Question 1

Principal

Accepted Answer

The party who hires an agent to perform tasks on their behalf, usually the seller or buyer in a real estate transaction.

Question 2

Fiduciary Duty

Accepted Answer

The legal obligation of an agent to act in the best interests of their principal.

Question 3

Dual Agency

Accepted Answer

A situation where a real estate agent represents both the buyer and the seller in the same transaction.

Question 4

Listing Agreement

Accepted Answer

A contract between a property owner and a real estate broker, authorizing the broker to represent the seller and sell the property.

Question 5

Escrow

Accepted Answer

A neutral third party holds the funds and documents in a real estate transaction until all conditions are met.

Question 6

Easement

Accepted Answer

A right to cross or otherwise use a portion of another's property for a specific purpose.

Question 7

Encumbrance

Accepted Answer

A claim, lien, charge, or liability attached to and binding upon real property.

Question 8

Freehold Estate

Accepted Answer

An interest in real property that lasts for an indefinite period of time.

Question 9

Leasehold Estate

Accepted Answer

An interest in real property that lasts for a specific, defined period of time.

Question 10

Tenancy in Common

Accepted Answer

A form of concurrent estate in which each owner, referred to as a tenant in common, is regarded by the law as owning separate and distinct shares of the same property.

Question 11

Joint Tenancy

Accepted Answer

A form of concurrent estate where each tenant owns an equal share of the property with the right of survivorship.

Question 12

Statute of Frauds

Accepted Answer

A legal concept that requires certain types of contracts to be in writing and signed by the parties involved, including real estate contracts.

Question 13

Quitclaim Deed

Accepted Answer

A deed which transfers whatever interest the grantor has in the property, without warranties or obligations.

Question 14

Warranty Deed

Accepted Answer

A deed in which the grantor guarantees that they hold clear title to a piece of real estate and has a right to sell it to the grantee.

Question 15

Earnest Money

Accepted Answer

A deposit made to a seller indicating the buyer's serious intention to complete the purchase.

Question 16

Appraisal

Accepted Answer

A professional assessment of a property's market value.

Question 17

Comparative Market Analysis (CMA)

Accepted Answer

An examination of the prices at which similar properties in the same area recently sold.

Question 18

Title Insurance

Accepted Answer

A form of indemnity insurance that protects against financial loss from defects in title to real property.

Question 19

Closing Disclosure

Accepted Answer

A five-page form that provides final details about the mortgage loan, including projected monthly payments, fees, and other costs.

Question 20

Real Estate Settlement Procedures Act (RESPA)

Accepted Answer

A federal law that provides consumers with improved disclosures of settlement costs and eliminates abusive practices.

Question 21

Fair Housing Act

Accepted Answer

A federal act that prohibits discrimination in housing based on race, color, national origin, religion, sex, familial status, or disability.

Question 22

Truth in Lending Act (TILA)

Accepted Answer

A federal law designed to promote the informed use of consumer credit by requiring disclosures about its terms and cost.

Question 23

Antitrust Laws

Accepted Answer

Laws designed to promote free competition in the marketplace by prohibiting unfair business practices.

Question 24

Contingency

Accepted Answer

A clause in a real estate contract specifying conditions that must be met for the contract to be executed.

Question 25

Property Disclosure Statement

Accepted Answer

A document provided by a seller disclosing known defects and conditions of a property.

Question 26

Adverse Possession

Accepted Answer

The occupation of land to which another person has title with the intention of possessing it as one's own.

Question 27

Condominium

Accepted Answer

A type of real estate divided into several units that are each separately owned, surrounded by common areas jointly owned.

Question 28

Timeshare

Accepted Answer

A property with a divided form of ownership or use rights, typically a resort condo shared among multiple owners.

Question 29

Homeowners Association (HOA)

Accepted Answer

An organization in a subdivision, planned community or condominium that makes and enforces rules for the properties within its jurisdiction.

Question 30

Real Estate Owned (REO)

Accepted Answer

Property owned by a lender, typically a bank, after an unsuccessful sale at a foreclosure auction.

Question 31

Short Sale

Accepted Answer

A sale of real estate in which the proceeds from selling the property fall short of the balance of debts secured by liens against the property.

Question 32

Broker Price Opinion (BPO)

Accepted Answer

An estimate of a property's value as determined by a real estate broker or other qualified individual or firm.

Question 33

Foreclosure

Accepted Answer

The process by which a lender attempts to recover the amount owed on a defaulted loan by selling or taking ownership (repossession) of the property securing the loan.

Question 34

Commission

Accepted Answer

The fee paid to a real estate agent or broker in exchange for their services, usually a percentage of the property's selling price.

Question 35

Adjustable-Rate Mortgage (ARM)

Accepted Answer

A type of mortgage loan where the interest rate is periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets.

Question 36

Fixed-Rate Mortgage

Accepted Answer

A mortgage that has a fixed interest rate for the entire term of the loan.

Question 37

Loan-to-Value Ratio (LTV)

Accepted Answer

A financial term used by lenders to express the ratio of a loan to the value of the asset purchased.

Question 38

Prequalification

Accepted Answer

The process of determining how much money a prospective homebuyer will be eligible to borrow before they apply for a loan.

Question 39

Preapproval

Accepted Answer

A lender's confirmation that a borrower is approved for a certain amount of mortgage loan.

Question 40

Principal, Interest, Taxes, and Insurance (PITI)

Accepted Answer

The four components of a mortgage payment.

Question 41

Amortization

Accepted Answer

The paying off of debt with a fixed repayment schedule in regular installments over a period of time.

Question 42

Subprime Mortgage

Accepted Answer

A type of mortgage that is offered to homebuyers with poor credit scores.

Question 43

Closing Costs

Accepted Answer

Fees and expenses, over and above the price of the property, incurred by the buyer and/or the seller in the property transfer process.

Question 44

Private Mortgage Insurance (PMI)

Accepted Answer

A type of insurance required by mortgage lenders when the loan-to-value (LTV) ratio on the home is greater than 80%.

Question 45

Multiple Listing Service (MLS)

Accepted Answer

A marketing database set up by a group of cooperating real estate brokers to provide accurate and structured data about properties for sale.

Question 46

Zoning

Accepted Answer

Government regulations regarding the use of property in certain areas.

Question 47

Radon

Accepted Answer

A radioactive, colorless, odorless, tasteless noble gas that occurs naturally as the decay product of radium. It can be hazardous to health if found in high levels in a home.

Question 48

Lead-Based Paint Disclosure

Accepted Answer

Federal law requires that before being obligated under a contract to buy housing built prior to 1978, buyers must receive the following from the homeseller: an EPA-approved information pamphlet on identifying and controlling lead-based paint hazards.

Question 49

Home Inspection

Accepted Answer

A non-invasive, visual examination of the accessible areas of a residential property to identify defects within specific systems and components.

Question 50

Abstract of Title

Accepted Answer

A condensed history, taken from public records or documents, of the ownership of a piece of land.

Question 51

Property Manager

Accepted Answer

A person or company hired by an owner to handle the day-to-day details of a property, including maintenance, dealing with tenants, and managing income and expenses.

Question 52

Bundle of Rights

Accepted Answer

The concept in real estate that describes the rights a property owner has, including possession, control, exclusion, enjoyment, and disposition.

Advanced Concepts for Tennessee Real Estate Agents