Chapter 6

A broker wants to be compensated if anyone else sells his listed property during the listing period. What type of listing should the broker acquire?

an exclusive right-to-sell listing

A selling broker is showing a parcel of property and tells the prospective buyer: "In my expert opinion, this property is the best for you." This statement could be interpreted as:

Implied agency

When does an open listing terminate?

In a reasonable time If the property is destroyed by fire When the property is sold

Jon lists his home with Paul. Salesperson Rupert finds a ready, willing, and able buyer for Jon's home. This situation could involve all of the following agency relationships except:

Designated agency

A buyer requests that a salesperson take a listed property off the market until his wife sees it. May the broker comply?

No, this violates the agency agreement

A property management contract could exist between the property manager and:

The property owner

A salesperson could be described as a "general" agent in his relationship with:

broker

The listing broker discovers that a property's value has been adversely affected by proposed construction of a new power plant. She must:

inform buyer and seller

Which of the following actions would be a violation of anti-trust laws?

two brokers agree to only market their services in specific areas of the community

A property is listed at $68,000. A full price offer is made without contingencies. In this situation, which of the following statements is correct?

The seller may refuse to sell

Agency relationships include all of the following duties, EXCEPT:

notice

Which of the following actions would create an agency relationship?

.A broker accepts the listing to sell a friend's home and agrees to a reduced commission An individual gives written authority for a broker to buy, sell, or exchange his real property for a one year period A duplex owner signs a listing agreement which authorizes a broker to market the property for one year

A broker accepts an exclusive right-to-sell listing. However, the property is later sold by another broker. How many brokers could be owed a commission by the principals in this transaction?

2

Broker Lynch has an exclusive listing to sell Jones' hardware store for a $4,500 commission. He took another exclusive listing to sell Brown's grocery store for a $5,000 commission. With the consent of Jones and Brown, Lynch arranges an exchange of these two stores. How much will Lynch make from this exchange?

9500

A broker has an exclusive right-to-sell listing, but the seller finds his own buyer while the listing is still in force. The broker is entitled to:

A full commission

A broker lists a property. A buyer submits a written offer and the seller accepts it. On the date scheduled for closing, the seller refuses to sign any of the papers. The broker is entitled to:

A full commission because he fully performed

Which of the following facts MUST a broker disclose to his seller?

A prospective purchaser (who asked the seller to hold a purchase money mortgage) has a history of bad credit

Which type of listing agreement allows the seller to sell his property and NOT have to pay a commission, but assures the broker a commission if anyone else (other than the owner) sells the property?

An exclusive agency listing

Jon is an agent for Betty the Buyer. This relationship could exist by virtue of:

An oral agreement Judicial action Validation

A broker could act as a fiduciary in all of the following functions, EXCEPT:

Appraising property

Buyer Billy and Broker Bobby enter into a buyer-broker agreement. Billy grows increasingly suspicious of Bobby's abilities. After two weeks pass without being shown a satisfying property, Billy revokes the agreement. All of the following statements could be true about this action, except:

Bobby could sue for specific performance

All of the following statements are true of buyer-broker agreements, except:

Buyer-broker agreement terms may be disclosed to customers

A seller entered into a valid contract with a buyer. Afterwards, the seller realized that his broker is also representing that buyer. The seller has a right to:

Cancel the contract without obligation to either buyer or broker

A listing agreement can be terminated by all of the following circumstances, EXCEPT:

Death of the salesperson

A listing will automatically terminate:

If the listing broker goes bankrupt On the date specified in the listing agreement If the seller dies prior to receiving an offer from a ready, willing, and able buyer

The zoning commission has proposed a change that would dramatically impact the subject property in a broker's listing agreement. This information:

Must be promptly disclosed to all parties

Broker Sam lists a house and sells it 2 months into the listing period. Sam tries to collect his commission after closing, but the seller refuses and correctly asserts that she has no legal obligation to pay. What type of listing did Sam have?

Net listing

If a salesperson lists a property, she CANNOT be:

Only a buyer's agent

Which of the following listings will permit an owner to sell his property without paying a commission to any broker?

Open listing and exclusive agency listing

In a real estate transaction, which of the following facts MUST an agent disclose to his principal?

That the buyer has had previous credit problems

Two salespersons have been assigned as designated agents in a real estate transaction. The seller requests that her agent, Anne, not mention the mold issue in the bathroom since she wants to sell her house quickly. At an office meeting, Anne tells her broker that the seller might accept a lower price because of the issue. In this situation:

The broker may tell the buyer about the mold problem in the bathroom

A salesperson lists a home, but the house burns down prior to receiving an offer. Which of the following statements is true for the situation?

The listing automatically terminates

What is the agency relationship between cooperating brokers (listing broker and selling broker) who are members of the MLS?

The listing broker is principal, and the selling broker is the agent of the listing broker

Which of the following statements is true about an open listing?

The seller only pays the broker who produces a ready, willing, and able buyer

Two brokers agree to charge the same commission rate on all property listed by their offices. Such an action:

Violates Anti-Trust laws

When must a licensee disclose agency relationships?

When the licensee has substantive discussions about specific property

When does a broker earn commission?

When the offer to purchase has been signed and accepted by the seller

Jill lists her property with Broker Joe. After much hard work, it looks as if the property will finally sell. However, Broker Joe files for bankruptcy before the property actually does sell. Jill becomes nervous and seeks to terminate the listing agreement. May Jill terminate the agreement without breaching the contract?

Yes, because she is legally justified

Dan and Daisy enter into a buyer-broker agreement. Dan believes that Daisy is in breach. May Dan terminate the contract?

Yes, but Dan risks causing a breach himself

Broker John and Buyer Jenny enter into an exclusive buyer agreement. However, Jenny finds a suitable property on her own. After Jenny purchases the property, John demands his commission. Must Jenny pay John a commission?

Yes, so long as Jenny purchased property similar to the one described in the agreement The exclusive buyer agreement obligates the buyer to compensate the agent if the buyer purchases property similar to that which was described in the contract

An owner entered into a valid listing agreement. During the agreement period, the seller sells the property himself. The seller is not legally required to pay a commission to any broker. What type of listing agreement did the seller have?

an open listing (only the person that gets paid is the broker that sells the property) or an exclusive agency (owner reserves for himself the right to sell the property and not pay commission)

How many brokers can be given an open listing?

as many as the owners chooses

A broker can do which of the following actions?

buy and sell property in his own name

A buyer-broker agreement should address which of the following items?

commission, time, and obligations

Under contract as a property manager, the broker is:

fiduciary and general agent

Which of the following listing agreements is LEAST likely to specify a commission rate?

net listing

A salesperson wishes to charge a reduced commission to her sister. Where would the salesperson obtain approval for such an arrangement?

none of the above

Brokers may only assist buyers if:

there is consent

A special agency empowers the agent to perform:

a specific act

A person engaged to act in place of another by contractual agreement is:

an agent or an attorney in fact

Two brothers own separate real estate companies, but agree to divide their received commissions equally. Broker A pays for three-fourths of the advertising costs and finds the buyer. Broker B pays for one-fourth of the advertising costs. If the total commission on the sale is $4,500, how much does Broker B receive?

2,250

A listing may be revoked by

the seller

All of the following circumstances will automatically terminate a listing broker's agency agreement, EXCEPT:

unilateral action

Seller Corcoran is in very poor health and cannot work on his farm anymore. Corcoran's broker discloses this fact to prospective buyers. Has the broker done anything wrong?

yes, because it is contrary to Corcoran's interest

Jon and Jacob are parties to a valid agency agreement. One day, Jon wakes up and decides that he no longer cares for Jacob's personality. Can Jon terminate the contract?

yes, regardless of whether Jon is the client

The relationship between a broker and client is most accurately described as:

A fiduciary relationship

Which of the following choices would terminate a buyer-broker agreement?

Abandonment time agreement

Which circumstance would terminate an agency by operation of law?

Bankruptcy of the seller

Broker Bill with XYZ Realty sells a property that was listed by Gene, an independent broker. In this transaction, what is the relationship between Bill and Gene?

Bill is the agent; Gene is the principal

Which of the following items is NOT required in an open listing?

Definite termination date

The buyer-broker agreement that is most similar to the exclusive right-to-sell contract is:

Exclusive buyer agency agreement

What would NOT terminate an agency agreement by operation of the parties?

Expiration of time

Mr. Foster signed a 60 day exclusive right-to-sell listing with Broker Ruotolo. One week later, Foster signed an exclusive agency listing with Broker Gary, who sold the home a few days later. Assuming the agreements are valid, which of the following statements is correct?

Foster owes two full commissions

Seller Chaney rejects three offers, all of which were $2,500 below the list price. Broker Rudy receives a fourth offer which is also $2,500 below the list price. What should Rudy do?

Give Chaney another offer that she is sure to reject

What should a salesperson do with the earnest money deposit she receives from a buyer?

Give it to her broker

Barnwell lists property with Broker Bob, and Bob assigns the transaction to Salesperson Ben. Ben shows the property. He quickly receives an offer and earnest money check from Billy. However, Barnwell cancels the listing agreement two days later, before Ben has time to act. What should Ben do with the earnest money that he received with the offer to purchase?

Give to Bob

A broker takes a listing and the owner later tells him that the roof leaks. Further, the owner states that she will not repair the roof, even if the house is sold at full price. The broker must:

Inform any prospective buyer of the condition of the roof

A salesperson receives an earnest money deposit check on Monday while working with Broker Allen. On Friday, the salesperson goes to work for Broker Bob. If the salesperson still has the earnest money deposit check on Friday, what should be done with it?

It should be immediately given to Broker Allen

The relationship between a seller and a listing broker is that of a(n):

Principal and agent

An agency relationship between seller and broker may be terminated by:

Mutual consent Renunciation of the agreement by the broker Expiration of the agreement

Susan and Sally enter into a buyer-broker agreement. However, Sally subsequently falls on hard times. Susan gets nervous and terminates the agreement. Is Susan in breach?

No, if Sally filed for bankruptcy

A real estate broker wishes to deposit an earnest money check in his business operating account in order to receive a higher interest rate on the purchaser's funds. Is he legally allowed to do this?

No, these funds must be placed in a separate escrow account

What is the highest commission rate that a real estate broker may charge for marketing a farm property?

None of the above

Buyer-broker agreements could be:

Oral executory Unassignable

A seller accepts an offer. Later, the broker receives a second offer for the property. The broker may:

Present the second offer Tell the second offeror to "stand by"

Puckett lives in Tennessee, but owns property in Virginia. She hires Samuels, a broker in Virginia, to sell that property for $75,000. Samuels knows that this property is worth considerably more since the zoning for the property was recently changed to commercial. Samuels buys the property himself and re-sells it two weeks later for $125,000. Which of the following statements is true?

Samuels can only purchase the property after informing Puckett of the zoning change

The relationship most likely to exist between a licensee and the seller is a:

Special agency

Barry, a salesperson with XYZ Realty, lists a property. Helen, also a salesperson with XYZ, presents an offer from her client which is accepted. In this situation, which of the following statements would best describe the position of the XYZ Broker?

The broker is an agent for both the buyer and the seller

Smith dies and his real property is sold. What determines the amount of commission paid to the broker who handles the sale?

The listing agreement

A buyer's broker presents an offer on a property listed by another broker. Proper agency disclosures have been made. Prior to acceptance, the listing broker discovers a zoning change that will affect the value of the property. He tells the buyer and the offer is withdrawn. Which of the following statements is correct?

The listing broker has exercised due care and loyalty to his principal

Wilma lists her house with Broker Fred under an exclusive right-to-sell agreement. Fred later abandons the listing. Which of the following statements is true about this situation?

Wilma may terminate the listing

A real estate salesperson may legally accept extra commission on a difficult sale from:

her broker

Salesperson Lynch found a home for a buyer, who agreed to pay a commission for this service. After closing, Lynch will receive his commission from:

his broker

A salesperson represents the:

listing broker

In which type of listing is the commission least likely to be expressed in terms of a percentage?

net

Randy buys a house, using a VA loan to finance the purchase. The listing broker and selling broker split the commission at a 75/25 ratio. If the Department of Veteran's Affairs learns about the arrangement between the brokers, what will they do?

nothing

A broker executes a listing agreement with her client. The broker subsequently learns that the property is in foreclosure. Which of the following choices is the broker's best course of action?

sell the property before the foreclosure is completed

The legal relationship between broker and seller is generally:

special agency

The law of agency can include relationships between principals, agents, and:

third parties

A general agency empowers the agent to:

transact the client's affairs in a certain business

An owner is listing his rental property with a broker. Based on past experience, the owner thinks that females cause less damage. He therefore tells the broker that he only wants to rent to females. What should the broker do?

Advise the owner that this restriction is illegal

A sales agent obtains an exclusive right-to-sell listing. What is the sales agent's relationship with the broker and the seller?

Agent of the broker and sub agent of the seller

Mr. Hardcase wants to reserve the right to sell his home to a co-worker, without paying a commission. Which of the following listings would best serve Mr. Hardcase's interests?

An exclusive agency

Casper is selling his house and wants the broadest possible exposure. Therefore, he gives an exclusive right-to-sell listing to Bert, an exclusive agency listing to Gail, and an open listing to Mark. Mark sells the property. Assuming that all of these listings are valid, which of the following statements is true?

Casper owes 3 commissions

Cheryl and Chris enter into a buyer-broker agreement. They specify that the agreement will last for a two week period. At the end of two weeks, Chris informs Cheryl that the agreement is no longer binding. Chris is:

Correct, regardless of whether Chris informed Cheryl

Which of the following circumstances will not terminate an agency by operation of law?

Discharge of the broker by the principal

A broker shows one of her listings to a prospective buyer. The broker knows that the listed property borders a toxic waste dump, as identified by the EPA. The broker should:

Disclose the information because it is material

A seller lists her house with a broker for $189,500. The seller tells the broker that if necessary, she will accept $185,000. What may the broker do when showing the property to prospective buyers?

Disclose what the seller will accept, with the seller's permission

In order for a dual agency to be legal, it must be:

Disclosed in writing and agreed upon prior to negotiations

A seller wants to list a property with a broker, but hopes to sell it herself in order to avoid a commission. Which listing agreement should the seller NOT sign?

Exclusive right-to-sell listing

A seller wants to list her home with a broker, but would like the option to sell it herself without paying a commission. Which type of listing should she AVOID signing?

Exclusive right-to-sell listing

Mr. Gregory is selling his house and puts a "FOR SALE BY OWNER" sign in the yard. Salesperson Gary calls, identifies himself, and asks for the key to show the property. Mr. Gregory agrees. What would best describe the relationship between Mr. Gregory and Gary?

Gary's broker is the agent of Mr. Gregory for a reasonable time

Tom lists his home with Salesman Gary, with the provision that the house not be shown if he is not at home. Tom leaves town on Monday for a two week business trip. On Tuesday, Jose and Maria (a minority couple) contact Gary to see Tom's house. Gary refuses to show the house. In this situation, which of the following statements is true?

Gary's refusal to show the property satisfies his fiduciary duty to Tom

A broker obtains an open listing on a piece of property. In order to collect a commission on the sale, he must prove which of the following details?

He was licensed at the time of the sale He was engaged by the owner at the time of the sale He was the procuring cause of the sale

An escrow account is maintained by a broker for the purpose of:

Impartial protection of both parties

A seller agrees to split all commission between the brokerage firm and his unlicensed brother. This agreement is:

Impermissible, unless the brother is licensed

Two brokers agree that they will charge the same commission rate on all property listed by their offices. Such an action:

Is in violation of anti-trust laws

Jan accepts Jenny's offer to purchase. Jenny's salesperson delivers the downpayment to Jan's salesperson. Jan's salesperson delivers the funds to her broker, who places the money into escrow. Jan's broker owes a fiduciary duty to:

Jan and Jenny

Sam Slick lists his home with Clueless Kelly, a broker. Two weeks later, Kelly learns that Sam has a reputation for dishonesty and a bad record with other brokers. Three weeks later, Kelly learns that Sam is speaking to other brokers behind her back. Kelly confronts Sam and terminates the listing. Which party breached the listing agreement?

Kelly, because she unilaterally terminated the agreement

Seller Jones gives Martin an exclusive listing to sell his property. Martin is a salesman for Broker Doe. Which of the following statements would best describe the relationships between these parties?

Martin is the agent of Doe

Wally Wells, a licensed salesperson, listed Parcel A under an open listing agreement and Parcel B under an exclusive right-to-sell listing agreement. Both listings expired. Three days later, the two owners exchanged properties. Wally will receive:

No commission so long as Wally was not the procuring cause

Henry enters into an exclusive right-to-sell listing agreement with Bob the Broker. The parties agree upon a 6% commission. Bob presents an offer to Henry, which he accepts. At closing, Henry discovers that the customary commission is 3%. Feeling as if he was taken advantage of, Henry refuses to pay Bob any more than a 3% commission. Is the listing still effective?

No, because Bob produced a ready, willing, and able buyer

Gwen lists her home with Broker Steve under a valid exclusive right-to-sell listing. Steve works diligently to find a buyer for Gwen. After two weeks of focused searching, Steve finally finds a buyer to make an offer. However, when Steve presents the offer to Gwen, he discovers that Gwen also worked with Broker Gerry and sold her home without informing Steve. Steve is furious and demands his commission. Is Steve's listing still active?

No, because Gerry sold the house

Seller Pruitt signed an exclusive right-to-sell listing with Broker Cook. The listing includes a 7% commission and a clause which states that this agreement is in effect until the house is sold. Is this legal?

No, because the term is potentially indefinite

Harry hires David to be his buyer-broker. However, a few days later, Harry spots a property for sale while driving home from work. He falls in love with the property and makes the purchase without David's assistance. Two days later, David demands a commission. Is Harry required to pay a commission to David?

No, so long as the agreement was not an exclusive buyer agreement

Under the usual listing agreement, a salesperson can:

Place a "For Sale" sign on the property

A seller contacted three brokers to suggest the list price for his property. Broker A said $78,000, Broker B said $79,000, and Broker C said $91,000. The seller listed with Broker C and the house ended up selling for $76,000. In this situation, Broker C might be guilty of violating which fiduciary duty?

Reasonable care

Ralph is an independent broker. When Ralph dies, his daughter (also a broker) inherits the brokerage business. If she intends to operate the firm and keep her father's listings, it is necessary that she:

Renegotiate Ralph's current listings

Broker Carson lists a home belonging to Brandon. Buyer John, insisting on anonymity, has Salesperson Joan make an offer using her own name as the prospective buyer. What should Carson do in this situation?

Submit the offer to Brandon Advise Brandon that an undisclosed buyer is involved if he suspects Joan is not the true offeror

Susan has a listing agreement with Tom to sell his house and an adjoining lot. Susan sells Tom's house to Pete. Before closing, Susan also negotiates a valid option contract with Pete for Tom's adjoining lot, which is listed at $150,000. When will Susan earn her commission on the adjoining lot?

Susan earns a commission if she produces a ready, willing, and able buyer to the agreed upon terms

Salesperson Kelly takes a 90 day exclusive listing to sell Murphy's home. Three weeks later, Kelly moves out of the area and puts her license on inactive status. Which of the following statements is true about the listing?

The listing remains effective

Seller Smith signs a listing with Broker Jones to sell a parcel of land for $65,000. While Smith is out of the country, the Mayor announces a development plan that will include Smith's land (causing it to double in value). Jones sells the property for $65,000 without telling Smith about the development. Has Jones breached his fiduciary duties?

Yes, but only because the information is material

Phil is a salesman working for Broker Joan. Phil takes a listing on January 3rd. The listing is a 60-day exclusive right-to-sell agreement. On February 1st, Phil was killed in an automobile accident. What is the status of the listing?

\The listing remains valid

A person who enters into a brokerage relationship with a licensee is:

client another name for principal

A buyer-broker agreement may arise by all of the following means, except:

custom

A seller tells a broker that she wants him to sell her house. This agreement is:

express (oral or written)

After the death of his wife, a property owner lists his property with a broker. Two days later, the owner sells the property himself, but is NOT obligated to pay a commission to the broker. What type of listing agreement did he most likely sign?

general (also known as open listing)

If a broker employs a property manager, the relationship is likely to be:

general agency

A listing broker is showing property near a toxic waste dump. The broker does not tell a prospective buyer about the dump. By withholding this information, the broker is negligent in his fiduciary duty of:

none of the above

A listing agreement will automatically terminate:

on the date specified in the listing agreement

If an owner gives a listing to more than one broker, it would most likely be which type of listing?

open listing

Who is an intermediary between a buyer and a seller?

real estate broker

A salesperson takes a 90 day exclusive right-to-sell listing on April 1st, but moves out of the area on May 15th. His license placed on inactive status on June 1st. This listing would:

remain in effect