7 Study Tips for Your Real Estate Exam: Learning Key Concepts

The moment has arrived! You have already passed your state’s mandatory prelicensing courses, and the big day is near. What now? Don’t let the nerves get the best of you; focus on your goal. The key is to practice, practice, and practice some more. A great way to start is with these study tips for the real estate exam, prepared exclusively for you.

We could give you common and too general study tips, like learning the vocabulary, using flashcards, or getting a good night’s sleep before the test, all of which are valid. However, we want to go further and give you something more meaningful.

After all, we’ve made our task to help you pass the exam on the first try. Is that your end game, too? Then, follow these seven study hacks to improve your test results.

Agent, Broker, and Realtor: What’s the Difference?

These may seem obvious, but you must understand the difference between the main real estate professionals.

This industry has three main types of work: agent, broker, and Realtor. Although they may seem the same to someone outside the real estate business, each has different roles and responsibilities.

Learning them is essential for the test and determining your career path:

• Real Estate Agent: Agents are licensed to help people or corporations buy and sell real estate. When the deal is completed, they might get a commission that they’ll have to split with the firm. Agents work for brokers or brokerage firms.

• Real Estate Broker: Brokers are real estate agents who continue their education and get a broker license. They can do all an agent can but have extra responsibilities and perks. Brokers can work independently, have their brokerage firm, and hire agents. They earn money with commissions from their deals, but they don’t have to split them; they own the business.

• Realtor: Realtors are licensed real estate agents or brokers (or other real estate professionals) and also members of the National Association of Realtors (N.A.R.). N.A.R. members must follow a strict ethics code.

We are starting with the basics, but keep reading because we saved the better study tips for the real estate exam for the end!

Real Property vs Personal Property

After agency, the other central part of real estate is, of course, property. As you can see, sometimes all you need for the test is to learn the difference between concepts, like, in this case, real property and personal property.

Let’s see an easy way to explain each one:

• Real Property: When we say real property, we’re talking about the land itself and everything that comes with it that’s immovable. For example, buildings, trees, soil, and minerals are real property. While some movable things may be considered real estate, the general rule is that they’re unmovable.

• Personal Property: On the other hand, we refer to personal property as possessions not fixed to the land. Movable objects such as furniture, vehicles, goods, and money are good examples of personal property.

Now, here are tips to memorize these concepts:

• Immovable = real property (buildings, trees, soil, minerals)
• Movable = personal property (furniture, vehicles, money)
• Personal property goes with a person when the property is sold.
• Real property stays when a property is sold.

On the exam, it’s important to note that “chattel” and “personalty” are synonymous with personal property.

Real Estate Study Tip to Define Fixtures

Fixtures are personal property that becomes real estate property. They are objects permanently attached to a property using bolts, screws, nails, glue, cement, or similar methods. They weren’t originally in it but became part of it. So, when you think of a fixture, think of attachment.

Imagine you buy a home and then buy a ceiling fan for the living room. At first, the ceiling fan is personal property. But when you attach it to the ceiling, it becomes part of the house, a fixture.

But to say something is a fixture, and by it, part of the real estate, there are several criteria. To ease understanding, many real estate students use the acronym “M.A.R.I.A”:

• Method of attachment: Did you add a built-in wardrobe fastened to a wall? That’s a fixture. When physically attached, no matter the process, it is considered part of the real estate.

• Adaptability: Items that become integral to the use of the property are fixtures. For example, a built-in dishwasher is tailored to fit the kitchen and is considered a fixture. Even if it is removable, it becomes a necessity of the house; it is viewed as a fixture, like ceiling lights.

• Relationship of parties: Disputes about fixtures often favor buyers over sellers and tenants over landlords.

• Intention at time of attachment: The item is a fixture if the intention was a permanent attachment. For example, a furnace installed to heat the home is a fixture. It was supposed to be permanent.

• Agreement between parties: Every purchase contract has a clause about which items are included with the sale. That means that parties (the seller and buyer) can agree on which fixtures stay with the property.

Remembering acronyms for the real estate exams is a great study tip to help you memorize all the content for the test.

-Or and -Ee Rule in Real Estate

These suffixes could give you a big headache if you don’t learn them right: (-or) and (-ee). Here is the study tip to remember them: -or is for the active subject (the giver), and -ee is for the passive (receiver).

Let’s explain this better with an example:

A grantor is a person or entity that transfers the property rights to another. They are the giver. In comparison, the grantee is the person or entity that receives the property at the end of the transaction. They are the receiver.

Other words with those terminations in real estate transactions are lessor and lessee, optionor and optionee, vendor and vendee, and mortgagor and mortgagee.

Prequalification vs Preapproval

Applying for a mortgage is a complex process. Two of the first steps are to pre-qualify and to be pre-approved by the lender. What does it mean, and what’s the difference between those terms?

• Prequalification: It’s like a first glance at your financial situation. It’s a quick, informal assessment in which you provide financial details to a lender—like your income, debts, and assets—and they estimate how much you can borrow. Think of prequalification as a starting point to understand your home-buying budget.

• Preapproval: On the other hand, preapproval goes a step further. You complete a formal mortgage application and provide the lender with the necessary documents, like proof of income, assets, and credit history. The lender will review your financial situation in depth and offer a specific loan amount and interest rate if you’re approved.

Let’s see this comparison to learn it faster:

• Depth of Review: Prequalification is a surface-level review of your finances, while preapproval is a comprehensive evaluation.
• Documentation: Prequalification usually doesn’t require documentation. Preapproval does require detailed financial documents.
• Loan Estimate: Prequalification gives you an estimate, but preapproval provides a specific loan amount.
• Credibility with Sellers: Preapproval is more valuable to home sellers because it shows that you’ve undergone a thorough financial check.

Listing Agreements vs Buyer Agency Agreements

Listing Agreements and Buyer Agency Agreements are very common contracts agents or brokers have with their principal or client.

A listing agreement is a contract between a property owner and a real estate broker that gives the broker the authority to act as the owner’s agent in the property sale. A Buyer Agency Agreement, also known as a “Buyer’s Broker Agreement,” is a contract that establishes a formal relationship between the principal and a broker to get help to buy real estate. It also specifies the broker’s rights, often including the terms under which the broker will receive a commission for their services.

Keep this in mind:

• Listing agreements: agreements between a principal and broker to sell a property.
• Buying agency agreements: agreements between a principal and broker to buy a property.

Appraised Value vs Market Value

Appraised and market values are important factors in determining a property’s worth and the price it can be sold or bought for. Lenders rely on them to underwrite mortgage terms and determine loan amounts.

Here’s the difference:

• Appraised value: is assigned by an appraiser (a professional who values properties) at a specific period to determine the worth of a property.

• Market value: is the price a property can have in the market for buyers and sellers. It’s a variable determined by larger market forces and economic conditions. For example, in case of inflation, the market value of houses and rents tend to increase.

Summing-up

Getting ready for the real estate exam is a big step. It’s not just about memorizing all the content but understanding any question that comes your way with confidence. That’s why real estate study tips are so helpful.

But, if you’re serious about passing that exam on your first try, it’s time to take it a step further and consider a real estate exam prep. Trust us, it’s a game-changer. With Lexawise’s real estate exam prep, you’ll get to take practice exams as close to the real deal as possible, so you’ll know what to expect when the big day arrives. Plus, they’ll help you master the real estate jargon like a pro and take as many practice tests with detailed explanations as you need. Investing in a real estate exam prep can seriously up your exam game. Your success awaits!