Laws of Agency
A saleman asks a broker, other than his own, for a $100.00 advance on his next commission. If the broker pays it, he is: (a) in violation of the law. (b) within his rights. (c) a good friend. (d) committing conversion.
Your answer: (a) is correct. A real estate broker may never pay money to another broker's salesperson.
Dual agency happens mostly with: (a) cooperating brokers. (b) mobile homes. (c) in-house sales. (d) subdivision sales.
The correct answer is c: An "in-house" sale is a form of dual agency where a buyer is represented by the same brokerage firm that has the listing.
Commission rate price fixing is a violation of the: (a) Truth-in-Lending. (b) Real Estate Settlement Procedures Act. (c) Anti-trust laws. (d) California Fair Employment and Housing Act.
The correct answer is c: Price fixing is a violation of the Sherman Anti-trust laws.
With regards to a fiduciary relationship, a Broker is to a Seller, as a: (a) Trustor is to a Trustee (b) Beneficiary is to a Trustor (c) Beneficiary is to a Trustee (d) Mortgagor is to a Mortgagee
The correct answer is c: The broker/seller relationship is similar to the beneficiary/trustee relationship as the trustee is holding the deed of trust for the benefit of the lender (beneficiary) and works on behalf of the beneficiary. The trustee has a fiduciary responsibility to the beneficiary
Broker Sue had a Buyer who wanted to purchase a farm. She told the buyer she would contact the owner because he is a client. When she talked to the owner he said his property wasn't for sale. A couple of months later she found out that the seller had sold directly to the buyer without involving her. What is Broker Sue's remedy? (a) There is nothing the Broker can do to collect a commission (b) Broker could get a finder (c) Broker is entitled to a commission (d) Buyer owes broker a commission
The correct answer is c: In this case, the buyer inquired for broker assistance and was already represented by the broker. Since there was already an existing buyer-agency relationship with the Broker, the Broker is entitled to full commission as she has established procuring cause.
A real estate agent is under a duty to use which of the following in the performance of his/her duties? (a) care (b) skill (c) diligence (d) all of the above
The correct answer is d: Among the obligations that a fiduciary owes to his/her principal are the duties of loyalty, obedience, and full disclosure; to be fair and honest; the duty to use skill, care and diligence; and the duty to account for all monies.
All of the following require an Agency Disclosure Agreement EXCEPT: (a) mobile home (b) fourplex (c) condominium (d) apartment building
The correct answer is d: An agency disclosure agreement is required for property with one to four dwelling units, any leasehold in this type of property exceeding one year's duration, and mobile homes, when offered for sale or sold through an agent.
A broker DOES NOT need to disclose if the principle is: (a) the broker's ex-spouse. (b) an employee of the broker's corporation. (c) an acquaintance of either buyer or seller. (d) a blood relative of the broker.
The correct answer is c: A real estate licensee must disclose any personal or business relationship he/she has with the buyer or seller which may influence the transaction or give the appearance of a conflict. This includes any member of the broker's immediate family, firms, or any member thereof, or any entity in which the broker has any ownership interest.
In the correct order, list the chain of events necessary to comply with the agency disclosure law: (a) confirm, disclose, elect (b) investigate, disclose, confirm (c) disclose, elect, confirm (d) disclose, confirm, reconfirm
The correct answer is c: According to the agency disclosure law, the correct order is: Disclose, Elect, Confirm (Memory Aid: DEC)
The phrase that best describes the nature of a broker's duty to keep a principal fully informed is: (a) ethical conduct. (b) continuing responsibility. (c) fiduciary obligation. (d) trustworthy business principles.
The correct answer is c: Among the obligations that a fiduciary owes to his/her principal are the duties of loyalty, obedience, and full disclosure; to be fair and honest; the duty to use skill, care and diligence; and the duty to account for all monies
When acting as agent for seller Jones, real estate broker Smith: (a) is obligated to render faithful service to Jones. (b) can modify the terms of any contract that Jones enters into. (c) can give Jones legal advice. (d) can eliminate any offers on Jones' property that Smith believes are not good enough.
Your answer: (a) is correct. As a fiduciary, the broker (and salesperson) have a duty to be faithful to the principal.
All of the following are essential elements of an agency agreement EXCEPT: (a) payment of consideration. (b) fiduciary relationship of the agent to the principal. (c) agreement by the principal. (d) a competent principal.
Your answer: (a) is correct. Choices b, c, and d are all essential elements for the creation of an agency relationship. The payment of consideration is not related to the creation of an agency relationship.
When is a properly licensed real estate salesperson most likely to get his/her commission? (a) When both the buyer and seller have signed the deposit receipt. (b) When the grant deed is signed. (c) When the grant deed is recorded. (d) When escrow closes.
Your answer: (d) is correct. Be careful in reading this question. The salesperson is most likely to get his/her commission when escrow closes.
A power of attorney can be terminated by the: (a) death of the attorney-in-fact. (b) revocation by the principal. (c) incapacity of the parties to the power of attorney. (d) All of the above
A power of attorney is a written instrument authorizing a person, the attorney-in-fact, to act as the agent on behalf of another to the extent indicated in the instrument. All of the choices would result in the termination of the power of attorney
A salesman asked the listing broker, who was not his employing broker, to advance him $600 against the commission the listing broker had agreed to pay to the selling agent. The listing broker paid the selling salesman the $600, even though the deal had not yet closed escrow. Which of the following is correct? (a) The listing broker had violated a Real Estate Law. (b) This is permissible if it is in writing. (c) This is fraud. (d) None of the preceding apply as brokers are allowed to pay commissions to anyone they wish.
The correct answer is a: A salesman may only collect a commission from his employing broker. Likewise, a broker may not pay a commission to anyone other than his employed salesman. The listing broker has violated the Real Estate Law, Section 10137.
A real estate licensee offered to rebate part of his commission to the buyer if the buyer would increase his offer to a level that the agent knew would be high enough for the seller to accept. Under these circumstances: (a) this information must be disclosed to the seller before the offer is accepted by the seller. (b) this action is a violation of the licensing law and would lead to immediate disciplinary action. (c) the licensee could be held liable for damages in a civil suit even though this information was given to the seller prior to the seller's acceptance. (d) All of the above
The correct answer is a: Any information material to the transaction must be disclosed to the seller prior to acceptance of the offer by the seller. This would include any agreement by a licensee to rebate a portion of his/her commission to the buyer.
Johnson, a real estate broker, listed a property. Suzie, a salesperson working for broker Sims, received an offer. Donna, a salesperson working for broker Johnson, got the offer accepted. Who earned the commission? (a) Johnson (b) Sims (c) Suzie (d) Donna
The correct answer is a: As the listing broker, Johnson earned the commission under the terms of the listing agreement. A commission split may occur since the offer came in through another broker
You are a California real estate broker. A prospect is referred to you by an out-of-state broker and a sale is consummated by you. You want to split your commission with the cooperating broker. Under the California Real Estate law: (a) you may pay a commission to a broker of another state. (b) you cannot divide a commission with a broker of another state. (c) you can pay a commission to a broker of another state only if he/she is also licensed in California. (d) None of the above
The correct answer is a: B & P Code § 10137: "it is unlawful for any licensed real estate broker to employ or compensate, directly or indirectly, any person for performing any of the acts within the scope of this chapter who is not a licensed real estate broker or a real estate salesman licensed under the broker employing or compensating him; however, a licensed real estate broker may pay a commission to a broker of another state."
Under the law of agency, a fiduciary relationship is created between the broker and the seller on execution of the listing agreement. As far as the broker's responsibility to third parties, the broker: (a) must be fair and honest. (b) has no obligation. (c) needs to disclose material facts only when asked about them. (d) should disclose the lowest price the seller is willling to accept.
The correct answer is a: In addition to his/her fiduciary obligations to the seller, an agent must be fair and honest to third parties. Because of the close personal relationship between broker (agent) and seller or buyer (principal), the broker often learns certain confidential information about the client and/or financial situation of the principal. This information cannot be disclosed by a broker, even after the transaction is completed and the fiduciary relationship is terminated.
A real estate broker should regard himself/herself as a: (a) fiduciary. (b) substitute for an attorney. (c) legal adviser. (d) None of the above
The correct answer is a: The broker acts as a fiduciary in the transaction.
Which of the following best describes a "dual agency?" (a) An agent only represents one principal. (b) The agent acts concurrently for both the buyer and seller in a transaction with the full knowledge and consent of both parties. (c) The agent is authorized to do all acts connected with a particular trade, business or employment. (d) The agent is only authorized to perform only those acts specifically authorized by the principal.
The correct answer is b: A dual agency is an agency relationship in which the agent acts concurrently for both of the principals in the transaction. A dual agency is lawful if it is created with the full knowledge and consent of both parties.
A licensed real estate broker representing the seller becomes the gratuitous agent (no fee) of the buyer and accepts all of the fiduciary responsibilities as the buyer's agent when he/she: (a) shows the property to the buyer. (b) arranges financing for the buyer, including a purchase-money-loan. (c) gives the buyer a list of certified appraisers. (d) writes up the offer to purchase the seller's property.
The correct answer is b: If the agent representing the seller goes as far as setting up the buyer's financing, he/she becomes the buyer's agent and thus assumes all fiduciary responsibilities as the buyer's agent.
A real estate broker, licensed only in California, verbally agreed to split a commission with a real estate broker not licensed in California: (a) This is a violation of the California Real Estate Law. (b) This is permissible. (c) This is permissible, but the broker must first get permission from the Real Estate Commissioner. (d) This is unenforceable in a California court as the agreement was not in writing as required by the California Business and Professions Code.
The correct answer is b: In California, a real estate broker acting in the capacity of an independent contractor may agree verbally or in writing to split a commission with another broker. Such a contract is enforceable in the California courts.
A broker has been in the business for many years. He currently has 40 exclusive listings in his office. The broker dies and his daughter who is also a broker, takes over for him. What should she do about the current listings? (a) Just inform the seller that she is taking over as broker. (b) She must attempt to renegotiate all of the listings. (c) She need only inform the Department of Real Estate that she is now the broker of record. (d) Do nothing
The correct answer is b: Listings are personal service contracts and terminate with the death of either party. The listing agreement is between the seller and the broker. When the broker dies, the listing terminates. The new broker must attempt to renegotiate the listings with the sellers
A "dual agency" is legal if: (a) All parties are told before close of escrow. (b) The buyer and seller consent to it. (c) The broker and escrow company agree to it. (d) All parties are told after they sign the contracts.
The correct answer is b: The safest rule to apply is than when you represent both parties, in any way, you become a dual agent. When the agent becomes the agent of both, without the knowledge and consent of both, the agency is considered illegal.
A licensed real estate broker who specializes in property management activities usually receives commissions: (a) based on a percentage of the rents expected to be collected over the life of the leases. (b) equal to the first and last month's rent. (c) based on a percentage of the gross rents collected. (d) based on the first year's rent.
The correct answer is c: A broker specializing in property management generally receives commissions based on a percentage of the gross rents collected, not those that would be anticipated over the term of the leases.
Seller "A" lets buyer "B" assume that Broker "C" was his agent. This type of agency relationship is an example of: (a) ratification. (b) estoppel. (c) ostensible authority. (d) None of the above
The correct answer is c: Ostensible authority is that authority which a third person reasonably believes an agent possesses because of the acts or omissions of the principal. Ratification is the adoption or approval of an act performed on behalf of a person without previous authorization, such as the approval by a principal of an agent after the acts have been performed. Estoppel is a legal doctrine which prevents a person from alleging something to be true or a fact which is contrary to a previous affirmation or allegation made by that same person.
When selling a business, the rate of commission is determined by: (a) the Commissioner's Regulations. (b) the Federal Code of Commissions. (c) the agreement between the broker and owner. (d) the Business Opportunities Law.
The correct answer is c: Real estate commissions are always negotiable and are determined by the agreement between the broker and owner.
When negotiating a lease on behalf of a commercial real property landlord, the broker would usually calculate his commission as: (a) a percent of the rent due in the first year of the lease. (b) a percent of the first and last month's rent. (c) a percent of the rent due for the entire lease period. (d) a percent of the rent due for the first six months of the lease.
The correct answer is c: The broker's commission is normally calculated as a percent of the total amount of lease payments. This is negotiable, however and not a hard and fast rule of law.
Jackson leased his home to Sullivan with a verbal agreement to sell the property to Sullivan. Jackson knows that Sullivan has been making significant improvements to the property in reliance on that verbal agreement. Jackson now declines to sell the property to Sullivan. Which of the following best describes the rights of the parties? (a) Jackson must sell because he made an ostensible agreement. (b) Sullivan has no right to enforce the verbal agreement. (c) Jackson must sell because the doctrine of estoppel will apply in this case. (d) Jackson does not have to sell because of the Statute of Frauds.
The correct answer is c: The doctrine of estoppelMethod of enforcing an agency relationship in which someone stated incorrectly that another person is his or her agent, and a third person relied on that representation.See GLOSSARY, right, for more definitions. estoppel would apply when one person allows another to rely on statements made to the detriment of that person. In this case, Jackson allowed Sullivan to rely on a verbal promise to sell and to make substantial improvements to the property. The court would "stop" Jackson from refusing to sell.
Which of the following statements is correct? (a) A dual agency is always a divided agency. (b) A divided agency is NOT always a dual agency. (c) A dual agency is NOT necessarily a violation of law. (d) A dual agency is always a violation of law.
The correct answer is c: This is a tricky question, read it carefully. The term dual agency does not, in itself, describe an unlawful activity. In fact, the law is reasonably clear when it states that an agent cannot legally act for two principals in negotations with each other unless both have knowledge of and consent to the dual agency. [B & P Code § 10176(d)]. Thus, we find that an agent can represent both parties in the same transaction.
Typically when leasing real property, the commission of the leasing agent is based on a percentage of: (a) the first year's rent. (b) cash paid by the lessee. (c) total rents collected during the term of the lease. (d) None of the above
The correct answer is c: Usually, the commission of a leasing agent is figured on the total rent to be collected over the term of the lease. The commission can be any amount negotiated and specified in the employment contract.
Which of the following describes the unlawful form of dual agency called "divided agency?" (a) The agent acts concurrently for both the buyer and seller, but keeps them divided by not ever letting them communicate directly. (b) The agent represents only one principal, but divides the duties to be performed with another agent. (c) The agent acts concurrently for both the buyer and seller in a transaction without the knowledge and consent of both parties. (d) The agent represents the seller and two buyers.
The correct answer is c: When the agent becomes the agent of both the buyer and seller, without the knowledge and consent of both, the agency may be more accurately described and identified as a "divided agency." When the agency is a divided agency, it is a violation of Section 10176(d) of the Business and Professions Code (the Real Estate Law).
An agency relationship can be created by all of the following, EXCEPT: (a) principal's agreement. (b) implication of the law. (c) oral agreement. (d) agent volunteers.
The correct answer is d: A real estate licensee cannot become your agent by simply volunteering. An agency relationship can be created by written agreement or it may be implied by the acts of the principal and agent. It can also be created by oral agreement
An agency relationship may be terminated by: (a) expiration of the term. (b) death of the agent. (c) agreement. (d) all of the above
The correct answer is d: All of the choices are ways to terminate an agency relationship. Look out for a question about what happens to a listing if the property burns down. Destruction of the property prior to the sale also terminates the agency agreement and thus a listing.
As the agent for the seller, a real estate broker negotiated a sale. By agreement, the licensee can be paid his commission in the form of: (a) valuable personal property. (b) assignment of a note. (c) buyer's personal check. (d) Any of the above
The correct answer is d: All of the choices may be the commission if agreed upon in advance.
The law of agency is concerned with the rights and duties between and among the: (a) agent and the principal, whether disclosed or undisclosed. (b) principal and third parties with whom the agent deals on behalf of the principal. (c) agent and third parties with whom the agent deals on behalf of the principal. (d) All of the above
The correct answer is d: All three choices describe the fiduciary relationship between the real estate agent and the principal.
Real estate commissions may be paid the form of: (a) a note. (b) stock. (c) cash only. (d) anything of value.
The correct answer is d: Although it is true that most real estate commissions are paid in the form of cash (check), it can be "anything of value" so long as that value is defined and agreed upon by all parties to the transaction.
An attorney-in-fact can best be described as a(n): (a) person casually granted the power to act as a principal for another. (b) properly authorized party who is acting as a dual agent. (c) attorney appointed by the court to administer an estate of a deceased person. (d) person authorized to act on behalf of another person by a power of attorney.
The correct answer is d: An attorney-in-fact is a person authorized to act on behalf of another person, but not necessarily authorized to practice law, e.g. a person authorized to act by a power of attorney. An attorney-in-fact is a fiduciary.For example, Person A might give a power of attorney to Person B that allows Person B to manage Person A's bank accounts. In this example, Person A is the principal, and Person B is the attorney-in-fact.
Which of the following types of sales requires a disclosure that the sales commission is negotiable? (a) 30-unit apartment complex (b) Commercial property (c) Industrial property (d) 1-4 unit residential property
The correct answer is d: B & P Code § Section 10147.5 is now operative. It reads: 10147.5(a)-Any printed or form agreement which initially establishes or is intended to establish or alters the terms of any agreement which previously established a right to compensation to be paid to a real estate licensee for the sale of residential real property containing not more than four (4) residential units, or the sale of a mobile home, shall contain the following statement in not less than 10-point boldface type immediately preceding any provision of such agreement relating to compensation of the licensee.NOTICE: THE AMOUNT OR RATE OF REAL ESTATE COMMISSIONS IS NOT FIXED BY LAW. THEY ARE SET BY EACH BROKER INDIVIDUALLY AND MAY BE NEGOTIABLE BETWEEN THE SELLER AND BROKER.
A real estate licensee who misrepresents a property to a buyer while acting as agent for the seller, may face: (a) disciplinary action by the Department of Real Estate. (b) civil action. (c) criminal action. (d) All of the above
The correct answer is d: Even though a real estate agent is representing the seller, he/she must still be fair and honest to all the parties to the transaction. Misrepresenting the property to the buyer may subject an agent to choices (a), (b), and (c).
A listing agent received two offers in the morning and immediately presented the offers to the seller. In the evening the agent received two more offers, both with a lower price. What should the agent do? (a) Don't present the evening offers to the seller because the offers were low. (b) Wait until the seller has made a decision on the morning offers before presenting the evening offers. (c) Wait until the next day to present the lower evening offers. (d) Let the seller know of the two new offers immediately.
The correct answer is d: Even though it is a temptation to favor the higher offers, it is the listing agent's fiduciary duty to notify the buyer of the new offers immediately.
Nondisclosure of a dual agency by a broker can result in: (a) contract rescission. (b) loss of commission. (c) disciplinary action. (d) Any of the above
The correct answer is d: Failure to disclose a dual agency can result in rescission of the contract. The agency may also lose his/her commission and be subjected to disciplinary action by the Department of Real Estate.
An agency relationship may be created by: (a) agreemment. (b) ratification. (c) estoppel. (d) All of the above.
The correct answer is d: Most agency relationships are created by written agreement. An agency relationship can also be created by ratification (consenting to acts of the agent), and estoppel (principal stopped from denying an inconsistent position in the representation).
An agency relationship may be created by all of the following EXCEPT: (a) an oral agreement. (b) necessity or emergency. (c) subsequent ratification. (d) subornation.
The correct answer is d: Subornation (suborn) means to bribe or induce someone to unlawfully (or secretly) perform some misdeed or to commit a crime. (Don't confuse this with subordination.) The other answers are methods by which agencies may be created
The Real Estate Commissioner may fine a broker which of the following amounts for illegal payment of commission to an unlicensed person: (a) $100.00 (b) $1,000.00 (c) $10,000.00 (d) None of the above
The correct answer is d: The Commissioner does not levy fines. This is done by the court. The Commissioner may temporarily suspend or permanently revoke the license of a real estate licensee for such illegal payment of commission.
An agent becomes the agent of the seller when both the seller and the agent sign: (a) The purchase agreement (b) The Transfer Disclosure Statement (c) The Agency Disclosure Statement (d) The Listing Agreement
The correct answer is d: The Listing Agreement creates the agency relationship between the seller and the listing agent
Which of the following statements does NOT correctly describe a fiduciary? (a) A fiduciary owes loyalty to the principal. (b) A fiduciary must conform to the principal's legal instructions. (c) A fiduciary is an agent. (d) A fiduciary is a neutral third party.
The correct answer is d: The broker has a fiduciary duty to work in the best interest of his/her client.
In the case of a sale of property where the deceased died without leaving a will, the commission would be set by: (a) the administrator. (b) the attorney. (c) the California Code of Civil Procedure. (d) court order.
The correct answer is d: The court referred to would be the probate court.
Broker Adams represents a buyer in a single-family home transaction. As an incentive, he agreed to rebate part of his commission to the buyer. Broker Adams is required to: (a) notify the seller of the rebate. (b) notify the Real Estate Commissioner of the rebate. (c) notify the Internal Revenue Service of the rebate. (d) notify no one as this is a financial matter that affects only the broker and the
Your answer: (a) is correct. Failure to disclose to the seller that the buyer will receive any part of the commission may subject the broker to disciplinary action under B & P Code § 10176(a). This section declares such action to be "substantial misrepresentation." A monetary inducement given to the buyer is a material fact and could affect the seller's negotiation.
A Buyer is interested in a property. Buyer calls Broker to see if she has a listing on the property. Broker says no, but that the owner is a client. Broker calls the owner to secure a listing and to let the owner know that she has a buyer. The owner says the property is not for sale. Two weeks later, the owner sells the property to the buyer. (a) Broker is not entitled to a commission for her efforts (b) Broker is entitled to 50% of the commission for her efforts (c) Broker is entitled to all of the commission for her efforts (d) Broker must share commission with the buyer, who found the property on their own.
Your answer: (a) is correct. In this case the buyer found the property on their own and wasnt a buyer of the broker. Without an existing buyer-agency relationship with the Broker, the Broker is NOT entitled to a commission as the broker did not establish procuring cause to the sale.
When a licensee is acting as the buyer's agent, this fact must be disclosed to others: (a) as soon as is practicable. (b) after the offer has been presented and accepted. (c) when the loan is funded. (d) after the licensee receives a commission.
Your answer: (a) is correct. The form of agency relationship must be disclosed as soon as practicable.
If you are a subagent of the listing broker, you are working for the: (a) buyer. (b) seller. (c) listing broker. (d) lender.
Your answer: (b) is correct. "Subagent" means a person to whom an agent delegates agency powers. However, "subagent" does not include an associate licensee who is acting under the supervision of an agent in a real property transaction.The marketing of real property by real estate agents is often a cooperative effort. The listing broker usually makes an offer of compensation to a cooperating broker (subagent) by placing the property on the Multiple Listing Service. Some MLS's make the offer of subagency automatic, while for others, the offer of subagency is optional and requires an affirmative act by the listing broker. If the principal (seller) specifically authorizes his/her broker to appoint a subagent and thus establishes a new contractual and fiduciary relationship, the subagent represents the principal in the same manner as the listing broke
What type of agency allows a broker to sign for a principal when there is an emergency? (a) Agency by Ratification (b) Agency by Necessity (c) Agency by Estoppel (d) Implied Agency
Your answer: (b) is correct. Agency by necessity is an agency created by an emergency arising from a situation making it necessary or proper for the agent to act without receiving the sanction or authorization of the principal, in order to prevent harm to the principal. It arises when a duty is imposed on a person to act on behalf of another apart from contract and to prevent irreparable injury. For instance, if a property is damaged by fire while the owner is out of town, another party may temporarily be called in to act as their agent until the owner returns or is able to provide instruction. The doctrine of agency by necessity is confined to fairly narrow limits by the courts.
A real estate commission is usually based on the: (a) listing price. (b) selling price. (c) down payment. (d) loan amount.
Your answer: (b) is correct. Real estate commissions are usually based on a percentage of the selling price.
All of the following are essential to the creation of an agency relationship, EXCEPT: (a) competent parties. (b) agreement to pay consideration. (c) agreement between principal and agent. (d) fiduciary relationship.
Your answer: (b) is correct. The payment of consideration need not be involved in an agency relationship. One may gratuitously undertake to act as an agent and will be held to the standards of agency upon assumption of those duties.
The maximum commission a broker may charge for the sale of residential property is: (a) set forth in the Real Estate Law. (b) determined by the broker's contract with his principal. (c) six percent of the total sales price of a residence. (d) determined by local custom.
Your answer: (b) is correct. There is currently no law which controls what amount may be charged by the broker. Therefore, it is set by agreement between the parties.
Select the choice which most nearly represents "price fixing" from the following: (a) A broker instructing his employees not to accept listings for less than a 6% commission. (b) A broker casually mentioning, during a luncheon with several other brokers from other offices, that his office is planning to decrease the minimum office commission from 6% to 5%. (c) At the request of a cooperating agent, the listing broker tells the cooperating agent the amount of compensation on an exclusive right to sell listing taken by one of his salespeople. (d) Advertising the amount of commission your office charges.
Your answer: (b) is correct. There is no such thing as an "innocent" discussion of commissions or fees between or among competing brokers and the law views this as price fixing. As a company policy, a broker may set a commission schedule for his/her own employees
Who is more likely to earn the commission? (a) The one who communicated the offer to the seller. (b) The one who communicated the seller's acceptance of the offer to the buyer. (c) The one who secured the biggest down payment from the buyer. (d) The one who secured the offer.
Your answer: (b) is correct. Until the seller's acceptance is communicated to the buyer, there is no contract. Therefore, the one who communicates the seller's acceptance to the buyer is more likely to earn the commission.
A listing broker wants to give $50 to a buyer and $50 credit against his commission to a buyer or seller who either lists with him or purchases one of his listings. With regard to his actions: (a) it is permissible to give $50 to the buyer but not the seller. (b) it is permissible to give $50 to the seller only. (c) it is permissible to give $50 to the buyer and to credit his commission with the seller. (d) it is against the real estate law to give $50 to either the buyer or the seller.
Your answer: (c) is correct. It is permissible for a listing broker to rebate a portion of his/her commission to the buyer or seller as long as the rebate and/or credit is disclosed to all parties.
Owner Johnson tells broker Stone that he wants to sell his house as soon as possible and would accept $350,000. Stone tells buyer Smith that Johnson has financial troubles and will accept a much lower price, possibly as low as $300,000. Johnson, ultimately, accepts an offer from Smith for $300,000. Broker Smith is guilty of: (a) nothing, since his job is to find a buyer no matter what. (b) violating the fiduciary duty to buyer Smith. (c) unethical behavior, but not a serious breach of his fiduciary responsiblity to Johnson. (d) unethical behavior and a violation of the fiduciary responsibility.
Your answer: (d) is correct. Broker Stone's actions are a clear violation of his fiduciary responsibility to the seller. This would also be a violation of the Realtors Code of Ethics since the seller did not authorize broker Stone to disclose such information to the buyer. If broker Johnson's financial troubles were in fact true and he authorized broker Stone to inform the buyer of such, it would not be a violation.