Texas Real Estate Broker Exam Study Guide

Before you dive into the substantive law, it helps to understand the shape of the exam you're preparing for. Knowing the format lets you budget your time and set a realistic scoring target on test day.

Format and Logistics

• Scored questions: The examination contains 145 scored questions.
• Time limit: You are given 240 minutes to complete the exam.
• Passing the National portion: You must answer 60 questions correctly on the National examination to pass it.
• Exam fee: The fee is $39.

Pacing Strategy

With 145 scored questions across 240 minutes, you have roughly 1.65 minutes per question on average. That is comfortable, but the arithmetic means you should not agonize over any single item — flag hard questions, keep moving, and circle back with your remaining time. Because you must answer 60 questions correctly on the National portion, treat every fundamentals topic below as high-yield rather than optional.

Agency is one of the most heavily tested areas on any broker exam, because it defines exactly what you owe to the people you work with. Master the duties, the relationship types, and the distinction between clients and customers.

What Is an Agency Relationship?

An agency relationship arises when a principal authorizes an agent to act on the principal's behalf in dealings with third parties. Once that relationship exists, the agent takes on a set of legally enforceable fiduciary duties.

The OLD CAR Fiduciary Duties

The agent's core fiduciary duties are commonly summarized by the acronym OLD CAR: Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care and diligence. A few of these deserve special attention on the exam:

• Loyalty requires the agent to place the principal's interests above the agent's own and above all others.
• Confidentiality survives termination of the agency and forbids revealing information that would harm the principal's bargaining position — so a duty you owed during the listing does not simply evaporate at closing.
• Accounting requires depositing client funds in a separate trust or escrow account and never commingling them with the broker's own funds.

Types of Agents

A special agent has limited authority for a single transaction, while a general agent may bind the principal in a range of matters, such as a property manager. Watch for this distinction in scenario questions: the scope of authority determines whether a given act binds the principal.

Dual Agency, Clients vs. Customers

Dual agency — representing both buyer and seller in the same transaction — is permitted only with the informed written consent of both parties. Contrast the client relationship with your obligations to a customer: agents owe customers honesty and fair dealing and must disclose known material latent defects, but they do not owe customers fiduciary duties. In practice, this means the level of duty you owe turns on whether the person is your principal or merely a third party to the transaction.

The Texas Broker exam is graded against a defined threshold on the National examination. Knowing the target number of correct answers lets you set concrete study goals instead of aiming vaguely for "a good score."

The passing benchmark

• You must answer 60 questions correctly on the National examination to pass that portion.

Treat 60 correct as your floor, not your goal. Aiming to answer well above 60 correctly builds a margin of safety, so that a few unexpectedly tricky questions or a nervous test day won't push you below the passing line. Focus your review on high-frequency national topics — agency, contracts, property ownership, financing, and real estate math — since consistent accuracy across these areas is what carries you past the 60-correct mark.

Contract questions test whether you can spot when an agreement is enforceable, when it falls apart, and what remedies follow a breach. Learn the four essential elements cold, then layer on the offer-and-acceptance mechanics.

Four Essential Elements

A valid real estate contract requires four essential elements: mutual assent (offer and acceptance), consideration, legally competent parties, and a lawful object. If any one is missing, the agreement is not a valid contract.

Offer and Acceptance Mechanics

• Acceptance must be unqualified, so any material change to the terms operates as a counteroffer that rejects and extinguishes the original offer.
• An offer may be revoked any time before acceptance is communicated.

Read these two rules together in scenario questions: once a party makes a counteroffer, the original offer is gone and can no longer be accepted.

Void, Voidable, and Unenforceable

These three terms are frequent distractors, so keep them straight. A contract lacking a required element is void, meaning it never existed legally. A contract that a party may disaffirm — such as one signed by a minor — is voidable. One that cannot be enforced in court despite being otherwise valid, such as an unwritten land-sale agreement, is unenforceable.

Statute of Frauds

The Statute of Frauds requires contracts for the sale of real estate, and leases longer than one year, to be in writing and signed by the party to be charged in order to be enforceable. This is why an oral land-sale agreement is treated as unenforceable.

Contingencies and Remedies for Breach

Contingencies are conditions that must be satisfied before a party is obligated to perform, commonly including financing, inspection, and appraisal contingencies. When a party breaches, two remedies come up constantly:

• Specific performance compels conveyance because land is deemed unique.
• Liquidated damages clauses let the seller retain the earnest money as the agreed measure of the buyer's default.

A structured plan turns the exam's known parameters into a repeatable routine. Use the confirmed facts to anchor every practice session so your preparation mirrors the real thing.

Simulate the real conditions

• Practice full-length sets. Because the exam has 145 scored questions, complete practice blocks of comparable length so you build the stamina to stay sharp late in the test.
• Time yourself. Rehearse under a 240-minute clock so you internalize a sustainable pace and learn when to move on and flag a question.
• Track your correct count. Since 60 correct answers pass the National portion, score every practice set and watch your correct-answer count climb well past that benchmark before you register.

Register with confidence

The $39 exam fee is modest, but a retake costs you time and momentum. Sitting only once you are consistently clearing the passing benchmark in practice is the most cost-effective approach.

This topic covers the bundle of rights: what kind of ownership someone holds, how it transfers, and what can burden it. Expect questions that ask you to rank estates and deeds by the level of protection or completeness they provide.

Estates in Land

• The fee simple absolute is the highest and most complete form of ownership, freely inheritable and transferable.
• A life estate lasts for the duration of a named person's life, after which title passes to a remainderman or reverts to the grantor.

Deeds and Their Requirements

A deed must be in writing, name the parties, contain a legal description, include a granting clause, and be signed by the grantor and delivered and accepted. Note that delivery and acceptance are required for the deed to take effect — signing alone is not enough.

The type of deed determines how much the grantor warrants:

• A general warranty deed offers the greatest protection because the grantor warrants title against all defects arising at any time.
• A quitclaim deed carries no warranties and conveys only whatever interest the grantor may have.

Recording, Lien Priority, and Easements

Recording the deed in the public land records gives constructive notice to the world and establishes priority. Priority is not absolute across all liens, however: property tax liens and special assessments generally take priority over all other liens regardless of when they were recorded. Finally, an easement appurtenant benefits an adjoining dominant tenement, burdens the servient tenement, and runs with the land — meaning it stays attached to the parcels even when they change hands.

Finance questions blend loan mechanics with the federal consumer-protection laws that govern lending. Break the topic into the loan documents, the clauses, the loan types, and the disclosure statutes.

The Note and the Security Instrument

A mortgage loan involves a promissory note evidencing the debt and a mortgage or deed of trust that pledges the property as security. Who holds title during the loan depends on the state: in a title-theory state the lender holds legal title until the debt is paid, while in a lien-theory state the borrower holds title and the lender holds only a lien.

Key Clause and Points

• The acceleration clause lets the lender declare the entire balance due upon default.
• One discount point equals one percent of the loan amount and is prepaid interest that buys down the interest rate.

Loan Types and PMI

Know the three main categories: conventional loans are not government-backed; FHA loans are insured by the FHA with low down payments; and VA loans are guaranteed for eligible veterans and can permit no down payment. Private mortgage insurance is typically required on conventional loans when the down payment is less than twenty percent, so a borrower putting down less on a conventional loan should expect to pay PMI.

RESPA and TILA / Regulation Z

Two federal statutes dominate this area:

• RESPA governs federally related mortgage loans, prohibits kickbacks and unearned referral fees, and requires the Loan Estimate and Closing Disclosure.
• TILA, implemented by Regulation Z, requires disclosure of the APR and total finance charge and grants a three-day right of rescission on certain refinances of a principal residence.

This final cluster covers three practice areas that show up together on the exam: anti-discrimination law, how appraisers determine value, and the manager's role. The fair-housing prohibitions in particular are high-yield.

Fair Housing Law

The federal Fair Housing Act prohibits housing discrimination based on seven protected classes: race, color, religion, national origin, sex, familial status, and disability. Be able to recognize the named prohibited practices:

• Steering is directing buyers toward or away from neighborhoods based on a protected class.
• Blockbusting is inducing sales by suggesting a protected group is moving in; redlining is denying loans in certain areas.

One point trips up many candidates: discrimination based on race, established under the Civil Rights Act of 1866, has no exemptions. So even where other fair-housing exemptions might apply, race-based discrimination is never permitted.

Valuation and Appraisal

Market value is the most probable price a property should bring in a competitive and open market under fair-sale conditions. Appraisers reach an opinion of value using the three approaches to value: the sales comparison approach, the cost approach, and the income approach. Underlying the sales comparison approach is the principle of substitution, which holds that a buyer will pay no more than the cost of an equally desirable substitute.

Property Management

In property management, the manager is a general agent who owes fiduciary duties to the owner while maximizing net operating income and preserving the property's value. This ties back to agency law: because the manager is a general agent rather than a special agent, the manager can bind the owner across a range of ongoing matters.