CH.1 The Real Estate Business

A property is listed for $380,000 with a commission set for 5%. If the property eventually sells for $370,000, how much is paid in commissions? A. $18,500 (Dollars) B. $20,500 (Dollars) C. $14,500 (Dollars) D. $37,000 (Dollars)

A. $18,500 (Dollars)

Terry has just sold a $900,000 home for clients. The listing agreement stated that Terry would receive a 6% commission. Terry agreed to do a 50/50 split with the buyer's broker. What is the final broker's commission that Terry will receive after the split with the buyer's broker? A. $27,000 (Dollars) B. $2,700 (Dollars) C. $54,000 (Dollars) D. $270,000 (Dollars)

A. $27,000 (Dollars)

If a real estate salesperson and their sponsoring broker agreed to a 40/60 split (60% going to the broker), how much would the salesperson earn if their broker received a commission of $11,600? A. $4,640 (Dollars) B. $11,600 (Dollars) C. $9,960 (Dollars) D. $8,600 (Dollars)

A. $4,640 (Dollars)

A property was sold, and the buyers want to make sure it is in good shape before they close on it. They want someone to go through the house from top to bottom, examine the physical exterior and interior, including appliances, electrical, plumbing, and more. The person they are looking for would be...? A. A home inspector. B. A title company representative. C. A loan officer. D. A real estate broker.

A. A home inspector.

Which of the following should work with a prospective buyer who has been the victim of identity theft...? A. A lender B. The real estate agent themselves C. The real estate agent's sponsoring broker D. All of the answer chices provided are correct

A. A lender

The difference between a real estate broker and a real estate agent is...? A. A real estate broker can do everything an agent can do, plus they can establish their own business and manage a team of real estate agents. B. A real estate agent supervises brokers. C. A real estate broker is always a woman, and a real estate agent is always a man. D. Nothing, as there is no difference.

A. A real estate broker can do everything an agent can do, plus they can establish their own business and manage a team of real estate agents.

An agent's liability typically involves which of the following...? A. All of the answer chices provided are correct B. Disclosures C. Ethics D. Discrimination

A. All of the answer chices provided are correct

Which of the following parties in a transaction may be held liable for their actions...? A. All of the answer chices provided are correct B. Seller C. Buyer D. Seller's broker

A. All of the answer chices provided are correct

A family is going to build their dream home, and they've looked at several house plans, but they haven't found one that is exactly right. They'd like to take some parts from one plan and combine it with parts from another, with some additional innovations of their own. They want someone who can design and plan their home and work with the contractors to build it. The person they need to find is ...? A. An architect. B. A financial planner. C. A property manager. D. An appraiser.

A. An architect.

Which statement is false? A. An independent contractor agreement is not that important because labor laws will generally protect the interests of a salesperson. B. An independent contractor agreement is the best way to create a clear understanding about what the broker and the salesperson can each expect from each other. C. An independent contractor agreement usually contains a plan for how to terminate the agreement. D. An independent contractor agreement is the best way to prevent misunderstandings about how much commission a salesperson will earn.

A. An independent contractor agreement is not that important because labor laws will generally protect the interests of a salesperson.

Where should an agent meet with a prospective buyer prior to showing any properties...? A. At the agent's office B. At the prospective house C. At the client's house D. At the agent's car

A. At the agent's office

Which of the following may dissuade criminals from committing assaults in dark or dimly lit parking lots...? A. Bright lights B. Audio recorders C. Security cameras D. None of the answer choices provided are correct

A. Bright lights

Gloria is interested in buying a business, and she needs to find someone who is familiar with sales of retail stores, restaurants, or offices. This person should have a good understanding of the business side of property ownership, such as leases, rentals, and maintenance. What she's looking for is a real estate agent or broker who works with...? A. Commercial property. B. Industrial property. C. Residential property. D. Agricultural property.

A. Commercial property.

The supply of willing and able buyers in the marketplace is known as...? A. Demand B. Supply C. Scarcity D. Labor

A. Demand

In construction, there are hard costs and soft costs, and hard costs include...? A. Excavation, grading, cost of materials. B. Costs that are difficult to explain. C. Costs that are hard to pay for. D. Fixed costs that never change.

A. Excavation, grading, cost of materials.

If an agent is hurt at a client's home, the client's .............insurance may cover the damages A. Homeowners B. Workers compensation C. Liability D. Any of the above

A. Homeowners

Which is true about independent contractor agreements? A. It lays out both the obligations of the broker and the duties of the salesperson B. It solely lays out the obligations of the broker C. It solely lays out the duties of the salesperson to the broker D. It solely lays out the duties of the salesperson to the client

A. It lays out both the obligations of the broker and the duties of the salesperson

Joan is a salesperson who has developed a great relationship with many of her brokerage's clients. She would like to take these clients with her. Which is most likely? A. Joan and her sponsoring broker have signed a comprehensive independent contractor agreement, which states that Joan may not take any listings with her B. If the clients prefer Joan they should be able to go with her to her new brokerage regardless of what the independent contractor agreement states C. There was no statement in the independent contractor agreement regarding termination, but Joan's broker insists that it is assumed that he would get to keep all listings. D. Joan insists that any statements in the independent contractor agreement about taking listings are nullified because Joan's broker owes Joan an outstanding balance

A. Joan and her sponsoring broker have signed a comprehensive independent contractor agreement, which states that Joan may not take any listings with her

Which of the following will most likely be covered under an agent's liability insurance...? A. Non-intentional acts B. Discrimination C. Failure to disclose a material fact about the property

A. Non-intentional acts

Sarah was recently contacted by a prospective buyer. What should Sarah have the buyer do before viewing any properties? A. Obtain a pre-approval from a lender B. Email the agent a copy of their ID C. Provide the agent with their phone number D. None of the answer choices provided are correct

A. Obtain a pre-approval from a lender

Bright lights should be used in which of the following area...? A. Parking lots B. Office reception C. Corridors D. None of the answer choices provided are correct

A. Parking lots

When the supply is limited and demand is high...? A. Prices escalate. B. Prices fall. C. The market is considered sluggish. D. More homes go into foreclosure.

A. Prices escalate.

Single family homes are...? A. Private freestanding residential houses. B. Homes that cannot house more than one family. C. One of the least popular types of property sales. D. Only located in cities, not rural areas.

A. Private freestanding residential houses.

Which of the following works for a real estate broker? A. Real estate salesperson B. Appraiser C. Architect D. Seller

A. Real estate salesperson

Properties that include single family homes and multi-family buildings are...? A. Residential properties. B. Multi-purpose properties. C. Varied-use properties. D. Illegal.

A. Residential properties.

The majority of real estate agents work with...? A. Residential properties. B. Commercial properties. C. Industrial properties. D. Foreclosed properties.

A. Residential properties.

Real estate offices should include which of the following...? A. Security cameras B. Audio recorders C. Bright lights

A. Security cameras

A REALTOR® is pledged to...? A. Standards of Practice and a Code of Ethics and receives continuing education and professional development. B. Donate a portion of their income to local non-profits. C. Only work with other REALTORS®. D. Maintain an office with at least five full-time agents.

A. Standards of Practice and a Code of Ethics and receives continuing education and professional development.

Which of the following acts on behalf of the broker...? A The agent B The seller C The buyer D The customer

A. The agentAn agent's liability typically involves which of the following...?

When supply is plentiful and demand is low...? A. The pricing drops. B. The demand drops. C. The pricing and the demand are not affected. D. The market is considered "hot".

A. The pricing drops.

A real estate salesperson is a licensed agent who negotiates and arranges real estate sales. Agents must...? A. Work under a real estate broker. B. Have their own car. C. Own property themselves. D. Belong to the National Association of REALTORS® (NAR).

A. Work under a real estate broker.

There is a mixed-use property for sale in Cassie's community, and a buyer walks into her office looking for a residential space. Should Cassie consider showing him the property zoned mixed-use? A. Yes, because mixed-use is a combination of commercial and residential real estate. B. No, because residential property is never part of mixed-use. C. Yes, because the buyer might change his mind. D. No, because residential space is always zoned for single-family homes.

A. Yes, because mixed-use is a combination of commercial and residential real estate.

A real estate salesperson must have their license sponsored at all times by whom? A. a licensed real estate broker B. the state real estate commission C. themselves D. a trusted professional who previously worked in the real estate industry

A. a licensed real estate broker

When a salesperson is considered an employee of a brokerage, the IRS requires the broker to do which of the following as the employer? A. all of the answer chices provided are correct. B. provide health insurance C. pay social security taxes D. withhold taxes

A. all of the answer chices provided are correct.

Which statement is true about real estate commissions? A. all of the answer chices provided are correct. B. the seller's broker might have to split their commission with the buyer's broker. C. it is usually calculated as a percentage of the sale price, but can also be a flat rate. D. it is spelled out in the listing agreement.

A. all of the answer chices provided are correct.

Which statement about the termination of an independent contractor agreement is true? A. both the broker and the salesperson may terminate the agreement at any time B. it can only be terminated in a court of law C. permission must be received from the state real estate commission prior to the termination of the agreement D. all current clients working with salesperson must first agree to the agreement being terminated

A. both the broker and the salesperson may terminate the agreement at any time

The real estate industry includes ............, ............, and ............. It also includes land, and the rights above and below the land. A. residential, commercial, industrial property B. condos, townhomes, single-family homes C. offices, schools, sports complexes D. manufacturing, commercial, industrial properties

A. residential, commercial, industrial property

property sells for $520,000 with a 6% commission, how much will the salesperson earn on the deal if their sponsoring broker also splits the commission with the buyer's broker 50/50? A. $7,800 (Dollars) B. $15,600 (Dollars) C. $12,400 (Dollars) D. $31,200 (Dollars)

B. $15,600 (Dollars)

Real estate brokers are paid a commission for the sales, and...? A. The commission, which can vary, is split between the broker and agent. B. The commission is always a fixed percentage. C. The broker has to split the commission 50/50 with the agent. D. The commission is always a fixed dollar amount.

B. The commission is always a fixed percentage.

Martha is a broker in charge of running her office. Which of the following should Martha ensure is strictly monitored...? A. Office keys B. Office lights C. Alarm system D. Audio recorders

C. Alarm system