RE1 "Agency"
When a seller and licensed salesperson agree to a listing, on terms acceptable to the broker, an agency relationship is established between: Select one: a. The seller agent and the seller b. The listing salesperson and the seller c. The listing broker and the buyer d. The listing broker and the seller
The correct answer is: The listing broker and the seller Legally, the listing is between the BROKER and the SELLER, not the seller and the sales agent, therefore the agency relationship is between the seller and the listing broker.
A listing broker has an agency relationship with his client (the seller). The broker also has a moral and statutory obligation to all prospective customers (buyers). One way to describe the relationship with the buyer would be: Select one: a. To obey the letter of the law. b. To do what is right. c. To do those things that are required. d. To do anything that is asked.
The correct answer is: To do what is right. This relationship is best described as doing what is right. Doing anything that is asked could conflict with his client's interests and could also be illegal. To do ONLY things that are required and to obey the letter of the law leaves the broker open to possible suit.
An agency relationship can exist between: Select one: a. Salesperson and employing broker b. Broker and seller c. Broker and buyer d. All of the above
The correct answer is: All of the above In a listing agreement, the seller is the client and the broker is the agent. The salesperson is an agent of the broker and a broker can be an agent for a buyer.
An agent's authority can arise from: Select one: a. Ratification. b. Custom. c. Implication. d. All of these choices.
The correct answer is: All of these choices. An agent's authority can arise from ratification, custom or implication.
How can an agency relationship be created? Select one: a. Written document b. Action of the parties c. Words of the parties d. Any of the above
The correct answer is: Any of the above Agency can be either an express agency, as in a written or oral agreement, or it can be an implied agency, as with action or words.
Which of the following agency responsibilities most likely would be limited in dual agency representation? Select one: a. Fairness. b. Reasonable care. c. Disclosure. d. Accounting.
The correct answer is: Disclosure. A dual agent may not disclose confidential information about either client, since he represents both clients.
In the process of taking a listing, a licensee noticed water stains on the ceiling in one of the rooms. What should the licensee do? Select one: a. Ignore it on the theory of caveat emptor b. Ignore it if the stain is old c. Inquire of the owner if there is a leak d. Advise the owner to paint over the stain
The correct answer is: Inquire of the owner if there is a leak The agent must inquire about the stains in an attempt to learn all that he can about the property.
Which of the following real estate related contracts is considered an employment contract or agreement? Select one: a. A listing agreement b. An offer to purchase c. An option d. None of the above
The correct answer is: A listing agreement A listing agreement is a contract where the seller hires or "employs" the broker to sell his property.
Upon signing a management contract with an owner, a broker becomes a/an: Select one: a. Trustee. b. Receiver. c. Director. d. Agent.
The correct answer is: Agent. A management contract creates an agency relationship between the property manager and the owner.
A broker can do which of the following? Select one: a. Accept, as binding, a promissory note given as an earnest money deposit. b. Accept, on behalf of the seller, an offer OVER the listed price of the property. c. Buy and sell property in his own name. d. Represent both buyer and seller, with the permission of the buyer.
The correct answer is: Buy and sell property in his own name. A broker may NOT accept any terms or conditions contained in the offer. The broker's job is to find a ready, willing and able buyer. Any and all terms of the offer MUST be accepted by the seller. The one exception to this would be if the seller gives the broker a power of attorney to consummate the deal. If a broker is going to represent both buyer and seller, he would need the approval of BOTH parties.
An owner listed a farm with a broker. Although the owner did not mention it, the broker knew the owner was in poor health. What should the broker tell potential buyers? Select one: a. Tell them of the need to sell to ensure a quick sale b. In order to sell quickly, tell them that the seller is ill because death would cancel the listing c. Tell them of the illness but NOT the need to sell d. NOT tell them because it would reduce the seller's bargaining leverage
The correct answer is: NOT tell them because it would reduce the seller's bargaining leverage Confidential information that may harm the client's bargaining position can only be disclosed with consent of the client.
A buyer and seller entered into a contract for the sale of a house. The buyer applied for and was approved for a loan. At the last minute the seller backed out of the sale. Is the broker due a commission? Select one: a. No, because the buyer did not meet all the personal requirements of the seller b. No, since the sale did not close, the broker did not perform c. Yes, because the buyer was able to perform all of the requirements in the contract d. Yes, anytime a contract is signed the broker has performed and is due a fee
The correct answer is: Yes, because the buyer was able to perform all of the requirements in the contract As a general rule, if the broker has procured a ready, willing and able buyer and the seller defaults, the broker is due a commission. It appears that the buyer DID meet the requirements of the seller (A). The broker DID perform (B); the seller did not. The simple signing of the contract does not automatically mean a buyer is ready, willing and able (D).
Carla, through her broker, is representing a buyer. Carla finds a house and the sale is made. Carla will receive her commission from which of the following? Select one: a. The broker that holds her license. b. The broker that listed the house that Carla sold. c. The settlement attorney handling the closing. d. The buyer, per his or her agreement with Carla.
The correct answer is: The broker that holds her license. One thing you MUST remember is that a salesperson or an associate broker may ONLY receive compensation from his or her employing broker or the broker that holds his or her license.
Which of the following MUST be disclosed by an agent to his client, in a real estate transaction? Select one: a. Minority groups are moving into the area b. The average commission recommended by the local real estate association c. The buyer intends to violate deed restrictions d. The buyer has had previous credit problems which may have an impact on loan qualifications
The correct answer is: The buyer has had previous credit problems which may have an impact on loan qualifications Disclosure of A would be a violation of Fair Housing Laws and could be considered blockbusting. The fact that the prospective buyer has credit problems is vital to the decision of the seller to accept or reject the offer.
Chris, a salesperson working for Broker Janet, is assigned to work on a listing that started on January 3, 2019. The listing is a 90 day exclusive right-to-sell agreement. On March 1, 2019, Chris is killed in an automobile accident. What is the status of the listing agreement? Select one: a. The listing becomes an open listing b. The listing terminates by operation of law c. The listing remains valid d. The seller may now list the property with another broker
The correct answer is: The listing remains valid The listing agreement is a contract between the seller and the BROKER (Janet). Chris's death has no effect on the contract.
Which is an example of ostensible agency? Select one: a. The principal showed by actions that the agent's actions were accepted b. A broker was able to sell any or all of an owner's properties c. A broker was able to sell only one of an owner's properties d. A selling broker acting as a subagent of a listing broker
The correct answer is: The principal showed by actions that the agent's actions were accepted Ostensible agency occurs when it "appears" that an agent had the principal's authority to act. So, when the principal acted as if the agent's actions were acceptable, an ostensible agency occurred, regardless of whether there was an actual agency agreement. (B) defines a "general" agent. (C) defines a "special agent." (D) refers to a cooperative sale between brokers.
A general agency empowers the agent to: Select one: a. Transact matters of all types for the client. b. Transact the clien'ts affairs in a certain business. c. Perform only specific acts for the client. d. Perform any legal act for the client.
The correct answer is: Transact the client's affairs in a certain business. A general agency empowers the agent to transact the client's affairs in a certain business.
Mark gives Suzanne the authority to sign for him in a real estate transaction. Suzanne is considered, in the eyes of the law, to be: Select one: a. A broker b. An attorney-in-fact c. An attorney-in-trust d. An attorney-at-law
The correct answer is: An attorney-in-fact An attorney-in-fact is a person given authority to perform an act for another through a power of attorney. Regardless of who that person is, legally they are considered to be an attorney-in-fact.
Which of the following statements BEST describes the difference between an exclusive right to sell listing versus an open or an exclusive agency listing? Select one: a. An exclusive right-to-sell agreement enables the seller to negotiate a commission; the others do not b. An exclusive right-to-sell agreement permits the seller to sell their house without paying a fee; the others do not c. An exclusive right-to-sell appoints only one agent; the others do not d. An exclusive right-to-sell guarantees the broker a commission if sold; the others do not
The correct answer is: An exclusive right-to-sell guarantees the broker a commission if sold; the others do not Under an exclusive right to sell, the broker is guaranteed a commission upon sale. An open listing allows other brokers and the seller to sell it without paying the listing broker a commission. An exclusive agency allows the seller to sell it without paying the broker a commission. All allow commission negotiation (A). (B) is backwards. (C) is wrong in that an exclusive agency only appoints one broker also.
A salesperson represents the: Select one: a. Seller b. Broker c. Buyer d. Lender
The correct answer is: Broker The salesperson is an "agent" of the broker that he represents.
In agency representation, the employer is called the: Select one: a. Seller. b. Agent. c. Client. d. Broker.
The correct answer is: Client. In agency representation, the employer is called the client.
The broker generally receives a commission: Select one: a. From a customer. b. From a client. c. 5 business days after closing. d. When the sales contract is signed.
The correct answer is: From a client. Commissions are generally received from clients, not customers.
An escrow account is maintained by a broker for the purpose of: Select one: a. Earning interest for the broker. b. Earning interest for the broker's clients. c. Disposition of money to the buyer. d. Impartial protection of both parties.
The correct answer is: Impartial protection of both parties. An escrow account is maintained by a broker for the purpose of impartial protection of both parties.
David, an independent broker, dies. His daughter, a licensed broker and only heir, inherits the brokerage business. If she intends to operate the brokerage and keep the listings, it is necessary that she: Select one: a. File legal notice of her intent to assume responsibility for the brokerage business b. Advise the probate court of her intent to assume responsibility for the listing agreements c. Negotiate and receive new listing agreements from each client d. Nothing is required because she is the only heir
The correct answer is: Negotiate and receive new listing agreements from each client By law, when David dies, all listings in his name terminate because a listing is a personal services contract. The fact that his daughter is his only heir is not relevant. She must negotiate new listing agreements to continue to handle the listings.
When a real estate broker is retained to perform one specific act for a client, it is known as: Select one: a. General warranty. b. Special agency. c. General agency. d. Special warranty.
The correct answer is: Special agency. When a real estate broker is retained to perform one specific act for a client, it is known as special agency.
A broker receives a call from a family that is moving into the area from another state. They advise the broker that they want the opportunity to look over different neighborhoods before making a buying decision, but do need to move soon. How should the broker handle this situation? Select one: a. Find a house for sale with immediate occupancy. b. Put the couple into a rental property with only a one year lease. c. Locate an owner willing to enter into a lease with option to buy. d. Suggest they rent on a month to month basis.
The correct answer is: Suggest they rent on a month to month basis. Find something that is going to allow the family flexibility after they move here. A month to month lease will allow them to act quickly if and when they find something in an area that they like.
A buyer's agent was showing a buyer a property that was listed for sale. No dual agency existed on this transaction. The seller would be considered a: Select one: a. client of the buyer's agent b. customer of the buyer's agent c. principal of the buyer's agent d. prospect of the buyer's agent
The correct answer is: customer of the buyer's agent (B) If no dual agency exists, then the buyer's agent must be an agent of the buyer only, making the buyer the client and the seller the customer. (A) & (C) The words client and principal mean the same thing. In this question, the buyer would be the client or principal, not the seller. (D) A prospect is just a general term.
Two brothers who each own their own real estate companies agree to divide commissions received equally. Broker A pays for three-fourths of the advertising costs and finds the buyer. Broker B pays one-fourth of the advertising costs. If the total commission on the sale is $4,500, how much does Broker B get? Select one: a. $4,500. b. $1,125. c. $2,250. d. None of the above.
The correct answer is: $2,250. Since the brokers agreed to divide the commission equally, each gets $2,250 regardless of what the expenses of each may be. You may have tried to make this more complicated than it is.
If a broker lists a property, she CANNOT be: Select one: a. A dual agent b. A buyer's agent only c. An agent for the seller only d. An agent for both buyer and seller
The correct answer is: A buyer's agent only The broker COULD be an agent to both buyer and seller (if all agree) which is the same as dual agency. The agent could represent the seller only, but the agent who takes the listing cannot be a buyer's agent exclusively.
A broker lists a property. A buyer submits a written offer and the seller accepts the offer. On the day scheduled for closing, the seller refuses to sign any of the papers to close the transaction. The broker is entitled to: Select one: a. A full commission b. One-half of the agreed upon commission c. Out of pocket expenses d. Nothing
The correct answer is: A full commission The broker has fulfilled the agency agreement by finding a ready, willing, and able buyer to purchase the property, on terms acceptable to the seller. Thus, the seller is liable for the full commission.
Which of the following would NOT be an agent? Select one: a. A real estate salesperson handling only referrals b. A property manager employed by the owner c. A person working for a multiple listing service d. A person holding a power of attorney
The correct answer is: A person working for a multiple listing service All of the above would be agents except an individual working for a multiple listing service. That person is an employee of MLS.
An owner lists a home with a broker for $172,000. Two days later, the broker brings an offer for $170,000. At this time, which of the following statements is true? Select one: a. The broker has found a buyer and has earned his commission b. A ready and willing buyer has been found and a commission is due c. A ready and willing buyer has been found, but no commission is owed the broker at this time d. None of the above
The correct answer is: A ready and willing buyer has been found, but no commission is owed the broker at this time In order to earn a commission, the broker must find a ready, willing and able buyer, ON THE TERMS OF THE SELLER. The offer was lower than the listed price, therefore NOT on the terms of the seller. No commission is due unless and until the seller accepts the offer.
Which of the following actions by a listing agent would be appropriate? Select one: a. Advise the buyer that the seller will take less than the list price b. Advise the buyer that the seller is going through a divorce c. Advise the buyer on the amount of money necessary to assume a loan d. Advise the buyer that the seller's home has been on the market for 180 days
The correct answer is: Advise the buyer on the amount of money necessary to assume a loan (C) Here, the buyer would be a customer. Disclosing the amount of the assumed loan would be appropriate. Advising the buyer that (A) the seller would take less, (B) the seller is going through a divorce or (D) the seller's home has been on the market for 180 days would be a breach of fiduciary obligation to the seller.
A broker obtains an open listing on a piece of property. In order to collect a commission on the sale of this property, the broker must be able to prove which of the following? Select one: a. He was licensed at the time of the sale b. He was employed at the time of the sale c. He was the procuring cause of the sale d. All of the above
The correct answer is: All of the above In order to receive his commission, the broker must be able to prove he was licensed as a real estate professional, he had a listing (was employed), and he was the procuring cause (that effort which brings about the desired result). This is an OPEN listing and the only person paid is the one that brings in the buyer.
A broker acts as an agent in all of the following functions EXCEPT: Select one: a. Leasing property b. Selling property c. Appraising property d. Exchanging property
The correct answer is: Appraising property A broker employed by another party (client) to lease, sell, or exchange property for them would hold a position of trust. An appraisal is an estimate or opinion of value given by an appraiser for a fee. Even though the broker may be a qualified appraiser, he should not appraise property if he is involved as the listing or selling broker due to the obvious conflict of interest.
Broker Jane is acting as a dual agent in a real estate transaction and decides to appoint salesperson Sara to represent the seller and salesperson Ben to represent the buyer. Ben and Sara both work in Jane's firm. Select one: a. Jane cannot legally do this. b. Ben and Sara are dual representatives. c. Ben and Sara must be independent contractors. d. Ben and Sara are designated representatives.
The correct answer is: Ben and Sara are designated representatives. A designated agent or representative is a licensee who has been assigned by a supervising or principal broker to represent a client when a different client with opposing interests is also represented by that broker in the same transaction. The broker in this situation would be a dual agent.
A listing broker had a signed sales contract on a house. The broker then noticed a crumbling wall in the basement. Which of the following should the broker inform about the wall? Select one: a. Buyer only b. Seller only c. Both buyer and seller d. Buyer, seller and the mortgage company
The correct answer is: Both buyer and seller The broker owes a fiduciary duty to disclose any information obtained to the principal (seller). Plus, the broker has an obligation to disclose any material damage to a customer (buyer). Unless there is some fraud involved, the broker does not have a direct obligation to the mortgage company.
A person that authorizes another to act for him or her is known as the: Select one: a. Agent b. Client c. Broker d. Customer
The correct answer is: Client The person granting the authority is the client, the person receiving that authority is the agent.
All of the following will automatically terminate a listing by operation of law, EXCEPT: Select one: a. Bankruptcy of the client b. Destruction of the property c. Condemnation of the property d. Client's decision
The correct answer is: Client's decision A listing (agency agreement) is terminated by law (automatically) by bankruptcy or death of either party (client or agent) or destruction or disposition of the property (including condemnation). A decision by the client to terminate the listing would be an act of one of the parties, rather than by law.
A salesperson took a listing on a property which had a crack in the foundation caused by water seepage. The owner had filled and painted over the crack and advised the sales agent that the seepage problem had been corrected, but it was obvious to the agent that the problem had not been corrected. If the salesperson shows the property without advising potential buyers of the problem, the salesperson would be guilty of: Select one: a. Fraud b. Misrepresentation c. Puffery d. Nothing
The correct answer is: Fraud This is fraud because it is intentional. The agent must disclose all adverse material facts about the property to prospective buyers.
Meredith "fell in love" with and made an offer to purchase a beautiful Cape Cod style house. When she learned that the seller had accepted her offer, she was so happy that she agreed to pay the selling agent an extra commission for her effort. How will the sales agent receive her "extra" commission, when the sale is consummated? Select one: a. From the buyer b. From the seller and buyer as agreed c. From the settlement attorney handling the closing d. From her employing broker
The correct answer is: From her employing broker Remember, a sales agent only receives compensation from his or her employing broker.
Mr. Gregory has a home for sale with a sign, FOR SALE BY OWNER, in the front yard. Salesperson Gary calls, identifies himself and asks for the key to show the property. Mr. Gregory agrees. Which of the following best describes any agency relationship that may exist? Select one: a. Mr. Gregory is Gary's client. b. Gary is Mr. Gregory's agent. c. Gary's broker is the agent of Mr. Gregory for a reasonable time. d. No agency relationship exists.
The correct answer is: Gary's broker is the agent of Mr. Gregory for a reasonable time. An agency agreement between Gary's BROKER (agent) and Mr. Gregory (client) exists by implication. Gary did identify himself and the seller agreed to let him show the property. In absence of a specified time, the agency would continue for a reasonable time.
During a listing presentation, a seller asked a salesperson to give them an opinion on the list price, not disclose their pending divorce, contact them at least weekly and give them an opinion on the validity of the title. The salesperson may do all of the following EXCEPT: Select one: a. Give them an opinion on the list price b. Not disclose their pending divorce c. Contact them at least weekly d. Give them an opinion on the validity of the title
The correct answer is: Give them an opinion on the validity of the title Title validity requires a legal judgment which should be done by an attorney, not a broker (D). List prices (A) are within a broker's expertise. Keeping confidential facts such as an impending divorce (B) are part of a broker's fiduciary duties. Keeping contact regularly (C) is part of a broker's legal obligation.
A licensed real estate salesperson may legally accept an extra commission for a difficult sale from: Select one: a. An appreciative seller. b. A thankful buyer. c. His or her broker-employer. d. The mortgage lender.
The correct answer is: His or her broker-employer. A licensed salesperson may ONLY accept compensation for an act of real estate brokerage from his or her employing broker.
Property owner Kilmer, who is living overseas, lists his property with Broker Huff. Later the land is rezoned for a higher use, increasing its value. Huff buys the property herself and sells it six months later. Which of the following is true? Select one: a. As long as Huff informs Kilmer of her intent to buy the property before she does so, her action is above reproach b. Huff can buy the property only after informing Kilmer of the zoning change and the effect that it has on the property c. Huff cannot legally act for someone who is overseas d. When Huff resells the property in six months, she has a legal obligation to inform Kilmer
The correct answer is: Huff can buy the property only after informing Kilmer of the zoning change and the effect that it has on the property As the agent of the seller, the broker has the obligation to inform the seller of the zoning change and what effect it will have on the property value.
If a listing broker tells a prospective buyer, ".. go ahead and make that offer, I'm sure the seller will accept it...", the broker may have created an agency relationship which would be described as: Select one: a. General agency b. Express agency c. Implied agency d. Unilateral agency
The correct answer is: Implied agency The words of the broker could create an implied agency relationship between himself and the buyer. If the broker says things that sound like he is looking out for the best interest of the buyer, he can imply agency representation even when he does not intend to.
If you are showing property you are listing and tell a prospective buyer that "...this property is the best for you," the relationship created could be interpreted as: Select one: a. Universal agency b. Special agency c. Implied agency d. General agency
The correct answer is: Implied agency This could create an implied agency, which might result in an undisclosed dual agency.
A client is obligated to her agent for: Select one: a. Indemnification against loss not caused by the agent. b. Reimbursement. c. Performance. d. All of these choices.
The correct answer is: Indemnification against loss not caused by the agent. A client is obligated to her agent for indemnification against loss not caused by the agent.
Broker Jenkins has presented an offer from buyer Frazer. Before the seller has accepted the offer, Jenkins is informed that Frazer is acting for an unknown purchaser in this transaction. What should Jenkins do in this situation? Select one: a. Inform the seller that the offer is void b. Inform the seller of the existence of an unknown purchaser c. Return the earnest money deposit to Frazer d. Inform Frazer that his offer is illegal
The correct answer is: Inform the seller of the existence of an unknown purchaser Broker Jenkins must inform the seller of any and all facts concerning the transaction of which Jenkins is aware.
A salesperson receives an earnest money deposit on Monday while working with broker Allan. On Friday, the salesperson goes to work for broker Bob. What should be done with the earnest money deposit? Select one: a. It stays with broker Allan b. It goes to broker Bob c. It should be given to the seller d. It is returned to the buyer
The correct answer is: It stays with broker Allan The salesperson should give the earnest money deposit to broker Allan since the salesperson was an agent of Allan at the time the deposit was received. The fact that the salesperson goes to work for another broker has no bearing on the deal.
A broker and salesperson owe all EXCEPT which of the following to the purchaser/customer? Select one: a. Negotiation of the lowest possible price. b. Honesty. c. Fairness. d. Disclosure of defects in the property.
The correct answer is: Negotiation of the lowest possible price. A buyer who is treated as a customer is owed honesty, fairness and disclosure of all material defects in the property. A purchaser/customer is not owed a duty to obtain the lowest possible price from the agent.
An owner listed a property with Broker Dole on May 1. On July 1 the owner was declared legally insane. The broker brought a full price offer on July 3 to the seller which was accepted. How much commission is Broker Dole due? Select one: a. The full commission as the broker brought in a ready, willing and able buyer b. The full commission as the seller accepted the offer c. No commission since the property was not sold within the protected period d. No commission since the listing was terminated when the owner was declared legally insane
The correct answer is: No commission since the listing was terminated when the owner was declared legally insane Insanity cancels a listing automatically. The broker did not earn a commission until AFTER the listing was terminated (D). Even though the seller accepted the offer, it is void since the owner had already been declared to be insane (B). The issue of a protection period (C) is irrelevant as a protection period just protects a broker from a seller waiting until after the listing expires and then selling to a buyer the broker had procured.
As a property manager, your duties would most likely include all of the following except: Select one: a. Rent collection b. Hiring and firing of maintenance personnel c. Showing units to prospective renters d. Providing legal advice to the property owner
The correct answer is: Providing legal advice to the property owner The property manager is the agent of the property owner and would be expected to do A, B, and C. Providing legal advice is the job of the owner's attorney. Let us hope the property manager does not give legal advice.
Who is an intermediary between a buyer and a seller? Select one: a. Lender. b. Mortgage broker. c. Real estate broker. d. FDIC.
The correct answer is: Real estate broker. The person who acts between the buyer and the seller is the broker. He finds a person that wants to sell property and he finds someone else that wants to buy the property. He puts the two together and collects a fee.
A seller contacted 3 brokers and asked each to suggest the listing price for his property. Broker A said $78,000. Broker B said $79,000. Broker C said $91,000. The seller listed with Broker C and the house later sold for $76,000. Broker C is guilty of violating which of his or her agency responsibilities? Select one: a. Loyalty b. Reasonable care c. Disclosure d. Accountability
The correct answer is: Reasonable care Of the duties listed, reasonable care best describes this situation. The agent must exercise care to properly advise his client, thereby looking out for his client's best interests.
A salesperson takes an exclusive-right-to-sell listing on April 1 for 90 days but moves out of the area on May 15 and has his license placed on inactive status on June 1. The listing would: Select one: a. Remain in force b. Terminate on May 15 c. Revert to an open listing d. Terminate on June 1
The correct answer is: Remain in force The listing agreement is between the seller and the BROKER. The fact that the salesperson moves out of the area has no bearing on the validity of the contract and would therefore remain in force.
A rental property manager's agreement allowed performance of normal maintenance and repairs. Which of the following acts would require the property manager to obtain the specific approval of the owner to do? Select one: a. Fix a broken window b. Repair the elevator c. Renovate a unit for a tenant d. Paint the outside trim
The correct answer is: Renovate a unit for a tenant Renovating a unit goes beyond normal maintenance and repair.
An agent had a listing which would expire on July 5. On July 1 the agent showed the property to a buyer. The seller plotted with the buyer and sold it to him a few days after the listing expired. Who would the broker sue for the commission? Select one: a. Buyer for the entire commission b. Buyer and seller each for 1/2 of the commission c. The broker could not sue as it sold after the listing expired d. Seller for the entire commission
The correct answer is: Seller for the entire commission If the broker could prove collusion, the broker could sue the seller (since the broker only had a contract with the seller, not the buyer). (A) & (B) both imply that the broker had some agreement with the buyer. Since collusion occurred, the broker may win a suit for a commission even though it sold after the listing expired (C).
The client in a listing agreement would be the: Select one: a. Salesperson taking the listing b. Seller of the listed property c. Listing broker d. Buyer
The correct answer is: Seller of the listed property The two parties to a listing (agency agreement) are the seller (client) and broker (agent). The salesperson taking the listing (as an agent of the broker) gathers the information writes the listing, and has the seller sign it.
A broker decides to lower the prices of her listings after the properties have been on the market for 120 days. She finds that more buyers are now calling on these listings. Which of the following is true about such a practice? Select one: a. She can do this only with the local Association of Realtors approval b. She can do this only with the owner's approval c. She can do this only after informing all previous buyers d. This an an excellent marketing technique
The correct answer is: She can do this only with the owner's approval This may or may not be a very good marketing technique, but only the owner of a property can authorize the broker to lower the price on a listed property so B is the best answer to this question.
A person owned several apartment houses. She hired an agent to sell only two of her apartment houses. What type of agency relationship was established? Select one: a. Special b. General c. Dual d. Universal
The correct answer is: Special A "special" agent is hired on a "one-time" basis. This person was hired to sell two properties. However, there was no "on-going" relationship as in a "general agency" (B). Dual (C) occurs when an agent represents competing parties in the same transaction. Universal(D) agents represent a principal in all the principal's affairs.
Broker Johnson has listed the property of Cheever and sells it to Brevard for $175,000. Before closing, Johnson finds that the property has a serious structural defect. What should Johnson do? Select one: a. Tell Cheever b. Tell Brevard c. Keep it quiet as it might kill the sale d. Tell both Cheever and Brevard
The correct answer is: Tell both Cheever and Brevard The broker is obligated to reveal all adverse material facts known to him about the property to clients and customers.
A broker listed a vacant lot zoned for residential use. Later, an adjacent lot was rezoned causing an increase in value. What should the broker do? Select one: a. Buy the listing, have it rezoned, then sell it for a profit b. Tell the seller of the zoning change and advise the seller to consider application for rezoning the property c. Continue to market the property as residential property, according to the terms of the listing d. Offer to terminate the listing agreement
The correct answer is: Tell the seller of the zoning change and advise the seller to consider application for rezoning the property Because of his agency relationship with the seller, the broker must keep his client/seller informed and look after his best interests. It is definitely in the seller's interest to seek rezoning of the property in order to increase the value.
A broker desired to charge a flat fee to all sellers in order to collect the same amount for the work, regardless of the list price of the house. The broker could do this only: Select one: a. if the broker applied to the state legislature for approval b. if there was a history of this in that area c. by showing the seller the flat fee versus a percentage of the list price d. by informing the seller prior to the listing and obtaining agreement
The correct answer is: by informing the seller prior to the listing and obtaining agreement Whether to charge a flat fee or a percentage fee is a negotiable item between the seller and broker. There is no requirement to ask the state (A) nor to show the seller how flat fees compare to percentage fees (although the broker may very well choose to do that).
A listing broker brought an offer to the seller with a $1,500 promissory note as earnest money which the seller accepted. Before closing, the buyer declared bankruptcy. Concerning the bankruptcy, the listing broker should: Select one: a. let the transaction go through as is b. not tell the seller as this is confidential information c. tell the seller only if the broker knows the buyer won't close d. tell the seller immediately
The correct answer is: tell the seller immediately A listing broker must reveal to the seller all information relevant to the seller. Since the bankruptcy may void the promissory note, the broker must tell the seller immediately.
A person owned a house which had been built over underground springs. This was a well-known fact in the area. The broker sold the property to a buyer but did not inform the buyer about the underground springs. Six months later, the back corner of the house was found to have structural damage caused by the springs. Which of the following is true? Select one: a. The agent and seller could be responsible because they did not disclose to the buyer about the house being built over the springs b. The agent and seller could not be responsible because of the time period that had elapsed between the date of the sale and the date of discovery of the damage c. Only the seller could be held responsible for not disclosing about the house being built over the springs d. Only the agent could be held responsible for not disclosing about the house being built over the springs
The correct answer is: The agent and seller could be responsible because they did not disclose to the buyer about the house being built over the springs The seller and broker both participated in the negligent misrepresentation (failing to disclose a material defect) and both can be liable.
Barry, a sales agent with XYZ Realty lists a property. Helen, also a sales agent with XYZ, presents an offer from one of her clients and the offer is accepted. Which of the following best describes the position of the broker and XYZ in this situation? Select one: a. The broker is an agent for the buyer only. b. The broker is an agent for the seller only. c. The broker is agent of the seller and sub-agent of the buyer. d. The broker is a dual agent.
The correct answer is: The broker is a dual agent. The Broker is agent of the seller by virtue of Barry's listing. The Broker is an agent of the buyer by virtue of the fact that the buyer is Helen's CLIENT (important word). The broker is therefore a dual agent. All agency agreements are with the broker, NOT the sales agents that procured the listing.
Sophie, a licensed salesperson, works for a broker who is representing a buyer. Sophie finds a house for the buyer and the transaction closes. Sophie will receive her commission from which of the following? Select one: a. The broker that holds her license b. The broker that listed the house that Sophie sold c. The settlement attorney handling the closing d. The buyer, per his or her agreement with Sophie
The correct answer is: The broker that holds her license The important thing you MUST remember is that a salesperson or an associate broker may ONLY receive compensation from his or her employing broker or the broker that holds his or her license.
An agent has the responsibility of care, obedience, accountability, loyalty and disclosure to which of the following? Select one: a. The customer b. The broker c. The client d. All of the above
The correct answer is: The client All of these responsibilities are agency responsibilities owed the client. Obedience and disclosure of confidential information would never be a responsibility owed a customer.
A listing agreement may be terminated by: Select one: a. The seller b. The buyer's broker c. The salesperson that obtained the listing d. Death of the salesperson
The correct answer is: The seller A listing agreement is one type of agency agreement and may be terminated by the client (seller), agent (broker) or by mutual consent. The salesperson cannot terminate the listing. Answer B addresses the buyer's broker. If it had said the LISTING broker, then it too would have been correct. Watch the wording of these questions.
The amount of commission or fee that a listing broker is to receive is determined by: Select one: a. The Multiple Listing Service b. The National Association of Realtors c. The seller and the broker d. The Real Estate Board or Commission
The correct answer is: The seller and the broker The fee charged for an act of real estate brokerage is negotiated between the client and the broker.
Real estate licensees are required to disclose pertinent information relative to property they list. Which of the following are you NOT required to disclose? Select one: a. The seller is having financial problems and must sell the property to avoid bankruptcy b. The state plans to build a new highway near the property c. The property is subject to seasonal flooding d. The interior of the house is badly in need of painting
The correct answer is: The seller is having financial problems and must sell the property to avoid bankruptcy As agent you owe your clients the responsibility of confidentiality. To disclose financial information about the seller (who in this case is your client) would violate your agency relationship. Such disclosure would put the seller in an adverse bargaining position. On the other hand, if your client was the buyer you would be REQUIRED by law to disclose such information about the seller.
A broker, acting as a dual agent, with the knowledge and consent of all parties, collected one-half the commission from the seller and one-half from the buyer at settlement. Which of the following statements is true concerning this situation? Select one: a. This action is illegal b. The broker needed only the consent of the seller c. The broker needed only the consent of the buyer d. This action is permitted only with the consent of both parties
The correct answer is: This action is permitted only with the consent of both parties A dual agency is the type of agency where a broker represents BOTH buyer and seller to a transaction. It is lawful in most states as long as both parties (buyer and seller) know about the dual agency and provide written consent.
When a broker accepts a listing he or she has created an agency relationship. Which of the following is not an agency responsibility? Select one: a. To obey all the instructions of the seller. b. To use care in filling out contract forms. c. To be accountable for documents and funds. d. To be loyal to the seller.
The correct answer is: To obey all the instructions of the seller. The broker or any other agent is under no obligation to obey ALL instructions of the principal. Only those instructions which are legal need be obeyed.
Brokers must hold their client's funds in a/an: Select one: a. Office safe. b. Savings account. c. Trust or escrow account. d. Special account managed by the Board of Realtors.
The correct answer is: Trust or escrow account. Brokers must hold their client's funds in a trust or escrow account.
When does a broker earn his commission? Select one: a. When the listing is taken b. When the title insurance policy is given to the purchaser c. When closing is complete and title passes d. When the offer to purchase has been signed and accepted by the seller
The correct answer is: When the offer to purchase has been signed and accepted by the seller The broker EARNS a commission when the broker brings a ready, willing and able buyer to buy on the seller's terms. The broker is PAID when the deal closes and title is transferred.
Wilma lists her house with broker Fred under an exclusive right-to-sell agreement. Fred later abandons the listing. Which of the following is true in this situation? Select one: a. Wilma must maintain the listing with Fred until the expiration date b. Wilma may terminate the listing c. Wilma must wait 90 days before she can list the property with another broker d. Wilma must file a notice of abandonment
The correct answer is: Wilma may terminate the listing Abandonment by the agent terminates the listing automatically. No action is required by Wilma.
Under Common Law Agency, the listing agent should disclose material facts to the seller AND buyer. Which of the following would NOT be a material fact? Select one: a. Worn carpeting. b. Seasonal flooding in the basement. c. A foundation crack covered with paneling. d. A faulty heating system.
The correct answer is: Worn carpeting. Material facts about the property means just that...Worn carpets are probably not "material" and are readily discoverable by the buyer. The other answer choices would be.
An owner of a large estate told a broker NOT to hold open houses on the estate and to only advertise in a national magazine. Is this allowable? Select one: a. Yes, as the seller is responsible for planning all marketing of the property b. Yes, as the broker works for the seller and must follow instructions c. No, the broker has the right to hold a house open at the broker's discretion d. No, the owner can NOT limit the broker's ability to earn a commission
The correct answer is: Yes, as the broker works for the seller and must follow instructions The client has the power to give legal instructions to the broker. These were legal instructions. If a broker feels that the instructions can NOT be followed, the broker should not accept the listing.
A broker had an agreement with a buyer to find a home for a flat fee of $5,000. The broker found a special home listed by another broker that the buyer liked and purchased. Is the buyer's broker entitled to receive a commission from both the buyer and the seller? Select one: a. Yes, the brokers automatically split the commission b. Yes, if disclosure was made to all parties in writing c. No, it is illegal to have a dual agency d. No, a seller can only legally pay the listing broker
The correct answer is: Yes, if disclosure was made to all parties in writing A broker can only accept compensation from both sides with prior, written consent of the parties. (A) implies that the brokers have the right to make the decision. Dual agency is not automatically illegal (C); however undisclosed dual agency is illegal. The seller may pay a commission to both parties if desired (D).
A seller told a broker during the listing presentation that cash only should be accepted for the earnest money deposit. The broker presented an offer with a check as earnest money but failed to disclose this to the seller. The seller accepted the offer only to find out two days later that the earnest money check was worthless. Did the broker do anything wrong? Select one: a. Yes, the broker did not follow instructions b. Yes, the broker should have cashed the check first c. No, the owner signed and accepted the agreement d. No, because the form of earnest money only has to be disclosed if it is a promissory note
The correct answer is: Yes, the broker did not follow instructions A broker must follow the principal's instructions unless the principal changes those instructions. The broker's violation resulted in damages to the seller. Therefore the broker is liable. The broker should not have cashed the check (B) since the offer had not yet been accepted. (C) is wrong as the seller accepted it based on misrepresentation. Anything other than cash must be disclosed (D).
A salesperson wishes to charge a reduced commission to her sister. Where would the salesperson obtain approval for such an arrangement? Select one: a. State Association of Realtors b. Local Association of Realtors c. Real Estate Board or Commission d. None of the above
The correct answer is: None of the above A real estate broker may charge any commission that is agreed upon by all parties to the listing agreement. The salesperson would therefore need only the approval of her employing broker to charge a reduced commission to a relative.
An owner and tenant signed a one year lease agreement. The owner sold the property to a buyer 4 months later. The buyer wanted to move into the property immediately. The original lease contract signed by the seller and tenant was silent on this point. Can the buyer of the property move in immediately? Select one: a. Yes, because the lease contract was silent on the issue of the owner selling the property, thus giving the buyer immediate rights to the property b. Yes, because the tenant's rights are terminated upon the selling of the property c. No, because the tenant can stay in the property for the duration of the original lease contract d. No, because the tenant has an automatic right of first refusal on the property
The correct answer is: No, because the tenant can stay in the property for the duration of the original lease contract (C) A new owner must honor the current tenant's lease rights in a property. (A) Just because the lease doesn't speak to the sale issue does not give the buyer immediate rights - the current lease must be honored. (B) The tenant's rights are NOT terminated upon selling of the property. (D) A tenant does NOT have an automatic right of first refusal - a right of first refusal must be specifically noted and agreed to.
Seller Corcoran is in very poor health and cannot work his farm. Should a broker, who has a listing on the farm, disclose this fact to prospective buyers? Select one: a. Yes, it is a material fact about the farm which Moore must disclose b. Yes, it may help to get at least a low offer and help sell the farm c. No, it may hurt Corcoran's bargaining position and hurt his chances to get a fair price for the property d. No, it would be a violation of Federal Fair Housing Laws
The correct answer is: No, it may hurt Corcoran's bargaining position and hurt his chances to get a fair price for the property The broker is precluded from discussing Corcoran's health with prospective buyers as it may weaken Corcoran's bargaining position which would be contrary to Corcoran's best interest. The sellers health is not an adverse material fact related to the property, nor is it covered under Federal Fair Housing Laws.
An out of state owner calls a broker wanting to sell a property for $50,000. The broker knows that the zoning has recently been changed and the property is now worth more. The broker buys it personally and six months later sells it for $75,000. Is this legal? Select one: a. Yes, as the broker bought it personally and did NOT put it on the market b. Yes, as the broker got the price the seller was asking c. No, the broker must inform the owner of the zoning change and the increased value before purchasing the property from the seller d. No, the broker can NOT buy listed property as this would be a conflict of interest
The correct answer is: No, the broker must inform the owner of the zoning change and the increased value before purchasing the property from the seller A broker has a "disclosure" obligation to tell the owner all information that would help the owner to make an informed decision (C) even if the property was never placed on the open market (A). The price (B) is not important since the listed price was too low due to the broker failing to inform the owner of the true value. A broker can buy listed property (D) but still must comply with ALL fiduciary duties.
A seller signs a listing with the provision that any commission will be split between the brokerage firm handling the sale and the seller's unlicensed brother. Is this agreement legal? Select one: a. Yes, as long as the brother has contractual ability b. Yes, if the brother assists in the negotiation c. No, the brother must be a licensed real estate broker to receive a commission d. No, the local board of Realtors must first approve this agreement
The correct answer is: No, the brother must be a licensed real estate broker to receive a commission Only real estate licensees or certain people, specifically exempt from licensing, may receive compensation for a real estate transaction. State regulations address this issue specifically but as a general rule, payment of a fee to an unlicensed person is illegal.
A buyer requests the broker take a listed property off the market until his wife sees the property. Should the broker do this? Select one: a. Yes, as long as his wife can see it before the next business day. b. Yes, if the buyer pays the brokerage firm a small fee for this service. c. No, this would violate the agency agreement. d. No, only the local Association of Realtors can approve such an arrangement.
The correct answer is: No, this would violate the agency agreement. This is not a question of should he do it, he CANNOT do it. Only the SELLER can authorize that the property be taken off the market.
Broker Boyd takes a listing on a property owned by Foster at a price of $75,000 with no more than 20% down. Five days later, Boyd secures a written, all cash, offer for $75,000 on the Foster property. Foster refuses the offer. What can Boyd do under the circumstances? Select one: a. Demand that Foster accept the offer b. Demand that Foster pay him a full commission since he secured a full price offer c. Demand that Foster pay at least half commission d. Nothing, since the offer does not meet the terms of the listing contract
The correct answer is: Nothing, since the offer does not meet the terms of the listing contract In order to earn a commission, a salesperson must find a ready, willing and able buyer, on the exact terms of the seller. The fact that the offer was all cash and not just 20% cash means that it was not on the terms of the seller.
Under the customary listing agreement, the broker, as the agent for the seller, can: Select one: a. Accept or reject offers for the seller b. Place a "For Sale" sign on the property c. Deposit earnest money in the broker's personal account d. Advertise the property at a price lower than the listed price
The correct answer is: Place a "For Sale" sign on the property Under the usual listing agreement, the broker can place a 'For Sale' sign on the property. The other answer choices are beyond the authority granted to the broker in most listing agreements.
A seller had a house listed with a broker for $86,000. The broker was working with a buyer who told the broker that the buyer would start by offering $85,000 but would pay $86,000 for the property. What should the broker do? Select one: a. Present the offer and NOT mention that the buyer would raise the offer b. Pressure the buyer to raise the offer c. Present the offer as is and inform the seller of the possible increase d. Refuse to present the offer as it was for less than the seller authorized
The correct answer is: Present the offer as is and inform the seller of the possible increase Agents must present all offers. However, the agent also must disclose to the client any information obtained that may help the client.