Chapter 3

An owner has entered into a listing agreement with a broker. During the period of the agreement, the owner sells the property himself. The owner is not legally required to pay a commission to the broker. What type of listing agreement did the owner have? Select one: a. A net listing. b. An exclusive agency. c. An exclusive right-to-sell. d. A lease contract.

b. An exclusive agency.

If a person pays for the right to purchase property at a specified price, within a specified time, the person has: Select one: a. A right of first refusal. b. An option. c. A sales contract. d. A lease.

b. An option.

During the executory period of a valid contract for sale, the rights of buyer are best described as: Select one: a. Executed. b. Equitable. c. Executory. d. Equalization.

b. Equitable.

Money paid upon the signing of a contract is known as principal. Select one: a. True b. False

b. False

Only the seller may attempt to sell property listed under an open listing. Select one: a. True b. False

b. False

What is the defining feature of a net listing? Select one: a. There is no commission if the seller finds the buyer. b. The broker's commission is any sale price in excess of a stated number. c. It offers the best protection to the broker. d. It offers a flat-fee commission regardless of sale price.

b. The broker's commission is any sale price in excess of a stated number.

The Sherman Antitrust Act prohibits agreements not to compete in certain geographical areas between: Select one: a. Two licensed salespersons who work for the same firm. b. Two different real estate firms. c. Both two salespersons working for the same firm and two different real estate firms. d. Neither two salespersons working for the same firm nor two different real estate firms.

b. Two different real estate firms.

An option contract is a __________ contract until the option is exercised and is then a __________ contract. Select one: a. Bilateral/unilateral. b. Unilateral/bilateral. c. Bilateral/bilateral. d. Unilateral/unilateral.

b. Unilateral/bilateral.

William Wells, a principal broker, listed parcel A under an exclusive agency listing agreement and listed parcel B under an exclusive right-to-sell agreement. Both listings expired. Three days later, without seeing each other's property beforehand, the two owners exchanged properties in a Like-Kind exchange. William will receive: Select one: a. One commission. b. Two commissions. c. No commission. d. A split commission.

c. No commission.

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.

c. No, the brother must be a licensed real estate broker to receive a commission.

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.

c. No, this would violate the agency agreement.

Salesperson Susan sells to buyer Pete, a home belonging to seller Tom. At the same time she writes a six month option for Pete to buy an adjoining lot, also from Tom. When does Susan earn her commission on the option contract? Select one: a. When she is paid her commission on the sale of the home. b. When the optionor and the optionee are brought together. c. When local custom dictates, she has earned it. d. None of the above.

d. None of the above.

An optionee is obligated to do which of the following? Select one: a. To rezone a property prior to exercising his option. b. To convey further assurance to the optionor. c. To exercise the option within 60 days. d. To pay consideration for the option right.

d. To pay consideration for the option right.

An oral listing is: Select one: a. Void. b. Voidable. c. Illegal. d. Unenforceable.

d. Unenforceable. Valid but unenforceable.

Why do brokers feel that an exclusive right to sell listing gives the broker the best protection? Select one: a. Because the broker would be paid regardless of who finds the buyer. b. Because exclusive right to sell listings permit protection clauses. c. Because exclusive right to sell listings never expire. d. Because exclusive right to sell listings do not have to be included in the local MLS.

a. Because the broker would be paid regardless of who finds the buyer.

A financing agreement that exposes the buyer to the greatest risk would be: Select one: a. Installment land sales contract. b. Sale and leaseback. c. Purchase money mortgage. d. Junior mortgage.

a. Installment land sales contract.

Which of the following real estate related contracts could be considered an employment agreement? Select one: a. Listing agreement. b. Offer to purchase. c. Option. d. Mortgage.

a. Listing agreement.

If an option to purchase real estate expires July 15th without the optionee exercising his option, what must the owner do to release the property from option? Select one: a. Nothing b. Obtain a release from the optionee c. File a lis pendens d. File a lien

a. Nothing

How many agents are there in an exclusive right-to-sell listing? Select one: a. One. b. Two. c. Three. d. As many as the owner chooses.

a. One

The vendee is: Select one: a. One who buys or offers to buy. b. One who sells or offers to sell. c. The lender. d. The borrower.

a. One who buys or offers to buy.

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.

a. Remain in force.

Which of the following would be a violation of antitrust law? Select one: a. Two brokers agree that each will market his services only in specific areas of the community. b. Jim, a broker, advertises that his firm will only represent buyers. c. An independent broker refuses to join the local Association of Realtors. d. A real estate company has some sales agents working as independent contractors and other sales agents working as employees.

a. Two brokers agree that each will market his services only in specific areas of the community.

When a buyer buys a property under an installment sale contract, the seller retains Select one: a. title to the property. b. a remainder estate. c. possession of the property. d. a life estate.

a. title to the property.

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.

b. A buyer's agent only.

What type of contract is an exclusive right-to-sell listing agreement? Select one: a. Unilateral. b. Bilateral. c. Multilateral. d. Lis pendens.

b. Bilateral.

Broker Jones is considering lowering the price on an overpriced listing. Which of the following is the best answer? Select one: a. This is good business practice. b. Jones must have the owner's permission to lower the price. c. Jones, as the listing agent, has implied authority to do this. d. Jones is legally liable for misrepresenting the price to previous prospective buyers.

b. Jones must have the owner's permission to lower the price.

A contract for the sale of land in which the buyer makes regular payments, takes possession, but does not receive title is known as a(n): Select one: a. Mortgage. b. Land contract. c. Lease. d. Option.

b. Land contract.

Which of the following is the BEST example of a unilateral contract? Select one: a. Lease. b. Option. c. Real estate contract for sale. d. Listing agreement.

b. Option.

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.

b. Place a "For Sale" sign on the property.

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.

b. Wilma may terminate the listing.

Which of the following would NOT terminate an offer to sell real property? Select one: a. Lapse of reasonable time b. Rejection of the offer by the offeree c. Death of the sales agent d. Revocation of the offer

c. Death of the sales agent

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.

c. Disclosure.

David, an independent and individual 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.

c. Negotiate and receive new listing agreements from each client.

A property is listed at $168,000. A full price offer is made without contingencies. Which of the following statements is the most complete correct answer? Select one: a. The seller must accept the offer. b. The seller is not obligated to sell the property. c. The seller may refuse to sell, but could be required to pay the broker a commission. d. The seller would be in violation of Fair Housing law.

c. The seller may refuse to sell, but could be required to pay the broker a commission.

Under an exclusive right-to-sell listing, the seller would be responsible for paying a commission to the listing broker: Select one: a. If the seller, himself, finds a buyer. b. If the seller went to another broker and the other broker found a buyer. c. If another broker saw the listing in the MLS and sold the property. d. All of these choices.

d. All of these choices.

A listing agreement will automatically terminate: Select one: a. If the listing broker goes bankrupt. b. On the date specified in the listing agreement. c. If the seller dies prior to receiving an offer. d. Any of these choices.

d. Any of these choices.

How many brokers can be given an open listing? Select one: a. One. b. Two. c. Three. d. As many as the owner chooses.

d. As many as the owner chooses.

In what type of listing would the listing broker be paid the commission if the listing broker or any other broker was the procuring cause, but not if the seller found the buyer personally? Select one: a. Net listing. b. Open listing. c. Exclusive right to sell listing. d. Exclusive agency listing.

d. Exclusive agency listing.

Broker Fowler located a property for buyer Jackson. Jackson paid seller Allan a $1,000 fee for a 30 day option. Which of the following is true? Select one: a. Fowler earned his commission when the option was signed b. Part of Fowler's commission will come from the $1,000 c. Local custom will determine the commission d. Fowler will not earn a commission until Jackson becomes owner of the property

d. Fowler will not earn a commission until Jackson becomes owner of the property

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.

d. Nothing, since the offer does not meet the terms of the listing contract.