Chapter 1, 2: Agency relationships & issues Questions

A seller gives a listing firm an exclusive right to sell. During the term of the listing, the seller signs another exclusive right to sell listing with a different firm. The first firm finds a buyer and the transaction closes. To which firm does the seller owe a commission? A: The seller owes both firms a commission B: To the first firm, which must split it with second firm C: To the first firm because the seller signed that agency agreement first D: To whichever firm found the buyer

A

A firm pays a licensee a monthly salary of $1,000 plus 3% commission on all of the licensee's listings that sell and 2.5% on properties where the licensee is the selling licensee. None of the licensee's listings sold last month. The firm paid the licensee $4,175 in salary and commission. What was the value of the property the licensee sold? A: $127,000 B: $147,000 C: $122,500 D: $105,833

A $4,175 - $1,000 salary = $3,175 commission on sales. $3,175 / .025 = $127,000 value of property sold.

What kind of agency relationship can a buyer and a firm create with a WB-36 Buyer Agency/Tenant Representation Agreement? A: A general agency relationship B: A net agency relationship C: A federal agency relationship D: An implied special agency relationship

A A WB-36 Buyer Agency/Tenant Representation Agreement can create a general or a special agency relationship. If the contract terminates when the buyer finds a property, it is a special agency relationship. If it continues after the buyer finds a property, it is a general agency relationship. A written agency agreement is express, not implied. Parties create express agency with words, either written or oral, and create implied agency through a party's actions.

What is a fiduciary? A: A set of principles that govern how a firm cooperates with other firms B: A set of laws that describe the responsibilities and obligations of a person who acts for another C: A person who starts an action that fulfills the goals of a principal D: A person who is responsible for the property of another

A A fiduciary is a person who is responsible for the property of another. Fiduciary duties are the set of laws that describe the responsibilities and obligations of a person who is a fiduciary for another.

What determines the amount a client's firm will earn in a real estate transaction? A: The agency agreement B: The Multiple Listing Service C: The Wisconsin Association of REALTORS® D: State law

A A firm's commission is negotiable between the parties. The agency agreement determines the firm's commission.

What is a licensee's deadline for providing agency disclosure to a client? A: Before or at the time of entering into an agency agreement with the client B: Before negotiating on the client's behalf C: Before writing the offer D: Before closing

A A licensee must provide agency disclosure to a client before or at the time of entering into an agency agreement with the client.

A homeowner is selling a residential property without listing it to a buyer who is not working with a firm. What do the seller and the buyer need to do to fill out the state-approved offer to purchase? A: Nothing B: One party needs to obtain a real estate license C: The seller or the buyer must hire a licensee to complete the form D: The seller or the buyer must hire an attorney to complete the form

A Buyers and sellers can complete state-approved real estate forms without the assistance of a licensee or an attorney. Individual buyers and sellers do not need a real estate license to complete the forms or the transaction.

When can a licensee draft an offer for a family member? A: The licensee discloses the relationship and the buyer and the seller consent B: The licensee refuses to sign a buyer agency agreement with the buyer C: The licensee does not disclose it D: Never

A Representing family members in a real estate transaction is permitted as long as there is consent and disclosure to all parties.

A seller executes a listing contract with a licensee for the listing firm. Which of the following statements INCORRECTLY describes the parties' relationship? A: If the listing licensee dies, the agency agreement terminates. B: The listing licensee is the firm's agent. C: The listing licensee and the listing firm owe fiduciary duties to the seller. D: The listing firm is the seller's agent.

A The agency relationship is between the firm and the client so the unfortunate death of the listing licensee does not change the agency relationship between the firm and the seller.

A seller lists a property with a firm. The firm finds a buyer who writes an offer at the price and on substantially the same terms as the listing. The firm presents the offer and the seller rejects it. The seller than terminates the listing before the expiration date. What can the firm do? A: The firm can sue the seller for the firm's commission. B: The buyer can sue the seller for specific performance. C: The firm can sue the buyer for the firm's commission. D: The firm can sue the seller for specific performance.

A The firm earned a commission according to the terms of the listing contract when the buyer wrote a "mirror image offer," even if the seller rejects the offer. The firm could not sue the buyer because the firm and the buyer do not have a contract and the firm could not sue the buyer for specific performance because that is not an available remedy for breach of a personal service contract, such as the listing contract.

A licensee's son wants to list property with the licensee's firm. What are the licensee's ethical obligations? A: The licensee must disclose the relationship between the licensee and the seller. B: The licensee must refuse to list the property because of the potential conflict of interest. C: The licensee can list it as long as the licensee does not accept a commission when the property sells. D: The licensee can list it as long as the licensee notifies the DSPS of the relationship.

A The licensee can list it as long as the licensee discloses the relationship to the parties. Wis. Admin. Code REEB § 24.05(2) A licensee acting as an agent in a real estate or business opportunity transaction may not act in the transaction on the licensee's own behalf, on behalf of the licensee's firm, on behalf of any member of the licensee's immediate family or any combination of members of the licensee's immediate family, or on behalf of any other organization or business entity in which the licensee has an interest without the prior written consent of all parties to the transaction. For the purpose of this subsection, a licensee shall obtain the written consent in the offer to purchase, option, lease or other transaction contract.

A firm lists a property for a husband and wife for $157,000. The wife's employer transferred her position to another state and the couple needs to sell quickly. To assist the couple and entice some offers for the couple to consider, the listing licensee decides to tell a buyer that the couple will probably accept slightly below list price. The buyer wrote an offer that the sellers accepted. What did the licensee do? A: Violated the duties to a client B: Protected the sellers' interest by generating offers for the sellers to review C: Fulfilled agency obligations under the contract by finding a buyer D: Violated the duties to all parties in a transaction by not telling the buyer that the sellers needed to sell quickly

A The licensee violated the duties to a client even though the licensee's action may have benefited the sellers by enticing buyers to submit offers. Unless the sellers authorized the licensee to reveal that they might take less than list price because they needed to sell quickly, the licensee violated the duty of confidentiality and loyalty.

How does multiple representation with designated agency affect clients? A: If both parties consent to designated agency in writing, each designated agent negotiates on behalf of the agent's client, even if negotiation places the interests of one client ahead of another. B: If a client consents to designated agency, a licensee may place the firm's interest ahead of the client's. C: If a client consents to designated agency, the firm and the firm's licensees must remain neutral. D: After a client consents to designated agency, the client cannot withdraw consent unless the other client agrees because clients' agency choices must match.

A When both parties consent to designated agency, a firm assigns each party an agent who negotiates on behalf of the agent's client even if the negotiation places the interests of one of the firm's client's ahead of the other. If the clients do not consent to designated agency, the firm must remain neutral in the negotiation. A client can withdraw consent to designated agency at any time.

A firm operates a home staging company. The firm takes a listing for a seller and the firm wants to offer home staging services to the seller. Can a licensee associated with the firm contact the seller and offer home staging services? A: Yes, the firm can offer home staging services to the seller as long as the firm discloses the firm's interest in the home staging business. B: Yes, the firm can offer home staging services to the seller as long as the firm has an unlicensed personal assistant contact the seller and no licensee discusses home staging services. C: No, it is an illegal tie-in arrangement to offer a different service to a client seeking real estate services. D: No, the firm must conduct real estate and home staging transactions from two separate offices and cannot mix business or contacts between the two operations.

A Wis. Admin. Code REEB § 24.05(1)(b) A licensee acting as an agent in a real estate or business opportunity transaction may not recommend or suggest to a party to the transaction the services of another individual or entity from which the licensee may receive compensation for a referral or in which the licensee has an interest, unless the licensee, prior to or at the time of referral, discloses to the party in writing the fact that he or she may receive compensation for the referral or that he or she has an interest in the individual or entity providing services.

What does a firm have to do to enforce a commission the firm earned under an agency agreement? A: The client and the firm must have a written agency agreement. B: The client and the firm must have agreed to the verbal agency relationship. C: The firm must hire a lawyer. D: The firm must have a licensed personal assistant.

A Wis. Stat. § 240.10, "Every contract to pay a commission to a real estate agent or broker or to any other person for selling or buying real estate shall be void unless such contract or note or memorandum thereof describes that real estate, expresses the price for which the same may be sold or purchased, the commission to be paid and the period during which the agent or broker shall procure a buyer or seller, is in writing, and is subscribed by the person agreeing to pay such commission, except that the contract to pay a commission to a person for locating a type of property need not describe the property."

What is presumptive evidence of a pattern of sales? A: Five sales in one year or 10 sales in five years B: Five sales in five years or 10 sales in 10 years C: 10 sales in one year or five sales in five years D: 10 sales in five years or one sale in 10 years

A Wis. Stat. § 452.01(2)(b) A broker is engaged wholly or in part in the business of selling or exchanging interests or estates in real estate or business, including businesses' goodwill, inventory, or fixtures, whether or not the business includes real property, to the extent that a pattern of sales or exchanges is established, whether or not the person owns the real estate or business. Five sales in one year or 10 sales in five years is presumptive evidence of a pattern of sales or exchanges.

Which activity requires a real estate license? A: An individual negotiating the terms of another's business sale B: A sheriff conducting a foreclosure sale C: An attorney representing a client in a real estate transaction D: A loan officer completing a loan application

A Wis. Stat. § 452.01(3)(a)(b)(f)(h) A broker does not include 1) receivers, trustees, administrators, executors, guardians or other persons appointed by or acting under the judgment or order of any court; 2) public officers while performing their official duties; 3) attorneys licensed to practice in this state while acting within the scope of their attorney's license; 4) any lender when engaged in the transaction of business within the scope of its corporate powers as provided by law.

Which activity can an unlicensed personal assistant NOT do? A: Negotiate an offer on behalf of a licensee's buyer B: Complete an approved form at the direction of the licensee C: Create marketing pieces for the licensee's listings D: Conduct an open house with a licensee present

A Wis. Stat. § 452.34 states that an unlicensed personal assistant can perform clerical duties on behalf of a salesperson including creating marketing pieces and filling in the blanks on an approved form. An unlicensed personal assistance could not conduct an open house unless a licensed person supervises the event and could not negotiate an offer on a buyer's behalf.

A firm pays a licensee $1,522.50, which is one-half of the firm's 7% commission on a sale. What was the sale price of the property? A: $45,000 B: $43,500 C: $22,500 D: $90,000

B $1,522.50 x 2 = $3,045. $3,045 / .07 = $43,500.

A firm pays a licensee $3,000, which is 50% of the listing firm's commission on a $100,000 sale. What percentage did the seller agree to pay the listing firm in the listing contract? A: 7% B: 6% C: 3% D: 8%

B $3,000 x 2 = $6,000 total commission. $6,000 / $100,000 = .06 = 6%.

A firm sold a property for $79,500. The seller paid the listing firm 6.5% commission. The listing firm will pay the listing licensee 30% of the commission and will pay the selling licensee 25% of the commission. How much did the listing firm pay the listing licensee? A: $3,617 B: $1,550 C: $1,292 D: $5,168

B $79,500 sale price x 6.5% commission = $5,168. $5,168 x .30 = $1,550 listing licensee's commission.

When must a licensee inform a client about multiple representation relationships? A: Before commission is paid B: Prior to or at the time of entering into the agency agreement C: When presenting the closing statement D: Any time

B A firm must disclose agency to clients prior to or at the time of entering into an agency agreement. A client chooses whether to consent to multiple representation relationships when executing an agency agreement. A firm must provide agency disclosure to customers before negotiations.

What should a salesperson do if the DSPS suspends the licensee's firm's license? A: Conclude all transactions within the 10-day grace period B: Stop participating in any real estate transactions C: Notify all buyers and sellers before the two-week conclusion period D: Amend all agency agreements to remove the firm's name and replace it with the licensee's name

B A salesperson can only practice real estate when associated with a firm and under the supervision of a supervising broker. There is no grace period and if the salesperson is no longer associated with a firm, the salesperson must stop participating in all real estate transactions.

The Sherman Antitrust Act of 1890: A: encourages companies to trust one another and set prices accordingly B: prohibits price fixing and group boycotts C: can only be violated by intentional price fixing and group boycotts D: states that agency agreements must be in writing because oral agreements cannot be trusted

B Actions that violate the Sherman Antitrust act do not have to be intentional. Behavior even without intent can be enough to constitute price fixing or group boycott.

A firm lists a seller's home. The seller is not satisfied with the firm's service and cancels the listing before accepting any offers and before the expiration date of the listing agreement. What can the firm do? A: Sue for a commission if the seller closes during the original term of the listing contract B: Sue the seller for damages due to early termination C: Sue for specific performance and force the seller to fulfill the terms of the listing D: Continue to market the property and present offers to the seller

B Agency agreements are personal service contracts and a court will not award specific performance as a remedy for a breach of a personal service contract. Early termination of an agency agreement without cause is a breach of contract and the non-breaching party could sue the other party for damages resulting from the breach.

A seller tells a firm that the seller needs to net $120,000 on the sale of the property. If the seller agrees to pay the firm 5% commission, what is the minimum price the seller will accept for the property? A: $125,468 B: $126,316 C: $126,000 D: $127,000

B Sale price - 5% = net price. 100% - 5% = 95%. $120,000 / .95 = $126,316.

A group of competing firms at a weekly breakfast meeting decided that introducing discount brokerage services to the market would be bad for business. They agreed among themselves not to charge any less than 7% commission. Is the firms' agreement legal? A: Yes, it is price fixing under the Sherman Antitrust Act. B: No, it is price fixing under the Sherman Antitrust Act. C: No, it violates fair housing laws. D: Yes, it is a group boycott under the Sherman Antitrust Act.

B The agreement is price fixing, which violates the Sherman Antitrust Act.

What must a licensee do for the licensee's client? A: Refuse to present offers unless the seller will net sufficient proceeds on the sale B: Fulfill the requirements of the agency agreement C: Disclose confidential information if it is beneficial to the client D: Fulfill all seller requests and put the seller's interest ahead of all other parties

B The licensee must fulfill the requirements of the agency agreements. The licensee cannot refuse to present offers based on the licensee opinion of the offer. A licensee cannot disclose confidential information even if it would be beneficial to the licensee's client. A licensee should fulfill a client's requests, except in the case of unlawful requests or where fulfilling the request requires the licensee to engage in unlawful conduct, such as housing discrimination. The licensee cannot put the seller's interests ahead of all other parties in the transaction because if a duty to the client conflicts with a duty to all parties, the licensee must comply with the duties to all parties.

XYZ Realty listed a property and ABC Realty found a buyer. The firms have an agreement to share the commission evenly. What could reduce the listing firm's commission? A: ABC showed the property more than XYZ B: The listing firm and the seller agree to reduce the firm's commission C: XYZ did not attend the closing but ABC did D: ABC presented the offer directly to the seller with XYZ's permission

B The listing contract is between the seller and the listing firm. The listing firm earned the full commission regardless of who procures the buyer or completes the closing details. A seller and the listing firm are the only parties that could agree to reduce the listing firm's commission.

Which of the following statements is true of multiple representation relationships with designated agency? A: Both the buyer and the seller may be represented by the same salesperson. B: Clients that select designated agency must consent in writing. C: One party cannot withdraw consent to designated agency unless the other party also withdraws consent. D: Both the buyer and the seller are customers of the same firm in the same transaction.

B When a buyer and a seller are clients of the same firm in the same transaction, the firm is representing multiple parties and the parties must consent in writing. Because they have agency agreements, the buyer and the seller are not customers and because they chose designated agency, the firm must assign an agent for each party. Either party can withdraw consent to multiple representation with or without designated agency at any time.

What should a buyer include when completing a WB-36 Buyer Agency/Tenant Representation Agreement? A: The exact description of the property the buyer ends up purchasing B: The general description of the property the buyer wants to purchase C: The street address of the property the buyer purchases D: The legal description of the area where the buyer hopes to find a property

B When executing a buyer agency agreement, the parties use a general description of the property because the buyer may not know the street address or legal description of the property that the buyer will purchase.

A builder owns several lots in a subdivision. The builder sells a lot contingent on the buyer's agreement to use the builder to construct a home on the lot. Can the builder do this? A: Yes, it is a legal tie-in arrangement as long as the builder offers a home warranty. B: Yes, it is a legal tie-in arrangement according to Wisconsin administrative rules. C: No, it is an illegal tie-in arrangement that violates antitrust laws. D: No, it is an illegal tie-in arrangement that violates Wisconsin administrative rules.

B Wis. Admin. Code REEB § 24.075(3)(a) Licensees shall not condition the sale of vacant real estate owned by the licensee or whose sale is effectively controlled by the licensee upon the buyer's agreement to employ one or more specific builders to make improvements on the real estate unless the builder owns a bona fide interest in the real estate and there is full disclosure.

To whom does a licensee owe the duties of providing brokerage services fairly and honestly, providing accurate market conditions, safeguarding trust funds, using reasonable skill and care, disclosure of all material adverse facts, confidentiality, and objectively presenting offers? A: The seller B: All parties to the transaction C: The buyer D: The selling firm

B Wis. Stat. § 452.133(1) A firm providing brokerage services to a party to a transaction owes all of the following duties to the party: (a) The duty to provide brokerage services honestly and fairly. (b) The duty to provide brokerage services with reasonable skill and care. (c) The duty to timely disclose in writing all material adverse facts that the firm knows and that the party does not know or cannot discover through reasonably vigilant observation, unless the disclosure of a material adverse fact is prohibited by law. (d) The duty to keep confidential any information given to the firm in confidence, or any information obtained by the firm that the firm knows a reasonable person would want to be kept confidential, unless the information must be disclosed by law or the person whose interests may be adversely affected by the disclosure specifically authorizes the disclosure of particular information. The firm shall continue to keep the information confidential after the transaction is complete and after the firm is no longer providing brokerage services to the party. (e) The duty to provide accurate information about market conditions that affect the transaction, within a reasonable time after a request for such information by the party, unless disclosure of the information is prohibited by law. (f) The duty to safeguard trust funds and other property held as required by rules promulgated under s. 452.13 (5). (g) When the firm is negotiating on behalf of a party, the duty to present contract proposals in an objective and unbiased manner and disclose the advantages and disadvantages of the proposals.

A seller nets $100,000 from a property. The seller paid the firm 7% commission. What was the sale price of the seller's property? A: $107,500 B: $115,524 C: $107,527 D: $107,000

C $100,000 / .93 = $107,527.

A firm offers a 60/40 split to cooperating firms. How much does the listing firm owe to a cooperating firm for a property that sold for $150,000 at 7% commission? A: $6,300 B: $7,200 C: $4,200 D: $5,250

C $150,000 x .07 = $10,500 commission paid to listing firm. $10,500 x .40 = $4,200 of commission received by selling firm. Commission owed = .07 Listing firm retains .60 of commission. Cooperating firm receives .40 of commission.

Two cooperating firms evenly split a 7% commission on a sale. The listing firm paid the listing licensee $2,520 as the licensee's 60% share. What was the sale price of the property? A: $30,000 B: $60,000 C: $120,000 D: $90,000

C $2,520 / .60 = $4,200 commission paid to the listing firm. $4,200 x 2 = $8,400 total commission paid. $8,400 / .07 = $120,000 sale price.

A listing licensee sells a house for $89,000. The listing firm paid one-half of its 7% commission to the cooperating firm. The listing firm pays the listing licensee 40% of the listing firm's share of the commission. How much did the listing firm pay the listing licensee? A: $2,000 B: $1,156 C: $1,246 D: $1,500

C $89,000 x .07 = $6,230. $6,230 x .50 = $3,115. $3,115 x .40 = $1,246 commission.

Which of the following statements is true of a licensee's agency disclosure duties? A: The licensee must provide agency disclosure before giving information about a property to a buyer. B: The licensee does not have to provide agency disclosure in non-residential transactions. C: The licensee must provide agency disclosure and request acknowledgment from the recipient of the disclosure when listing a single-family home. D: A licensee only needs to provide agency disclosure to customers.

C A licensee must provide agency disclosure in all real estate transactions. For a client, the licensee must provide it when entering into the agency contract and for customers, the licensee must provide it prior to negotiations. Just providing a customer with information about a property is not negotiations. A licensee only has to ask for acknowledgement of receipt of agency disclosure in transactions involving residential properties with one-to-four dwellings units.

After a successful transaction, what are a buyer's licensee's duties to the buyer? A: The licensee owes no duties after closing. B: The licensee must make sure the property is what the buyer expected. C: The licensee must keep the buyer's confidential information confidential. D: The licensee must file a lawsuit on behalf of the buyer if the buyer is unhappy with the property.

C A licensee's responsibility to a client ceases upon termination of the agency relationship. The licensee's duty of confidentiality survives the transaction.

Which event does NOT terminate an agency relationship? A: A seller decides not to sell B: A firm finds a ready, willing, and able buyer for the seller's property, who subsequently purchases the property and receives title C: A firm discovers that the market value of the property will not generate a sufficient commission for the firm D: A seller dies

C An agency agreement terminates at the death or incapacity of the principals, destruction of the property, expiration of the term, mutual agreement, breach, operation of law, or completion.

Which agreement gives a buyer the right to acquire a property at a fixed price for a period of time? A: A lease B: An exchange C: An option to purchase D: An offer to purchase

C An option to purchase is an agreement between a buyer and a seller where the buyer has the right to purchase a property for a fixed period of time.

Which of the following is a similarity between an exclusive agency and an exclusive right to sell listing? A: The firm earns a commission unless the seller sells the property B: The firm earns a commission no matter who finds the buyer C: Each contract employs only one firm to market the property D: The firm earns a commission if the seller's house is sold to a buyer

C Both an exclusive agency and an exclusive right to sell listing contract employ a firm to represent the seller in the sale of a property. With an exclusive right to sell listing, the listing firm earns a commission regardless of who procures the buyer. Under an exclusive agency listing, the listing firm earns a commission unless the seller finds the buyer.

When can a firm take a net listing? A: A firm makes an independent business decision to take net listings B: The firm discloses it in writing to the seller C: A firm cannot take a net listing D: The buyer gives permission for the listing firm to pay the buyer's firm's commission

C Net listings are illegal in Wisconsin. Wis. Admin. Code Chapter REEB 24 Conduct and Ethical Practices for Real Estate Licensees.

Which of the following describes the relationship when a seller lists a property with a firm? A: The seller is the firm's customer B: The firm is the selling firm C: The seller is the firm's client D: The seller is a fiduciary of the firm

C The listing contract is an agency agreement, making the seller the firm's client.

What or who does the seller hire with an agency agreement? A: The listing licensee B: The selling licensee C: The listing firm D: The selling firm

C The listing firm is the agent of the seller. The seller hires the firm with a listing contract. The listing firm engages licensees as the firm's agents.

What is the result of a listing licensee telling a buyer that a property is overpriced in an effort to get the buyer to write an offer? A: The listing licensee creates an express agency relationship. B: The listing licensee creates a single agency relationship. C: The listing licensee creates a multiple representation relationship. D: The buyer creates an implied agency relationship with the seller.

C The listing licensee created a multiple representation relationship by providing information and advice to the buyer-customer. This could lead a buyer to believe that the listing licensee is representing the buyer's interests, which creates implied agency between the buyer and the licensee. The listing licensee may not have intended to create an agency relationship but did so by providing agency services to the buyer. The firm now has agency relationships with the buyer and the seller, which is multiple representation.

A seller nets $80,000 after paying 7% commission to the listing firm. How much did the seller pay the listing firm? Use whole numbers. A: $7,000 B: $3,678 C: $6,022 D: $5,601

C The seller received $80,000 after paying the firm a 7% commission. To determine the commission paid, calculate the sale price first. $80,000/.93 = $86,022 sales price. $86,022 x .07 = $6,022 commission paid.

Which of the following does a licensee NOT have to do before acting as an agent in a real estate transaction? A: Provide agency disclosure B: Have a valid license C: Join the MLS D: Execute a valid agency agreement

C There must be a valid agency agreement, agency disclosure, and a valid license.

What is a firm doing if it advertises to pay $50.00 for any lead that results in a listing or sale of real estate? A: Offering to engage in illegal dual compensation B: Legitimate activity C: Offering to engage in illegal fee-splitting D: Offering to engage in illegal multiple representation

C Wis. Stat. § 452.19. "No licensee may pay a fee or a commission or any part thereof for performing any act specified in this chapter or as compensation for a referral or as a finder's fee to any person who is not licensed under this chapter or who is not regularly and lawfully engaged in the real estate brokerage business in another state, a territory or possession of the United States, or a foreign country. (2) If a licensee is associated with a firm, all fees or commissions and any part thereof for performing any act specified in this chapter and all compensation for a referral or as a finder's fee shall be paid to the firm."

What is the result of a licensee giving a seller a $100.00 gift certificate after the sale if the licensee and the seller do not disclose the gift certificate? A: The unlicensed practice of law B: Prohibited self-dealing C: Illegal fee-splitting D: A multiple representation relationship

C Wis. Stat. § 452.19. "No licensee may pay a fee or a commission or any part thereof for performing any act specified in this chapter or as compensation for a referral or as a finder's fee to any person who is not licensed under this chapter or who is not regularly and lawfully engaged in the real estate brokerage business in another state, a territory or possession of the United States, or a foreign country. (2) If a licensee is associated with a firm, all fees or commissions and any part thereof for performing any act specified in this chapter and all compensation for a referral or as a finder's fee shall be paid to the firm."

A seller accepts an offer for $190,000 and nets $160,000 after paying the firm's 7% commission and other closing costs. How much did the seller pay in closing costs? A: $16,700 B: $13,300 C: $12,800 D: $30,000

D $190,000 sales price - $160,000 net = $30,000 paid in closing costs.

How can a firm enforce a verbal listing contract? A: The firm can sue the seller in court for enforcement of the express agency agreement. B: The firm can collect only the money to cover for marketing and advertising expenses from the seller. C: The firm can collect only the commission that the seller promised verbally. D: The firm can sue the seller in court for the commission but the seller will not have to pay.

D A Wisconsin court will not enforce a verbal real estate agency contract, which means the firm does not have a remedy to enforce the contract terms with the seller, including payment of the firm's commission.

When can a client waive the duty of negotiation? A: The client waives the duty fully and hires an attorney for settlement services B: Only if the firm agrees to reduce the commission on a transaction C: As long as the client waives it before a firm advertises a property D: The waiver is in writing and a firm provides mandatory disclosure of the effect of a waiver of the duty of negotiation

D A client can waive the duty of negotiation in full or in part. The written waiver must contain a copy of the text of the duty the client is waiving, a statement that the firm will not have a legal duty to negotiate, and a warning that the client may need to hire an attorney or other service provider because of the waiver.

Who is NOT acting as a licensee? A: A salesperson B: A broker C: A property manager who signs leases on behalf of the landlord D: An unlicensed personal assistant who holds a valid real estate license

D A firm can hire a person who holds a real estate license to do unlicensed work for the firm. In this case, the person is functioning as an unlicensed personal assistant even though the person holds a real estate license.

Which of the following statements INCORRECTLY describe a firm's supervision responsibilities? A: The firm must provide reasonable review of all documents and records related to transactions. B: The firm must provide licensees associated with a firm with a written statement of office procedures for handling transaction documents. C: The firm must ensure licensees associated with a firm are properly licensed. D: The firm cannot delegate supervision to a supervising broker.

D A firm's supervision responsibilities include reasonable review of all documents and records relating to transactions, ensuring all licensees associated with the firm are properly licensed, and providing all licensees associated with the firm a written statement of office procedures on handling transaction documents. A firm can delegate supervision responsibilities to a supervising broker.

Unlicensed individuals working in a real estate office may: A: be paid on commission B: conduct open houses C: show properties to buyers D: be employed by licensed salespeople

D A licensee associated with a firm, prior to retaining an individual to serve as an unlicensed personal assistant, shall enter into a written agreement with the licensee's firm, setting forth the duties of the unlicensed personal assistant, the manner in which the unlicensed personal assistant will be compensated for his or her services, and the responsibilities of the licensee and the firm with respect to supervision of the unlicensed personal assistant's activities.

What is a listing contract? A: A promise to sell the seller's property B: A promise to pay the buyer's closing costs C: A promise to pay the buyer's firm's commission D: A promise to find a ready, willing, and able buyer

D A listing contract is a promise by the firm to attempt to find a ready, willing, and able buyer. It is not a promise to sell the property or pay a buyer's expenses.

ABC and XYZ are cooperating firms. XYZ is the listing firm and ABC is the selling firm. The firms agree to evenly share the commission. When does XYZ earn the commission? A: When the buyer satisfies a financing contingency B: At closing C: ABC submits an offer to XYZ D: The seller accepts an enforceable contract for sale

D A listing firm earns a commission when the seller accepts an enforceable contract for sale. The seller does not pay the commission until the day of closing or the date set for closing if the transaction does not close.

The best description of a special agent is someone who has the authority to: A: represent a principal in all matters B: sell a property C: act as a power of attorney D: represent a principal in a specific transaction

D A special agent is one who is authorized by a principal to perform one particular act or transaction.

A listing firm earns a commission: A: according to the terms of the buyer agency agreement B: only on net listings C: at closing D: when the seller accepts an enforceable contract for sale

D Commissions are earned when a seller accepts an enforceable contract for sale and will be paid at closing or another time as agreed to by the parties. Net listings are illegal.

A licensee wants to write an offer on a property listed with the licensee's firm. What duty to the client is the licensee in danger of violating? A: Care B: Obedience C: Confidentiality D: Loyalty

D If a licensee tried to purchase a property listed with the licensee's firm, the licensee's own interests are competing with the interests of the seller, which would prevent the licensee from placing the seller's interests ahead of the licensee's interests. This violates the licensee's duty of loyalty to the seller.

How long does a salesperson have to close transactions if the salesperson is no longer associated with a firm? A: 10 days B: 10 days from the date the salesperson sends a notice to the DSPS C: The DSPS will notify the salesperson of the grace period for closing transactions D: A salesperson cannot practice real estate unless associated with a firm

D If a salesperson is no longer associated with a firm, the salesperson must stop practicing real estate until associated with another firm. There is no grace period during which a salesperson can conclude transactions, even if the salesperson is without fault in the situation.

Parties to an agency agreement: A: must pay damages for cancelling the contract prior to its stated termination date B: cannot cancel the agreement without breaching it C: should notify another party of cancellation verbally so that there is no record of the breach D: may sue a breaching party for damages in the event of a breach

D Parties who suffer damages because of another's breach of contractual obligations can bring a lawsuit to recover damages due to the breach.

What does it mean if a party rescinds a contract? A: The party receives court-ordered compensation for damages from breach of contract. B: The party terminates the contract and must pay damages. C: The party agrees to reveal confidential contract terms to a firm. D: The party cancels the contract and is restored to the position before the contract.

D Rescission means to cancel a contract and restore the parties to their original positions.

Apportioning commission percentages earned on a sale is: A: determined according to agreements between licensees B: illegal fee-splitting C: permitted only on in-house sales D: determined by the firms involved in the transaction

D Shares of the commission will be determined according to agreements among the firms involved in the transaction.

A married couple hires a listing firm with an exclusive right to sell listing contract. Two weeks into the listing, buyers write an offer that the sellers accept. The buyers satisfied all of their contingencies but did not close. What are the listing firm's rights to the commission? A: The listing firm must sue the buyers for the commission. B: The listing firm did not earn a commission because the transaction did not close. C: None because a listing firm does not earn a commission until closing. D: The listing firm earned a commission because the sellers entered into an enforceable contract for sale.

D The firm earned a commission even though the transaction did not close.

A buyer executes an option to purchase with a seller. Which of the following statements is true? A: The buyer is the optionor. B: The seller is the optionee. C: The buyer must purchase the property. D: The seller must sell if the buyer chooses to buy.

D The seller (the optionor) must sell the property if the buyer (the optionee) chooses to purchase the property.

A seller lists a property with a firm for three months. One month into the listing contract, the seller sells the home to a friend but does not owe the listing firm a commission. What type of listing contract did the seller and the firm have? A: A net listing B: An irregular listing C: An exclusive right to sell listing D: An exclusive agency listing

D The seller had an exclusive agency listing, which means that the firm earns a commission unless the seller finds the buyer. The seller found the buyer, which means the seller does not owe a commission.

A seller enters into a listing contract for one month. The contract states that the seller will pay the listing firm 6% commission only if a named buyer purchases the property. What kind of listing contract is this? A: Exclusive Right to Negotiate B: Open C: Net D: One-party

D When a seller executes a listing contract agreeing to pay a firm a commission only if a named buyer purchases the property, the seller and the firm have a one-party listing contract.

A listing firm lists a property. A buyer's firm successfully writes the offer on the property. How do you describe the firms? A: Subagent firms B: Unethical C: Multiple representation firms D: Cooperating firms

D When two firms are engaged in a transaction, they are called cooperating firms.

When can a firm collect compensation from both a buyer and a seller? A: The buyer and the seller are related B: Never C: The firm holds a Wisconsin real estate license D: The firm's client consents

D Wis. Admin. Code REEB § 24.05(1) A licensee acting as an agent in a real estate or business opportunity transaction may not accept any fee or compensation related to the transaction from any person, other than the licensee's client, principal firm, or firm the licensee is associated with without prior written consent from all parties to the transaction.

Which of the following statements INCORRECTLY describes a multiple representation relationship? A: A firm must disclose multiple representation to all parties in writing. B: The firm owes both parties the duty of confidentiality. C: All parties must consent in writing to a firm representing multiple parties in a transaction. D: The firm owes loyalty to the party who first signed an agency agreement with the firm.

D Wis. Stat. § 452.134 If a firm's client in a multiple representation relationship does not consent to designated agency or withdraws consent to designated agency, the firm and any licensees associated with the firm may not place the interests of any client ahead of the interests of any other in the negotiations.

What must occur when a licensee terminates association with a firm? A: The licensee must send termination paperwork to all former clients of the licensee. B: The licensee must surrender the person's real estate license to the DSPS within 10 days of terminating association with firm. C: The licensee must send termination paperwork to the licensee's firm 10 days before the date of termination. D: The licensee must notify the DSPS in writing of the termination within 10 days.

D Wis. Stat. § 452.30 A licensee that ceases to be associated with a firm shall, through the use of a form prescribed by the department, send written notice to the department within 10 days after the date on which the licensee ceases to be associated with the firm.