Practice Midterm -Rockwell
How is the maximum commission rate a broker may charge established? a. It is set by the local multiple listing service b. It is mandated by the state Real Estate Law c. It must be within limits prescribed by real estate professional associations' ethical codes d. It is set by agreement between principal and broker
d. It is set by agreement between principal and broker Explanation: There are no legal limits on commission rates. They are determined by agreement between the broker and the broker's principal.
If a seller uses an open listing, she may employ several brokers: a. who will share the commission if anyone, including the seller, sells the property b. who will share the commission if one of the brokers sells the property c. only one of whom (the procuring cause) will receive the commission d. to whom she must pay a higher commission rate than if an exclusive listing were used
c. only one of whom (the procuring cause) will receive the commission Explanation: A seller may sign open (nonexclusive) listings with multiple brokers, but only the broker who was the procuring cause of the sale is entitled to a commission.
K makes an offer to purchase M's farm. How is the amount of the good faith deposit determined? a. By agreement between the parties b. State law sets the minimum amount as a percentage of the purchase price c. Local MLS policy d. Real Estate Commissioner's guidelines
a. By agreement between the parties Explanation: The amount of the deposit is determined by negotiation between the parties. It is an element of the buyer's offer that the seller may accept or reject like any other.
When a counteroffer is made: a. the offeree becomes the offeror b. the offeror is accepting the terms without modification c. the original offer is amended d. the offeree can later go back and accept the original offer
a. the offeree becomes the offeror Explanation: When a counteroffer is made, the original offer is terminated. The counteroffer is a new offer, and the offeree of the original offer is now the offeror of the counteroffer - in other words, the original offeree is now the counterofferor.
Selling property under an 'as is' contract is permissible as long as: a. there is a full disclosure of known latent defects and other material facts by the seller and the seller's agent b. the latent defects are clearly visible to an ordinary person c. the buyer does not inquire as to whether there are latent defects d. None of the above
a. there is a full disclosure of known latent defects and other material facts by the seller and the seller's agent Explanation: An 'as is' contract does not relieve a seller or a broker from the affirmative obligation to disclose latent defects and other material facts concerning the property to the buyer. And in a residential transaction, the transfer disclosure statement should be filled out completely, disclosing defects whether they are latent or not. (Latent defects are, by definition, not obvious or clearly visible to an ordinary person.)
When an agent finds a prospective buyer, the first thing the agent should do is: a. preapprove the buyer b. determine the buyer's needs c. enter the buyer's information into the MLS database d. take the buyer to see homes in the neighborhood
b. determine the buyer's needs Explanation: The agent's first step should be to determine the buyer's housing needs. It's also a good idea for the buyer to get preapproved for financing, but that's done by a lender, not a real estate agent.
If someone is on the Do Not Call Registry: a. she can be called only at her place of business, not her home b. she cannot be called by real estate licensees making "cold calls" c. real estate brokers must get special permission before allowing affiliated licensees to call her d. only members of the Better Business Bureau are allowed to make sales calls to her
b. she cannot be called by real estate licensees making "cold calls" Explanation: Real estate licensees cannot make cold calls to those who are on the do-not-call registry.
A net proceeds to seller form is used to: a. show buyers what they can expect to spend b. show sellers how much cash they are likely to receive from the sale after closing c. estimate the property's likely selling price d. report the transaction to the IRS
b. show sellers how much cash they are likely to receive from the sale after closing Explanation: A listing agent uses a net proceeds to seller form to show the sellers approximately how much cash they can expect to come away with after the transaction closes.
The best indication of a property's value comes from: a. current listings b. expired listings c. recently sold properties d. Any of the above
c. recently sold properties Explanation: Recently sold properties represent what buyers in the current market are actually willing to pay for comparable properties.
The seller's agent is most likely to be liable for damages to a buyer if she: a. executes a contract in the seller's name, as authorized in a power of attorney b. fails to disclose that the seller is forced to sell quickly and would accept considerably less than the asking price c. holds the buyer's check uncashed while waiting for the seller's acceptance, after authorization to accept deposits d. exceeds the authority given to her by the seller
d. exceeds the authority given to her by the seller Explanation: An agent may be liable to third parties for actions that exceed the scope of authority granted by her principal (and the principal generally won't be liable for those actions).
In an attempt to obtain listings, a broker visits sellers in a particular neighborhood and tells them that property values will soon decline due to a recent influx of minority home buyers. This tactic is: a. legal if the statements can be proven to be true b. legal as long as no sellers give him listings as a result of his statements c. unethical but legal d. illegal
d. illegal Explanation: This is blockbusting, also called panic selling, and it is illegal.
A homeowner preparing his home for sale should do all of the following, except: a. fix any broken fences and railings b. replace worn carpeting c. prune trees and mow the lawn d. repaint interior walls in a bright primary color
d. repaint interior walls in a bright primary color Explanation: Repainting interior walls may be a good idea, but neutral colors will appeal to the widest audience of prospective buyers.
After several months of trying to sell a property, the seller's agent decided to purchase it herself. She must: a. notify the Real Estate Commissioner b. notify the seller that she is the buyer c. wait until the listing period expires before making an offer d. find a third party to purchase the property through
b. notify the seller that she is the buyer Explanation: If a real estate agent wants to purchase a property being sold by her principal, she must inform the principal of her intentions and receive the principal's consent.
Which of the following methods of advertising is legal? a. Only advertising in an ethnic newspaper b. Only asking current tenants, who are mostly white, to refer friends c. Only asking current tenants to refer minority friends d. Only asking current white tenants to refer their friends
b. Only asking current tenants, who are mostly white, to refer friends Explanation: Asking current tenants to refer their friends is permissible (even if the building is mostly white or mostly Chinese, for example). But asking only the white tenants, or inquiring about only minority friends, would be illegal. Advertising in an ethnic newspaper is legal as long as the landlord also advertises in more widely circulated media, such as a metropolitan daily newspaper.
Which of these factors would tend to lower overall property values most in a single-family residential neighborhood? a. Construction of smaller and less valuable homes b. Homogeneity in socioeconomic levels c. Small changes in zoning laws d. Purchase of existing homes by first-time buyers
a. Construction of smaller and less valuable homes Explanation: The introduction of less valuable homes into a neighborhood tends to lower the value of the more expensive homes.
Which kind of listing agreement requires the seller to pay a commission to her broker if the property is sold, unless the seller sells the property herself? a. Exclusive agency listing b. Exclusive right to sell listing c. Net listing d. Open listing
a. Exclusive agency listing Explanation: Under an exclusive agency listing agreement, the seller will owe the broker a commission if a buyer is found during the listing term, unless the seller finds the buyer herself.
For which of the following acts might a broker be subject to disciplinary action? a. Failing to include a termination date in an exclusive listing agreement b. Failing to include a termination date in an open listing agreement c. Keeping trust funds from different clients in a single trust account d. Basing a commission amount on the property's selling price
a. Failing to include a termination date in an exclusive listing agreement Explanation: Failure to include a termination date in an exclusive listing agreement is a violation of the Real Estate Law, so the broker could be subject to disciplinary action.
Which of the following can be affected by conditions of sale? a. Price b. Cost c. Value d. None of the above
a. Price Explanation: Only the price of a property can be affected by conditions of sale. (For example, a seller who's forced to sell her property as quickly as possible will often accept a price that is lower than the property's true value.) The past cost and the value of the property are not changed by conditions of sale.
Which of the following transactions would require a transfer disclosure statement? a. Sale of a four-unit residential property b. Foreclosure sale of residential property c. Sale of residential property between spouses as part of a divorce settlement d. All of the above
a. Sale of a four-unit residential property Explanation: Sales of one- to four-unit residential properties are subject to the transfer disclosure statement requirement. Exceptions are made for certain kinds of sales, including foreclosure sales, probate sales, transfers between spouses, and sales of properties in new subdivisions.
Which of the following is equivalent to value in exchange? a. Book value for income tax purposes b. Probable price in a competitive and open market c. Assessed value d. Subjective value
b. Probable price in a competitive and open market Explanation: Value in exchange is the same thing as market value. Market value is defined as the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, where the price is unaffected by undue stimulus.
Before making a listing presentation, an agent should: a. visit the property to observe its features and quality b. complete a competitive market analysis c. prepare a marketing plan d. All of the above
d. All of the above Explanation: Preparing for a listing presentation involves researching and visiting the property, completing a CMA, and coming up with a marketing plan.
Once a listing agreement has been signed: a. it can't be modified b. it can be modified only by the seller c. it can be modified only by the agent d. it can be modified only with the written consent of all parties
d. it can be modified only with the written consent of all parties Explanation: Like any written contract, once a listing agreement has been signed, it can be modified only with the written consent of all of the parties. The MLS may provide a form that can be used for this purpose.
Two brokers in a small community felt that another local broker was unethical and dishonest. They agreed not to send him any referral business, and they encouraged other area brokers to follow their lead. They could be accused of: a. price fixing b. a group boycott c. extortion d. a list-back arrangement
b. a group boycott Explanation: Even if the brokers are well-intentioned, by trying to shut a competitor out of fair participation in the marketplace, they are engaging in a group boycott. This is a violation of the Sherman Act.
A seller has accepted another offer, but your client doesn't want to give up. Even now, she can submit an offer to the seller, called a: a. fallback offer b. backup offer c. secondary offer d. bump offer
b. backup offer Explanation: This kind of offer is called a backup offer. It's contingent on the failure of a previous sales contract.
In order to be enforceable, an exclusive listing must be signed by: a. the broker b. the seller c. the broker and the seller d. the broker, the buyer, and the seller
b. the seller Explanation: A listing agreement must be signed by the seller. The broker is not required to sign, although she almost always does (or the listing salesperson signs on her behalf).
The buyer receives the transfer disclosure statement in the mail. How many days does she have in which to rescind the purchase agreement? a. 5 days from when the buyer received the disclosure b. 5 days from the date escrow was opened c. 5 days from when the statement was deposited in the mail d. 7 days from the date when the seller signed the disclosure statement
c. 5 days from when the statement was deposited in the mail Explanation: If the transfer disclosure statement is mailed, the buyer's right of rescission lasts for five days after the disclosure statement is deposited in the mail.
Which of the following is NOT a requirement for a sale under normal conditions? a. No undue stimulus or unusual pressure on either party b. Buyer and seller both acted prudently and knowledgeably c. Buyer offered cash or cash equivalent financing d. Property was offered in a competitive and open market
c. Buyer offered cash or cash equivalent financing Explanation: The criteria for a sale under normal conditions are that it was an arm's length transaction, the property was offered on the open market for a reasonable length of time, the buyer and the seller acted prudently and knowledgeably and in their own best interests, and neither party was subject to undue stimulus or unusual pressure. Method of financing is an important consideration in an appraisal, but it is considered as a separate element of comparison, not as a criterion for a sale under normal conditions.
Which of these is not a way in which an agency can be created? a. By express agreement b. By implication c. By prescription d. By ratification
c. By prescription Explanation: Prescription is a means of creating an easement, not an agency relationship. Express agreement, implication, and ratification are all ways in which an agency relationship can be created.
When preparing their home for showing, sellers should: a. remove small items of value b. remove large, delicate pieces of furniture or artwork c. give the listing agent a set of keys for the keybox d. All of the above
d. All of the above Explanation: To prepare their home for showing, sellers should remove small, valuable items and also delicate furniture or artwork (whatever the size). This will prevent items from being stolen or damaged during an open house or other showing. In addition, the sellers need to give the listing agent a set of keys for the keybox, so that he and other agents will be able to show the home to prospective buyers when the sellers are unavailable.
On Thursday, Angie decided to accept Harry's counteroffer for the purchase of his house. She signed the counteroffer and placed it in the mail. On Friday, Harry decided that he had asked too low a price for the house, so he faxed Angie stating that the counteroffer was withdrawn. On Saturday, Harry received Angie's acceptance in the mail. Under the mailbox rule, which of the following is true? a. Harry withdrew his offer, so no contract was formed b. Harry did not withdraw his counteroffer in time, so a contract was formed c. Harry may not make a counteroffer d. Harry's withdrawal was ineffective since it was not in writing
b. Harry did not withdraw his counteroffer in time, so a contract was formed Explanation: Angie's acceptance was placed in the mail before Harry communicated his revocation of the counteroffer. If the mailbox rule applies, as in this scenario, this means that Angie's acceptance was effective and a binding contract was formed. (Note that some commonly-used purchase agreements state that the mailbox rule does not apply.)
Which of these is a fundamental difference between the natural hazard disclosure statement and the real property transfer disclosure statement? a. The transfer disclosure statement is limited to information that the seller has, while the natural hazard disclosure requires additional research b. The transfer disclosure statement is filled out by the seller, while the natural hazard disclosure is filled out by local authorities c. The transfer disclosure statement is required for all properties, while the natural hazard disclosure is only for residential properties d. The transfer disclosure statement is the seller's responsibility, while the natural hazard disclosure is the buyer's responsibility
a. The transfer disclosure statement is limited to information that the seller has, while the natural hazard disclosure requires additional research Explanation: The transfer disclosure statement and the natural hazard disclosure statement are both filled out by the seller. The transfer disclosure statement requires only disclosure of known latent defects, though, while the natural hazard disclosure statement requires disclosure of whether the property is in a zone subject to earthquakes, floods, or other natural hazards as shown on government maps.
According to the Americans With Disabilities Act: a. a real estate office is a public accommodation b. a disability is defined as any permanent physical impairment c. architectural barriers that prevent access to goods and services must be removed regardless of cost d. all multistory buildings must be equipped with elevators
a. a real estate office is a public accommodation Explanation: The ADA applies to public accommodations and other commercial facilities. A place intended for nonresidential use is classified as a public accommodation if it is open to the public and if its operation affects commerce. This definition covers real estate offices.
When an agent is preparing a competitive market analysis, the adjusted sales price of a comparable property: a. indicates what the comparable property's value would be if it were more like the subject property b. should match the subject property's market value exactly c. is the basis for capitalization calculations d. None of the above
a. indicates what the comparable property's value would be if it were more like the subject property Explanation: The sales prices of comparable properties are adjusted to indicate what the properties might have sold for if they more closely resembled the subject property. The adjusted prices merely indicate the subject property's value, and even after reconciling them, the agent will arrive only at an estimate of that value.
All of these are typical tasks that an unlicensed real estate assistant may do, except: a. negotiating counteroffers b. maintaining transaction files c. greeting visitors at open houses d. answering phones
a. negotiating counteroffers Explanation: Real estate assistants are commonly responsible for maintaining files, answering phones, and assisting with open houses. The task of negotiating a counteroffer must be left to a licensee.
A licensee acting as a finder (or middleman) won't owe agency duties to either party, as long as: a. she did nothing other than bring the buyer and seller together b. she participated in the negotiations c. she isn't paid a fee d. All of the above
a. she did nothing other than bring the buyer and seller together Explanation: A licensee may act as a finder in a transaction (and receive a fee for doing so) without owing either party any agency duties, as long as her involvement is limited to introducing the parties.
A buyer submitted an offer with a deposit on a property on June 1. The offer included the condition that it must be accepted within 48 hours. The sellers were out of town, however, and could not be contacted until June 6. At that point, the sellers eagerly signed and returned the purchase agreement; but now the buyer says he does not want the property any longer and is demanding the return of his deposit. A court would rule that: a. the deposit should be returned to the buyer b. the sellers may keep the deposit c. the sellers' broker is entitled to his full commission d. the sellers' acceptance acts as a counteroffer
a. the deposit should be returned to the buyer Explanation: An offer may include a deadline for acceptance. If the deadline passes, the offer is automatically terminated. Therefore, the sellers' acceptance after the deadline was not valid, and the buyer's deposit should be returned.
An apartment rental application contains a question about marital status. This question is: a. unlawful b. permissible as long as the building is owned by a single party c. permissible as long as rental ads inform applicants that the owner prefers married couples d. permissible as long as the building rents to unmarried tenants as well as married tenants
a. unlawful Explanation: In California, it is illegal for a residential rental property owner to ask applicants for information regarding marital status. However, the landlord can (and should) ask how many adult residents will live in the unit and require that all the adult residents sign the lease.
What is the best way to estimate the value of a relatively new, owner-occupied, single-family residential property? a. Determining the cost of replacing the property, including all improvements b. Comparing the property with similar homes that have sold recently c. Using a recent appraisal report prepared for one comparable property d. Any of the above
b. Comparing the property with similar homes that have sold recently Explanation: Competitive market analysis is adapted from the sales comparison approach to appraisal, which estimates a property's value by comparing it to similar properties that have sold recently. An appraiser would not apply the sales comparison approach using only one comparable property; three comparables is considered the minimum.
When does an offer to purchase become a binding contract? a. When the offeree decides to accept the offer b. When the acceptance is communicated to the offeror c. When the acceptance is communicated to the offeree d. When the deadline passes before a counteroffer is submitted
b. When the acceptance is communicated to the offeror Explanation: Acceptance must be communicated by the offeree to the offeror. At that point, a binding contract is formed.
An agent is preparing a CMA and evaluating possible comparable sales. Which of the following characteristics would most likely make a property unsuitable for use as a comparable? a. The property is in the same neighborhood as the subject property b. The property is too similar to the subject property in age, style, and quality c. The property sold just over 12 months ago d. None of the above
c. The property sold just over 12 months ago Explanation: A comparable should be in the same neighborhood as the subject property if possible, and it should be similar to the subject property in age, style, and quality. Preferably, comparables should have sold within the last six months; a property that sold a year ago generally should not be used.
Which California law prohibits discrimination by business establishments in general? a. Fair Employment and Housing Act b. Housing Financial Discrimination Act c. Unruh Civil Rights Act d. Real estate license law
c. Unruh Civil Rights Act Explanation: The Unruh Civil Rights Act prohibits discrimination by business establishments, including real estate brokerages.
Which of the following does California law require a real estate agent to do in a residential transaction? a. Inspect the common areas of a condominium b. Inspect all areas of the property, including those that may be physically inaccessible c. Visually inspect the property and inform all parties of any latent defects found d. All of the above
c. Visually inspect the property and inform all parties of any latent defects found Explanation: In residential transactions, real estate agents must perform a competent and diligent visual inspection of the property and inform the parties of any latent defects and other material facts discovered. The law does not require inspection of condominium common areas or physically inaccessible areas, however.
The buyer's offer states that the deposit check will be held by the broker uncashed until the seller has accepted the offer. The broker may comply with these instructions: a. under no circumstances b. for no longer than 10 days c. as long as the seller is informed that the check is being held d. as long as the check is postdated
c. as long as the seller is informed that the check is being held Explanation: A broker is permitted to hold a buyer's deposit check uncashed pending acceptance of the offer if the seller is informed that the check is being held when the offer is presented. Once the offer has been accepted, the broker must deposit the check into a trust account or into escrow within three business days, unless the seller gives written authorization for the broker to continue holding the check.
An owner sold her property through her own efforts, but still wound up paying a commission to the listing broker. The broker had a/an: a. open listing b. nonexclusive listing c. exclusive right to sell listing d. exclusive agency listing
c. exclusive right to sell listing Explanation: Under the terms of an exclusive right to sell listing, the seller must pay a commission to her broker if the property is sold during the listing term, even if the seller herself was the one who found the buyer.
Broker Ray is closely acquainted with the Subdivision Heights neighborhood in his town. Over the years, Ray has made it a practice to contact homeowners in person and also to send them quarterly mailings. This method of finding listings is known as: a. cultivation b. grooming c. farming d. knock and drop
c. farming Explanation: In farming, an agent chooses a neighborhood and focuses on building a reputation within that area.
A seller's agent intends to give part of his commission to the buyer. The agent: a. is guilty of fraud b. will be subject to disciplinary action by the Real Estate Commissioner c. must disclose this fact to the seller d. may freely do so
c. must disclose this fact to the seller Explanation: Any relationship between a seller's agent and the buyer is a conflict of interest and a material fact that the agent must disclose to the seller. There is nothing necessarily illegal about sharing the commission with the buyer, as long as the arrangement is properly disclosed.
When performing a competitive market analysis, agents typically make numerous adjustments to the comparables' prices. This is because: a. the subject property will eventually depreciate b. the subject property's value will increase due to inflation c. no two properties are exactly alike d. two different appraisers rarely arrive at exactly the same estimated value for the same
c. no two properties are exactly alike Explanation: An agent performing a CMA (or an appraiser applying the sales comparison approach to value) must make adjustments to the comparables' prices to reflect the differences between the comparables and the subject property. No two properties are exactly alike.
Two types of value that are often contrasted are subjective value and: a. inherent value b. reproduction value c. objective value d. value in use
c. objective value Explanation: Subjective value refers to the value of an object or property as determined by its user; it is also called value in use. Objective value refers to the value of an object or property as determined by potential buyers--in other words, its market value.
When a home is constructed, consideration is given to the positioning of the building relative to its surroundings and the sun, wind, and other elements. This placement is called: a. plottage b. frontage c. orientation d. topography
c. orientation Explanation: Orientation, the positioning of a house or other building on a parcel of land, requires the developer to consider sun, wind, noise, views, and other factors. The orientation of the site in relation to its surroundings is also important.
Two properties, each worth $50,000, are combined into one larger parcel that has a value of $120,000. This increase in value is called: a. blockage b. appurtenance c. plottage d. appreciation
c. plottage Explanation: An increase in value that results when two or more contiguous properties are combined into one parcel under single ownership is called plottage. The extra value is due to improved usability. This often occurs when larger parcels are needed for industrial or commercial uses.
A prospective buyer has submitted an offer to Broker Randolph that meets the asking price. As Randolph is on his way out of the office to present the offer to the seller, one of Randolph's salespersons brings in another offer on the same property that is for $5,000 less. Randolph should: a. inform the salesperson that the property has already sold on the seller's terms b. present the offers in the order they were received c. present the two offers at the same time d. present the second offer only if the first offer is turned down
c. present the two offers at the same time Explanation: An agent has a fiduciary duty to present all offers to the principal. The agent must present all offers promptly; it is up to the principal to decide which offer to accept.
An Asian buyer meets with a broker and asks to be shown homes. If she doesn't ask to see homes in areas with no Asian residents, the broker: a. may assume that she is not interested in areas with other Asian residents b. may assume that she is not interested in areas without other Asian residents c. should choose homes for showing as the broker would for any other customer d. has no obligation to show her homes in areas where no other Asians live
c. should choose homes for showing as the broker would for any other customer Explanation: Under the Fair Housing Act, the broker is required to treat all clients equally. If the buyer has not specified certain areas in which she is or is not interested, the broker must choose homes as he would for any other buyer.
A real estate agent who is acting as a buyer's agent: a. will become a dual agent if she accepts compensation from the seller (a commission split) b. may disclose information that the buyer has instructed her to keep confidential if the disclosure could benefit the buyer c. should present offers to the seller through the seller's agent d. should present offers directly to the seller
c. should present offers to the seller through the seller's agent Explanation: If the seller is represented by an agent, a buyer's agent will generally present offers and negotiate through the seller's agent. She should not contact the seller directly. A buyer's agent's acceptance of compensation from the seller does not create an agency relationship with the seller or a dual agency.
A real estate salesperson is often approached by home buyers of a particular race. His usual practice is to show them homes in neighborhoods where most of the residents are the same race as the buyers. He avoids showing these buyers properties in integrated areas. This is called: a. blockbusting b. panic selling c. steering d. profiling
c. steering Explanation: Steering involves guiding customers toward (or away from) particular neighborhoods based on their race or ethnicity, in violation of fair housing laws.
A seller's agent owes the buyer: a. the duty of confidentiality b. only the duty to disclose latent defects c. the duty of good faith and fair dealing d. all of the same fiduciary duties owed to the seller
c. the duty of good faith and fair dealing Explanation: A seller's agent owes the buyer the duty of good faith and fair dealing. While this includes the duty to disclose latent defects, it goes well beyond that, encompassing honesty in all dealings with the buyer.
A salesperson shows his broker an offer for one of his listings that has a good faith deposit in the form of a promissory note. The broker should tell the salesperson that: a. he should not have accepted the promissory note as a deposit b. he should have obtained the seller's permission before accepting the promissory note as a deposit c. the seller must be informed when the offer is presented that the deposit is a promissory note d. if the offer is accepted, cash must be substituted for the promissory note within 14 days
c. the seller must be informed when the offer is presented that the deposit is a promissory note Explanation: A promissory note may be used as a good faith deposit, but the agent must disclose this fact to the seller when presenting the offer. The form of the deposit should also be indicated in the purchase agreement.
Agent Mary notices that a competitor's listing is about to expire. She should: a. ask the sellers if they'd like to terminate their current listing and list with her instead b. point out what her competitor did wrong and explain why she's a better agent than he is c. wait until the listing expires, and then explain what she can do for the sellers to market and sell their home d. Both A and B
c. wait until the listing expires, and then explain what she can do for the sellers to market and sell their home Explanation: While an agent may keep an eye on listings that are about to expire, she should never encourage anyone to break a listing agreement or other contract. (An agent who did so might be liable to the original agent for damages resulting from "interference with contractual relations.") In addition, the agent should refrain from criticizing a competitor's performance. Instead, she should focus on what she can do for the sellers as a real estate agent.
A dual agency requires the agent to: a. obtain the written consent of both parties b. fulfill fiduciary duties to both parties, including the duty of confidentiality c. treat both parties impartially d. All of the above
d. All of the above Explanation: A dual agent must obtain the written consent of both parties, must treat both parties impartially, and must fulfill fiduciary duties to both of them, which includes protecting each party's confidential information.
A broker showed one of his own listings to a buyer he was representing. The buyer decided to make an offer on the property, which was accepted. At no point did the broker disclose his dual agency status. The broker may be: a. forced to give up any payment received from the buyer and/or seller b. sued by the seller c. subject to disciplinary action by the Real Estate Commissioner d. All of the above
d. All of the above Explanation: If a licensee acts as a dual agent without making the proper disclosures and obtaining the written consent of both parties, he may be subject to disciplinary action, he may be sued by either party (or both), and he may be required to refund any compensation received in the transaction.
To successfully sue a seller for a commission owed, a broker who worked under a nonexclusive listing must be able to prove that she was: a. licensed at the time of the transaction b. working under a written listing agreement c. the procuring cause of the sale d. All of the above
d. All of the above Explanation: Regardless of the type of listing in question, to be entitled to sue for a commission a broker must have been working under a written listing agreement and have been licensed at the time of the transaction. With a nonexclusive or open listing, the broker must also have been the procuring cause of the sale.
A listing broker presents his client with a full-price offer from a ready, willing, and able buyer. The seller refuses the offer and tells the broker it's because the buyer is black. The buyer makes an offer on another property. Which of these steps could the broker take? a. Explaining to the seller that she is in violation of the Fair Housing Act b. Suing the seller for his full commission c. Informing the buyer of his right to file a complaint with HUD d. All of the above
d. All of the above Explanation: The seller has violated the Fair Housing Act. She also owes her broker the commission, since he did locate a suitable buyer.
Which of the following actions by a broker would be illegal under the federal Fair Housing Act? a. Imposing a rule that if African-American clients ask to see "some less expensive houses," agents should show them houses in predominantly black neighborhoods b. Matching up potential buyers with salespersons based on race c. Neither A nor B; both actions are legal d. Both A and B; both actions are illegal
d. Both A and B; both actions are illegal Explanation: The Fair Housing Act prohibits discrimination based on race (or other characteristics protected under the act) in the provision of services related to the sale or rental of housing, so both of these actions would be illegal under the act.
A lender discriminates against a loan applicant based on the racial composition of the neighborhood where the applicant hopes to purchase a home. What California state law has the lender violated? a. Unruh Civil Rights Act b. Home Mortgage Disclosure Act c. Civil Rights Act of 1866 d. Housing Financial Discrimination Act
d. Housing Financial Discrimination Act Explanation: The Housing Financial Discrimination Act, also known as the Holden Act, is a California state law that prohibits lenders from redlining--making lending decisions based on the racial or ethnic composition of the subject property's neighborhood. Redlining is also a violation of the federal Fair Housing Act.
Which of the following would be considered a design deficiency in newer, high-end construction? a. More bathrooms than bedrooms b. Kitchen close to garage c. Bedrooms not visible from living room d. There's no comfortable area in the kitchen where the family can eat
d. There's no comfortable area in the kitchen where the family can eat Explanation: It's considered a design deficiency if a kitchen is too cramped to allow even a small area for eating.
What is the minimum time limit for employment in an exclusive listing agreement? a. 30 days b. Six months c. The average length of time it takes to find a buyer in that particular locality d. Whatever is agreed upon by broker and property owner
d. Whatever is agreed upon by broker and property owner Explanation: The termination date of an exclusive listing is determined by agreement between the broker and the seller.
A buyer makes and signs a written offer. The seller writes in one small change to the offer and signs it. This document is known as: a. an addendum b. an amendment c. a modification d. a counteroffer
d. a counteroffer Explanation: If any change is made to an offer by the offeree, this terminates the original offer and creates a new offer known as a counteroffer.
An agency relationship is best created through: a. conduct b. consideration c. cooperation with other brokers d. express agreement
d. express agreement Explanation: An agency relationship is ordinarily created through express written agreement. An agency created only through conduct or cooperation with other brokers may leave considerable doubt as to whom the agent represents. Consideration (a promise to compensate the agent) is not necessary for the creation of an agency relationship.
Most listing contracts authorize a broker to: a. find a buyer and accept the buyer's offer on behalf of the seller b. guarantee to a prospective buyer that the seller will accept his offer c. deed the property over to the buyer d. find a buyer and accept a deposit with the offer to purchase
d. find a buyer and accept a deposit with the offer to purchase Explanation: A typical listing agreement only authorizes the broker to find a buyer and accept the buyer's deposit. To authorize a broker to accept an offer or convey title, a seller would need to execute a power of attorney that specifically empowers the broker to do those things.
Young buyers with limited funds are typically: a. boomerang buyers b. trade-up buyers c. window shoppers d. first-time buyers
d. first-time buyers Explanation: First-time buyers are typically young and inexperienced, with limited funds available for a downpayment.
In the financing of owner-occupied residences, a lender charges what it calls an "immigration-status review fee" if English doesn't seem to be the borrower's native language. This fee is most likely: a. permitted, if it is disclosed to the borrower in the loan application documents b. permitted, if the money is used only for translation of loan documents c. permitted, if it does not exceed .01% of the loan amount d. in violation of the Housing Financial Discrimination Act of 1977
d. in violation of the Housing Financial Discrimination Act of 1977 Explanation: The Housing Financial Discrimination Act (also known as the Holden Act) prohibits lending institutions from discriminating in the provision of financial assistance for housing based on race, color, religion, sex, marital status, national origin, or ancestry. Charging a special fee based on a borrower's apparent ancestry or national origin would violate that law.
A listing agreement with a property description that is not a complete legal description: a. is void b. is unenforceable c. is voidable d. may still be valid
d. may still be valid Explanation: A listing agreement must identify the seller's property, but it can be a valid contract without a complete legal description.
A broker, in dealing with the public, may not: a. delegate responsibilities to other persons b. receive a commission from both buyer and seller c. refuse to take a listing d. remain silent concerning material facts about a property that are known only to the broker
d. remain silent concerning material facts about a property that are known only to the broker Explanation: The broker's duty to disclose material facts is an affirmative duty; he may not remain silent even if he isn't asked for the information. (While a broker may not refuse to take a listing for discriminatory reasons, there are many other reasons a broker may refuse a listing, such as a seller's insistence that the broker conceal latent defects.)
One of the legal obligations of a seller's agent is providing a copy of the seller's transfer disclosure statement to: a. the county recorder b. the listing brokerage and all its agents c. the multiple listing service d. the buyer
d. the buyer Explanation: The seller's agent is responsible for providing a copy of the transfer disclosure statement to a buyer.
During the summer, a buyer purchased a commercial building with a tile roof that appeared to be in good condition. In the fall, when the first major rain came, the buyer noticed that the roof leaked in many places. When the buyer contacted the listing agent, the agent stated that the seller had mentioned problems with the roof, but the agent never brought it up with the buyer because "he didn't ask." If this case went to court: a. too much time has elapsed for the buyer to be able to collect damages b. the buyer would not be able to collect damages, under the doctrine of "caveat emptor" c. the buyer could recover from the listing broker, but not the seller d. the buyer could recover from the listing broker and the seller, who could in turn sue the broker for the amount she had to pay the buyer
d. the buyer could recover from the listing broker and the seller, who could in turn sue the broker for the amount she had to pay the buyer Explanation: Under the doctrine of vicarious liability, a person injured by an agent's acts may sue the principal as well as the agent. (If the principal was not personally at fault, she may in turn sue the agent to recover the amount she paid the injured party.) Since this is a commercial building, not a residence, no transfer disclosure statement would be involved (if there was, the seller would be liable on the basis of omitting the leaking roof issue from the disclosure statement).
The sellers have been particularly impressed with the efforts of the salesperson who handled the sale of their home. After closing, the sellers give the salesperson a bonus, separate from the broker's commission. This is permissible: a. as long as the salesperson splits the bonus equally with the broker b. as long as the bonus does not exceed $500 c. as long as the bonus is not a cash payment d. under no circumstances
d. under no circumstances Explanation: The Real Estate Law allows a real estate salesperson to be compensated only by his own broker. A salesperson may not accept a payment, a gift, or any other form of compensation directly from a client.
