General Principles of Agency Exam

You represent the buyer in one transaction and the seller in a different transaction. What type of agency relationship do you have with the buyer? A. Buyer agency B. Dual-licensee dual agency C. Seller agency D. Single-licensee dual agency

A. Buyer agency You have a buyer agency relationship with the buyer in one transaction and a seller agency relationship with the seller in the other transaction.

Trina's property is listed with Avalon Homes. The market is a little slow, and Trina's listing is a high-end home, where sales are even slower. She's had several showings, but no offers. The term of the listing agreement is nearly over. What happens when the termination date is reached? A. The listing expires and is automatically terminated. B. Trina can't extend the listing agreement, so she'll have to list with another brokerage firm. C. Trina owes Avalon whatever compensation was noted in the listing agreement. D. Trina's agent may still try to sell the property.

A. The listing expires and is automatically terminated. A listing agreement automatically terminates on the end date noted in the agreement unless the seller agrees to extend it. It's generally not legal to include an automatic extension clause in a representation agreement.

Which of the following is true regarding the definition of agency? A. Agency describes a collaborative effort between multiple parties or units. B. Agency describes the relationship between the real estate professional and the person or persons being represented C. Agency describes the relationship between the seller and the buyer in a real estate transaction. D. Agency is the legal term used for a real estate licensee.

B. Agency describes the relationship between the real estate professional and the person or persons being represented

Which of the following is an example of an agent exercising the duties owed to customers and other parties? A. Ari didn't present the buyer's offer to the seller, since it was a lowball offer. B. Francine disclosed information about the flooding basement to the buyer and buyer's agent. C. Mark complied with the buyer's agent's instructions to change the available times for showings so the potential buyer could see the property. D. With her client's permission, Missy shared the entire inspection report with the seller's agent.

B. Francine disclosed information about the flooding basement to the buyer and buyer's agent. The duties licensees owe to customers and other parties include disclosure of material facts, honesty, and fairness.

Which statement best describes the criteria that would permit Tristan to legally engage in dual agency? A. His firm and the state permit it. B. His firm and the state permit it and he obtains the proper consent. C. His firm permits it and it's an inadvertent dual agency situation. D. The state permits it and he discloses the dual agency to all parties.

B. His firm and the state permit it and he obtains the proper consent. Tristan must be practicing in a state that permits dual agency; his brokerage firm must allow it, and he must obtain informed consent from all parties to the contract (buyers and sellers).

What is an open listing agreement? A. One in which anyone can find the buyer, but the listing agent still gets paid B. One in which only the person who finds the buyer gets paid C. One in which the price is negotiable within a specified range D. One in which there's no end date

B. One in which only the person who finds the buyer gets paid In an open listing agreement, only the licensee who locates the buyer will be paid. If the seller locates the buyer, no commission is owed.

What happens when your client asks you to do something that's against the law? A. According to the duty of obedience, you must obey, but document the request. B. You must break your duty of obedience. C. You must obey, but ask your client to sign a disclaimer for your actions. D. You must report your client to the authorities.

B. You must break your duty of obedience. Remember that obedience does not mean acting outside the law. Depending on the situation, reporting your client to the authorities might be unnecessary and ill-advised.

Christy found a property that was for sale by owner and made an offer. The seller accepted Christy's offer, but neither of them knew how to proceed. Licensee Zelda helped Christy complete the necessary purchase documents and walked her through the process. What kind of agency exists? A. Confirmed agency B. Express agency C. Implied agency D. Verbal agency

C. Implied agency Christy and Zelda never signed a formal agency agreement, but through Zelda's actions in her attempt to help Christy, she created an implied agency agreement.

Melissa signed a six-month listing agreement with Greg on February 12. Her property is very specialized, and Melissa was adamant about the sales price. By September, the property still hadn't sold. Melissa expressed her displeasure with Greg for his inability to sell the property. What's the status of the listing agreement? A. Greg can renounce the listing because Melissa refuses to listen to reason about the sales price. B. Melissa and Greg can mutually agree to terminate the agreement. C. Melissa and Greg's agreement expired in August. D. Melissa can revoke the agreement because Greg isn't performing in good faith to sell the property.

C. Melissa and Greg's agreement expired in August. A six-month agreement signed on February 12 would expire in August.

Which clause in the listing agreement gives the listing broker the authority and obligates the broker to market the property to other brokers? A. Broadcast clause B. Marketing clause C. Multiple listing clause D. Provisionary clause

C. Multiple listing clause This is the MLS clause.

You represent a seller as a listing agent. Do you owe any duties to buyer agents? A. No, you owe no duties B. Only if the agent works in your office C. Yes, the duty to cooperate on showings D. Yes, the same duties you owe to the seller

C. Yes, the duty to cooperate on showings

In a real estate transaction, which two parties are owed the same duties? A. Clients and cooperating agents B. Clients and customers C. Clients and other parties D. Customers and other parties

D. Customers and other parties Other parties in the transaction are owed the same duties as customers. Only clients receive the full offering of your duties.

Nate represents Elena in the purchase of a house. Katherine represents the seller, Timothy. Which of the following statements accurately reflects the agency duties owed? A. Each licensee owes all fiduciary duties to both clients. B. Katherine owes Elena the duty of loyalty. C. Nate owes no duties to Timothy, and Katherine owes no duties to Elena. D. Nate owes Timothy the duty of disclosure.

D. Nate owes Timothy the duty of disclosure. A licensee owes all parties the duty of disclosing material facts, as well as honesty, fairness, and accounting. Only a client would be owed obedience, loyalty, and confidentiality.

Which of these is a NOT a reason why agency disclosure is mandated? A. Before buyer representation came into being, buyers were often unaware that the agent they worked with actually represented the seller. B. Consumers may compromise their bargaining position if they're not aware how agency relationships work. C. Consumers often don't realize that the agency relationship guarantees that they benefit from the agent's fiduciary duties. D. Real estate transactions aren't covered by consumer protection laws; agency law and disclosures provide the only protections.

D. Real estate transactions aren't covered by consumer protection laws; agency law and disclosures provide the only protections.

Managing broker Todd is often extremely busy supervising his brokerage and training new licensees. He doesn't have time for his own clients, so he frequently sends his wife Cindy to meet with clients to sign transactional paperwork. Cindy doesn't hold a real estate license but she does have a power of attorney (POA) for Todd. All fees are paid to Todd. What is the issue with Todd doing this? A. Cindy should be paid any fees due. B. There is no issue as long as Cindy has a POA for Todd. C. There is no issue as long as the fees are paid directly to Todd. D. Todd is prohibited from allowing anyone to use his principal broker's license in order to perform real estate activities.

D. Todd is prohibited from allowing anyone to use his principal broker's license in order to perform real estate activities. In most states, principal brokers can't let anyone use their license in order to perform real estate activities, even if the principal broker receives the fee and/or a POA is in place.

Assuming that dual agency is legal where these scenarios occur and that the licensees' brokerages permit it, which of these situations demonstrates illegal dual agency? A. Jarrod represents the seller, Juan. A buyer, Alaina, approaches Jarrod about representing her in the purchase of Juan's house. Jarrod obtains Juan and Alaina's consent to dual agency. B. Kady's firm uses representation agreements that, when signed, provide consent to dual licensee dual agency. Kady's buyer makes an offer on one of Kady's colleague's listings. C. Levi's customer, Renee, wants to make an offer on Levi's seller client's home. Levi explains that he represents the seller but then presents Renee's offer to his client. D. Tom is holding an open house for his client. Ruby, a buyer, says she wants to make an offer. She details her situation; Tom waits until she finishes and then suggests that she offer a non-refundable earnest money deposit to strengthen her offer.

D. Tom is holding an open house for his client. Ruby, a buyer, says she wants to make an offer. She details her situation; Tom waits until she finishes and then suggests that she offer a non-refundable earnest money deposit to strengthen her offer. Not only did Tom allow the potential buyer to give him all of her details, he then gave her advice about her offer. This example of illegal dual agency is likely to get Tom into big trouble.

In a real estate transaction in which you represent the seller, your duty to other parties is to ______. A. Be honest in all matters that do not affect your client's interests B. Be polite and courteous C. Maintain the confidentiality of all matters that other parties disclose to you D. Treat them honestly and fairly

D. Treat them honestly and fairly You must treat other parties in the transaction honestly and fairly, and you must disclose all material facts.