
financing by insuring the loan
-protects the lender
-paid for by the borrower
-requires an approved appraisal
✔✔Veterans Administration (VA) loan - ✔✔guarantees repayment of the loan (for at
least the top 25% of the loan)
-lenders call this a 75/25 ratio
-the guarantee is free to the vet and protects the lender
-veteran must obtain a Certificate of Eligibility from the VA (must have served 181 days
of active duty and must have been honorably discharged)
- needs $0 down payment, the loan is assumable, and may be prepaid without penalty
-Certificate of Reasonable Value (CRV) must meet or exceed the sale price (if not the
vet may cancel the sale, pay the difference between price and appraisal, or ask the
seller to renegotiate)
-interest rates set by market conditions
✔✔amortized - ✔✔paid off in portions over time
✔✔primary market - ✔✔where individuals borrow
✔✔secondary market - ✔✔where lenders go for money
- 3 main agencies: Fannie Mae, Ginnie Mac, Freddie Mac
✔✔Truth in Lending Act (TILA) - ✔✔allows consumers to understand the true cost of
borrowing money
-implemented by Regulation Z
-covers consumer credit for all real estate loans regardless of value, and for non-real
estate loans up to $25,000
-PITI not needed in an advertisement to comply with Regulation Z
