Chapter 5, Unit 1 Quiz

What is special about a universal agent? a. A universal agent has power of attorney. b. A universal agent has veto power. c. A universal agent has unilateral power. d. A universal agent has statutory powers.

a. A universal agent has power of attorney.

Which of the following best defines the term procuring cause? a. Actions that demonstrate the unbroken efforts of an agent that are responsible for the buyer making a decision to complete the sale b. Being involved at some point in the transaction c. Scheduling and conducting open house tours d. Establishing a marketing plan for the listing

a. Actions that demonstrate the unbroken efforts of an agent that are responsible for the buyer making a decision to complete the sale

What are the two forms of fraud? a. Active and passive b. Direct and nondirective c. Major and minor d. Primary and secondary

a. Active and passive

Which of the following duties is NOT owed to a customer? a. Confidentiality b. Honesty c. Reasonable care and skill d. Proper disclosure

a. Confidentiality

Which of the following duties best describes what an agent owes customers? a. Fairness, care and honesty b. Obedience, confidentiality and accounting c. Diligence, care, and loyalty d. Honesty, diligence and skill

a. Fairness, care and honesty

Which of the following does a principal owe to his or her licensee? a. Information b. Access c. Accounting d. Performance

a. Information

"Everyone charges the same so you might as well list with me" is an example of what? a. Price fixing b. Boycott c. Market allocation d. Tying agreement

a. Price fixing

The Criminal Antitrust Penalty Enhancement and Reform Act increased the maximum criminal penalty for individuals to what amount? a. $350,000 b. $1 million c. $2 million d. $10 million

b. $1 million

Which BEST describes the role of a fiduciary? a. A broker can only accept a reasonable amount of profit over the agreed upon consideration. b. A fiduciary relationship is established when a property manager agrees to represent an owner in leasing the owner's property. c. A fiduciary can only disclose confidential information obtained after termination of fiduciary relationship. d. A fiduciary relationship is always created when a broker shows a buyer a house.

b. A fiduciary relationship is established when a property manager agrees to represent an owner in leasing the owner's property.

"Let's not do business with AVC Real Estate Company; they discount their commissions" is an example of what? a. Price fixing b. Boycott c. Market allocation d. Tying agreement

b. Boycott

When the real estate agent has produced a buyer who is ready, willing and able, the agent has generally done what? a. Accounted to the principal b. Earned a commission c. Consummated the sale d. Established personal competence

b. Earned a commission

Which of the following types of information can a licensee legally provided to both a principal and a customer? a. Counsel b. Facts c. Legal d. Advice

b. Facts

Puffing is best characterized as which of the following a. Fraud b. Subjective opinion c. Objective opinion d. Misrepresentation

b. Subjective opinion

Agent Sam told a buyer that the fence line also marked the property line. Agent Sam knew that the property line did not extend to the fence line. Agent Sam's actions are an example of what? a. Passive fraud b. Unintended fraud c. Active fraud d. Puffing

c. Active fraud

What are the three primary areas of disclosure? a. Limits, conditions, and funding b. Relationships, performance history, investment value c. Agency, property condition, and environmental hazards d. Fiduciary, accounting, and feedback

c. Agency, property condition, and environmental hazards

Paul Shafer is acting as the agent of David Smith. He a. can agree to a change in price without Smith's approval. b. may share his commission with a licensed attorney. c. must report all offers to Smith. d. can make a profit in addition to his commission.

c. must report all offers to Smith.

Violations of the Sherman Anti-Trust Act can include prison terms and fines of up to how much per violation? a. $50,000 b. $250,000 c. $500,000 d. $1,000,000

d. $1,000,000

An agency relationship is created in each of the following situations EXCEPT which? a. A broker agrees to sell an un-licensed friend's home for no compensation. b. A client authorizes a broker to sell, exchange, and manage his property for 1 year. c. A broker and seller sign a listing agreement for 3 months. d. A broker shows a tenant an apartment.

d. A broker shows a tenant an apartment.

In which situation can a licensee give legal advice? a. If the licensee is knowledgeable in the subject area b. If the licensee has attended real estate law classes c. If the licensee has practiced real estate for more than 10 years d. If the licensee has a separate attorney license

d. If the licensee has a separate attorney license

An agent's duties to a principal include all of the following except which? a. Loyalty b. Accounting c. Notice d. Legal advice

d. Legal advice

Under what conditions can an agent provide advice and counsel to the customer? a. Upon a verbal request by the customer b. Upon a written request by the customer. c. When the request benefits the agent's client d. Never

d. Never

Broker Freehand and Broker Getrich make a deal that Freehand will take all the listings on the north side of town, which are located near his office and Broker Getrich will take all the listings on the south side near his office. They have agreed not to cross into each other's territories or allow their salespeople to do this. They have also agreed to set their rates at 7% so that the sellers will all pay the same fee. Is this acceptable? a. Yes, it is good business to map out a service area. b. Yes, the public should be allowed to all pay the same fee. c. No, the real estate commission sets the commission rates. d. No, this is violation of Sherman Antitrust.

d. No, this is violation of Sherman Antitrust.

Which duty requires that the agent act in good faith and obey the principal's directions? a. Honesty b. Care c. Accounting d. Obedience

d. Obedience

A person who hires an agent to represent his or her interests is known as what? a. Customer b. Referral c. Advocate d. Principal

d. Principal

Murphy, a buyer (customer), does not know about the leaking basement so he proceeds to make an offer. Should the broker (salesperson) who represents the seller have told Murphy about the defect? a. No, caveat emptor would apply in this case. b. No, the broker is the agent for the seller he should not mention the basement unless he is asked. c. Yes, any defects known to the broker should have been disclosed to Murphy. s. Yes, the broker owes Murphy a fiduciary relationship.

c. Yes, any defects known to the broker should have been disclosed to Murphy.

An agency relationship is based on a. compensation b. commission c. authorization and mutual consent d. contact and access

c. authorization and mutual consent

A contract in which an owner hires a broker to market the property creates an agency relationship between a. buyer and seller. b. buyer and broker. c. broker and seller. d. broker, buyer, and seller.

c. broker and seller.

Which of the following statements best defines agency? a. The fiduciary relationship between the agent and the principal b. The fiduciary relationship between the agent and the broker c. The fiduciary relationship between the agents d. The fiduciary relationship between the agent and the customer

a. The fiduciary relationship between the agent and the principal

A special agent is also known as a a. single or solo agent. b. directed or assigned agent. c. limited or specific agent. d. general or area agent.

c. limited or specific agent.

An agency relationship a. can occur through implication (what you might say or do) without a written contract b. always require a written contract c. is always derived by express act d. is better accomplished through implication or ratification

a. can occur through implication (what you might say or do) without a written contract

Antitrust laws prohibit a. market allocation. b. trade unions. c. market coops. d. volume discounting

a. market allocation.

What is the primary directive given to a seller's agent? a. Provide support to cooperating agents. b. Find a ready, willing and able buyer. c. Deal in the best interest of the buyer. d. Provide opinions based on experience.

b. Find a ready, willing and able buyer.

What is a form of implied agency relationship created by the actions of the parties involved rather than by written agreement? a. Defined agency b. Ostensible agency c. At-Large agency d. Non-Facto agency

b. Ostensible agency

An agent fails to discover flood marks on the walls in the basement of a property. The agent sells the property, and the buyer later sues the agent for failing to mention the problem. Which statement best describes what can happen in this case? a. The agent may be guilty of intentional misrepresentation. b. The agent has an exposure to a charge of negligent misrepresentation. c. The agent has little exposure, since the problem was not mentioned on the signed disclosure form. d. The agent is not vulnerable, since the problem was not discovered.

b. The agent has an exposure to a charge of negligent misrepresentation

Seller Joe Needy lists his home for $40,000 and the broker tells the prospective buyer to submit a low offer because the seller is desperate. The buyer offers $38,000 and the seller accepts. Which statement is TRUE about this situation? a. The broker was unethical but because no one was hurt, it is not improper. b. The broker violated the agency relationship. c. The broker's action was proper in obtaining a quick offer. d. Any broker is authorized to encourage bidders.

b. The broker violated the agency relationship.

The broker, who has listed a property for sale, has the obligation to a. do whatever the broker believes to be in the best interest of the owner. b. do whatever the owner has instructed him to do legally. c. discriminate at the owner's instructions. d. accept and sign offers in the name of the owner.

b. do whatever the owner has instructed him to do legally.

An agent is a. one who is the source of another's authority b. one who represents and acts for another c. one who has conferred authority to another d. one who has been paid a commission by another

b. one who represents and acts for another

Which of the following is NOT a form of agency? a. Express agency b. Implied agency c. Closed agency d. Ostensible agency

c. Closed agency

The principles of an agency relationship include all of these factors except which one? a. Mutual consent b. Authorization c. Compensation d. Fiduciary duties

c. Compensation

The principal of Notice is sometimes called what? a. Openness b. Honesty c. Disclosure d. Diligence

c. Disclosure

Which of the following best defines negligent misrepresentation? a. Intentionally misrepresenting facts b. Providing false information as facts c. Failure to use ordinary or reasonable care in a situation d. Manipulation of facts to direct a favorable outcome

c. Failure to use ordinary or reasonable care in a situation

Which of the following is a common complaint buyers have against brokers? a. Excessive paper work b. Compensation fees c. Misrepresentation of the facts d. Failure to respond to questions

c. Misrepresentation of the facts

Which of these is not a violation of Sherman Antitrust laws? a. Boycott b. Price Fixing c. Redlining d. Market allocation

c. Redlining

What do we call the unreasonable restriction of business activities that results from conspiracy among members of a trade? a. Market allocation b. Group boycott c. Restraint of trade d. Tie-in arrangement

c. Restraint of trade

When a home is listed, what is the most limited agency that can be created? a. Agency coupled with an interest b. General agency c. Special agency d. Universal agency

c. Special agency

Obedience of the agent to the principal means what? a. The agent may disobey those instructions in good faith if the agent feels it is necessary b. The agent must follow all the instructions of the seller even if they violate state law c. The agent must follow those instructions regardless of personal feelings about them, as long as they do not violate the state or federal laws. d. The agent must follow all those instructions regardless of the consequences.

c. The agent must follow those instructions regardless of personal feelings about them, as long as they do not violate the state or federal laws.

Agent Paul is bound to inform his client of all facts that might affect the client's interests - both what Paul knows and what he "should have known." Which of these situations would not be something Paul "should know?" a. There is a crack in the basement wall. b. The air conditioner does not work. c. The owner of the property is HIV positive. d. The casement windows have broken seals.

c. The owner of the property is HIV positive.

After listing a home with a broker, the seller told the broker NOT to disclose a major structural defect in the house. What should the broker do? a. Refrain from telling prospective buyers because of the fiduciary responsibility to the seller. b. Refrain from telling the prospective buyers because that is the brokers responsibility to the seller. c. Tell the buyer only if he asks about it. d. Tell the buyer of the defect prior to the writing of an offer or refuse the listing.

d. Tell the buyer of the defect prior to the writing of an offer or refuse the listing.

Matt Bower is a developer. Will Jones is a builder. Matt agrees to sell Will a lot, but he conditions the sale by insisting that Will agree to list the property with him after the home is built. What is this called? a. Market allocation b. Price fixing c. Coercion d. Tie-in arrangement

d. Tie-in arrangement

Which of the following best describes "agency coupled with an interest?" a. When a licensee knows the seller in a property transaction b. When a licensee knows the buyer in a property transaction c. When a licensee has previously sold the property in a current transaction d. When a licensee holds interest in a property transaction

d. When a licensee holds interest in a property transaction

Misrepresenting facts to a buyer might result in a. an extended contract and protracted compensation b. federal sanctions c. loss of a business license d. a voided contract and loss of commission

d. a voided contract and loss of commission

Agent Fred fronts his cousin Norm money to buy a client's house. Shortly after the closing, Agent Fred flips the house and realizes a substantial profit. Agent Fred's actions might be describe as a. across the table. b. arms length. c. direct intent. d. self-dealing.

d. self-dealing.