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Two identical houses built by the same builder sell for very different prices because one is in a neighborhood buyers strongly prefer. Which characteristic of real estate does this illustrate?
- APermanence of investment
- BArea preference (situs)
- CIndestructibility of land
- DScarcity of usable land
Show answer and explanation
📋 What this tests
Characteristics of real property
✅ Correct answer: B
Area preference, or situs, is the economic characteristic that reflects people's preference for particular locations. It is often called the most important economic characteristic, because the same improvements can have very different values depending on where they are located.
❌ Why other options are wrong
- A: Permanence (fixity) concerns the long payback period of improvements, not buyer preference for a location.
- C: Indestructibility means land itself cannot be destroyed; it does not explain price differences between locations.
- D: Scarcity refers to the limited overall supply of land, not to buyers preferring one neighborhood over another.
2 / 3
A house sells for $250,000. The total commission is 6% of the sale price, split equally between the listing broker and the cooperating (selling) broker. The listing broker pays the listing salesperson 60% of the listing broker's share. No other fees or deductions apply, and no rounding is needed. How much does the listing salesperson receive?
- A$4,500
- B$9,000
- C$7,500
- D$3,000
Show answer and explanation
📋 What this tests
Commission/compensation
✅ Correct answer: A
Total commission = $250,000 x 0.06 = $15,000. Listing broker's share = $15,000 x 0.50 = $7,500. Listing salesperson's share = $7,500 x 0.60 = $4,500. The 6% rate, the 50/50 cooperating split, and the 60% salesperson split are assumptions given in this problem; commission rates and splits are set by agreement, not by law.
❌ Why other options are wrong
- B: This takes 60% of the entire $15,000 commission, skipping the 50/50 split with the cooperating broker.
- C: This is the listing broker's full share; the salesperson receives only 60% of it.
- D: This applies 40% instead of 60%, which is the portion the listing broker keeps.
3 / 3
Two buyers each win a final court judgment against the same Texas broker for losses caused by that broker's conduct in one real estate transaction. Counting attorney's fees, interest, and court costs, their judgments total $190,000, and both buyers have satisfied every other requirement for payment from the real estate recovery trust account. The trust account has never paid a claim against this broker. What is the most the account may pay on the claims arising from this transaction?
- A$125,000 in total, with each buyer's claim reduced in proportion to its size
- B$250,000 in total, because each of the two buyers is entitled to a separate $125,000 limit
- C$190,000 in full, because the total is below the cap on claims against a single license holder
- D$125,000 to whichever buyer files first, with nothing left for the other buyer
Show answer and explanation
📋 What this tests
Penalties for Violation – Recovery Trust Account
✅ Correct answer: A
Section 1101.610(a) caps payments from the trust account, including attorney's fees, interest, and court costs, at $125,000 for claims arising out of a single transaction, regardless of the number of claimants. The separate $250,000 limit in § 1101.610(b) applies to judgments against a single license holder across transactions and does not raise the per-transaction cap. When total claims exceed the limits, § 1101.610(c) directs the court to reduce each claim proportionately.
❌ Why other options are wrong
- B: The $125,000 limit applies to the single transaction regardless of the number of claimants; it does not multiply per claimant.
- C: The $250,000 cap on one license holder does not override the lower $125,000 cap per transaction.
- D: When claims exceed the limits, the court reduces each claim proportionately; there is no first-filed priority.
💡 Sources
- Tex. Occ. Code § 1101.610(a) (Texas Occupations Code Chapter 1101): "Payments from the trust account for claims, including attorney's fees, interest, and court costs, arising out of a single transaction may not exceed a total of $125,000, regardless of the number of claimants."
- Tex. Occ. Code § 1101.610(c) (Texas Occupations Code Chapter 1101): "If the court finds that the total amount of claims against a license or certificate holder exceeds the limitations in this section, the court shall proportionately reduce the amount payable on each claim."
