CHAPTER 13: REAL ESTATE BROKERAGE OPERATIONS & AGREEMENTS

Kendra is an Illinois real estate licensee and the listing agent for a home. After one month of the three-month listing has gone by without any offers on the property, Kendra becomes concerned. At the time the listing agreement was signed, Kendra and the sellers orally agreed that if no offers were received after one month, the price of the property would be reduced by ten percent. Because the sellers are out of town, Kendra crosses out the old listing price, writes in the new one, and then updates the information on the computerized listing service. Three days later, a prospective buyer comes into Kendra's office to make an offer on the property. Based on these facts, which of the following statements is true? A. Illinois licensees are prohibited by law from making any addition to, deletion from or other alteration of a written listing agreement without the written consent of the principal. B. While alteration of a written listing agreement is usually prohibited by Illinois law, Kendra acted properly in this situation because the sellers were out of town. C. Changing the listing price of a property is a matter of professional discretion, and Illinois licensees are permitted to make alterations to that aspect of a listing agreement only without the written consent of the principal. D. While alteration of a written listing agreement is usually prohibited by Illinois law, Kendra acted properly in this situation because of the prior oral agreement with the sellers.

A. Illinois licensees are prohibited by law from making any addition to, deletion from or other alteration of a written listing agreement without the written consent of the principal.

A listing contract in which the sponsoring broker's commission is contingent on the sponsoring broker being able to produce a buyer before the property is sold by the owner or another sponsoring broker is called a(n): A. open listing. B. net listing. C. exclusive-right-to-sell listing. D. exclusive-agency listing.

A. open listing. open listing A listing contract under which the broker's commission is contingent on the broker's producing a ready, willing, and able buyer before the property is sold by the seller or another broker; the principal (owner) reserves the right to list the property with other brokers.

A sponsoring broker's Licensee lists a unit for sale in a condominium building. The Licensee in this transaction: A. Has a direct contractual relationship with the owners of the unit B. Acts on behalf of the sponsoring broker C. Acts on behalf of the condominium association D. Must find a buyer for the unit to obtain a share of the commission

B. Acts on behalf of the sponsoring broker

Which of the following is true of listing agreements in Illinois? A. All listing agreements must be in writing to be legal. B. All exclusive listing agreements must be in writing to be enforceable. C. Open listing agreements are illegal. D. Net listings are not legal in Illinois.

B. All exclusive listing agreements must be in writing to be enforceable.

A real estate sponsoring broker was responsible for a chain of events that resulted in the sale of one of his client's properties. This is referred to as a: A. Pro forma B. Procuring cause C. Private offering D. Proffered offer

B. Procuring cause procuring cause The effort that brings about the desired result. Under an open listing, the broker who is the procuring cause of the sale receives the commission.

A Licensee may advertise a property for sale only if he or she: A. Personally listed the property B. Uses the employing sponsoring broker's name in the advertisement C. Personally pays the advertisement D. Is a member of the local real estate board

B. Uses the employing sponsoring broker's name in the advertisement

614 Stevenson Street in Peoria is owned by Walter. Walter lives in Chicago, and the house in Peoria is occupied by married couple, Chris and Debbie. If Walter wants to sell the property, who is required by law to sign the listing agreement? A. Walter and Chris and Debbie, because they are a married couple B. Walter only C. Walter as owner and Chris and Debbie as tenants in possession regardless of their marital status D. Chris and Debbie only, because of their marital homestead interest

B. Walter only

While an agent was showing a house to a potential buyer, the agent said, "I don't think there's a better view in the city!" Was this statement by the agent permissible? A. Yes, and it can be best described giving facts related to the property. B. Yes, and it can be best described as puffing. C. No, because state law does not allow an agent to give opinions. D. No, because the sponsoring broker does not allow an agent to give opinions

B. Yes, and it can be best described as puffing.

A property owner lists his property for sale with a sponsoring broker. During the negotiations, the owner told the sponsoring broker that the owner wanted $238,000 for the property, and anything above that amount the sponsoring broker could keep as his commission. The listing with this type of provisions is known as a: A. gross listing. B. net listing. C. open listing. D. non-exclusive listing.

B. net listing.

The Illinois court decision in Chicago Bar Association et al. v. Quinlan and Tyson, Inc., held that: A. licensees have no duty to search for undisclosed latent material defects in a property. B. real estate licensees may complete preprinted forms, but not draft legal documents. C. multiple-listing services may not establish commission rates. D. a sponsoring broker may not pay a commission to another sponsoring broker.

B. real estate licensees may complete preprinted forms, but not draft legal documents. p240 The 1966 Illinois Supreme Court decision in the case of Chicago Bar Association, et al. v. Quinlan and Tyson, Inc., placed certain limitations on real estate licensees in drafting a contract of sale. The court ruled that : • Licensees can only use standard (pre-printed or digital) form contracts that are customarily used in the real estate community • Licensees are authorized only to fill in blanks on pre-printed or digital form contracts. Where no information is required for a blank space, the Licensee should insert NA or a line through the unused blank. It is a violation of Licensing Law to leave blank spaces in a signed contract (either pre-printed or digital). • Licensees are authorized only to line out wording which is not applicable to the pre-printed or digital contract, such as alternative financing arrangements.

All of the following must appear in a written Illinois listing agreement EXCEPT: A. a statement that the property must be shown to all prospective buyers regardless of race, color, religion, national origin, sex, handicap or familial status. B. the complete legal description of the property being sold. C. the time duration of the listing. D. the proposed gross sales price of the property.

B. the complete legal description of the property being sold.

An owner lists her property for sale with a sponsoring broker. Another sponsoring broker, however, finds a buyer for the house. The listing sponsoring broker did not receive a commission from the sale. The type of listing contract between the owner and the sponsoring broker could have been a(n): A. Exclusive right-to-sell B. Exclusive agency C. Open listing D. Multiple listing

C. Open listing

Sponsoring broker Juanita was accused of violating antitrust laws. She was probably accused of: A. not having an equal housing opportunity sign in her office window. B. undisclosed dual agencies. C. allocation of customers or price fixing D. dealing in unlicensed exchange services.

C. allocation of customers or price fixing

By executing a listing agreement with a seller, a real estate sponsoring broker has become: A. a procuring cause. B. obligated to open a special trust account. C. an agent of the seller. D. responsible for sharing commissions.

C. an agent of the seller.

A listing agreement may be terminated by all of the following EXCEPT: A. by mutual agreement. B. by operation of law. C. because the seller can't find another house to buy. D. because of impossibility of performance.

C. because the seller can't find another house to buy.

In a typical agency relationship between the sponsoring broker and the client, the sponsoring broker's commission is determined by: A. state law. B. the local real estate board. C. mutual agreement. D. minimums based on the property type.

C. mutual agreement.

A sponsoring broker lists a property for sale at $200,000 with a 5 percent commission, and he later obtains a verbal offer to purchase the property from a prospective buyer. The seller indicates to the sponsoring broker that the offer would be acceptable if it were submitted in writing. Before it can be put in writing, the buyer backs out and revokes the verbal offer. In this situation, the sponsoring broker would be entitled to: A. a commission of $10,000. B. only a partial commission. C. no commission. D. the normal rate of commission.

C. no commission.

Under which of the following listing agreements can the owner of listed property sell the property on his or her own without having to pay the listing sponsoring broker a commission? A. Exclusive right-to-sell listing only B. Exclusive agency listing only C. open listing and exclusive agency listing D. Open listing only

C. open listing and exclusive agency listing p281 The buyer retains the right to locate and buy property without paying a commission to the broker. Buyer brokers end up "educating" buyers about the process and show many homes only to find that the buyers avoid compensation by working directly with an unlisted property owner, (For Sale By Owner FSBO).

Unless some other written agreement has been made, the sponsoring broker will usually receive the sales commission from the seller when: A. the purchaser takes possession of the property. B. the seller lists the property with the sponsoring broker. C. the transaction is closed. D. an offer is procured from a ready, willing, and able buyer.

C. the transaction is closed.

An owner who is interested in selling his house is usually concerned about how much money he can get when it sells. A comparative market analysis may help the seller determine a realistic listing price. Which of the following is true? A. A comparative market analysis is the same as an appraisal. B. A sponsoring broker is the only one who is permitted to prepare a comparative market analysis. C. A comparative market analysis is prepared by a certified real estate appraiser. D. A comparative market analysis contains a compilation of other similar properties that have sold

D. A comparative market analysis contains a compilation of other similar properties that have sold

Which of the following is NOT prohibited under the antitrust laws? A. Property management companies standardizing management fees B. Sponsoring brokers allocating markets based on the value of homes C. Real estate companies agreeing NOT to cooperate with a sponsoring broker because of the fees that sponsoring broker charges D. A sponsoring broker deciding whether to join a MLS

D. A sponsoring broker deciding whether to join a MLS

To be entitled to collect a real estate commission, a sponsoring broker must be able to prove all of the following EXCEPT that he or she: A. Had a valid real estate sponsoring broker's license B. Was a procuring cause C. Was employed to perform certain acts D. Belonged to a real estate board

D. Belonged to a real estate board

Sponsoring broker Paul listed the Kennedy's property for sale under an exclusive-right-to-sell agreement. One of Paul's agents, Tanya, obtained an offer to purchase the property along with a certified check for 5 percent of the purchase price as earnest money. What should Tanya do with the earnest money check? A. Give it to the Kennedy's B. Hold it until the closing C. Deposit the money in her trust account D. Give the money to Paul for deposit in his trust account

D. Give the money to Paul for deposit in his trust account

In Illinois, if a sponsoring broker is taking a listing and asks the seller to complete a disclosure of property conditions, which of the following statements is true? A. The disclosures are optional, and the seller may avoid liability by refusing to make any disclosures about the condition of the property. B. The standard disclosures cover a narrow range of structural conditions only. C. An agent should give the seller advice regarding which property conditions to disclose and which to ignore. D. Seller disclosure of property conditions is required by Illinois statute

D. Seller disclosure of property conditions is required by Illinois statute

A sponsoring broker who represents a seller under an exclusive listing receives two offers for the property at the same time, one from one of his agents and one from an agent of a cooperating sponsoring broker. What should the sponsoring broker do? A. Submit the offer from his agent first B. Submit the offer from the other agent first C. Submit the higher offer first D. Submit both offers at the same time

D. Submit both offers at the same time

A property owner signed a 90-day listing agreement with a sponsoring broker. The owner was killed in an accident before the listing expired. Now the listing is: A. Binding on the owner's spouse for the remainder of the 90 days B. Still in effect as the owner's intention was dearly defined C. Binding only if the sponsoring broker can produce offers to purchase the property D. Terminated automatically upon the death of the principal

D. Terminated automatically upon the death of the principal

A real estate agent who is an independent contractor receives: A. a monthly salary or hourly wage. B. company-provided health insurance. C. a company-provided automobile. D. negotiated commissions on transactions.

D. negotiated commissions on transactions.

The sponsoring broker enters into a listing agreement with a seller in which the seller will receive $12,000 from the sale of a lot and the sponsoring broker will receive any sale proceeds over this amount. This type of listing is a(n): A. gross listing. B. legal and ethical way to ensure that the sponsoring broker is compensated. C. exclusive agency. D. net listing.

D. net listing.

All of the following are types of listing contracts EXCEPT a(n): A. open listing. B. exclusive agency. C. exclusive right-to-sell. D. MILS mediation agreement.

D. MILS mediation agreement.

The type of buyer agency agreement that best protects the buyer. A. Open buyer agency agreement. B. Exclusive buyer agency agreement. C. Non exclusive buyer agency agreement. D. Buyer's net agreement.

B. Exclusive buyer agency agreement

A Licensee may not receive compensation or commission from anyone EXCEPT: A. His/her sponsoring broker B. From the principal C. From any sponsoring broker D. From a landlord

A. His/her sponsoring broker

Wilia is a Licensee working for Sponsoring broker Vic. Willa sells a $150,000 home listed by Vic's office. The listed commission is 6.5 percent of the selling price. Sponsoring broker Vic and Willa agreed that Willa would receive 55 percent of any commission that she generated for the office. Willa is entitled to receive: A. $2,632.50 B. $5,362.50 C. $3,412.50 D. $5,850.00

B. $5,362.50

The type of listing agreement that provides for the payment of a commission to the sponsoring broker even though the owner makes the sale without the aid of the sponsoring broker is called an: A. Exclusive-right-to-sell listing B. Open listing C. Exclusive-agency listing D. Option listing

A. Exclusive-right-to-sell listing exclusive-right-to-sell listing A listing contract under which the owner appoints a real estate broker as the owner's exclusive agent for a designated period of time to sell the property on the owner's stated terms and agrees to pay the broker a commission when the property is sold, whether by the broker, the owner, or another broker.

Which of the following constitutes grounds for the suspension or revocation of a real estate license? A. Failure to specify a termination date in a listing agreement B. Inclusion of a multiple-listing clause in a listing agreement C. Entering into a guaranteed sales agreement D. Encouraging a seller to agree to a net listing

A. Failure to specify a termination date in a listing agreement

A seller refused to pay a commission to the sponsoring broker even though there was a valid listing agreement and the sponsoring broker procured a buyer for the property. What can the sponsoring broker do? A. Sue the seller in court for the commission B. File a lien on the seller's property for the amount of the commission C. Obtain an injunction to stop the transaction until the commission is paid D. Collect the commission from the buyer

A. Sue the seller in court for the commission

All of the following are typical provisions of a listing agreement EXCEPT the: A. price the seller is asking for the property. B. date the sponsoring broker will schedule an open house. C. commission rate to be paid to the listing sponsoring broker. D. responsibilities of the sponsoring broker.

B. date the sponsoring broker will schedule an open house.

A listing agreement may be terminated for any of the following reasons EXCEPT the: A. sale of the property. B. death of the broker working for the sponsoring broker. C. agreement of the parties. D. destruction of the premises.

B. death of the broker working for the sponsoring broker.

The provision in a listing agreement that gives additional authority to the sponsoring broker and obligates the sponsoring broker to distribute the listing to other sponsoring brokers is a(n): A. joint listing clause. B. multiple listing clause. C. net listing clause. D. open listing clause.

B. multiple listing clause.

The type of listing agreement that provides the least protection for the listing sponsoring broker is the: A. exclusive-right-to-sell listing. B. exclusive-agency listing. C. open listing. D. net listing.

C. open listing.

Under an exclusive agency listing, the listing sponsoring broker would NOT be entitled to a commission if: A. the sponsoring broker presents a full price offer from a qualified buyer. B. the property is sold through another sponsoring broker. C. the property is sold through the multiple-listing service. D. the seller exchanges the property with a neighbor across the street.

D. the seller exchanges the property with a neighbor across the street.

Sponsoring broker Wayne took a listing on a property and shortly thereafter discovered that his client had been previously declared incompetent by the court. The listing now is: A. binding as the sponsoring broker was acting in good faith. B. still valid. C. the basis for commission if the sponsoring broker produces a buyer. D. void.

D. void.

Two different sponsoring brokerage companies claimed they were entitled to a commission from the sale of a property that was listed by one of the firms under an open listing agreement. The sponsoring broker who is entitled to the commission is the one who: A. listed the property. B. advertised the property. C. obtained the first offer. D. was the procuring cause of the sale.

D. was the procuring cause of the sale. In an open listing (known in some areas as a nonexclusive listing), the seller retains the right to employ any number of brokers as agents. The brokers can act simultaneously, and the seller is financially obligated only to that broker who successfully produces a ready, willing, and able buyer. If the seller personally sells the property without the aid of any of the brokers, the seller is not obligated to pay a commission.