Agency

A home sold for $23,000. The buyers paid closing costs of 6% and taxes and insurance of $299. Upon what price was the commission rate computed? 1 » $ 23,000 2 » $ 23,299 3 » $ 24,468 4 » $ 24,786

(1) The commission is usually figured as a percentage of the sale price.

From which of the following persons may a licensee lawfully receive a commission? 1 » Seller 2 » MLS 3 » The licensee's managing broker 4 » A cooperating broker

(3) A licensee may only receive commission from the licensee's own managing broker.

Is it normally legal for an agent to be a dual agent representing both buyer and seller in a real estate transaction? 1 » No, this is not legal anywhere 2 » Yes, as long as all parties agree 3 » Yes, but only if both parties pay the commission 4 » No, only attorneys can act as dual agents

(2) A person can be a dual agent if informed consent is given by all parties right up front(NOTE: some states allow dual agency while others do not). (1) Dual agency is legal in most states. (3) Paying of commission does not necessarily establish agency relationships. (4) Real estate agents can be dual agents, not just attorneys.

A person builds a building on ground that is leased from a land owner. Which of the following statements would be correct concerning this situation? 1 » This is not allowed under federal law 2 » When the lease expires, the land owner would own the building 3 » It would be easier to get financing this way rather than the land owner and building owner being the same person 4 » The land owner would have to notify the building owner if the land was to be sold

(2) A person can build a building on leased ground, however, when the lease expires, any improvements made would now belong to the land owner. (1) Ground leases are allowed by law. (3) Financing would be easier if the land owner and building owner were the same person. (4) Any new purchaser would have to honor the current ground lease. Therefore, the land owner is not under legal obligation to notify the building owner.

A listing agent is showing property to a prospective buyer. The listing agent should disclose to the buyer that the agent: 1 » represents both the seller and buyer 2 » represents the seller only 3 » represents neither the seller nor the buyer 4 » is merely a consultant for both parties

(2) A prospective buyer is a customer; therefore, the listing agent would represent the seller only, not (1) both seller or buyer or (3) neither party. (4) A consultant is not normally a valid legal term.

What is always true about a real estate commission? 1 » An agent cannot be paid by both seller and buyer 2 » It is always negotiable 3 » The commission percentage is limited by state law 4 » It is always paid by the seller

(2) A real estate commission is always negotiable. (1) An agent can be paid by both parties if written informed consent is given by all parties. (3) There is no limitation on a commission percentage. (4) The commission is normally paid by the seller, but not always.

All of the closing documents should be prepared in accordance with the terms of the: 1 » listing contract 2 » sales contract 3 » right of first refusal contract 4 » title policy

(2) A sales contract contains the information for all the closing figures and needed documents. (1) A listing contract is between the seller and broker and covers the marketing and commission in selling the property. (3) A right of first refusal gives a buyer the first opportunity to buy should the property ever be for sale. (4) A title policy insures title rights for an owner.

A licensee, while in the process of trying to obtain a listing, notices stains on the ceiling of the property. What should the licensee do? 1 » Tell the seller to paint over it 2 » Tell the seller the appraiser will have to lower the value 3 » Ask the seller about roof leaks 4 » Ignore the stains

(3) A licensee must disclose material facts, such as a roof leak. Therefore, the licensee should inquire about the stains. (1) Telling the seller to paint over the stains would be fraudulent misrepresentation. (2) The appraiser is to estimate value; a property inspection is to check for leaks, etc. (4) Ignoring the stains could be misrepresentation.

An agreement between a property owner and a property manager detailing the managers responsibilities in managing the property would be called a(n): 1 » option contract 2 » lease agreement 3 » property management agreement 4 » listing contract

(3) A property management agreement is between the owner and manager outlining the property manager`s duties. (1) An option contract gives a buyer the right to buyer at a later date for a set price. (2) A lease agreement is between a landlord and tenant. (4) A listing contract is between an owner and broker.

Which of the following would be an example of a tying contract with a managing broker? 1 » A group of managing brokers setting a common commission rate 2 » A managing broker referring buyers to a particular lender 3 » Requiring a builder to list a finished house with the managing broker after buying a lot in the subdivision 4 » A managing broker listing a seller's house for sale and then finding the seller a bigger house to buy in that same area

(3) A tying contract is tying together two unrelated activities - a builder being required to list with a managing broker in order to purchase a lot in a subdivision would be an example of this - tying contracts are usually illegal. (1) A group of managing brokers setting a common commission rate is price fixing under the Sherman Anti-Trust laws. (2) A managiing broker referring buyers to a particular lender is allowed as long as there are no referral fees involved. (4) A managing broker can find a bigger home for the seller - this is normal.

A listing managing broker has to exercise all the following duties to a seller EXCEPT: 1 » due care 2 » accountability 3 » obedience 4 » management

(4) Agency obligations include: Care, Obedience, Accountability, Loyalty & Disclosure. (4) Management is NOT an obligation of an agent.

A seller normally pays commission money to the: 1 » selling managing broker 2 » buyer 3 » title company 4 » listing managing broker

(4) The seller normally pays commission money to the listing managing broker, not the (1) selling managing broker, (2) buyer or (3) title company.

A seller called a licensee asking the licensee to list the seller's home for sale. The licensee did so and submitted the listing to the MLS after the licensee's managing broker approved the listing. Another managing broker within the MLS cooperated with the listing managing broker and found a buyer customer for the house. Which of the following best describes the relationship of the parties involved? 1 » The selling managing broker is working with the buyer as a customer and does NOT represent the seller 2 » The selling managing broker is automatically a subagent of the listing broker 3 » The selling managing broker is a direct agent of the seller 4 » The listing managing broker represents both the seller and buyer

(1) A cooperating managing broker working with a buyer customer does NOT represent the seller. (2) The selling managing broker is NOT automatically a subagent of the seller. (3) The selling managing broker is only working with the buyer as a customer and does NOT represent the seller. (4) The listing managing broker represents the seller only, not the buyer.

Which of the following would be a violation of the Sherman Anti-Trust Laws? 1 » A group of managing brokers setting a common commission rate 2 » A managing broker establishing a commission split between the managing broker and licensees 3 » An agent directing buyers toward areas based on race 4 » A lender limiting loans to a certain geographical area

(1) A group of managing brokers cannot set a common commission rate. (2) An individual managing broker DOES set a commission split for their own company. (3) and (4) are fair housing violations, not anti-trust violations.

A property manager's two main objectives are to maintain the value of the property and: 1 » generate and produce income from the property 2 » minimize expenses 3 » avoid lawsuits for the owner 4 » get good tenants to occupy the space

(1) A property manager`s job is to produce the best income for the property being managed. While (2) minimizing expenses, (3) avoiding lawsuits and (4) getting good tenants are good ideas, it is not the manager's main job.

An agent owes care, obedience, accounting, loyalty, disclosure and confidentiality to: 1 » principals 2 » lenders 3 » title companies 4 » customers

(1) Agent duties to principals include care, obedience, accounting, loyalty, disclosure and confidentiality. (2) Agency duties are NOT owed to a lender or (3) title company. (4) An agent owes the following to customers; fairness, honesty and accuracy.

If a licensee showed several houses to a buyer and told the buyer one home in particular was the best buy, what type of agency might have been created? 1 » Implied 2 » Expressed 3 » General 4 » Universal

(1) By telling a buyer that a property is better, the licensee may have "implied" to the buyer that the agent was working for the buyer. (2) It would take an actual agreement to have an expressed agency. (3) General and (4) Universal are types of agents and deals with the scope of their authority.

A buyer was considering purchasing a new home that the listing managing broker was aware had been built on a toxic waste dump. What duty does the listing managing broker owe to the buyer? 1 » Disclosure 2 » Accountability 3 » Loyalty 4 » Obedience

(1) Disclosure of the toxic waste dump is required to be disclosed to any buyer. (2) Accountability, (3) loyalty, and (4) obedience are all client level duties that the listing managing broker owes to the seller.

An agent wanting to represent both sides of a transaction and be a dual agent would need to: 1 » have written informed consent from both parties 2 » have payment from both parties 3 » make sure both parties see an attorney 4 » make sure both parties receive an agency brochure

(1) Dual agency requires written informed consent of all parties (NOTE: some state allow dual agency while some states do not). (2) Who pays does not necessarily determine agency relationships. Dual agency does not require both parties to (3) see an attorney or (4) receive an agency brochure.

How does a buyer become a client of a managing broker? 1 » By signing an agency agreement with a managing broker 2 » By looking at a managing broker's in-house listings 3 » By writing a sales contract with a managing broker 4 » By looking at other companies' listings with a managing broker

(1) Signing a buyer agency agreement with a broker is typically how a buyer becomes a client. Simply looking at listings or writing contracts with a broker does not normally establish an agency relationship (2), (3) and (4).

How would prepaid taxes, with a midyear closing, show up on a closing statement? 1 » Debit buyer, credit seller 2 » Debit seller, credit buyer 3 » Credit seller only 4 » Debit buyer only

(1) Since the seller has pre-paid taxes for the year and we have a mid-year closing, the buyer will owe the seller for the buyer`s fair share - hence we debit the buyer and credit the seller. (2) This answer is backwards. (3) and (4) only show one side of the entry.

An agreement between a seller and a managing broker where a managing broker is hired to sell the seller's property is referred to as a(n): 1 » option contract 2 » listing agreement 3 » buy sell agreement 4 » offer to purchase contract

(2) A listing agreement is where a seller hires a managing broker to sell the property. (1) An option agreement gives a buyer the option of buying a property in the future at a set price within a set time frame. (3) A buy sell agreement deals with other business arrangements. (4) An offer to purchase contract is between a seller and a buyer for the sale of property.

Mrs. J signed a listing contract on August 15. When she signed the listing, she told the managing broker that some major repairs had just been completed on termite damage. The managing broker should: 1 » tell her not to tell any other licensees about this 2 » pay for the repairs himself 3 » be sure to inform all buyers of this fact 4 » cancel the listing agreement

(3) Since termite damage is a material defect, the managing broker must disclose it to all buyers. (1) The managing broker must disclose this to other licensees who have buyers who may be interested in the property. (2) The managing broker does NOT have to pay for any repairs or (4) cancel the listing.

Which statement made by a seller's agent to a prospective buyer would be a breach of fiduciary obligation to the seller? 1 » Telling the buyer about a roof leak 2 » Advising the buyer to see an attorney on how to take title 3 » Telling the buyer that the seller was desperate to sell 4 » Advising the buyer to obtain inspections

(3) Telling a buyer that the seller is desperate to sell would be hurting the seller and thus a breach of fiduciary. (1) An agent must tell buyers about material defects such as roof leaks. (2) An agent should tell buyers to see an attorney on title issues. (4) An agent should advise buyers that they are entitled to have inspections done.

Who does a licensee owe loyalty to? 1 » Buyer customer 2 » Seller customer 3 » Managing Broker 4 » Bank

(3) The licensee owes loyalty first and foremost to the managing broker. A licensee would not owe loyalty to a (1) buyer customer or (2) seller customer; loyalty is owed to clients, not customers. (4) A licensee would not owe loyalty to a bank.

Which of the following would a seller's agent have to disclose to a buyer? 1 » The seller had lived there for one year making no improvements to the property 2 » The seller had been convicted of a felony one year ago but has been clean ever since 3 » A mental institution was located one mile away 4 » The roof on the seller's property is in bad condition

(4) A roof problem is a material fact that would need to be disclosed to a buyer. The other three items are not material facts about the property, but rather about the seller and need not be disclosed. (1) How long a seller has lived in the property, (2) a seller`s past felony conviction and (3) a mental institution nearby do not have to be disclosed.

A licensee sells a property receiving $8,400 by charging a 6% commission. What was the sale price? 1 » $140,000 2 » $157,000 3 » $182,000 4 » $302,000

(1) $8,400 \ 6% = $140,000

A seller's agent would be guilty of a breach of fiduciary obligation by doing which of the following? 1 » Telling the buyer that the seller is in bad financial shape and would take less for the property than the asking price 2 » Telling the buyer about property defects 3 » Taking a full priced offer of a friend to the seller 4 » Taking a full priced offer from the seller's agent himself with full disclosures of all material and fiduciary facts

(1) Telling a buyer that the seller would take less is a breach of fiduciary responsibility by the seller`s agent. (2) Disclosing property defects and (3) taking a full priced offer from a friend or (4) the seller's agent himself would NOT be a breach of fiduciary responsibility; rather, this would be what is expected of a seller's agent.

Three agents made listing proposals to a seller. The first agent did a market analysis and came up with a price of $179,000. The second agent did a market analysis and came up with a price of $181,000. The third agent did not do a market analysis and told the seller it should sell for around $198,000. The third agent did get the listing, but the property sold for $174,000. The third agent violated the duty of: 1 » care 2 » loyalty 3 » notice 4 » accounting

(1) The duty of care is using knowledge and skill. By not doing a market analysis, the agent hurt the seller. (2) Loyalty is doing what is best overall for a client. (3) Notice is keeping the client informed. (4) Accounting is for actions and earnest money, etc. Although all are fairly similar, the issue of care (knowledge and skill) was the most violated as an agent should know to do a market analysis to protect the seller

Why should a listing agent be aware of all the ownership documents that will be used in a real estate transaction? 1 » So the agent can know which documents the seller and buyer will have to sign to complete the transaction 2 » So the agent can give both parties advice on vesting 3 » So the agent can give the seller capital gains advice 4 » So the agent can give both parties inheritance advice

(1) The listing agent is responsible for closing, so it is important that the listing agent knows which documents need signing to complete the transaction. (2) Vesting deals with ownership rights in an item. (3) Capital gains advice and (4) inheritance advice should be given by an accountant or financial planner.

AAA Realty had a listing with a seller. BBT Realty sold the property as a sub-agent for the seller. K was the licensee for AAA Realty and R was the licensee for BBT Realty. Who is the commission paid to? 1 » The managing broker of AAA Realty 2 » Licensee K of AAA Realty 3 » The managing broker of BBT Realty 4 » Licensee R of BBT Realty

(1) The seller always pays the entire commission to the listing managing broker (1). The listing managing broker then pays the cooperating managing broker and the listing managing broker`s licensees whatever the agreement called for (2), (3) and (4).

A seller lists with managing broker X. Managing broker Y sells the property. To whom does the seller owe a commission? 1 » Broker X 2 » Broker Y 3 » Broker X and Broker Y's salesperson 4 » Broker X and Broker Y

(1) The seller would pay the listing agent (X) who would then in turn pay the selling agent (Y).

A house was listed for $127,000. An offer of $120,000 was made and accepted. The commission on the sale was 7% of which the licensee received 40%. How much would the licensee receive? 1 » $1680 2 » $3360 3 » $3556 4 » $5334

(2) $120,000 (actual sale price) X 7% = $8,400 (total commission). $8,400 X 40% = $3,360 (salesperson`s share).

A person sold a property for $125,000 which represented an increase of 25% over the original cost. What was the original cost? 1 » $93,750 2 » $100,000 3 » $105,500 4 » $112.000

(2) $125,000 divided by 125% = $100,000 for original cost.

An industrial building sold for $535,000. The listing managing broker charged a 4.5% commission agreeing to cooperate with other managing brokers and split the commission 50/50. If a cooperating managing broker sold the property, how much would each of the managing brokers receive? 1 » $10,535.50 2 » $12,037.50 3 » $24,075.00 4 » $28,975.00

(2) $535,000 x 4.5% = $24,075 divided by 2 = $12,037.50 for each managing broker.

What would the seller net if the property was sold for $650,000 with a 6.5% commission? 1 » $601,350 2 » $607,750 3 » $614,580 4 » $622,300

(2) $650,000 x 6.5% = $42,250. $650,000 - $42,250 = $607,750

A seller received $75,000 at closing after paying a 6.5% commission. What would have been the sale price? 1 » $79,875 2 » $80,214 3 » $82,570 4 » $85,356

(2) $75,000 / 93.5% = $80,214 You can check your answer by taking the sale price of $80,214 x 6.5% = $5,214 in commission. Price of $80,214 less commission of $5,214 = $75,000 net.

A house sold for $84,500 with a commission rate of 6%. The listing managing broker received 50% of the commission. How much would the selling licensee receive if the licensee and the selling managing broker split their portion of the commission 40/60? 1 » $ 816 2 » $1014 3 » $1521 4 » $2856

(2) $84,500 X 6% = $5,070 (commission). $5,070 / 2 = $2,535 (selling managing broker). $2,535 X 40% = $1,014 (the first name in the clause receives the first number).

A listing agent was showing a buyer customer a property listed by the agent. While showing the property, the agent noticed a crack in the basement wall that was covered by some boxes. The agent should: 1 » not disclose this fact to the buyer as the agent is a seller's agent 2 » disclose this material fact to the buyer 3 » disclose this fact to the seller and then see if the seller wants to tell this to the buyer 4 » call the broker for help

(2) A crack in a wall is a material fact that must be disclosed to any buyer customer. (1) Even though the agent represents the seller, the buyer must be informed of material facts concerning the property. (3) The seller also must disclose material facts to buyers. (4) If you call the broker, the broker will say disclose.

What is the relationship between a property manager and an owner? 1 » Universal agency 2 » General agency 3 » Specific agency 4 » Ostensible agency

(2) A general agency (2) is created when someone has an ongoing right to represent another (such as ongoing management of a property). A special agency (3) is done when just one responsibility is given to an agent (such as to sell a property). Universal (1) agents represent a person in ALL that person`s affairs (such as a personal guardian). Ostensible agency (4) is created by actions of the parties rather than an agreement.

A property was sold with a 300-gallon fuel tank being part of the sale. The tank was 2/3 full at closing with a cost of $1.45 per gallon. What would be the proration at closing? 1 » $100 2 » $145 3 » $290 4 » $435

(3) 300 x 2/3 (300 x 2 / 3) = 200 gallons x $1.45 per gallon = $290

A listing agent is showing the listed property to a prospective buyer. The buyer tells the listing agent that a favorable zoning is coming with regard to the listed property. What should the listing agent do? 1 » Call the broker for help 2 » Tell the seller because of the fiduciary obligation to the seller 3 » Don't tell the seller as this violated confidentiality to the buyer 4 » Don't tell anyone as the buyer could sue the agent for damages if the information was disclosed

(2) An agent owes full disclosure to a client. (1) The managing broker would remind the agent of the full disclosure responsibilities, but this is not the best answer. (3) Confidentiality is not owed to a buyer customer, rather it is owed to a client. (4) An agent must disclose anything that would affect a client`s decision in a real estate transaction - fear of lawsuits is irrelevant.

A seller lists a property with one managing broker but reserves the right to sell it herself without paying a commission. This is an example of a(n): 1 » exclusive right to sell listing 2 » exclusive agency listing 3 » open listing 4 » net listing

(2) An exclusive agency listing authorized one managing broker and the seller to sell and earn or save the commission money. (1) An exclusive right to sell is where the managing broker only is authorized to sell and gets paid no matter who sells the property. (3) An open listing is where there are multiple managing brokers as well as the owner who are authorized to sell and receive commission. (4) A net listing is illegal (in most states) where the commission is the sales price less the seller`s proceeds.

A for-sale-by-owner lists a property with a managing broker. The managing broker puts the listing in the multiple listing service. The seller continues to advertise the property themselves. The seller then finds a buyer for their own property but still owes a commission to the managing broker. This must have been a(n): 1 » exclusive agency listing 2 » exclusive right to sell listing 3 » open listing 4 » net listing

(2) An exclusive right to sell listing is where the managing broker is the sole person authorized to sell the property and earn a commission. Even if the seller sells the property, a commission is still owed to the managing broker. (1) An exclusive agency listing would allow the seller to sell and not pay a commission as both the seller and listing managing broker are authorized to sell. (3) An open listing allows the seller and multiple managing brokers to sell the property - the only one paid is the one who sells the property. (4) A net listing is illegal (in most states).

An agent takes a listing on a commercial property. The agent finds a buyer for the property and the buyer and seller both sign a contract for the purchase. Prior to closing, the agent learns that the city plans on putting in a ramp on the back of the property. What should the agent do? 1 » Not disclose to the seller so the seller has no liability 2 » Disclose to the seller so the buyer can be informed 3 » Disclose to the seller and then let the seller determine whether or not to disclose to the buyer 4 » Disclose to the buyer only

(2) Any material fact about the property must be disclosed to all parties. (1), (3) and (4) are all false as these answers deal with only one of the parties being informed of the ramp.

A property manager is contemplating renting a space to a tenant with a mental disability. The manager is worried about this tenant posing a threat to the other tenants in the building. Under federal guidelines, what should the property manager do? 1 » Distribute leaflets to the other tenants about the new tenant 2 » Inform the property owner if the manager suspects any problems 3 » Confer with a manager of a condominium to get another opinion 4 » There are no federal guidelines on this issue

(2) As a person with a mental impairment is a protected class under federal fair housing laws, the manager should not discriminate but let the owner know of any possible problems posed to the other tenants. (1) The manager should NOT pass out leaflets about a person of a protected class. (3) Talking with a manager of a condominium would not help the property manager. (4) The federal fair housing law does speak to this issue, naming a person with a mental handicap as a protected class.

A commercial tenant leased a commercial space from a landlord. The tenant operated a grocery store on the premises. Which of the following statements would be true if the landlord died? 1 » The heirs could terminate the lease 2 » The heirs have to honor the lease as it runs with the land 3 » The heirs could change the terms of the lease as new owners 4 » The heirs must give an automatic renewal to the tenant

(2) Death of a landlord does not terminate a lease - the heirs have to honor the current leases in effect. (1) The heirs cannot terminate the lease. (3) The heirs cannot change the terms. (4) The heirs do not have to automatically renew the lease.

Which of the following terms best describes a fiduciary obligation to a client? 1 » Subrogation 2 » Disclosure 3 » Estoppel 4 » Liquidity

(2) Full disclosure is one of the services owed by an agent to a client. (1) Subrogation is where a buyer signs over rights in a claim to a title insurance company in return for money. (3) An estoppel certificate state the current loan balance. (4) Liquidity refers to something being easily converted into cash.

If a licensee is an employee of a managing broker, then the managing broker must: 1 » give yearly vacations 2 » withhold FICA and federal tax 3 » pay a commission 4 » pay a salary instead of commission

(2) If a licensee is an employee, then the employer must withhold taxes. (1) A licensee employee does NOT have to receive yearly vacations. (3) and (4) An employee can be paid a salary or commission or both.

Managing Broker A enters a listing in the multiple listing service under the rules of sub-agency. Managing Broker B, a member of the multiple listing service, finds a buyer and shows the house under the rules of sub-agency. Which of the following statements best describes the relationships of the parties? 1 » The buyer was an agent of Broker B 2 » Broker B was an agent of Broker A 3 » Broker B was an agent of the buyer 4 » Broker B was an agent of the seller

(2) In sub-agency, the selling managing broker becomes an agent of the listing managing broker. (1) & (3) both imply some type of buyer relationship. (4) is wrong since the seller`s agent is the listing managing broker. The selling managing broker is the sub-agent of the listing managing broker, not a direct agent of the seller.

What does a person have who can sign legal papers for another person? 1 » Attorney-in-fact 2 » Power of attorney 3 » Ostensible agency 4 » Attorney at law

(2) Power of attorney is what a person "has" who can sign legal documents for another person; this is accomplished by the signing of an actual power of attorney document. (1) An Attorney-in-fact is what a person is called when one has a written power of attorney. Ostensible (3) is a form of apparent agency. Executor (4) refers to a person who carries out a will.

A listing agent presents a contingency offer from a buyer to the seller. The offer contains language that says if the seller accepts the offer, the buyer will put their own home on the market within 24 hours. This is: 1 » considered to be a unilateral contract 2 » good for the seller as this would expose the buyer's property on the market within a short time frame 3 » a contingency that puts the buyer in the strongest position 4 » not allowed by law

(2) Putting the buyer`s home on the market immediately protects the seller by trying to get the buyer's property sold as soon as possible. If the buyer's property is sold soon, then the buyer can go ahead and purchase the seller's property. (1) This is a sales contract which is a bilateral contract. (3) This contingency does NOT put the buyer in the strongest position, rather, it puts the buyer in a rather weak position. (4) This contingency is allowed by law.

A buyer's agent presents an offer to a seller. The buyer's agent is not acting as a dual agent. In relation to the buyer's agent, the seller would be a(n): 1 » client 2 » customer 3 » principal 4 » prospect

(2) Since the buyer`s agent represents the buyer only and not the seller, the buyer would be the client and the seller would be the customer (one an agent works with but does NOT represent). (1) A client and (3) principal mean the same thing. Here, the buyer would be the client as the agent represents the buyer. (4) The word prospect is a general term and does not really apply.

Managing Broker L was the listing agent. Managing Broker S was the selling agent. Both were members of a multiple listing service. Managing Broker L did not know the buyer and Managing Broker S did not have any contact with the seller. No buyer agency agreement existed. Which of the following is the MOST likely agency relationship? 1 » Managing Broker L is a subagent of Managing Broker S 2 » Managing Broker S is working with the buyer as a customer 3 » Managing Broker L is an agent of the buyer 4 » Managing Broker S is an agent of the buyer

(2) Since there is no buyer agency involved, Managing Broker S must be working with the buyer as a customer. (1) is backwards: Managing Broker S could be a subagent of Managing Broker L, but not the other way around. (3) and (4) are wrong as it indicates in the question that there was no buyer agency.

Two managing brokers from two different companies get together and decided to charge the same commission rate. This may be a violation of the: 1 » federal fair housing law 2 » Sherman Anti-Trust law 3 » Equal Credit Opportunity Act 4 » Truth-In-Lending laws

(2) The Sherman Anti-Trust laws prohibit price fixing, which is what the managing brokers are doing here. (1) The federal fair housing laws prohibit discrimination on things such as race and religion. (3) The Equal Credit Opportunity Act prohibits lenders from discriminating on things such as race and religion. (4) The Truth-In-Lending laws (Regulation Z) require lenders to disclose all loan costs.

A purchase agreement was accepted with earnest money given as part of the contract. The broker deposited the earnest money in the broker's escrow account. How would the earnest money appear on the closing statement? 1 » Debit buyer, no entry for seller 2 » Credit buyer, no entry for seller 3 » Debit buyer and credit seller 4 » Credit seller, no entry for the buyer

(2) The earnest money is a credit to the buyer only and does not appear on the seller`s statement. The seller gets credited for the full sale price of the property. This credit to the buyer simply shows the buyer receives the earnest money and is applying this amount to the purchase price.

The property management agreement is between the property manager and: 1 » his/her employees 2 » the property owner 3 » the tenants 4 » the lender

(2) The property manager is hired by the owner.

The most usual way for a managing broker to receive commission is to have the seller pay as a: 1 » flat fee 2 » percentage of the selling price 3 » non-refundable retainer fee 4 » option bonus

(2) The traditional method of compensation is for the seller to pay as a percentage of the price. (1) A flat fee and (3) non-refundable retainer fee are allowed but are not as common. (4) An option bonus is not really a valid term.

A licensee included a protective period clause in a listing agreement with a seller. To protect the licensee under this clause, what must the licensee do? 1 » Verbally tell the seller about any interested buyers 2 » Before listing expires, give a list of all buyers who have seen the property to the seller 3 » Before listing expires, give a list of all buyers who have seen the property to the managing broker 4 » See an attorney close to the expiration date of the listing

(2) To be protected, a list of all buyers must be given to the seller at the expiration of the listing. (1) Verbally telling about buyers is not good enough. (3) The list does not go to the managing broker, rather the seller. (4) An attorney does not have to be involved to be protected.

A managing broker sold a commercial property for $1.5 million. The managing broker earned a total commission of $87,000. If the managing broker was paid 6% on the first $1.2 million of sales price, what was the managing broker's rate of commission on the amount of sale price over $1.2 million? 1 » 3% 2 » 4% 3 » 5% 4 » 6%

(3) $1,200,000 X 6% = $72,000; $87,000 (total commission) - $72,000 = $15,000 (the commission on the other $300,000 (1.5 million - 1.2 million). $15,000 / $300,000 = 5%.

A property manager is compensated at 10% of the gross income. The total rents collected were $12,000 with expenses of $600 for utilities, $350 for insurance, $219 for repairs and maintenance, and $60 for advertising. What was the property manager's compensation? 1 » $1,000 2 » $1,077 3 » $1,200 4 » $1,229

(3) $12,000 (gross income) X 10% = $1,200 (compensation). The other numbers are just there to see if one knows the difference between gross (before expenses) and net (after expenses).

A property had a list price of $164,000, an actual sale price of $158,000 and a $124,000 loan. If the transfer fee was $3 per $1,000, what was the fee? 1 » $250 2 » $372 3 » $474 4 » $492

(3) $158,000 / $1,000 = 158 x $3 = $474 The transfer fee is based on sale price

A licensee was paid commission of 5% of the first $50,000 of a sale price and 3% of all over $50,000. If the total commission was $3,475, what was the sale price? 1 » $32,500 2 » $43,438 3 » $82,500 4 » $97,500

(3) $50,000 X 5% = $2,500. $3,475 (total commission) - $2,500 = $975 (3% of all over $50,000). $975 / 3% = $32,500 (sales price over $50,000). $32,500 + $50,000 = $82,500 (total sales price).

From whom does a licensee receive a commission? 1 » Owner 2 » Multiple listing service (MLS) 3 » The licensee's own managing broker 4 » A cooperating managing broker

(3) A licensee can never receive payment from anyone other than the licensee's own managing broker.

XYZ Realty listed a property for sale and put the listing in the multiple listing service (MLS). ABC Realty, working with a prospective buyer, cooperated through the MLS and showed the property. What is true? 1 » XYZ Realty represents the sellers and buyers 2 » XYZ Realty represents the buyers only 3 » ABC Realty does NOT represent the seller and is working with the buyer as a customer. 4 » XYZ Realty is a subagent of ABC

(3) ABC Realty (selling agent) is working with the buyer who is a customer (prospective buyer means customer). (1) & (2) Prospective buyer means customer, so no one is representing the buyer. (4) This answer is backwards: ABC Realty could operate as a subagent under the listing brokerage company XYZ Realty, but XYZ Realty would never be a subagent under ABC Realty.

Which of the following activities would be a violation of the Sherman Anti-Trust Laws? 1 » A managing broker charging a commission of 6% for certain type properties 2 » A managing broker charging a minimum fee of $1,000 3 » All the managing brokers in an area agreeing to charge a 6% commission 4 » A managing broker charging a non-refundable retainer fee to a buyer client

(3) All of the managing brokers cannot establish a common commission rate as this is a violation of the Sherman Anti-Trust Laws. (1) A managing broker charging a certain commission amount along with (2) a certain minimum fee or (4) a non-refundable retainer fee is allowed.

An agent gathering information on a listing should gain as much information as possible for which of the following reasons? 1 » In order to list more properties 2 » To reduce the odds of being sued 3 » In order to have as much information as possible when showing the house 4 » In order to sell more properties

(3) Although (1), (2) & (4) all have some merit, the major reason to analyze a property prior to showing is to handle questions that come up during the showing itself, thus minimizing the chances of misrepresentation.

An agent took a listing in which the seller said to sell it in "as is" condition. The agent then found a major structural flaw in the property. Which of the following BEST describes what the agent should do? 1 » Tell the buyer the property is sold "as is" 2 » NOT reveal the flaw unless asked by the buyer 3 » Inform the buyer of the flaw 4 » NOT reveal the flaw as the agent is a fiduciary of the seller

(3) An agent must disclose all material defects. Selling a property "as is" does not relieve the agent of the obligation to disclose material defects. The buyer has a right to know about the defects in order to determine whether to accept the property "as is".

An agency agreement between a seller and managing broker is normally created with an: 1 » implied agreement 2 » offer and acceptance agreement 3 » expressed agreement 4 » option agreement

(3) An expressed contract is where both parties clearly state their intentions. A seller and managing broker normally agree in writing on a listing contract where all obligations by both parties are understood. (1) An implied contract is created by one`s actions. (2) An offer and acceptance agreement is normally between a seller and a buyer for the purchase of a property. (4) An option agreement gives a possible buyer the right to purchase at a later date for a set price.

A licensee flagrantly misrepresents something in the sale of a property. Which of the following statements would be true? 1 » Only the buyer can sue the licensee, not the seller 2 » The licensee can plead ignorance and would not be liable 3 » Any party to the contract could sue the licensee if damages occur because of the misrepresentation 4 » Only the managing broker could be sued because a licensee's statements cannot be held against the licensee

(3) Any party damaged by a licensee's misrepresentations can sue. (1) This is not correct as any party can sue. (2) A licensee who flagrantly misrepresents cannot plead ignorance. (4) The licensee and the managing broker could both possibly be held liable.

Taxes on a property were paid in arrears running from July 1st to June 30th. If closing was on April 15th and the annual taxes were $912, what was the tax proration? 1 » $191 2 » $437 3 » $721 4 » $912

(3) As taxes were paid in arrears, the seller would owe from July 1st to April 15th of the next year which is 9 months and 15 days or 285 days. $912 annual taxes / 360 days = $2.53 per day for taxes x 285 days = $721.

A licensee, while showing two different houses to a buyer, advised the buyer that one of the houses would be a better buy. Which type agency may have been created? 1 » Expressed 2 » Exclusive 3 » Implied 4 » Executory

(3) By telling the buyer a property is better, the licensee may have "implied" that the agent was working for the buyer. (1) It would have taken an expressed statement by both parties to create an expressed agency. (2) Exclusive refers to a listing agreement where the managing broker is the sole or exclusive agent representing a seller. (4) Executory refers to a contract where the promises have been made but not completed.

A listing contract with a seller is about to expire. The managing broker has a buyer who is interested in the property but is not quite ready to make an offer. If the managing broker wants to be protected as far as earning commission if this buyer wants to purchase the property at a later date, the managing broker would need to do all of the following EXCEPT: 1 » make sure there is a protective period clause in the listing 2 » make sure the protective period clause covers a certain number of days 3 » give a notice in writing to the buyers that the buyers are on a protective period list 4 » give in writing to the sellers the names of all buyers who have looked at the property through the managing broker

(3) For a managing broker to be protected through a protective period clause, there is no requirement that a notice be given to the buyers that the buyers name is on the list given to the seller. To be protected, however, a managing broker must (1) have a protective period clause in the listing, (2) have the protection for a certain number of days and (4) give to the seller a list of buyers names who have seen the property already.

A managing broker acting as a property manager usually indicates which type of agency? 1 » Managerial 2 » Special 3 » General 4 » Ostensible

(3) General agency means that one performs an "ongoing" responsibility, such as managing a property. A special agent (2) performs a one time task. Ostensible (4) agency is a type of "apparent" agency. Managerial (1) is not a type of agency.

A property manager generally does all EXCEPT: 1 » marketing 2 » keep records 3 » give legal advice 4 » pay taxes

(3) Only an attorney can give legal advice. (1), (2) & (4) are all property management functions.

A managing broker signs an exclusive right to sell listing with an owner. The next day, the owner talks to another managing broker about listing the same property. What should be the managing broker's response to the owner? 1 » I can list it concurrently with the other managing broker and put it in MLS 2 » I can list it with the other managing broker's permission 3 » I cannot list the property while another managing broker has a current exclusive listing 4 » I can't list the property, but I'll bring buyers directly to you

(3) The managing broker should inform the seller that an owner should only list with one managing broker at a time on an exclusive listing; otherwise, if the property sells, the owner could possibly owe two commissions to two different exclusive managing brokers. The managing broker should not (1) and (2) list the property as well as the seller might have to pay two commissions. (4) The other managing broker cannot go to the owner directly.

Under a listing agreement, who would be the client? 1 » The licensee 2 » The managing broker 3 » The seller 4 » The buyer

(3) The seller is the client or principal (the one who does the hiring) under a listing agreement. (1) The licensee is an agent of the managing broker. (2) The managing broker is an agent of the seller. (4) The buyer is not involved in a listing agreement.

An assumed loan in a real estate transaction would appear on the closing statement as a: 1 » credit to the buyer only 2 » debit to the buyer, credit to the seller 3 » debit to the seller, credit to the buyer 4 » neither a debit nor credit to the seller

(3) The seller still owes on the loan - hence the debit to the seller; the buyer receives the loan money to help buy the property - hence the credit to the buyer. (1) Credit buyer only is wrong as the seller owes the money (debit). (2) This answer is simply backwards. (4) It would show as a debit to the seller.

A managing broker talks to a seller about listing the property for sale. The seller won't list just with this one managing broker, but tells the managing broker that if he finds a buyer for the property, the seller will pay a commission. This would be a(n): 1 » exclusive right to sell listing 2 » exclusive agency listing 3 » open listing 4 » net listing

(3) Under an open listing, only the one who produces the buyer and sells the property gets paid a commission. (1) An exclusive right to sell authorizes just one listing managing broker to sell the property and earn commission. (2) An exclusive agency listing authorizes the seller or the one listing managing broker to sell the property and earn a commission. (4) A net listing is illegal (in most states) and says the commission is the sales price less the seller`s proceeds.

A seller lists a property with Managing Broker A. However, the listing provides that if any other managing broker sells the property, Managing Broker A does NOT receive a commission. This type of listing would be called a(n): 1 » exclusive agency 2 » exclusive right to sell 3 » open listing 4 » net listing

(3) Under an open listing, only the one who sells the property earns a commission. Here, all other managing brokers must have also had an open listing. (1) An exclusive agency listing is where only the owner or the one listing managing broker can sell the property and earn commission. (2) An exclusive right to sell is where only the one listing managing broker is authorized to sell the property and earn a commission. (4) A net listing is illegal (in most states) whereby the commission is the sales price less the seller`s proceeds.

Which of the following types of listings would give the managing broker the LEAST protection for receiving commission? 1 » Exclusive agency 2 » Exclusive right to sell 3 » Open 4 » Net

(3) With an open listing, the only one who gets paid is the one who finds the buyer who purchases. (1) An exclusive agency authorized two parties to sell and earn commission; the seller and the managing broker. Here, the managing broker is better protected. (2) An exclusive right to sell is where only the managing broker is authorized to sell; this is the best protection for the managing broker. (4) A net listing is illegal (in most states) where the commission is the sales price less the seller`s proceeds.

Taxes of $1,200 were prepaid for the year on January 1st. If the property was sold with a closing date of March 1st and the buyer was credited with the day of closing, what would be the tax proration? 1 » $ 200 2 » $ 500 3 » $ 800 4 » $1,000

(4) $1,200 / 360 = $3.33 per day x 300 days = $1,000 (The buyer owes from March through December which is 10 months or 300 days)

A property sold for $125,000 with a loan of $50,000. The seller paid $2,000 in closing costs and a 7% commission? How much would the seller net? 1 » $54,250 2 » $57,000 3 » $61,300 4 » $64,250

(4) $125,000 x 7% = $8,750 in commission. $125,000 - $50,000 - $2,000 - $8,750 = $64,250 net.

A licensee earned 2.75% commission on $600,000 in sales for the year. However, the licensee had only taken a draw against commission of $150 per week for the entire year for the licensee's salary. What would be the total amount earned by the licensee? 1 » $ 7,800 2 » $ 8,700 3 » $12,400 4 » $16,500

(4) $600,000 X 2.75% = 16,500 (total commission)

As a buyer's agent, which of the following would the agent NOT have to disclose to a seller? 1 » The buyer's ability to complete the contract 2 » The agency relationship between the agent and buyer 3 » Any change in the buyer's financial ability that would affect the contract 4 » The buyer was willing to pay more for the property than the offer price

(4) A buyer`s agent would NOT disclose to the seller how much higher the buyer would be willing to go in negotiating the contract. (1) The buyer's ability to purchase, (2) the agency relationship and (3) the buyer's financial position would be disclosed to the seller.

When a tenant pays taxes and insurance in addition to normal rent, this would be called a: 1 » graduated lease 2 » percentage lease 3 » gross lease 4 » net lease

(4) A net lease is where the tenant pays expenses such as taxes and insurance. (1) A graduated lease goes up or down over the term but is pre-determined. (2) A percentage lease is where the rent is based on a percentage of sales. (3) A gross lease is where the landlord pays expenses such as taxes and insurance.

Which of the following duties BEST describes the duty of a property manager to the owner? 1 » Fair 2 » Honest 3 » Accurate 4 » Fiduciary

(4) A property manager is generally considered to be a general agent for the owner, thus owing the owner fiduciary responsibility (4). Fair (1), honest (2) and accurate (3) are all duties owed to a customer (in this case, the tenants).

An agent, in trying to obtain a listing from a seller, notices that there are water stains on the ceiling. The seller tells the agent NOT to disclose to anyone about the water stains. What should the agent do? 1 » List the property and follow the seller's instructions 2 » Tell the seller to paint over the water stains and then list 3 » Advise all buyers to get inspections done before purchasing 4 » Refuse to take the listing

(4) An agent must disclose all material facts about a property. If the seller refuses to disclose, the agent should decline the listing. (1) A seller`s agent cannot follow illegal instructions about not disclosing material defects. (2) Telling the seller to paint over the stains would be fraud. (3) Simply advising the buyers to get inspections does not relieve the agent of disclosing all material defects.

Which type of relationship is established between a principal and a managing broker? 1 » Trustor 2 » Trustee 3 » Blanket 4 » Fiduciary

(4) Fiduciary means a relationship of loyalty and trust. (1) A trustor is the giver of a trust deed, i.e., the borrower. (2) A trustee is the receiver of a trust deed, normally an attorney for a lending institution. Blanket (3) refers to a type of loan that uses more than one property as security.

In which of the following cases might a managing broker still be owed a commission on an unexpired listing? 1 » Destruction of property 2 » Death of the seller 3 » Foreclosure on the property 4 » The principal terminates the listing agreement

(4) If the seller or principal cancels the listing, the managing broker still might be owed a commission. For example, if the seller cancels as the seller found their own buyer, the managing broker could sue for commission under a typical exclusive right to sell listing. The other three instances are terminations by law; (1) destruction, (2) death of seller and (3) foreclosure.

An agency agreement can always be terminated by: 1 » the seller unilaterally 2 » the managing broker unilaterally 3 » the licensee and seller 4 » mutual agreement by all parties to the contract

(4) Mutual agreement by all parties can terminate an agency agreement. An agency agreement cannot be terminated by just one party as in (1) the seller or (2) the managing broker. (3) A licensee cannot terminate an agency agreement as the contract is between the managing broker and the seller.

One who engaged another to act for him or her in transactions is a(n): 1 » testator 2 » agent 3 » trustee 4 » principal

(4) Principal is the person doing the hiring. Testator (1) is the maker of a will. Agent (2) is the one who "is hired." Trustee (3) is someone holding property in trust.

How would a loan origination fee normally show up on a closing statement? 1 » Debit buyer - credit seller 2 » Debit seller - credit buyer 3 » Debit seller - no entry to buyer 4 » Debit buyer - no entry to seller

(4) The buyer normally pays the loan origination fee - therefore, it is a debit to the buyer and no entry to the seller. (1) and (2) are incorrect as there is no entry for the seller since the buyer only pays this fee. (3) This answer is backwards.

A seller and buyer are awaiting closing on a real estate transaction. The listing agent learns that a zoning change has just taken place on the property. What should the listing agent do? 1 » Tell the seller only as the seller is the principal 2 » Tell the seller and then see if the seller wants this information to be given to the buyer 3 » Don't tell anyone if the agent deems this information unnecessary 4 » Disclose this to all parties in the transaction

(4) This is a material fact and would have to be disclosed to all parties in the transaction, not (1) just the seller. (2) The seller does not make the decision on whether to disclose to the buyer - this must be done by the agent. (3) The agent must disclose all material facts.

A local multiple listing service (MLS) passed a rule saying that any managing broker who charges less than 4% commission in a minority area cannot belong to the MLS. Which of the following statements would be true? 1 » This is legal as managing brokers cannot be forced to operate at a financial loss 2 » This is legal because without this rule, other managing brokers would be scared away from joining the MLS 3 » This is illegal as this violated federal fair housing laws 4 » This is illegal as this violated price fixing laws under the Sherman Anti-Trust laws

(4) This violates the price fixing provision under the Sherman Anti-Trust laws. (1) and (2) This is not legal - commission rates are always negotiable. (3) This is not necessarily a fair housing discrimination against an individual, but rather a group price fixing idea.

A tenant signs a three-year lease with a landlord. The landlord dies with the heirs inheriting the rental property. The heirs then sold the rental property to a new owner. The new owner would like to terminate the tenant's lease. Can the new owner do so? 1 » Yes, because of the death of the original landlord 2 » Yes, because the rental property had been sold 3 » No, unless the new owner gives property notice to the tenants 4 » No, the lease is still valid for the remainder of the term

(4) When a rental property is sold, the new owner must honor the current leases that are still in effect. (1) The death of the landlord does not effect the leasehold rights of the tenant - heirs must honor the lease. (2) The sale of a rental property does not affect the tenant`s rights - the new owner must honor the current leases. (3) A new owner just can't give notice and terminate a valid lease contract.

An exclusive right to sell listing is given by an owner to a managing broker. Which of the following would be required of the owner? 1 » To convey the property if a buyer offers full list price 2 » To put the listing in the multiple listing service 3 » Pay the managing broker a commission only if the managing broker can prove procuring cause 4 » Pay the managing broker a commission upon completion of the sale of property

(4) With an exclusive right to sell listing, the listing managing broker is the sole person authorized to sell and would be due a commission upon the sell of the property. (1) The seller does NOT have to sell to a buyer who offers full price as the seller has the right to reject any offer (seller is the offeree). (2) The owner must authorize the listing to go into the multiple listing service. (3) The managing broker does NOT have to prove procuring cause (found buyer) as the managing broker gets paid regardless under exclusive right to sell no matter who sells.