TEXAS PRINCIPLES OF REAL ESTATE II EXAM LATEST 2023-2024, PRACTICE QUESTIONS AND CORRECT
ANSWERS
Mixed Numbers - (answer) A number containing both a whole number and a fraction (examples: 1⅓;
9⅞)
Improper Fractions - (answer) a fraction with its numerator equal to or greater than its denominator
Commission Calculation - (answer) Sales price X rate of commission = total commission
Solving for the Commission Rate - (answer) Commission Rate = Commission ÷ Price
Solving for the Property's Price - (answer) Price = Commission ÷ Commission Rate
Profit - (answer) Profit (or Loss) = Selling price - Original cost
Profit Percentage - (answer) Percentage of profit = Profit ÷ Original cost
Profit Margin - (answer) Profit margin = Profit ÷ Selling price
Interest - (answer) the price paid for the use of borrowed money
3 types of interest calculations - (answer) Simple interest, add-on interest, and compound interest
Simple interest - (answer) Interest = principal x rate x time
Add-on interest - (answer) loan amount x contracted interest rate x number of payments
Add-on interest APR - (answer) APR = 2 x number of payment periods in one year x total financing
charges ÷ (principal, or amount borrowed x (number of scheduled payments +1)
,TEXAS PRINCIPLES OF REAL ESTATE II EXAM LATEST 2023-2024, PRACTICE QUESTIONS AND CORRECT
ANSWERS
Compound interest - (answer) interest which is computed on the principal amount plus the accrued
interest.
Compound Interest Formula - (answer) Compound amount = Initial deposit (1 + Interest rate)n
Points - (answer) a one-time service charge to the borrower for making the loan
Two types of points - (answer) origination fee and discount points
Loan-to-Value Ratio (LTV) - (answer) expresses the relationship between a property's purchase price
and its loan amount.
Loan-to-Value formula - (answer) LTV ratio = (Loan amount ÷ Value)
Area of a rectangle - (answer) Area = length x width
Area of a square - (answer) Area = side x side
Area of a triangle - (answer) Area = ½ base x height
Perimeter - (answer) a lot or other shape is the sum of the length of all its sides.
Acre - (answer) A measure of land equal to 43,560 square feet.
Hectare - (answer) is equal to 10,000 square meters or approximately 2.47 acres.
To convert acres to hectares - (answer) divide the total acres by 2.47
,TEXAS PRINCIPLES OF REAL ESTATE II EXAM LATEST 2023-2024, PRACTICE QUESTIONS AND CORRECT
ANSWERS
Appraisal - (answer) is an unbiased estimate of the nature, quality, value or utility of an interest in or
aspect of identified real estate and related personalty as of a certain date.
Specific data - (answer) This is information and details about the subject property, as well as data
(used for comparison) about comparable properties' costs, income and expenses, sales and other
relevant information
General data - (answer) This is information about the property's location - its country, region, city, and,
most importantly, its neighborhood
Steps in Appraisal Process - (answer) 1. Define problem and scope of work
2. Collect, record, and verify the required data
3. Determine the property's highest and best use
4. Estimate the land value
5. Use ALL THREE approaches to estimate value
6. Reconcile the estimated values to determine the final value estimate
7. Communicate the final value estimate
Highest and Best Use - (answer) Legally permissible
Physically possible
Financially feasible
Maximally productive
Describe the difference between specific and general data - (answer) Specific data is information and
details about the subject property and the comparables.
General data is information about the property's location - its country, region, city, and neighborhood.
Direct sales comparison - (answer) sales of comparable vacant parcels are analyzed and adjusted to
indicate a value for the subject land
, TEXAS PRINCIPLES OF REAL ESTATE II EXAM LATEST 2023-2024, PRACTICE QUESTIONS AND CORRECT
ANSWERS
Allocation - (answer) a typical ratio of land value to total value is derived from comparable properties
and applied to the subject
Extraction - (answer) land value is estimated by deducting the depreciated cost of improvements on a
property from the total sale price of the property.
Subdivision development analysis - (answer) costs and profit are deducted from estimated gross sale
prices of subdivided and finished lots, and net sales proceeds are discounted to present value
Land residual - (answer) net operating income attributable to the land is capitalized at market rates to
obtain land value
Ground rent capitalization - (answer) ground rent of subject is capitalized at market rates
In the cost approach to value - (answer) the appraiser estimates a property's value by adding the land
value to the depreciated value of any improvements to the property
The income approach - (answer) (sometimes called the "income capitalization approach") is used by
appraisers who need to value commercial and investment properties
In the sales comparison approach - (answer) an appraiser examines the price (or price per unit area) of
similar properties recently sold or currently being sold in the marketplace to come up with comparable
value assessments
In the reconciliation step - (answer) the appraiser looks at each approach to value and all the data
used to determine
Communicating the Appraisal - (answer) 1. Short- or Long-Form Narrative Reports
2. Reports
3. Letter or Oral Reports
ANSWERS
Mixed Numbers - (answer) A number containing both a whole number and a fraction (examples: 1⅓;
9⅞)
Improper Fractions - (answer) a fraction with its numerator equal to or greater than its denominator
Commission Calculation - (answer) Sales price X rate of commission = total commission
Solving for the Commission Rate - (answer) Commission Rate = Commission ÷ Price
Solving for the Property's Price - (answer) Price = Commission ÷ Commission Rate
Profit - (answer) Profit (or Loss) = Selling price - Original cost
Profit Percentage - (answer) Percentage of profit = Profit ÷ Original cost
Profit Margin - (answer) Profit margin = Profit ÷ Selling price
Interest - (answer) the price paid for the use of borrowed money
3 types of interest calculations - (answer) Simple interest, add-on interest, and compound interest
Simple interest - (answer) Interest = principal x rate x time
Add-on interest - (answer) loan amount x contracted interest rate x number of payments
Add-on interest APR - (answer) APR = 2 x number of payment periods in one year x total financing
charges ÷ (principal, or amount borrowed x (number of scheduled payments +1)
,TEXAS PRINCIPLES OF REAL ESTATE II EXAM LATEST 2023-2024, PRACTICE QUESTIONS AND CORRECT
ANSWERS
Compound interest - (answer) interest which is computed on the principal amount plus the accrued
interest.
Compound Interest Formula - (answer) Compound amount = Initial deposit (1 + Interest rate)n
Points - (answer) a one-time service charge to the borrower for making the loan
Two types of points - (answer) origination fee and discount points
Loan-to-Value Ratio (LTV) - (answer) expresses the relationship between a property's purchase price
and its loan amount.
Loan-to-Value formula - (answer) LTV ratio = (Loan amount ÷ Value)
Area of a rectangle - (answer) Area = length x width
Area of a square - (answer) Area = side x side
Area of a triangle - (answer) Area = ½ base x height
Perimeter - (answer) a lot or other shape is the sum of the length of all its sides.
Acre - (answer) A measure of land equal to 43,560 square feet.
Hectare - (answer) is equal to 10,000 square meters or approximately 2.47 acres.
To convert acres to hectares - (answer) divide the total acres by 2.47
,TEXAS PRINCIPLES OF REAL ESTATE II EXAM LATEST 2023-2024, PRACTICE QUESTIONS AND CORRECT
ANSWERS
Appraisal - (answer) is an unbiased estimate of the nature, quality, value or utility of an interest in or
aspect of identified real estate and related personalty as of a certain date.
Specific data - (answer) This is information and details about the subject property, as well as data
(used for comparison) about comparable properties' costs, income and expenses, sales and other
relevant information
General data - (answer) This is information about the property's location - its country, region, city, and,
most importantly, its neighborhood
Steps in Appraisal Process - (answer) 1. Define problem and scope of work
2. Collect, record, and verify the required data
3. Determine the property's highest and best use
4. Estimate the land value
5. Use ALL THREE approaches to estimate value
6. Reconcile the estimated values to determine the final value estimate
7. Communicate the final value estimate
Highest and Best Use - (answer) Legally permissible
Physically possible
Financially feasible
Maximally productive
Describe the difference between specific and general data - (answer) Specific data is information and
details about the subject property and the comparables.
General data is information about the property's location - its country, region, city, and neighborhood.
Direct sales comparison - (answer) sales of comparable vacant parcels are analyzed and adjusted to
indicate a value for the subject land
, TEXAS PRINCIPLES OF REAL ESTATE II EXAM LATEST 2023-2024, PRACTICE QUESTIONS AND CORRECT
ANSWERS
Allocation - (answer) a typical ratio of land value to total value is derived from comparable properties
and applied to the subject
Extraction - (answer) land value is estimated by deducting the depreciated cost of improvements on a
property from the total sale price of the property.
Subdivision development analysis - (answer) costs and profit are deducted from estimated gross sale
prices of subdivided and finished lots, and net sales proceeds are discounted to present value
Land residual - (answer) net operating income attributable to the land is capitalized at market rates to
obtain land value
Ground rent capitalization - (answer) ground rent of subject is capitalized at market rates
In the cost approach to value - (answer) the appraiser estimates a property's value by adding the land
value to the depreciated value of any improvements to the property
The income approach - (answer) (sometimes called the "income capitalization approach") is used by
appraisers who need to value commercial and investment properties
In the sales comparison approach - (answer) an appraiser examines the price (or price per unit area) of
similar properties recently sold or currently being sold in the marketplace to come up with comparable
value assessments
In the reconciliation step - (answer) the appraiser looks at each approach to value and all the data
used to determine
Communicating the Appraisal - (answer) 1. Short- or Long-Form Narrative Reports
2. Reports
3. Letter or Oral Reports
