Real Estate Practice Practice Questions

Every question explained

Prefer to study at your own pace? Here are all 20 questions. Read each one and pick your answer, then reveal the correct answer, the reasoning, and the trap that catches most candidates.

1. 1. A seller signs a listing in which the broker earns a commission no matter who finds the buyer, including the seller. Which listing type is this?

   • A.Open listing
   • B.Exclusive agency listing
   • C.Exclusive right-to-sell listing
   • D.Net listing
   ▸Show answer and explanation

   Correct answer: C. Exclusive right-to-sell listing

   Why C is correct: An exclusive right-to-sell listing guarantees the broker a commission regardless of who procures the buyer, including the seller. An exclusive agency listing lets the seller sell on their own without owing a commission. An open listing pays only the broker who finds the buyer.

   Trap: If the seller can find their own buyer and avoid paying, that is exclusive agency, not exclusive right-to-sell.

   Source: Listing types; exclusive right to sell. Tex. Occ. Code 1101.652(b)(12) definite termination date

2. 2. A net listing, in which the broker keeps any amount above the seller's stated net, is disfavored because it

   • A.guarantees the seller the highest price
   • B.creates a conflict of interest between the broker and the seller
   • C.is the only listing that pays a commission
   • D.must always be in writing
   ▸Show answer and explanation

   Correct answer: B. creates a conflict of interest between the broker and the seller

   Why B is correct: In a net listing, the broker keeps any surplus above the seller's net figure, which tempts the broker to maximize personal gain rather than the seller's interest. This conflict of interest is why net listings are disfavored and tightly regulated.

   Trap: A net listing creates a conflict of interest. Do not mistake the broker's incentive for a benefit to the seller.

   Source: 22 TAC 535.16(b); net listing restrictions

3. 3. Which set lists the federally protected classes under the Fair Housing Act?

   • A.Race, color, religion, national origin, sex, familial status, and disability
   • B.Age, income, occupation, and credit score
   • C.Marital status, education, and political affiliation
   • D.Only race and color
   ▸Show answer and explanation

   Correct answer: A. Race, color, religion, national origin, sex, familial status, and disability

   Why A is correct: The federal Fair Housing Act protects against discrimination based on race, color, religion, national origin, sex, familial status, and disability. Income, age, and occupation are not federally protected classes under that Act.

   Trap: Memorize the seven federal classes. Age and income are not among them at the federal level.

   Source: Fair Housing Act, 42 U.S.C. 3604; Tex. Prop. Code 301.021, 301.025

4. 4. An agent tells a homeowner that minority families are moving in and values will drop, urging a quick sale. This illegal practice is

   • A.steering
   • B.blockbusting
   • C.redlining
   • D.puffing
   ▸Show answer and explanation

   Correct answer: B. blockbusting

   Why B is correct: Blockbusting is inducing owners to sell by suggesting that the entry of a protected class will lower property values or change the neighborhood. It is prohibited under the Fair Housing Act. Steering is channeling buyers toward or away from areas based on a protected class.

   Trap: Blockbusting scares owners into selling; steering directs buyers. Both are Fair Housing violations, but they are different acts.

   Source: Fair Housing Act, 42 U.S.C. 3604(e); Tex. Prop. Code 301.024, blockbusting

5. 5. A lender refuses to make loans in a particular neighborhood based on its racial composition. This illegal practice is

   • A.steering
   • B.blockbusting
   • C.redlining
   • D.a tie-in arrangement
   ▸Show answer and explanation

   Correct answer: C. redlining

   Why C is correct: Redlining is the refusal to lend or insure in certain areas based on the racial or ethnic composition of the neighborhood rather than the merits of the loan. It is prohibited under fair lending and fair housing laws.

   Trap: Redlining is a lending practice tied to a geographic area. Steering and blockbusting target buyers and sellers directly.

   Source: Fair Housing Act, 42 U.S.C. 3605; Tex. Prop. Code 301.026, redlining

6. 6. Two brokers from competing firms agree to both charge sellers the same commission rate so neither undercuts the other. This agreement is

   • A.permissible because commission rates are set by local custom
   • B.price-fixing, an antitrust violation, even though the rate sounds standard
   • C.permissible if both brokers disclose the rate in writing
   • D.a tie-in arrangement
   ▸Show answer and explanation

   Correct answer: B. price-fixing, an antitrust violation, even though the rate sounds standard

   Why B is correct: Commission rates are always negotiable between a broker and a client. Competing brokers agreeing to charge the same rate is price-fixing, a per se violation of antitrust law under the Sherman Act, which carries serious penalties.

   Trap: There is no standard or customary commission rate. Even calling a rate standard is an antitrust risk.

   Source: Sherman Act, 15 U.S.C. 1; price-fixing is per se illegal

7. 7. A residential sales agent is asked to list a specialized industrial site in a market the agent has never worked. What is the best first step?

   • A.Accept because an active license proves competence in every property type
   • B.Disclose the limits of the agent's competence and obtain qualified help or refer the assignment
   • C.Accept if the seller promises to supply all technical information
   • D.Draft a disclaimer shifting all responsibility to the buyer
   ▸Show answer and explanation

   Correct answer: B. Disclose the limits of the agent's competence and obtain qualified help or refer the assignment

   Why B is correct: Texas Rule 531.4 requires a license holder to know the local market, exercise judgment and skill, and understand the characteristics of the specific type of real estate being brokered. An active license is not proof of competence in every specialty.

   Trap: The license grants brokerage authority. It does not create market or property-type expertise.

   Source: 22 TAC 531.4, competency

8. 8. A licensee states that a roof is in perfect condition when the licensee knows it leaks. This is

   • A.puffing, which is lawful opinion
   • B.misrepresentation, which can expose the licensee to liability
   • C.a permissible sales technique
   • D.a Fair Housing violation
   ▸Show answer and explanation

   Correct answer: B. misrepresentation, which can expose the licensee to liability

   Why B is correct: Stating a known false fact, such as that a leaking roof is perfect, is misrepresentation and may support a fraud claim when the other elements are met. Puffing is non-factual opinion or sales talk, such as calling a view stunning.

   Trap: Puffing is opinion; misrepresentation is a false statement of fact. A known false condition is misrepresentation.

   Source: Tex. Occ. Code 1101.652(b)(3), material misrepresentation of a significant defect; 22 TAC 535.156(d)

9. 9. An agent shows minority buyers homes only in certain neighborhoods and white buyers homes in others. This practice is

   • A.good customer service
   • B.steering, a fair housing violation
   • C.required by law
   • D.permitted if the buyer agrees
   ▸Show answer and explanation

   Correct answer: B. steering, a fair housing violation

   Why B is correct: Steering is intentionally directing buyers toward or away from neighborhoods because of a protected class. Calling the conduct helpful, or obtaining the buyer's agreement, does not make protected-class channeling lawful.

   Trap: The deciding fact is that the agent intentionally used a protected class to limit housing choices.

   Source: Fair Housing Act, 42 U.S.C. 3604; steering. Tex. Prop. Code 301.021

10. 10. An advertisement for a rental states 'adults only, no children.' This advertisement is

    • A.acceptable
    • B.a fair housing violation based on familial status
    • C.required disclosure
    • D.only a problem in commercial property
    ▸Show answer and explanation

    Correct answer: B. a fair housing violation based on familial status

    Why B is correct: Stating a preference, limitation, or discrimination based on a protected class in an advertisement violates the Fair Housing Act. Familial status (households with children) is a protected class. Discriminatory advertising is never exempt.

    Trap: Discriminatory ads are always prohibited, even where a sale-or-rental exemption might otherwise apply.

    Source: Fair Housing Act, 42 U.S.C. 3604(c); Tex. Prop. Code 301.022, never exempt

11. 11. Which is a recognized exemption under the federal Fair Housing Act?

    • A.Any landlord may refuse anyone for any reason
    • B.An owner of a single-family home selling without a broker and without discriminatory advertising, subject to limits
    • C.A broker may discriminate if the client requests it
    • D.Discriminatory advertising by an owner
    ▸Show answer and explanation

    Correct answer: B. An owner of a single-family home selling without a broker and without discriminatory advertising, subject to limits

    Why B is correct: The federal Act includes a limited single-family owner exemption, subject to ownership, transaction, no-broker, and no-discriminatory-advertising conditions. It also has a separate owner-occupied exemption for a building of no more than four units. The no-broker condition belongs to the single-family exemption, while discriminatory advertising remains prohibited.

    Trap: Do not attach the single-family no-broker condition to every exemption. Advertising is the rule that stays prohibited across both common exemptions.

    Source: Fair Housing Act, 42 U.S.C. 3603(b); Tex. Prop. Code 301.041

12. 12. Two competing brokerages agree to divide the city so each works only its own territory. This is the antitrust violation of

    • A.market allocation
    • B.puffing
    • C.steering
    • D.novation
    ▸Show answer and explanation

    Correct answer: A. market allocation

    Why A is correct: Market allocation is an agreement among competitors to divide territories or customers instead of competing. A naked horizontal market-allocation agreement is a per se antitrust violation.

    Trap: Dividing territories among competitors is market allocation, an antitrust violation, not normal business planning.

    Source: Sherman Act, 15 U.S.C. 1; market allocation

13. 13. A consumer asked a brokerage not to call again. The brokerage has an established business relationship with the consumer. May a sales agent make another live telemarketing call?

    • A.Yes, for 18 months after the last transaction
    • B.No, the company-specific Do Not Call request overrides the established-business-relationship exception
    • C.Yes, if the call occurs between 8 a.m. and 9 p.m.
    • D.Yes, if the agent calls from a personal phone
    ▸Show answer and explanation

    Correct answer: B. No, the company-specific Do Not Call request overrides the established-business-relationship exception

    Why B is correct: Under the FTC Telemarketing Sales Rule, an established business relationship can support certain live calls to a registered number, but it does not override the consumer's request not to receive calls from that seller. Time-of-day compliance does not cure the Do Not Call violation.

    Trap: The 18-month relationship period is an exception to the National Registry rule, not permission to ignore the seller-specific request.

    Source: 16 CFR 310.4(b)(1)(iii), entity-specific Do Not Call request

14. 14. A visitor slips on a wet floor in a brokerage lobby and suffers a bodily injury. Which policy is the closer match?

    • A.Errors and omissions insurance
    • B.General liability insurance
    • C.Title insurance
    • D.Private mortgage insurance
    ▸Show answer and explanation

    Correct answer: B. General liability insurance

    Why B is correct: General liability insurance is designed for specified bodily-injury, property-damage, and premises or operations claims. Errors and omissions insurance is the closer match for specified professional-service errors. Actual coverage depends on the policy.

    Trap: The location is a brokerage office, but the claim arises from a physical premises injury rather than brokerage advice or paperwork.

    Source: Insurance doctrine; general liability versus errors and omissions

15. 15. A Texas license holder will show one house to a prospective residential buyer without representing the buyer. Which statement about the required agreement is correct?

    • A.No written agreement is required because there is no representation
    • B.A written showing-only agreement is required, must be nonexclusive, and may last no more than 14 days
    • C.The agreement must be exclusive for at least 30 days
    • D.An oral agreement is sufficient if the buyer receives the IABS notice
    ▸Show answer and explanation

    Correct answer: B. A written showing-only agreement is required, must be nonexclusive, and may last no more than 14 days

    Why B is correct: Effective January 1, 2026, Section 1101.563 requires a written agreement before a license holder shows residential real property to a prospective buyer while performing buyer-side brokerage. A showing-only non-representation agreement must be nonexclusive and may not extend more than 14 days.

    Trap: Written agreement and representation are separate ideas. Texas permits a limited written non-representation agreement for showing only.

    Source: Tex. Occ. Code 1101.563(b), (e)

16. 16. A Texas property-management sales agent receives rent and a security deposit for an owner. What must the agent do?

    • A.Deposit the money in the agent's operating account and reconcile it later
    • B.Deliver it immediately to the sponsoring broker because a sales agent may not maintain the trust account
    • C.Hold the money until the property-management agreement terminates
    • D.Give the security deposit to the tenant's employer
    ▸Show answer and explanation

    Correct answer: B. Deliver it immediately to the sponsoring broker because a sales agent may not maintain the trust account

    Why B is correct: Rent and security deposits held for another person are trust money under Section 535.146(a)(1). Section 535.146(b)(2) bars a sales agent from maintaining a trust account and requires immediate delivery to the sponsoring broker. The broker then follows the deposit or delivery deadline in subsection (b)(3).

    Trap: The property-management agreement may authorize collection, but it does not let a sales agent maintain the trust account.

    Source: 22 TAC 535.146(a)(1), (b)(2), (b)(3)

17. 17. A buyer asks a Texas sales agent to draft a custom clause that changes when the buyer may terminate. What should the agent do?

    • A.Draft the clause because the buyer requested it
    • B.Recommend that the buyer consult an attorney rather than drafting the legal language
    • C.Write the clause if it is fewer than 100 words
    • D.Refuse to present any offer from the buyer
    ▸Show answer and explanation

    Correct answer: B. Recommend that the buyer consult an attorney rather than drafting the legal language

    Why B is correct: Rule 537.11(b)(5) prohibits a license holder from drafting or recommending contract language that defines or changes the parties' rights, obligations, or remedies. The client should obtain legal advice for the custom clause.

    Trap: A client's request does not turn legal drafting into a permitted brokerage act.

    Source: 22 TAC 537.11(b)(5), unauthorized practice of law

18. 18. Which task is a Texas license holder permitted to perform without practicing law?

    • A.Give an opinion on whether title is valid
    • B.Fill factual blanks and explain informational choices without giving legal advice
    • C.Draft an appraisal contingency
    • D.Interpret the legal effect of a deed restriction for the client
    ▸Show answer and explanation

    Correct answer: B. Fill factual blanks and explain informational choices without giving legal advice

    Why B is correct: Rule 537.11 permits a license holder to add informational items and to explain the meaning of informational items or choices without giving legal advice. Title opinions, legal-effect advice, and drafted contingency language cross the line.

    Trap: Explaining a factual choice is not the same as telling the client what legal rights the instrument creates.

    Source: 22 TAC 537.11(c)(2), (d)(1)

19. 19. A Texas broker sponsors twelve sales agents. One agent, acting without the broker's knowledge, misrepresents a property's condition to a buyer. What is the broker's exposure?

    • A.None, because the broker did not know about the statement
    • B.The broker is liable to the Commission, the public, and the broker's clients for the agent's conduct
    • C.The broker is liable only if the broker failed to provide training
    • D.Liability passes to the agent's errors and omissions insurer alone
    ▸Show answer and explanation

    Correct answer: B. The broker is liable to the Commission, the public, and the broker's clients for the agent's conduct

    Why B is correct: TRELA Section 1101.803 states it without qualification: a licensed broker is liable to the Commission, the public, and the broker's clients for any conduct engaged in under this chapter by the broker or by a sales agent associated with or acting for the broker. There is no knowledge requirement in the provision. The underlying misconduct is separately a ground for discipline under Section 1101.652(b)(3), which covers a material misrepresentation to a potential buyer concerning a significant defect known to the license holder.

    Trap: Lack of knowledge is the tempting answer and the statute does not offer it. What the broker's supervision system affects is the practical outcome, not the existence of liability under Section 1101.803.

    Source: Tex. Occ. Code 1101.803; 1101.652(b)(3)

20. 20. A Texas seller insists on a net listing. The broker agrees. Which combination does 22 TAC Section 535.16(b) require?

    • A.Only that the seller requested it and appears familiar with market values
    • B.The seller required it, appears familiar with market values, is assured not less than the desired price, and the broker's commission is capped at a specified maximum
    • C.Only that the broker disclose the arrangement in writing
    • D.Net listings are prohibited in Texas without exception
    ▸Show answer and explanation

    Correct answer: B. The seller required it, appears familiar with market values, is assured not less than the desired price, and the broker's commission is capped at a specified maximum

    Why B is correct: Section 535.16(b) imposes four conditions, and study guides routinely report only the first two. The principal must require the net listing, the principal must appear familiar with current market values, the listing agreement must assure the principal of not less than the principal's desired price, and the agreement must limit the broker to a specified maximum commission. The rule explains why: a net listing places an upper limit on the principal's expectancy and places the broker's interest above the principal's with reference to obtaining the best possible price.

    Trap: Net listings are restricted in Texas, not banned, so option D overshoots. The two conditions people forget are the ones that actually cap the conflict: a floor under the seller's price and a ceiling on the broker's commission.

    Source: 22 TAC 535.16(b)