Brokerage Relationships: Laws and Practice (National)
A buyer's agent would NOT recommend that the buyer seek expert advice if the buyer asked, A) "Would you recommend a radon test?" B) "How long has the property been on the market?" C) "Does this crack in the foundation mean there is structural damage?" D) "How should I take title to the property?"
"How long has the property been on the market?"
An individual who is authorized and who consents to represent the interests of another person above their own interests is A) an agent. B) a client. C) a principal. D) customer.
A) An agent
A broker who is the agent of the buyer should do which of these? A) Disclose to the seller that the buyer is a minority person B) Disclose to the seller the maximum price the buyer is willing to pay C) Advise the buyer if the listing price of the seller's house is unrealistic D) Present to the seller only offers that are acceptable
Advise the buyer if the listing price of the seller's house is unrealistic
A broker touring a house before taking a listing notices that the floor is sagging in the living room. The seller has placed a large rug over the floor. What should the broker do in this situation? A) Tell the seller that the buyer is responsible for discovering any defects in the home. B) Take the listing and rely on the seller to disclose any defect on the property disclosure form. C) Rely on the buyer's property inspection to discover any defect. D) Ask the seller about the sagging floor to discover if there is a structural problem with the house
Ask the seller about the sagging floor to discover if there is a structural problem with the house
A salesperson representing a buyer is told that the buyer plans to operate a dog-grooming business out of any house he buys. The salesperson does not tell the buyer to verify local zoning ordinances to determine in which parts of town such a business can be conducted. Which duty does the salesperson violate? A) Loyalty B) Care C) Obedience D) Disclosure
Care
A buyer's agent notices that the seller's property disclosure form provided to him by the listing broker is not complete because some of the boxes indicating structural damage have NOT been checked. What should the buyer's agent do? A) Contact the sellers directly and question them about the form. B) Contact the listing broker and request a properly completed disclosure form. C) Advise the buyers that a property inspection will uncover any structural problems. D) File a complaint against the sellers with the state real estate commission.
Contact the listing broker and request a properly completed disclosure form.
Real estate professionals owe what duties to consumers they don't represent? A) Disclosure of all facts, confidentiality, and accounting of funds B) Disclosure, confidentiality, accounting of funds C) Honesty, disclosure of material facts, and accounting of all funds D) Loyalty, confidentiality and honesty
Honesty, disclosure of material facts, and accounting of all funds
At last week's homeowners association meeting, the board voted to install new windows in the coming months. As a result of this improvement, the association dues will be increased by $100 per month. This increase will become effective the following year. In this case, if a homeowner decides to sell in the interim, which of these BEST applies? A) Disclosure is not required because the increase will not go immediately into effect. B) It is not the seller's responsibility to disclose changes. C) Proposed changes should always trigger disclosure. D) Disclosures of this type should be handled by the attorneys.
Proposed changes should always trigger disclosure.
A broker who represents a seller under an exclusive agency listing receives two offers for the property at the same time, one from one of his salespeople and one from the salesperson of a cooperating broker. What should the broker do? A) Submit both offers at the same time. B) Submit the offer from the other salesperson first. C) Submit the higher offer first. D) Submit the offer from his salesperson first.
Submit both offers at the same time.
Which statement is TRUE of a real estate broker acting as the agent of the seller? A) The broker can accept a commission from the buyer without the seller's approval. B) The broker has a fiduciary obligation of loyalty to the seller. C) The broker can disclose confidential information about the seller to a buyer if the buyer is also represented by the broker. D) The broker can agree to a change in price without the seller's approval.
The broker has a fiduciary obligation of loyalty to the seller.
Two salespeople working for the same broker obtained offers on a property listed with their firm. The first offer was obtained early in the day. A second offer for a higher purchase price was obtained later in the afternoon. The broker presented the first offer to the seller that evening. The broker did not inform the seller about the second offer so that the seller could make an informed decision about the first offer. Which of these statements is TRUE? A) The broker's actions are permissible provided the commission is split between the two salespeople. B) The broker has no authority to withhold any offers from the seller. C) After the first offer was received, the broker should have told the salespeople that no additional offers would be accepted until the seller decided on the offer. D) The broker was smart to protect the seller from getting into a negotiating battle over two offers.
The broker has no authority to withhold any offers from the seller.
Which of these BEST defines the law of agency? A) The principles that govern one's conduct in business B) The rules and regulations of the state's licensing agency C) The selling of another's property by a properly licensed brokerage D) The rules of law that apply to the responsibilities of a person who acts as agent for another
The rules of law that apply to the responsibilities of a person who acts as agent for another
The principal to whom a real estate broker provides professional opinions and counsel is A) a fiduciary. B) a customer. C) a subagent. D) a client.
a client.
The principal to whom an agent gives professional opinions and counsel is A) a customer. B) a subagent. C) a fiduciary. D) a client.
a client.
A listing agent loses the seller's house keys. The agent has breached her fiduciary duty of A) loyalty. B) care. C) accounting. D) disclosure.
accounting.
A real estate broker's responsibility to keep the principal informed of all the facts that could affect a transaction is the duty of A) obedience. B) disclosure. C) care. D) accounting.
disclosure.
Hidden defects, which are not easily discovered during a property inspection, are called A) fraudulent defects. B) latent defects. C) material facts. D) observable defects.
latent defects.
A broker is aware that a property near his new listing may have environmental concerns. In this situation, the environmental issues A) need to be disclosed because they can impact the value of the listing. B) do not need to be disclosed unless they are within the property's boundaries. C) do not need to be disclosed because issues outside the neighborhood have no impact on value. D) need to be disclosed only if they are not obvious and would not be easy for a buyer to discover.
need to be disclosed because they can impact the value of the listing.
When showing a property, an agent exaggerates the property's benefits. This practice is A) an illegal ministerial act. B) an illegal misrepresentation of the property. C) fraud on the part of the agent. D) puffing, which is legal as long as there is no misrepresentation.
puffing, which is legal as long as there is no misrepresentation.
A buyer's agent duty of care to a buyer includes all of these EXCEPT A) sharing with a listing agent that the buyer is willing to pay more for the property. B) helping the buyer to evaluate a seller's counteroffer. C) helping the buyer to locate a suitable property. D) evaluating neighborhood and property conditions.
sharing with a listing agent that the buyer is willing to pay more for the property.
The listing broker learned, while he was out of town, that a large hail and rain storm caused some flooding in the area of the property he is due to close on this week. The seller has not called to report any issues with the property, even though many properties in the neighborhood were damaged. The listing broker A) should verify that no damage occurred to the property. B) has no responsibility because it will be the buyer's broker who should request an inspection. C) does not need to worry because only the seller will be liable if there is undisclosed damage. D) has no duty to inform the buyer because he represents the seller.
should verify that no damage occurred to the property.
The type of agency that exists when a broker represents the seller or the buyer, but not both, in a transaction is A) designated agency. B) facilitator or transaction broker. C) dual agency. D) single agency.
single agency.
In a real estate transaction, the term fiduciary typically refers to A) the agent's relationship to the principal. B) the principal's relationship to the agent. C) the set of obligations owed by the principal to the agent and vice versa. D) the person who has legal power to act on behalf of another.
the agent's relationship to the principal.
In response to the question by a buyer of how much to offer, the best response of the listing agent is, A) "I can't offer you any advice unless you hire me to represent you." B) "I am not sure, but I think a full price offer should be accepted." C) "Typically 5% under the asking price is a good place to start." D) "You can always offer less and see if the seller will counter."
"I am not sure, but I think a full price offer should be accepted."
Which of these would be considered dual agency? A) A broker representing more than one seller B) A broker acting for both the landlord and the tenant in the same transaction C) A broker listing and then selling the same property D) Two brokerage companies cooperating with each other
A broker acting for both the landlord and the tenant in the same transaction
A seller discovered radon and has sealed the cracks in the foundation and told the listing broker that he feels sure the problem is solved. The listing broker should do which of these? A) Disclose the radon if the buyer does not have a radon test done. B) Disclose the radon issue to all potential buyers. C) Not disclose, because the broker represents the seller and it might cause the seller harm. D) Not worry, because the buyer's inspector will find any problems.
Disclose the radon issue to all potential buyers.
After signing a listing contract with a homeowner, the owner tells the listing agent that because his home is in such good condition, he does not want the home sold to any buyers with small children. The agent takes the listing and obeys the owner's instructions by not showing the home to any buyers with small children. He discourages other agents from showing the home to families by telling them the home is not suitable for a family. Are the agent's actions legal? A) Yes, because an agent may choose to whom to market a home she has listed. B) Yes, because the agent has obeyed the owner's instructions. C) No, because fair housing laws do not exempt any property from being marketed to families. D) No, because refusing to show a property to buyers with families violates fair housing laws.
No, because refusing to show a property to buyers with families violates fair housing laws.
A buyer makes an offer on a property and gives the listing agent a check for $1,000 for earnest money. The listing agent deposits the check into his personal account and, a week later, wrote the broker a check from his account to deposit into the broker's trust account. Has the agent fulfilled his fiduciary duty to the client? A) Yes, if he has followed procedures provided by the broker. B) No, because he has commingled funds. C) No, because he has embezzled the funds. D) Yes, if the buyer has given him permission to follow that procedure.
No, because he has commingled funds.
A seller has told the listing agent that the agent must only represent the seller in the sale of the property. In this case, the first guide for the agent is to obey A) all lawful instructions of the owner. B) any state dual agency requirements. C) the concept of caveat emptor. D) the common law of agency, even if a state agency statute exists.
all lawful instructions of the owner.
When a property is misrepresented because defects are not disclosed to a buyer, the buyer may be able to rescind a sales contract or receive A) a return of any earnest money paid to the seller. B) compensatory damages for repair of the defect. C) incidental damages that occur in every real estate transaction. D) special damages due to the inconvenience to the buyer.
compensatory damages for repair of the defect.
A buyer and a seller are both represented by the same real estate brokerage firm acting as an agent in the same transaction. In this transaction, the firm is practicing A) universal agency. B) implied agency. C) dual agency. D) single agency.
dual agency.
A buyer's agent reveals to a listing agent that the buyer is moving into the area for a new job and must be in a new home as soon as possible. The buyer's agent A) may share this information with anyone because it is not relevant to the transaction. B) is required to share this information with the seller or the seller's agent as a material fact relevant to the transaction. C) has violated her duty of confidentiality to the buyer. D) terminates the agency relationship by revealing this information to the seller's agent.
has violated her duty of confidentiality to the buyer.
While looking at a property, the potential buyers ask their salesperson if a fence is the boundary line of the property. The salesperson should recommend that the buyers A) have a survey conducted. B) ask the neighbors. C) read the legal description. D) ask the owners of the property.
have a survey conducted.
On discovering a latent defect in a property, a salesperson should discuss the problem with the seller and then A) arrange for the repairs. B) inform any prospective buyers of the defect. C) contact the city building inspector about the defect. D) tell the seller that the defect must be repaired.
inform any prospective buyers of the defect.
The law of agency is a common-law concept. As common law, it is A) may not be superseded by statutory law. B) legal doctrine that is formed from common sense and usual practices. C) enacted by a legislatures and other governing bodies. D) part of a body of law established by tradition and court decisions.
part of a body of law established by tradition and court decisions.
A salesperson is working with a young married couple expecting a child who are buying their first home. The couple has found a home they want to make an offer on, and in completing the offer, the salesperson explains the options for taking title and then asks how the couple wants to take title. The couple state that they are still not sure what will be best for them and their family. The salesperson should A) recommend they speak to an attorney. B) recommend they take title as joint tenants with right of survivorship. C) leave the form blank to be completed by the title company. D) recommend they take title as tenancy in common.
recommend they speak to an attorney.
It is the duty of an agent to disclose to the principal every material step taken in the transaction of the principal's business. This duty exists because A) the state license laws have this requirement. B) the terms of the purchase contract require the agent to do so. C) the agent has fiduciary obligations to the principal. D) the commission can be adjusted up or down according to the agent's efforts.
the agent has fiduciary obligations to the principal.
A seller has listed her home with a broker for $190,000. The listing broker tells a prospective buyer to submit a low offer because the seller is desperate to sell. The buyer offers $185,000 and the seller accepts it. In this situation, A) the broker acted properly to obtain a quick offer on the property. B) the broker has violated his fiduciary relationship with the seller. C) any broker is authorized by the listing contract to encourage such bids for the property. D) the broker's action was unethical but not illegal.
the broker has violated his fiduciary relationship with the seller.
All of these are examples of due diligence in a purchase contract EXCEPT A) the seller orders title work and agrees to pay for the owner's policy at closing. B) the broker who completes a comparative market analysis (CMA) for a listing appointment. C) the buyer has an attorney review the title commitment. D) the buyer has a property inspection and calls zoning to verify the property zoning will meet her needs.
the broker who completes a comparative market analysis (CMA) for a listing appointment.
A salesperson who has a seller complete a property disclosure form and who provides the form to a buyer in a timely manner is protecting the liability of A) the buyer. B) the brokerage. C) the home inspector. D) the lender.
the brokerage.
Before making an offer on a property, the buyer should have received and read A) the independent contractor agreement. B) the seller's property disclosure form. C) the broker policy manual. D) the general warranty deed.
the seller's property disclosure form.
Most states require a property condition disclosure in a residential transaction. The statement is completed by A) the seller. B) the broker. C) the seller and salesperson or broker. D) the property inspector.
the seller.
The seller has completed a property disclosure for an "as is" sale, which states that all items are in working order. After closing, the buyer finds out the sewer system has had long-term problems. The person or persons MOST likely to be held responsible for the misrepresentation is A) no one because it is an "as is" sale. B) the buyer's broker. C) the listing broker and the seller. D) the seller.
the seller.
The length and terms of home warranties are determined by A) the city and local laws. B) the federal laws. C) the warranty contract. D) the state laws.
the warranty contract.
Due diligence is BEST defined as A) using a good-faith effort to carry out the terms of a contract. B) a seller's obligation to complete a property disclosure. C) the requirement to have an inspection on a property. D) all the acts required of all parties to a transaction.
using a good-faith effort to carry out the terms of a contract.
Good faith as applied to agency is BEST defined as A) using honest and sincere intentions. B) using professional skills to support all parties in a transaction. C) putting the interest of a principal above those of an agent. D) following all lawful instructions of a principal.
using honest and sincere intentions.
A listing agent brings an offer from his separated spouse to his seller. The agent and his spouse, though separated, still own the property. The agent does not tell the seller, his client, that the buyer is his spouse, because she has retained her maiden name throughout the marriage. The agent's action A) creates an express agency with the buyer. B) terminates the agency contract with the seller. C) violates his duty of disclosing material facts to the seller. D) is legal and ethical because the agent's relationship to the buyer does not affect the seller.
violates his duty of disclosing material facts to the seller.
A listing agent does not disclose to his client that he has agreed to manage a duplex for the buyer once it has been sold. The agent's action A) is legal and ethical because his managing the property after the sale does not affect the seller. B) violates his duty of disclosing material facts to the seller. C) is legal under dual agency. D) terminates the agency contract with the seller.
violates his duty of disclosing material facts to the seller.
The relationship of agents to their principal is that of A) a trustee. B) an attorney-in-fact. C) a subagent. D) a fiduciary.
a fiduciary.
A property manager is hired to manage a property while the owner is overseas for two years. The property manager is A) a universal agent. B) a general agent. C) a special agent. D) an attorney-in-fact.
a general agent.
A property manager is typically A) a special agent. B) a universal agent. C) a general agent. D) a designated agent.
a general agent.
A real estate broker hired by an owner to sell a parcel of real estate must comply with A) the concept of caveat emptor. B) all lawful instructions of the owner. C) all dual agency requirements. D) the common law of agency, even if a state statute exists.
all lawful instructions of the owner.
An agent for a brokerage firm has six listings. Another agent for the same firm represents a buyer who wants to purchase one of the six listings. The firm's broker appoints the listing agent as an agent for the seller, while appointing the other agent to represent the buyer in the same transaction. The broker has both the seller and the buyer sign a statement acknowledging that arrangement. The arrangement that results is A) designated agency. B) single agency. C) undisclosed agency. D) implied agency.
A) Designated Agency
While a condo unit was listed for sale, the homeowners association voted to amend the bylaws to become a pet-free building. The licensee in this case should do which of these? A) Avoid informing potential buyers because this action would be a violation of fiduciary duties. B) Disclose the changes to all potential buyers. C) Disregard the matter because pets are of no relevance to material defects. D) Avoid informing the buyers because this information might prevent a sale.
Disclose the changes to all potential buyers.
A woman tells her neighbor, a real estate broker, that she is thinking about selling her home. The broker contacts several prospective buyers to whom she has shown her firm's listings in the past month. One of the buyers makes an attractive offer on the woman's home without even seeing the property. The broker goes to the woman's house and presents the offer, which the homeowner accepts. What is the agency relationship between the homeowner and the broker? A) Express agency B) Universal agency C) Implied agency D) General agency
Implied agency
A seller agreed to list his home for $220,000, but the listing agent did not tell him that the fair market value of the home was $245,000. The listing agent purchased the property the next day. The agent has violated which of these duties to the seller? A) Disclosure B) Accounting C) Care D) Loyalty
Loyalty
Shortly before closing on her home, a seller learns that her listing broker is related to the buyer. The listing broker has not disclosed that relationship to the seller. If the seller later refuses to pay the listing broker his commission, will the broker likely prevail in a lawsuit to recover the commission? A) Yes, because a seller must pay commission if the broker produces a ready, willing, and able buyer. B) Yes, because the disclosure of a relationship between the buyer and the listing broker is not relevant to the transaction. C) No, because the seller may rescind a listing agreement at any time before closing. D) No, because the broker has violated his fiduciary duties to the seller.
No, because the broker has violated his fiduciary duties to the seller.
A listing salesperson schedules an open house with the sellers. Before the open house, she advises the sellers to place valuable jewelry that is visible in the bedroom into a safe or another secure place. The sellers ignore the salesperson's advice. The morning after the open house, the sellers call the salesperson to inform her that some of their jewelry is missing from the bedroom. Will the salesperson likely be held accountable for the missing jewelry? A) Yes, because the salesperson is accountable for the money or property of her clients. B) Yes, because the salesperson should have checked every visitor leaving the open house for any stolen valuables. C) No, because the salesperson advised the sellers to remove or hide all valuables before the open house. D) No, because the sellers should have watched over their valuables during the open house.
No, because the salesperson advised the sellers to remove or hide all valuables before the open house.
A broker listing an older home secures his own property inspection to discover any defects in the property. The inspection reveals that water has been seeping into the basement and the crawl space beneath the house for years. What should the broker advise the seller to do? A) Hide the problem as much as possible to get the best price from a buyer B) Leave the discovery of the problem up to the buyers C) Reveal the problem on the property disclosure form D) Tell buyers that any drainage problems have been corrected
Reveal the problem on the property disclosure form
According to its state's laws, a brokerage firm is allowed to have an agency relationship with only one party in the same transaction. This relationship is known as A) single agency. B) designated agency. C) disclosed dual agency. D) exclusive buyer agency.
Single agency
The typical relationship between a listing broker and a seller represents what type of agency? A) General B) Universal C) Implied D) Special
Special
The relationship between a broker and a seller is generally what type of agency? A) Implied agency B) Universal agency C) General agency D) Special agency
Special agency
Designated agency will MOST likely occur under what circumstance? A) The buyer is a client of the firm and the seller is the customer of the firm. B) Both the buyer and the seller are customers of the firm. C) The buyer and the seller in the same transaction are both represented by the same brokerage firm. D) The seller and the buyer are represented by different brokerage firms.
The buyer and the seller in the same transaction are both represented by the same brokerage firm.
A salesperson lists a residence. The owner confides to the salesperson that a lower price would be acceptable. The salesperson tells a prospective buyer that the seller will accept up to $5,000 less than the asking price for the property. Based on these facts, which statement is TRUE? A) The salesperson has not violated any agency responsibilities to the seller. B) The relationship between the salesperson and the seller ends automatically if the purchaser submits an offer. C) The salesperson should have disclosed this information, regardless of its accuracy. D) The disclosure is improper—and possibly illegal—regardless of the salesperson's motive.
The disclosure is improper—and possibly illegal—regardless of the salesperson's motive.
Which of these BEST defines the common law of agency? A) The principles that govern one's conduct in business B) The rules and regulations of the state licensing agency C) The selling of another's property by an authorized agency D) The rules of law that apply to the responsibilities and obligations of a person who acts for another
The rules of law that apply to the responsibilities and obligations of a person who acts for another
A salesperson working with a commercial client for the first time follows the client's orders and drafts a contract for the purchase of a small strip center. Which of these is TRUE? A) The salesperson is legally practicing law because the client ordered him. B) Commercial brokers are allowed to draft contracts under the direction of clients. C) The salesperson is illegally practicing law and is most likely not competent. D) The salesperson is in violation of truth-in-lending laws.
The salesperson is illegally practicing law and is most likely not competent.
A buyer who is a client of the broker wants to purchase a house that the broker has listed for sale. Which of these statements is TRUE? A) The seller and the buyer must be informed of the situation and agree, usually in writing, to the broker's representing both of them. B) The buyer should not have been shown a house listed by the broker. C) The broker must refer the buyer to another broker to negotiate the sale. D) The broker must treat the buyer as a consumer/customer and proceed to write an offer on the property and submit it.
The seller and the buyer must be informed of the situation and agree, usually in writing, to the broker's representing both of them.
A real estate broker lists a home as agent for the seller. Later that same day, a buyer comes into the office and asks for general information about homes for sale in the area. Based on these facts, which statement is TRUE? A) The brokerage firm owes fiduciary duties to both seller and buyer. B) Both seller and buyer have no relationship with the brokerage except as consumers. C) The seller is the broker's client; the buyer is a consumer. D) If the buyer later asks for buyer representation by the firm, he cannot have it because the firm is an agent of the seller only.
The seller is the broker's client; the buyer is a consumer.
A listing agent is frustrated that a property has been on the market for over two months, and the agent wants to sell the home quickly. The listing agent shares with a nonrepresented buyer that the home has been on the market for a long time and so the seller would welcome any offer on the home. The buyer makes an offer at a price lower than he had expected to offer. Has the agent violated any duties to the seller? A) No, because the agent has served the seller's interest by producing a ready, willing, and able buyer. B) Yes, the agent has violated his fiduciary duty by disclosing a fact that could benefit the buyer. C) No, because the agent is not required to disclose that information to any party in the transaction. D) Yes, the agent has violated his fiduciary duty because license law prohibits any discussion of how long a property has been on the market.
Yes, the agent has violated his fiduciary duty by disclosing a fact that could benefit the buyer.
A buyer's agent knows that a property has been on the market for a time longer than normal for the neighborhood and type of house. Her buyer decides to write an offer above the listed price of the home because the buyer is in a hurry to find a home and move in. The buyer's agent does not mention to the buyer the length of time the home has been on the market. Has the buyer's agent violated any duties to the buyer? A) No, because the agent has served the buyer's interest in finding a suitable home that the buyer wants to purchase. B) Yes, because the license law requires agents to disclose the length of time on the market to all parties in a transaction. C) Yes, the agent should disclose the time on the market because that fact creates a more favorable opportunity for the buyer to offer a lower price. D) No, because the agent is not required to disclose that information to any party in the transaction.
Yes, the agent should disclose the time on the market because that fact creates a more favorable opportunity for the buyer to offer a lower price.
A real estate agent acting as a single agent owes either fiduciary or statutory agency duties to any of these EXCEPT A) a seller. B) a landlord. C) a buyer. D) a customer.
a customer.
A principal broker authorizes one agent in her firm to represent the seller and another to represent the buyer in the same real estate transaction. Each agent is A) a single agent. B) a universal agent. C) a dual agent. D) a designated agent.
a designated agent.
A homeowner received estimates that ranged between $20,000 and $25,000 for repairing damage caused by water leaking into the basement. The owner couldn't afford the repairs, so he constructed a false floor over the entire basement and installed carpet over the floor to conceal the damage. When he listed the house, he did not disclose the leak or the damage to the basement on the property disclosure form. The basement damage is an example of A) a patent defect, and the brokerage firm is not liable for not discovering the false floor and the damage. B) a latent defect, and the listing brokerage firm is not liable for not discovering the false floor over the damage. C) a latent defect, and the listing brokerage firm may be liable for not discovering the false floor over the damage. D) a patent defect, and the brokerage firm may be liable for not discovering the false floor and the damage.
a latent defect, and the listing brokerage firm is not liable for not discovering the false floor over the damage.
Fiduciary means that there is A) an oral agreement between the parties that does not create an agency agreement. B) a written agreement between the parties to pay a real estate commission. C) a legal relationship between parties that creates a position of trust and confidence. D) a legal relationship in which only the duties of honesty and good faith are owed to the parties.
a legal relationship between parties that creates a position of trust and confidence.
A salesperson working with a customer knows that the neighborhood he is showing is very near an airport with low-flying planes that create a lot of noise. The salesperson should disclose the level of airplane noise in the neighborhood because it is A) a material breach. B) a material defect. C) a material fact. D) material information.
a material fact.
Information that is important to buyers that could change their decision to purchase a property is known as A) a material fact. B) a latent defect. C) an observable defect. D) a physical defect.
a material fact.
A home with a warranty that is required by the state and covers merchantability and habitability is MOST likely A) an older home with outdated systems. B) a home in a covenant controlled community. C) a home built in the last 15 years. D) a new home.
a new home.
A couple accompanies a property inspector during an inspection of a house on which they have a contract. The inspector points to a six-inch crack at the corner of a dining room window. The crack is an example of A) a patent defect. B) a latent defect. C) a structural defect. D) an environmental defect.
a patent defect.
A prospective buyer looking to build on a vacant lot asks his salesperson if a septic tank could be built on the lot. The salesperson may suggest that the buyer conduct A) a topography test. B) a percolation test. C) a hydroponics test. D) a septic soil test.
a percolation test.
To protect the buyer, many states require A) a broker's certification of property condition. B) a property survey. C) a buyer's independent property inspection. D) a seller's property condition disclosure.
a seller's property condition disclosure.
A listing broker is typically A) a designated agent. B) a special agent. C) a general agent. D) a universal agent.
a special agent.
A property that has an undesirable reputation because of an event that occurred on or near the property is A) a stigmatized property. B) a polluted property. C) a dangerous property. D) considered a physical hazard.
a stigmatized property.
A broker helps a buyer and a seller with paperwork but does not have fiduciary obligations to either party. The broker's activity in this situation is that of A) a transaction broker. B) a designated agent. C) a single agent. D) a dual agent.
a transaction broker.
A broker helps a buyer and a seller with paperwork but does not represent either party as an agent. This arrangement is A) a transaction brokerage. B) dual agency. C) prohibited in all states because a broker must always represent one party. D) designated agency.
a transaction brokerage.
The property disclosure form is usually given to a buyer A) at the closing of the transaction. B) at the initial contact with the buyer. C) before an offer is made. D) after an offer is made.
before an offer is made.
In a dual agency situation, a broker may represent both the seller and the buyer if A) the broker determines dual agency is the only option to sell the property and get paid a full commission. B) both parties give their informed consent, usually in writing, to the dual agency. C) the broker informs either the buyer or the seller of this fact. D) both parties are represented by attorneys.
both parties give their informed consent, usually in writing, to the dual agency.
An agency relationship in which a broker represents both the seller and the buyer in the same transaction would require all of following EXCEPT A) commissions are to be collected according to the provisions of agreements with both parties. B) the broker will not disclose confidential information about one party to the other party. C) both the seller and the buyer are required to allow the broker to share price, terms, and motivations with the other party. D) the principals agree in writing that the broker is representing both sides of the transaction.
both the seller and the buyer are required to allow the broker to share price, terms, and motivations with the other party.
Abandoned factories, former dry cleaning properties, and vacant gas stations that may contain environmental hazards are classified as A) green fields. B) priority list sites. C) wetlands. D) brownfields.
brownfields.
A buyer in a fast-selling market has written a number of offers in hopes of getting at least two accepted. The buyer then plans to terminate those that the buyer does not want during the inspection period. The buyer can buy only one property, and the broker representing him as an agent knows this and is helping with the process. In this case, the A) buyer is acting in good faith, but the broker is acting in bad faith. B) broker will be sure to get paid, which is second to helping the buyer. C) buyer and broker are acting in bad faith. D) buyer has a good business plan, which is standard in seller's markets.
buyer and broker are acting in bad faith.
A listing salesperson acting as the seller's agent is holding an open house. The state does not allow dual agency. A buyer starts a conversation about the property and tells the salesperson she is an investor looking for a number of properties. The salesperson states that the seller of the property will take less and that the salesperson can represent the buyer in the purchase of this property and others. In this case, the salesperson A) is an undisclosed dual agent who acted in bad faith. B) can act as a subagent to the seller and a full agent to the buyer. C) is guilty of conversion of agency and could be fined. D) may act as the buyer's agent without disclosure because it is an open house.
is an undisclosed dual agent who acted in bad faith.
A broker tells a prospective buyer that a lake property has a spectacular view of the lake. In fact, the view from the property also includes several large trees that block the view of parts of the lake. In this case, the broker A) is guilty of intentional misrepresentation. B) is guilty of negligent misrepresentation. C) is merely puffing, which is legal as long as there is no misrepresentation. D) has committed fraud.
is merely puffing, which is legal as long as there is no misrepresentation.
A seller tells a listing broker his home is serviced by a city water system for both water and sewer services, and indicates city water service on the property disclosure form. The broker suspects that there is no city water to the home because it is in a rural area, but she relies on the seller's statement and says nothing concerning the water system to a buyer. The buyer discovers after the purchase that the home has no city water service. In this case, the broker A) is not liable for misrepresentation because the seller did not disclose the lack of city water services. B) may file a complaint against the seller with the state real estate commission. C) may file suit against the seller for not disclosing the lack of city water services. D) may be liable for misrepresentation because she should have known about the lack of city water services.
may be liable for misrepresentation because she should have known about the lack of city water services.
A prospective buyer looks at a house listed for sale and asks the listing broker if it is connected to the city water system. The broker does not know the answer, but sensing it is important to making a sale, says yes. If the prospect relies on this statement, purchases the house, and finds out there is no sewer system, the broker A) is not liable because the buyer is responsible for her own property inspection. B) is only liable if she falsifies the property disclosure form. C) may face court action resulting in cancellation of the sale and money damages. D) is not liable for information she does not know.
may face court action resulting in cancellation of the sale and money damages.
The buyer's salesperson states upon entering a home, "This home is the best home on the block, has the nicest floor plan and the best schools in the area." The salesperson maybe guilty of A) puffing, which is not breaking the law. B) misrepresenting the property and the schools. C) misrepresenting the schools and puffing about the location and the floor plan. D) nothing; this is how all salespeople talk.
misrepresenting the schools and puffing about the location and the floor plan.
A listing broker discovers a latent defect in the home, which the seller has not disclosed on the seller's property disclosure form. The broker A) should trust that the buyer's property inspection will discover the defect. B) is not required to disclose defects that the seller does not indicate on the property disclosure form. C) must disclose the defect to the buyer or the buyer's representative. D) should report the seller to the state real estate commission.
must disclose the defect to the buyer or the buyer's representative.
A broker was told by her principal not to advertise her property in a certain newspaper, which was out of the area. The broker complied because he A) allowed to advertise only in local newspapers. B) had never advertised in that newspaper anyway. C) must obey the lawful instructions of her principal. D) was not intending to advertise the property at all.
must obey the lawful instructions of her principal.
A real estate broker acting as the agent of the seller A) must promote and safeguard the seller's best interest. B) should present to the seller only the highest offer for the property. C) can accept an offer on behalf of the seller. D) can disclose the seller's minimum price.
must promote and safeguard the seller's best interest.
A broker is hired as a buyer's agent. The buyer confides that he filed for bankruptcy two years ago. The buyer would like to find a seller who is willing to carry the loan. In this situation, a correct statement about the broker's responsibility regarding disclosure of the bankruptcy when presenting the offer to purchase is that the broker is A) required to disclose the bankruptcy because it is a material fact—information important to the seller's evaluation of the offer. B) not required to disclose the bankruptcy because the broker has no agency relationship with the seller. C) required to disclose the bankruptcy under Equal Credit Opportunity Act (ECOA). D) not required to disclose the bankruptcy because the seller might reject the offer.
required to disclose the bankruptcy because it is a material fact—information important to the seller's evaluation of the offer.
A listing agent's duty of care to a seller includes all of these EXCEPT A) helping the seller arrive at a realistic listing price and commission splits for the MLS entry. B) making reasonable efforts to market the property. C) sharing the seller's financial situation with a buyer in order to expedite a sale. D) helping the seller evaluate an offer to purchase and write a counteroffer if needed.
sharing the seller's financial situation with a buyer in order to expedite a sale.
A broker who has done a proper comparative market analysis (CMA) discusses the probable market value of the property with the seller, and the seller wants an unrealistic price on the property. The broker may do all of these EXCEPT A) decline to take the listing at the high price. B) take the listing at the seller's proposed price, planning on reducing the price himself in the future when the seller is more realistic. C) take the listing with the understanding from the seller that price reductions may be needed to sell the property. D) suggest the seller have a formal appraisal done.
take the listing at the seller's proposed price, planning on reducing the price himself in the future when the seller is more realistic.