Real Estate, Chapter 8, Lesson Cumulative Quiz

A buyer is considered "ready and willing" if she: A. makes an offer that meets the seller's stated terms B. makes any reasonable offer to purchase C. offers to pay at least the appraised value of the property D. makes an earnest money deposit

A. Explanation: A buyer is "ready and willing" if she makes an offer that meets the seller's stated terms. If the offer doesn't meet the seller's terms, the seller can turn down the offer without becoming liable for a commission.

Listings that do not fix the brokerage's commission at a certain rate, but allow the brokerage to keep any excess above a set amount, are known as: A. net listings B. open listings C. due diligence D. multiple listing services

A. Explanation: A net listing does not fix compensation at a set rate and therefore is open to abuse by unscrupulous agents.

With an exclusive agency listing, the seller: A. only lists the property with one brokerage, but retains the right to sell the property by herself without being obligated to pay a commission B. can list the property with several brokerages, but only one of the firms is considered the seller's agent C. is only allowed to list the property with the procuring cause of the sale D. can list the property with several brokerages, but is only obligated to pay a commission to the procuring cause

A. Explanation: An exclusive agency listing is entered into with only one brokerage, but the seller may avoid liability for a commission if she sells the property herself.

The listing agreement provides that if the seller sells the property within six months after the agreement expires to anyone who first learned of the property through the brokerage, the seller will be required to pay the brokerage's commission. This type of provision is called: A. an extender clause or safety clause B. a warranty clause or option provision C. an automatic renewal clause or holdover clause D. a habendum clause or hold harmless clause

A. Explanation: An extender clause (or safety clause) guarantees a brokerage a commission if a buyer who learned of the property through the brokerage buys the property after the listing period is over.

After persuading the sellers to list their house, the broker fills out a listing agreement form. This listing agreement is a contract between the seller and the: A. listing brokerage B. broker C. designated broker and the broker D. buyer

A. Explanation: Even when it is prepared by a broker, a listing agreement is a contract between a brokerage and a seller. A broker is only allowed to act as his brokerage's agent, and cannot enter into a contract with a seller.

If a seller accepts a buyer's offer, as a general rule the seller is: A. required to pay the brokerage's commission whether or not the offer matched the terms set forth in the listing agreement B. only required to pay the brokerage's commission if the offer did not match the terms set forth in the listing agreement C. only required to pay the brokerage's commission if the offer matched the terms set forth in the listing agreement D. not required to pay the brokerage's commission, whether or not the offer matched the terms set forth in the listing agreement

A. Explanation: The seller is required to pay the brokerage's commission if he accepts an offer, regardless of whether it matches the terms set forth in the listing agreement.

Under an open listing agreement, the seller is obligated to pay the brokerage a commission: A. only if the brokerage was the procuring cause of the sale B. whether or not a ready, willing, and able buyer is found during the listing period C. unless the agreement has entered the extension period D. no matter who found the buyer

A. Explanation: Under an open listing, the brokerage receives a commission only if it was the sale's procuring cause.

A ready and willing buyer is considered "able" only if she has: A. enough cash to buy the property on the agreed terms B. the capacity to contract and the financial ability to complete the purchase C. obtained a firm loan commitment from a mortgage broker or institutional lender D. prequalified for a loan from a reputable institutional lender

B. Explanation: A buyer is "able" if she has contractual capacity and the financial resources to complete the purchase.

A listing agreement is NOT an enforceable contract unless it contains: A. the street address of the property B. a description of the property that is adequate to identify it C. the complete legal description of the property D. the property description photocopied from the seller's deed

B. Explanation: A listing agreement will be enforceable as long as it includes an adequate description of the property in question. It's always good to have the street address and the complete legal description, and photocopying the seller's deed is often a simple way to get the description, but these are not legal requirements.

If a brokerage submits an exclusive listing to a multiple listing service: A. the MLS is entitled to 50% of any commission earned on the listing B. the listing brokerage will share the commission if a cooperating broker from the MLS is the procuring cause of the sale C. all cooperating agents from the MLS represent the seller D. All of the above

B. Explanation: If a cooperating agent who is an MLS member is the procuring cause of the sale, the listing brokerage and the cooperating brokerage will split the commission.

The circumstances under which the seller will be required to pay the brokerage a commission are determined by: A. MLS rules B. the terms of the listing agreement C. the terms of the purchase and sale agreement D. the Department of Licensing

B. Explanation: The brokerage will be compensated according to the terms of the listing agreement.

The owners of a house want to sell it, and they recognize the value of using an agent who is committed to getting their house sold. But they want to avoid paying a commission if they are able to find a buyer on their own. What type of listing should they sign? A. Exclusive right to sell B. Exclusive agency C. Open D. Net

B. Explanation: The exclusive agency listing allows them to contract for the services of an agent but retain the right to sell the property themselves without obligation for a commission.

Under an exclusive right to sell listing, the brokerage is entitled to a commission: A. whether or not the property sells during the listing term B. if the property sells during the listing term, regardless of who finds the buyer C. only if the brokerage is the procuring cause of the sale D. unless the seller finds a buyer without the brokerage's help

B. Explanation: The exclusive right to sell listing guarantees that the brokerage will be paid if the property sells during the listing term, even if the seller himself sells the property. As a result, brokerages prefer this type of listing.

A property owner gave an open listing to each of six different brokerages. Which of the following statements is CORRECT? A. Whichever firm sells the property will share the commission equally with the other firms. B. The firm that sells the property will earn the entire commission. C. The owner can't legally give more than one listing for her property. D. The seller could be liable for as many as six different commissions.

B. Explanation: The seller gave open (non-exclusive) listings. The firm that sells the property is entitled to the entire commission.

A seller signs an open listing agreement with Brokerage A, and then immediately signs another open listing agreement with Brokerage B. If the property is sold before either listing expires, and Brokerage B is the procuring cause of the sale: A. the seller is required to pay the full commission to both brokerages B. Brokerage A will not be compensated for its efforts C. Brokerage A and Brokerage B will each receive half of the agreed commission D. Brokerage A can sue the seller for breach of contract

B. Explanation: Under an open listing agreement, only the brokerage that is the procuring cause of the sale receives a commission (in this case, that's Brokerage B). A seller may enter into multiple open listings without creating the possibility of liability for more than one commission.

A homeowner sells his own property, but is still required to pay a real estate commission. What kind of listing did the homeowner sign? A. Net B. Exclusive right to sell C. Exclusive agency D. Open

B. Explanation: With an exclusive right to sell listing, the real estate firm is guaranteed a commission if anyone sells the property during the listing period. If it had been an exclusive agency listing, the homeowner would not have been obligated to pay a commission after selling the property himself.

The commission a brokerage will charge a seller is determined by: A. the state real estate board B. MLS policy C. negotiation between the brokerage and the property owner D. state law

C. Explanation: A brokerage's commission can't be fixed by the MLS or any agreement between brokerages.

A brokerage's commission is usually a: A. percentage of the property's listing price B. percentage of the property's appraised value C. percentage of the property's sales price D. flat fee based on the anticipated difficulty of selling the property

C. Explanation: A brokerage's commission is usually a fixed percentage of the property's sales price.

An open listing is also called a/an: A. exclusive agency listing B. multiple listing C. non-exclusive listing D. net listing

C. Explanation: Because a seller may give an open listing to more than one brokerage, it is also called a non-exclusive listing.

A buyer makes an offer that matches the seller's terms set forth in the listing agreement, but the seller decides not to accept the offer after all. Under the terms of most listing agreements, the brokerage is: A. entitled to keep the earnest money deposit B. required to refund the commission to the seller C. entitled to the commission anyway D. not entitled to any payment

C. Explanation: If a "ready, willing, and able" buyer is found but the seller backs out of the deal, the seller still owes his brokerage the commission.

When a transaction fails to close, the brokerage is legally entitled to the commission: A. unless the seller and buyer mutually agreed to terminate the transaction B. only if the buyer was the procuring cause C. if the failure to close was the seller's fault D. All of the above

C. Explanation: If a transaction fails to close, the brokerage is legally entitled to a commission if the failure to close was the seller's fault. This may occur if the seller had a change of heart about selling, if the seller didn't have marketable title, if the seller was unable to deliver the possession of the property to the buyer, or if buyer and seller mutually backed out.

An exclusive listing agreement should always include a: A. description of the procuring cause B. net listing provision C. termination date D. time is of the essence clause

C. Explanation: It's very important for an exclusive listing agreement to state the date the agreement will terminate. Although exclusive listings without termination dates are not actually illegal in Washington, they are illegal in many other states. On the National portion of the license exam, the termination date may be treated as an essential element of an exclusive listing.

A brokerage cannot prevail in a lawsuit against a seller for a commission unless certain requirements have been met. These requirements include all of the following, EXCEPT: A. The terms of the listing agreement were fulfilled B. The listing agreement was in writing C. The brokerage submitted the listing to a multiple listing service D. The brokerage and the agent were properly licensed

C. Explanation: There is no requirement that a listing be submitted to a multiple listing service (although it's usually to the advantage of both the seller and the brokerage to do so). To successfully sue for a commission, the brokerage must be able to show that that it had a written listing agreement, that the terms of the listing were fulfilled, and that the brokerage and the affiliated broker handling the transaction were properly licensed before real estate services were provided or a promise of compensation was procured.

When a buyer makes an offer on terms other than those set forth in the listing agreement: A. the agent should refuse to present it to the seller B. the seller is liable for the agent's commission whether he accepts the offer or not C. the seller can accept the offer without becoming liable for the agent's commission D. the seller can turn down the offer without becoming liable for the agent's commission

D. Explanation: A buyer who makes an offer that does not meet the seller's terms is not "ready and willing," and therefore the seller does not become liable for the agent's commission.

Many listing agreement forms provide that if the seller signs a purchase and sale agreement during the listing period: A. the listing is terminated immediately B. the buyer will pay half the brokerage's commission C. the brokerage will accept half the earnest money in lieu of the agreed commission D. the listing period is extended to the date set for closing the transaction

D. Explanation: A clause extending the listing period until the closing date guarantees the brokerage a commission even if the closing date occurs after the end of the original listing period.

The type of listing agreement that will not state a fixed commission rate is the: A. open listing B. exclusive listing C. non-exclusive listing D. net listing

D. Explanation: A net listing does not fix compensation as either a commission rate or a set dollar amount. Net listings are discouraged in Washington.

Open listings are: A. generally used only when an agent is unwilling to execute a net listing agreement B. illegal in Washington C. standard for residential property in Washington D. generally used only when a seller is unwilling to execute an exclusive listing agreement

D. Explanation: Agents prefer exclusive listing agreements, since those offer them a better chance of getting paid for their work. Most multiple listing services won't accept open listings for residential properties, but open listings are sometimes used for unique, difficult-to-market commercial properties.

A married couple is listing their house for sale, and a broker is preparing the listing agreement. The agreement should be signed by: A. the designated broker, the broker, and either one of the sellers B. either one of the sellers, and the broker on behalf of the brokerage C. both of the sellers and the buyer D. both of the sellers, and the broker on behalf of the brokerage

D. Explanation: All of the owners of a property should sign the listing agreement. In addition, the spouses of any married owners should sign the agreement, even if they probably do not have any ownership interest. The broker can sign the listing agreement on behalf of the brokerage.

A brokerage cannot successfully sue a seller for a commission unless: A. they had a written listing agreement B. the brokerage and its agent(s) were properly licensed before services were provided or a promise of compensation was procured C. the brokerage has fulfilled the terms of the listing agreement D. All of the above

D. Explanation: All of these are requirements that must be met in order for a brokerage to be entitled to compensation.

A seller authorizes an agent to actually sell the property (that is, to enter into a binding contract with a buyer) under the terms of a typical: A. exclusive right to sell listing agreement B. open listing agreement C. net listing agreement D. None of the above

D. Explanation: In order for an agent to be able to enter into a contract with a buyer, the seller must execute a power of attorney, making the agent her attorney in fact.