On your own terms

A real estate transaction involves dozens of terms, most of which you know well. But then there are those you’ve heard but perhaps aren’t as familiar with. Take a look at the questions below and make sure you come off looking like an expert if your client asks about any of these terms.

The answer follows each question, so scroll slowly if you wish to read a question before revealing the answer.

1. A client is more likely to get a loan if the lender says that the client has been:
   a) preapproved
   b) preregistered
   c) prequalified
   
   
   
   
   
   
   
   
   
   
   1. a. Preapproval generally means that your client has completed a loan application and provided debt, income, and savings documentation that has been reviewed and approved. Prequalification, however, usually refers to a loan officer’s written opinion of the ability of your client to qualify for a home loan after asking your client rudimentary questions about the state of his finances.
   

    

2. If the median home price in your area is $150,000, that means:
   a) half the homes are priced above $150,000, and half are priced below $150,000
   b) the average price is $150,000
   c) $150,000 is the most common price
   
   
   
   
   
   
   
   
   
   
   2. a. In statistics, the median is the middle value in a set of numbers.
   

    

    

3. If a plumber isn’t paid for his services, he can file which of these as security for payment?
   a) laborer’s attachment
   b) tradesman’s lien
   c) mechanic’s lien
   
   
   
   
   
   
   
   
   
   
   3. c. Such a lien would cloud the title on a property.
   

    

    

4. True or false? Inserting “time is of the essence” in a contract form has the effect of requiring the parties to strictly comply with all the time periods in the contract.
   
   
   
   
   
   
   
   
   
   
   4. True. Insertion of such a clause in TREC forms should be made only at the direction of the broker’s principal or the principal’s attorney.

    

    

    

5. True or false? Renting an apartment and leasing an apartment refer to different things.
   
   
   
   
   
   
   
   
   
   
   5. False. Although rent normally refers to the consideration paid under
   a lease and lease to the agreement under which rent is paid, the terms renting and leasing have become interchangeable over
   the years.
   
   

6. How big is an acre of land?
   a) 621 square feet
   b) 43,560 square feet
   c) 15,430 square feet
   d) 114,250 square feet
   
   
   
   
   
   
   
   
   
   
   6. b.
   

    

7. True or false? If for many years a neighbor has continually used your client’s property without his permission for a specific purpose (e.g., as a shortcut to access other parts of the neighbor’s property), that neighbor may be entitled to an easement by prescription.
   
   
   
   
   
   
   
   
   
   
   
   7. True. The neighbor’s case must meet tough statutory criteria; however, under Texas law, the neighbor could force an easement.
   

    

8. When talking about a mortgage loan, a point is equal to:
   a) 1% of the lender’s fee
   b) 1% of a loan’s principal
   c) 1% of a loan’s total value (principal plus interest)
   d) the per capita value of the loan’s
   median APR
   
   
   
   
   
   
   
   
   
   
   8. b.
   

    

9. Which would be more beneficial to your client as the result of a real estate transaction?
   a) $1,000 tax credit
   b) $1,000 tax deduction
   
   
   
   
   
   
   
   
   9. a. A tax deduction reduces only your taxable income, while a tax credit reduces the total income tax payment that you owe.

Illustration © Artville.

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