Laws of Agency
Which is NOT required in an open listing? A. Signature of the principal B. Definite termination date C. Agreed upon commission or fee D. Description of the property
B. Definite termination date
Two brothers own separate real estate companies, but agree to divide their received commissions equally. Broker A pays for three-fourths of the advertising costs and finds the buyer. Broker B pays for one-fourth of the advertising costs. If the total commission on the sale is $4,500, how much does Broker B receive?
$2250
Broker Lynch has an exclusive listing to sell Jones' hardware store for a $4,500 commission. He took another exclusive listing to sell Brown's grocery store for a $5,000 commission. With the consent of Jones and Brown, Lynch arranges an exchange of these two stores. How much will Lynch make from this exchange?
$9500
A broker accepts an exclusive right-to-sell listing. However, the property is later sold by another broker. How many brokers could be owed a commission by the principals in this transaction?
2
A person who enters into a brokerage relationship with a licensee is:
A client
A broker has an exclusive right-to-sell listing, but the seller finds his own buyer while the listing is still in force. The broker is entitled to:
A full commission
A broker lists a property. A buyer submits a written offer and the seller accepts it. On the date scheduled for closing, the seller refuses to sign any of the papers. The broker is entitled to:
A full commission because he fully performed
Which of the following persons would likely NOT be an agent? A. A real estate salesperson handling referrals only 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
A person working for a multiple listing service
Which of the following facts MUST a broker disclose to his seller? A. Minorities are buying homes in a neighborhood where the seller wants to later buy property B. A prospective buyer intends to violate deed restrictions that run with the land C. A prospective purchaser (who asked the seller to hold a purchase money mortgage) has a history of bad credit D. A prospective purchaser is a member of a particular minority race
A prospective purchaser (who asked the seller to hold a purchase money mortgage) has a history of bad credit
A special agency empowers the agent to perform:
A specific act
Which of the following choices would terminate a buyer-broker agreement?
Abandonment, Time, and Agreement
An owner is listing his rental property with a broker. Based on past experience, the owner thinks that females cause less damage. He therefore tells the broker that he only wants to rent to females. What should the broker do?
Advise the owner that this restriction is illegal
A sales agent obtains an exclusive right-to-sell listing. What is the sales agent's relationship with the broker and the seller?
Agent of the broker and sub-agent of the seller
A broker obtains an open listing on a piece of property. In order to collect a commission on the sale, he must prove which of the following details? Select one: A. He was licensed at the time of the sale B. He was engaged by the owner at the time of the sale C. He was the procuring cause of the sale D. All of the above
All of the above
A buyer-broker agreement should address which of the following items?: A. Commission B. Services offered C. Obligations D. All of the above
All of the above
Buyer-broker agreements could be: A. Oral B. Executory C. Unassignable D. All of the above
All of the above
How can an agency relationship be created? A. In writing B. Implicitly C. Orally D. All of the above
All of the above
Salesperson Sam works for Broker Betty. Betty enters into a listing agreement with Cheryl the Seller. Which term best describes these relationships? A. Subagency B. General agency C. Special agency D. All of the above
All of the above
A broker wants to be compensated if anyone else sells his listed property during the listing period. What type of listing should the broker acquire?
An exclusive right-to-sell listing
A broker could act as a fiduciary in all of the following functions, EXCEPT: A. Leasing property B. Selling property C. Appraising property D. All of the above
Appraising property
A listing agreement can be terminated by all of the following circumstances, EXCEPT: A. Mutual consent B. Revocation by the principal C. Death of the salesperson D. Performance of the requested act
Death of the salesperson
Jon lists his home with Paul. Salesperson Rupert finds a ready, willing, and able buyer for Jon's home. This situation could involve all of the following agency relationships except: A. Single agency B. Dual agency C. Designated agency D. None of the above could be involved
Designated agency
A broker shows one of her listings to a prospective buyer. The broker knows that the listed property borders a toxic waste dump, as identified by the EPA. The broker should:
Disclose the information because it is material
A seller lists her house with a broker for $189,500. The seller tells the broker that if necessary, she will accept $185,000. What may the broker do when showing the property to prospective buyers?
Disclose what the seller will accept, with the seller's permission
In order for a dual agency to be legal, it must be:
Disclosed in writing and agreed upon prior to negotiations
A person engaged to act in place of another by contractual agreement is:
Either principal or an agent
A seller wants to list a property with a broker, but hopes to sell it herself in order to avoid a commission. Which listing agreement should the seller NOT sign? Select one: A. Open listing B. Exclusive agency listing C. Exclusive right-to-sell listing D. General listing
Exclusive right to sell listing
What would NOT terminate an agency agreement by operation of the parties?
Expiration of Time
A seller tells a broker that she wants him to sell her house. This agreement is:
Express
Mr. Foster signed a 60 day exclusive right-to-sell listing with Broker Ruotolo. One week later, Foster signed an exclusive agency listing with Broker Gary, who sold the home a few days later. Assuming the agreements are valid, which of the following statements is correct? Select one: A. Foster must only pay Ruotolo B. Foster owes two full commissions C. Foster must only pay Ruotolo, and Ruotolo will split the fee with Gray D. Foster should give Ruotolo and Gray one half of the commission
Foster owes two full commissions
Mr. Gregory is selling his house and puts a "FOR SALE BY OWNER" sign in the yard. Salesperson Gary calls, identifies himself, and asks for the key to show the property. Mr. Gregory agrees. What would best describe the relationship between Mr. Gregory and Gary?
Gary's broker is the agent of Mr. Gregory for a reasonable time
After the death of his wife, a property owner lists his property with a broker. Two days later, the owner sells the property himself, but is NOT obligated to pay a commission to the broker. What type of listing agreement did he most likely sign?
General
Seller Chaney rejects three offers, all of which were $2,500 below the list price. Broker Rudy receives a fourth offer which is also $2,500 below the list price. What should Rudy do?
Give Chaney another offer that she is sure to reject
Barnwell lists property with Broker Bob, and Bob assigns the transaction to Salesperson Ben. Ben shows the property. He quickly receives an offer and earnest money check from Billy. However, Barnwell cancels the listing agreement two days later, before Ben has time to act. What should Ben do with the earnest money that he received with the offer to purchase?
Give it to Bob
What should a salesperson do with the earnest money deposit she receives from a buyer?
Give it to their broker
A real estate salesperson may legally accept extra commission on a difficult sale from:
Her broker
Salesperson Lynch found a home for a buyer, who agreed to pay a commission for this service. After closing, Lynch will receive his commission from:
His broker
An escrow account is maintained by a broker for the purpose of:
Impartial protection of both parties
A seller agrees to split all commission between the brokerage firm and his unlicensed brother. This agreement is:
Impermissible, unless the brother is licensed
A selling broker is showing a parcel of property and tells the prospective buyer: "In my expert opinion, this property is the best for you." This statement could be interpreted as:
Implied agency
A broker takes a listing and the owner later tells him that the roof leaks. Further, the owner states that she will not repair the roof, even if the house is sold at full price. The broker must:
Inform any prospective buyer of the condition of the roof
The listing broker discovers that a property's value has been adversely affected by proposed construction of a new power plant. She must:
Inform the seller and inform the buyer
A salesperson lists a home, but the house burns down prior to receiving an offer. Which of the following statements is true for the situation? A. The listing remains in effect B. The broker is entitled to a commission based on the listed price C. All advertising must be revised to accurately describe the property D. The listing automatically terminates
Listing automatically terminates
The zoning commission has proposed a change that would dramatically impact the subject property in a broker's listing agreement. This information:
Must be promptly disclosed to all parties
The commission received by a broker who is a member of a multiple listing service is:
Negotiated between broker and seller
In which type of listing is the commission least likely to be expressed in terms of a percentage?
Net listing
Which of the following listing agreements is LEAST likely to specify a commission rate? A. Open listing B. Net listing C. Exclusive agency D. Exclusive right-to-sell
Net listing
Wally Wells, a licensed salesperson, listed Parcel A under an open listing agreement and Parcel B under an exclusive right-to-sell listing agreement. Both listings expired. Three days later, the two owners exchanged properties. Wally will receive:
No commission so long as Wally was not the procuring cause
Who represents the buyer in the traditional real estate transaction?
No one
Henry enters into an exclusive right-to-sell listing agreement with Bob the Broker. The parties agree upon a 6% commission. Bob presents an offer to Henry, which he accepts. At closing, Henry discovers that the customary commission is 3%. Feeling as if he was taken advantage of, Henry refuses to pay Bob any more than a 3% commission. Is the listing still effective?
No, because Bob produced a ready, willing, and able buyer
Seller Pruitt signed an exclusive right-to-sell listing with Broker Cook. The listing includes a 7% commission and a clause which states that this agreement is in effect until the house is sold. Is this legal?
No, because the term is potentially indefinite
Susan and Sally enter into a buyer-broker agreement. However, Sally subsequently falls on hard times. Susan gets nervous and terminates the agreement. Is Susan in breach?
No, if Sally filed for bankruptcy
A real estate broker wishes to deposit an earnest money check in his business operating account in order to receive a higher interest rate on the purchaser's funds. Is he legally allowed to do this?
No, these funds must be placed in a separate escrow account
A listing broker is showing property near a toxic waste dump. The broker does not tell a prospective buyer about the dump. By withholding this information, the broker is negligent in his fiduciary duty of: A. Obedience B. Loyalty C. Accounting D. None of the above
None of the above
A salesperson wishes to charge a reduced commission to her sister. Where would the salesperson obtain approval for such an arrangement? A. State Association of Realtors B. Local Association of Realtors C. State Real Estate Commission D. None of the above
None of the above
An owner lists a home with a broker for $72,000. Two days later, the broker brings in an offer for $70,000. At this time, which of the following statements is true?
None of the above
Susan has a listing agreement with Tom to sell his house and an adjoining lot. Susan sells Tom's house to Pete. Before closing, Susan also negotiates a valid option contract with Pete for Tom's adjoining lot, which is listed at $150,000. When will Susan earn her commission on the adjoining lot? A. When the sale on the home closes B. When the option period expires C. Upon Tom's acceptance of Pete's offer of the option D. None of the above
None of the above
Randy buys a house, using a VA loan to finance the purchase. The listing broker and selling broker split the commission at a 75/25 ratio. If the Department of Veteran's Affairs learns about the arrangement between the brokers, what will they do?
Nothing
Agency relationships include all of the following duties, EXCEPT: Select one: A. Obedience B. Notice C. Confidentiality D. Accounting
Notice
If a salesperson lists a property, she CANNOT be:
Only a buyer's agent
If an owner gives a listing to more than one broker, it would most likely be which type of listing?
Open listing
An owner entered into a valid listing agreement. During the agreement period, the seller sells the property himself. The seller is not legally required to pay a commission to any broker. What type of listing agreement did the seller have?
Open listing or an exclusive agency
What type of penalties are imposed for Federal Fair Housing violations? A. Up to two years in jail B. Up to $5,000 in fines C. Order to correct the violation D. All of the above
Order to correct violation
Under the usual listing agreement, a salesperson can:
Place a "For Sale" sign on the property
The relationship between a seller and a listing broker is that of a(n):
Principal and agent
A salesperson takes a 90 day exclusive right-to-sell listing on April 1st, but moves out of the area on May 15th. His license placed on inactive status on June 1st. This listing would:
Remain in effect
Ralph is an independent broker. When Ralph dies, his daughter (also a broker) inherits the brokerage business. If she intends to operate the firm and keep her father's listings, it is necessary that she:
Renegotiate Ralph's current listings
Puckett lives in Tennessee, but owns property in Virginia. She hires Samuels, a broker in Virginia, to sell that property for $75,000. Samuels knows that this property is worth considerably more since the zoning for the property was recently changed to commercial. Samuels buys the property himself and re-sells it two weeks later for $125,000. Which of the following statements is true?: A. Samuels cannot act for someone from Tennessee unless he has a Tennessee real estate license B. This may be unethical, but Puckett got the asking price and therefore suffered no loss C. Samuels can only purchase the property after informing Puckett of the zoning change D. Samuels cannot purchase the property under any circumstances
Samuels can only purchase the property after informing Puckett of the zoning change
A broker executes a listing agreement with her client. The broker subsequently learns that the property is in foreclosure. Which of the following choices is the broker's best course of action? Select one: A. Sell the property before the foreclosure is completed B. Advise all prospective buyers of the pending foreclosure C. Rescind the listing D. Buy the property quickly
Sell the property before the foreclosure is completed
A property is listed at $68,000. The Broker presents the seller with a full price offer that is made without contingencies. In this situation, which of the following statements is correct? A. The seller must accept the offer B. The seller is not obligated to pay the commission C. The seller may refuse to sell D. Fair Housing Laws don't apply
Seller may refuse to sell
The legal relationship between broker and seller is generally:
Special agency
It would NOT be considered commingling of funds if:
The broker holds an earnest money check, as requested by the offeror, until acceptance by the offeree
Salesperson Kelly takes a 90 day exclusive listing to sell Murphy's home. Three weeks later, Kelly moves out of the area and puts her license on inactive status. Which of the following statements is true about the listing? A. The exclusive listing becomes an open listing B. The listing remains effective C. The listing is voidable by Murphy D. The listing is automatically terminated
The listing remains effective
A listing agreement must contain all of the following pieces of information EXCEPT: Select one: A. The signature of the owner of the property B. The percentage of commission or fee C. An expiration date D. The proceeds due to the seller from the sale
The proceeds due to the seller from the sale
Which of the following statements is true about an open listing? A. The commission is split between all brokers that have an open listing for the property B. The seller only pays the broker who produces a ready, willing, and able buyer C. No more than two brokers may attempt to sell the property D. If the owner sells the property, she owes a commission to the broker that took the listing first
The seller only pays the broker who produces a ready, willing, and able buyer
The law of agency can include relationships between principals, agents, and:
Third parties
Which of the following items is the listing agent NOT required to disclose? A. To the seller: that the potential buyer is having financial problems B. To the seller: that the state plans to build a new highway near the property C. To the buyer: that they property is subject to seasonal flooding D. To the buyer: that the seller is going through a divorce
To the buyer: that the seller is going through a divorce
A general agency empowers the agent to:
Transact the client's affairs in a certain business
Which of the following actions would be a violation of anti-trust laws? A. Two brokers agree to only market their services 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 firm has some salespersons working as independent contractors and others working as employees
Two brokers agree to only market their services in specific areas of the community
All of the following are examples of dual agency except: A. Broker representing buyer and seller, with consent of both B. Escrow agents C. Broker representing both buyer and seller, without consent of either D. Two salespersons in a firm represent a different buyer and seller
Two salespersons in a firm represent a different buyer and seller
Two brokers agree to charge the same commission rate on all property listed by their offices. Such an action:
Violates anti-trust laws
When must a licensee disclose agency relationships?
When the licensee has substantive discussions about specific property
When does a broker earn commission?
When the offer to purchase has been signed and accepted by the seller
Wilma lists her house with Broker Fred under an exclusive right-to-sell agreement. Fred later abandons the listing. Which of the following statements is true about this situation? 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
Wilma may terminate the listing
Seller Corcoran is in very poor health and cannot work on his farm anymore. Corcoran's broker discloses this fact to prospective buyers. Has the broker done anything wrong?
Yes, because it is not a mandated disclosure and is contrary to Corcoran's interest
Jill lists her property with Broker Joe. After much hard work, it looks as if the property will finally sell. However, Broker Joe files for bankruptcy before the property actually does sell. Jill becomes nervous and seeks to terminate the listing agreement. May Jill terminate the agreement without breaching the contract?
Yes, because she is legally justified
Seller Smith signs a listing with Broker Jones to sell a parcel of land for $65,000. While Smith is out of the country, the Mayor announces a development plan that will include Smith's land (causing it to double in value). Jones sells the property for $65,000 without telling Smith about the development. Has Jones breached his fiduciary duties?
Yes, because the information is material
Dan and Daisy enter into a buyer-broker agreement. Dan believes that Daisy is in breach. May Dan terminate the contract?
Yes, but Dan risks causing a breach himself
Jon and Jacob are parties to a valid agency agreement. One day, Jon wakes up and decides that he no longer cares for Jacob's personality. Can Jon terminate the contract?
Yes, regardless of whether Jon is the client
Broker John and Buyer Jenny enter into an exclusive buyer agreement. However, Jenny finds a suitable property on her own. After Jenny purchases the property, John demands his commission. Must Jenny pay John a commission?
Yes, so long as Jenny purchased property similar to the one described in the agreement
A salesperson represents the:
listing broker
Which circumstance would terminate an agency by operation of law? A. Mutual agreement B. Unilateral rescission C. Bankruptcy of the seller D. Abandonment by the broker
Bankruptcy of the seller
By virtue of a signed listing agreement, the broker will generally have authority to do all of the following actions without the seller's consent, EXCEPT: Select one: A. Use the services of another broker B. Use the services of the salespersons in his own brokerage firm C. Use the MLS to market the property D. Bind the seller to a full price offer
Bind the seller to a full price offer
Buyer Billy and Broker Bobby enter into a buyer-broker agreement. Billy grows increasingly suspicious of Bobby's abilities. After two weeks pass without being shown a satisfying property, Billy revokes the agreement. All of the following statements could be true about this action, except: Select one: A. Billy was justified because Bobby was in breach B. Billy was in breach C. Billy owes Bobby for damages D. Bobby could sue for specific performance
Bobby could sue for specific performance
Under contract as a property manager, the broker is: A. A special agent B. A fiduciary C. A general agent D. Both B and C
Both fiduciary and general agent
A broker can do which of the following actions? Select one: A. Accept, of behalf of the seller, a promissory note as an earnest money deposit B. Accept, of 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
Buy and sell property in his own name
All of the following statements are true of buyer-broker agreements, except: A. Buyer-broker agreements cannot be assigned B. Buyer-broker agreement terms may be disclosed to customers C. Buyer-broker agreements may be created verbally D. The salesperson is not a party to the agreement
Buyer-broker agreement terms may be disclosed to customers
A seller entered into a valid contract with a buyer. Afterwards, the seller realized that his broker is also representing that buyer. The seller has a right to:
Cancel the contract without obligation to either buyer or broker
Casper is selling his house and wants the broadest possible exposure. Therefore, he gives an exclusive right-to-sell listing to Bert, an exclusive agency listing to Gail, and an open listing to Mark. Mark sells the property. Assuming that all of these listings are valid, which of the following statements is true? A. Mark must split his commission with Bert and Gail B. Casper owes 2 commissions, one to Mark and one to be split between Bert and Gail C. Casper owes 3 commissions D. Only Mark earned a commission
Casper owes 3 commissions
A buyer-broker agreement may arise by all of the following means, except: A. Express agreement B. Ostensible agreement C. Custom D. None of the above are valid
Custom
