UNIT 2: AGENCY UNIT QUIZ

Which type of agent has the greatest authority? A. general agent B. special agent C. universal agent D. All have equal authority.

C. A universal agent has the authority to do everything that a principal could do by himself. Real estate agents are rarely universal agents.

What duty is an agent breaching when she appears to be advocating for the customer? A. accountability B. disclosure C. loyalty D. obedience

C. Agents must be loyal to clients, not customers.

A broker takes a listing from a seller. In the third month of the listing the sellerhad a fatal heart attack. Regarding the listing agreement, which statement is TRUE? A. The broker must disclose if the seller had the heart attack at the listing. B. The broker must now reduce the price. C. The broker must remove the sign and the lockbox. D. The heirs must work with the broker to get the estate sold.

C. By operation of law, once the client or broker in an agency relationship dies the agency ends.

Which information obtained from the client CANNOT be kept confidential? A. The boundary line of the property subject of the transaction is in dispute. B. The current resident of the property was diagnosed with HIV/AIDS. C. A murder of a previous resident occurred on the property three years ago. D. The neighboring property is a group home for developmentally disabled adults.

A. A boundary line dispute is a physical condition of the property that must be disclosed by law.

Which is NOT a potential consequence of undisclosed dual agency? A. criminal prosecution B. liability for damages due to a rescinded transaction C. loss of license D. loss of a commission associated with the transaction

A. The risks a sponsoring broker and affiliated agent face for acting as undisclosed dual agents does not include criminal prosecution, but other disciplinary action is possible.

Identify the activity that is NOT considered a ministerial act. A. Broker Amy attends an open house and responds to buyer Bob's questions about a property. B. Broker Carrie advises her client Davis to have a property inspection. C. Broker Ethan makes an appointment to show a house to buyer Fritz. D. Broker Gwyneth goes along with Hannah, the home inspector, on her visit to seller Ivan's property.

B. Broker Carrie is advising her client, which is not considered a ministerial act. The other circumstances are examples of ministerial acts.

A listing agent listed a property for a term of six months from the beginning of the listing. Six months have now passed. How did the listing terminate? A. accomplishment of purpose B. expiration C. mutual release D. operation of law

B. Expiration is when the end of the listing term arrives.

The fiduciary duty of loyalty requires that the agent A. arrange financing for the buyer. B. hold the principal's interest above all other interests. C. look out for his own interest first. D. obey each and every request of the principal.

B. The broker putting self interest above the client's may be held liable for selfdealing, and is breaching the obligation of loyalty.

A broker has a policy that agents will not be dual agents when the agents sell their own listings. Which would a potential buyer be to the listing agent if the buyer wants to buy the agent's listing? A. agent B. client C. customer D. designated client

C. A dual agent is a broker who represents both buyer and seller. The customer is the party in the transaction that is not represented.

What is the most common way to create an agency relationship between a home seller and a broker? A. buyer-broker agreement B. by implication C. listing agreement D. oral contract

C. A listing agreement is an employment contract that creates an agency relationship between a seller and a broker.

Kevin is looking for a house and calls agent Guy about a listing he saw on a yard sign. At this point, Kevin just wants to learn a little bit about the house. Which question would most likely trigger the need to present agency disclosure? A. How big is the lot? B. How many bedrooms are in the house? C. How quickly might the owner want to close? D. What's the asking price?

C. Of these questions, discussing the timeframe for settlement or the seller's motivations is most likely to lead to a discussion of Kevin's particular needs. The other questions simply require a factual answer.

Joan has power of attorney to care for all aspects of her sister's life while her sister is serving in the military overseas. She handles her bills, signs legal papers, and even took on the task of selling her sister's house. Which type of agency does this represent? A. general agency B. limited agency C. special agency D. universal agency

D. Joan is a universal agent. She is authorized to do anything and everything that can be lawfully delegated to a representative.

What does an agent owe to a client that he does not owe to a customer? A. fairness B. honesty C. integrity D. obedience

D. Obedience is a fiduciary duty owed only to clients.

A sales agent has a duty to treat all parties to a transaction honestly and fairly A. in all transactions. B. only when acting as a dual agent. C. only when representing a buyer in a transaction. D. only when representing a seller in a transaction.

A. Even with a customer, an agent has to be fair and honest. With a client, the agent has even more duties.

Lori is buying a house. She talks to broker Ralph of Star Agency who explains the different agency relationships to her. Lori says she only wants buyer's agency and will not accept dual agency under any circumstances. If that's the case, which statement is TRUE? A. Ralph cannot show Lori any of his listings. B. Ralph cannot show Lori any of Star's listings. C. Ralph's sponsoring broker must be a dual agent. D. Ralph must refuse Lori as a client.

A. If Lori insists that she will not accept dual agency, Ralph cannot show her any homes he has listed for seller clients. He could show her listings from other Star Agency brokers, however, since he is her designated agent.

Of these, which termination of agency would be due to accomplishment of purpose? A. The listing broker abandons the seller before the listing period ends. B. The listing broker does not find a buyer before the listing period ends. C. The listing broker sells the house. D. The seller fires his agent before the listing period ends.

C. The most common way agency is terminated is by accomplishment of purpose, as when a listing broker sells the house.

What duty does an agent NOT owe a customer? A. fair dealing B. honesty C. integrity D. loyalty

D. Agents must be fair and honest in their dealings with customers, and should behave with integrity at all times. Loyalty is a duty that an agent owes only to a client.

Which is the best example of a special agent? A. attorney-in-fact B. landlord C. property manager D. real estate licensee

D. By definition, a special agent is one who has very limited authority and may do only one thing for the principal (e.g., find a ready, willing, and able buyer).

During a 90-day listing agreement, the seller dies. What statement is true? A. The agent can continue to show the property to any interested buyer. B. The agent's death is the only thing that would terminate the listing. C. The listing agreement can be enforced against the seller's heirs. D. The listing agreement is terminated.

D. By law, if either the seller or the broker dies, the listings are terminated. The listing is between the broker and the seller, not the agent, so the agent's death would have no effect upon the listing.

How long must an agent keep confidential information obtained from the client? A. Agents have no duty to keep information confidential. B. Agents must maintain confidentiality for three years after the transaction closes. C. Agents must maintain confidentiality only until the relationship ends. D. This duty never ends, even when the relationship does.

D. Even if the relationship ends, the duty to keep information to yourself does not end.

A property is listed with broker Barry for $200,000. He receives an offer from Gina for $150,000 cash with a closing in 90 days; an offer from Tim at $155,000, subject to the buyer obtaining a first mortgage for $130,000; an offer from Shari at $190,000 subject to the owner taking back a purchase money mortgage with closing in 30 days. Barry should disclose which offer(s)? A. all of the offers B. none of the offers, as they are all below the asking price C. only the first offer presented until the seller makes a decision to accept or reject; then the broker can reveal the next offer presented D. whichever offer is the highest and has the most favorable terms for the seller

A. The broker must disclose and present the seller with all offers to purchase the said home. It is a breach of the broker's fiduciary duties to withhold pertinent information such as multiple offers.

What information would probably NOT be considered confidential? A. the city in which a buyer wants to look B. the price range that a buyer is interested in C. the reason a seller is selling a home D. the timeframe in which a seller must sell a home

A. The city in which a buyer chooses to house hunt is not likely to be confidential. The other information, on the other hand, could have an impact on the bargaining position of a buyer or seller and would, therefore, be considered confidential.

Rick was the buyer's agent for Tina, whose offer for Jane's house was countered with an amount $10,000 below list price. This was still more than Tina wanted to pay. She found another house and bought that instead. Now Rick is buyer's agent for Herman, who wants to put in an offer on Jane's house. Can Rick tell Herman that Jane would accept $10,000 below list? Why or why not? A. No, Tina's negotiations with the seller are confidential. B. Yes, Rick has no fiduciary obligation to seller Jane. C. Yes, Rick must act in Herman's best interest. D. Yes, Rick's relationship with Tina was over when she found another house.

A. The details of client Tina's negotiations with the seller are confidential information. That fiduciary obligation never ends unless Rick is given written permission to divulge that.

An attorney-in-fact is best described as a(n) A. attorney at law. B. fiduciary to a principal. C. power of attorney. D. principal.

B. An attorney-in-fact receives authority under a power of attorney, and need not be an attorney at law. An attorney in fact is an agent for the principal and owes the principal all fiduciary duties.

Joel and Andy work for Blue Roof Realty. Joel has listed 1776 Constitution Blvd. and Andy has an interested buyer. If Joel and Andy put this deal together, then it will A. allow Joel and Andy to take advantage of what each other knows about seller and buyer. B. be an in-house deal where each client is represented individually. C. be illegal because in-house transactions are prohibited in Illinois. D. create a dual agency situation that requires written consent from buyer and seller.

B. It will be a perfectly legal in-house deal.

Margaret of XYZ Realty discloses the fair housing laws to her client; however, the client refuses to show the property to a Native American couple. Which action do you think Margaret should take? A. Margaret has fulfilled her duty by disclosing the laws to her client; no other action is necessary. B. Margaret should contact the Native American couple and inform them of her client's violation of the fair housing laws. C. Margaret should ignore her client's wishes and show the house to any potential buyer without regard to race, religion, etc. D. Margaret should inform her broker so that the broker may determine the method in which to proceed or terminate the listing.

D. A licensee must follow the laws governing the federal Fair Housing Act, even if the seller is in violation. If the listing is active, the licensee should consult with her broker so that the broker may determine the method in which to proceed or terminate the listing.

An agency relationship can be terminated by the A. agent discarding the agency disclosure forms. B. agent revoking the agency relationship. C. principal renouncing the agency relationship. D. principal revoking the agency relationship.

D. A principal revokes an agency relationship, while an agent is the party that would renounce the agency relationship.

What is another word for client? A. agent B. customer C. fiduciary D. principal

D. The client in any fiduciary relationship is the principal.

An agent is one who: A. acts, or has the power to act, for another. B. is owed a fiduciary duty. C. is represented by another. D. represents the agent of another.

A. An agent works for a principal. The person for whom the agent works is owed a fiduciary duty. A customer is not owed any fiduciary duty. A person who acts on behalf of another agent is known as a subagent.

Ken is a sponsoring broker. He contracts with licensee Barb to work for him as a broker. Barb is Ken's A. general agent. B. limited agent. C. special agent. D. universal agent.

A. Barb is a general agent in terms of her relationship to her sponsoring broker.

Which situation does NOT represent a conflict of interest? A. Alex is a disclosed dual agent, representing both buyer and seller. B. Kaye is a buyer's agent whose commission is based on the sale price of the home. C. Paul is showing his buyer client a house on which he had a prior listing. D. Susan is negotiating the purchase of a home for her client, who is also her sister.

A. Dual agency is not a conflict of interest if it is disclosed. Alex is obligated to remain completely neutral in this transaction.

The listing agreement provides that the listing broker may make an offer of compensation to other brokers to assist in finding prospects willing to purchase the seller's property. A buyer-broker accepts this offer on behalf of the buyer. In this case, the cooperating buyer-broker represents the A. buyer. B. buyer and the seller. C. listing broker. D. seller.

A. The payment of fees from one broker to another does not establish any agency relationship between them or the clients that they represent. In this instance, the buyer-broker is the representative of the buyer and is accepting a fee on behalf of the client.

Tom employs broker Lester to sell his house, promising a specified sum as commission. Without informing Tom, Lester also acts for the buyer, who also promises a commission. When Tom discovers that Lester is acting for both parties, he goes through with the deal but refuses to pay any commission. If Lester sues, is he likely to recover commission from Tom? A. No, dual agency transactions are illegal. B. No, he breached his fiduciary responsibility. C. Yes, by going through with the deal, Tom forfeits his right to object. D. Yes, Lester has properly acted as a dual agent.

B. A broker cannot represent both parties in the same transaction without being a dual agent. To attempt to represent each party independently without disclosure to do so to each party is a breach of the broker's fiduciary responsibility and a violation of the Illinois Real Estate License Act.

Broker Maeve met with buyer Sean and presented him with the required designated agency disclosure at the same time he signed a buyer-broker contract. The contract expired before Sean found a house. How long does Maeve's agency have to keep these records? A. It does not have to keep them since no transaction resulted. B. 5 years C. 2 years D. 1 year

B. Records of agency disclosure must be maintained by the sponsoring broker either electronically or in hard copy format for five years.

The Multiple Listing Service (MLS) was created so that A. all brokers could have a secure place to record a client's confidential information. B. all brokers could share listings with a blanket offer of cooperation and compensation. C. dual agency agreements and disclosures would not be necessary. D. subagency could be established through membership in the service.

B. The Multiple Listing Service was created so that all brokers could have a common place to share property listings. Subagency cannot be established through membership in a multiple listing real estate board. The other statements are FALSE.

Which event that would LEAST LIKELY trigger the requirement to disclose an agency relationship and/or present the agency disclosure form to a prospective buyer? A. discussing an offer to buy property B. providing the price of a property in response to a phone inquiry C. requesting specific financial information from the buyer D. showing a property to a buyer (except at an open house)

B. When working with a prospective buyer of real estate, the agency relationship must be disclosed at the first substantive contact but no later than certain trigger events. A phone call from someone making an inquiry about a property is not necessarily a trigger event.

Which is the best example of a general agent? A. a power of attorney given in order to transfer an automobile B. a power of attorney given to handle all dealings of a disabled person C. a property manager D. a real estate agent

C. A general agent may do anything in a specific area, such as a property manager who has the authority to handle most, if not all, tasks associated with taking care of an owner's property.

Which agency relationship requires the written consent of both parties to the transaction? A. buyer's agent B. designated agent C. dual agent D. seller's agent

C. According to Illinois law, a licensee may act as a dual agent only with the written consent of both parties to the transaction.

What duty would require an agent to limit showings to a one-hour block on Sunday mornings if the seller insists? A. accountability B. loyalty C. obedience D. The agent would actually be in breach of the duty of reasonable care if he did not make every appropriate effort to market the property.

C. Agents must obey their clients' lawful instructions.

What acronym can be helpful for remembering the basic fiduciary obligations? A. BAD CAT B. NEW CAB C. OLD CAR D. RED DOG

C. Basic fiduciary obligations include obedience, loyalty, disclosure, confidentiality, accountability, and reasonable care: OLD CAR.

If your buyer client wants to submit an offer on one of your own listings, you are a(n) A. buyer's agent. B. designated agent. C. dual agent. D. open agent.

C. If you represent both buyer and seller, you are a dual agent. Remember that dual agency requires written permission from both parties.

Felicia is a buyer's agent for Kevin. She sees a "For Sale By Owner" sign in front of Ron's house that indicates a 3% commission would be paid to any broker who procures a buyer. If Kevin makes an offer on that house through Felicia, what is seller Ron's relationship to Felicia? A. agent B. client C. customer D. principal

C. In this scenario, agent Felicia exclusively represents the buyer, Kevin. Ron, the seller, is representing himself and is therefore Felicia's customer.

Listing broker Dan includes an offer of cooperation to be a broker's agent in the MLS, and broker Sylvia accepts. When Fred, one of Sylvia's agents, refuses to show the house to a minority, who could NOT be held liable? A. Dan, the listing broker B. Fred, Sylvia's agent C. Steve, the seller D. Sylvia, the broker's agent

C. In this situation, the seller does not have liability for the actions of a broker's agent or her affiliated licensees.

Agent DeeDee has a 60-day buyer broker agreement with Melanie. The agreement states that DeeDee will vigorously pursue finding a house for Melanie. A month into the agreement, DeeDee goes on a two-week cruise. It's clear to Melanie that DeeDee has neglected and abandoned her. This could be an example of termination of agency by A. expiration. B. mutual agreement. C. renunciation. D. revocation.

C. Terminating agency through renunciation means that someone who was granted something later rejects it. In this case, DeeDee was granted to right be Melanie's agent, and you could say that her neglect and abandonment was a rejection of that right.

In Illinois, a real estate agent who works for the seller must provide an agency disclosure form to a prospective buyer A. after first receiving confidential information. B. after the first property showing. C. at the first substantive contact. D. once the buyer wishes to make an offer on the property.

C. The agent working for the seller has the duty to disclose agency relationship in order to eliminate confusion or mistake. The disclosure of agency relationship should be provided at the first substantive contact (i.e., before any property showings or receiving confidential information).

An agency relationship can be terminated legally without recourse under what circumstance? A. the agent becomes mentally incompetent B. the buyer dies C. the listing broker dies D. the listing agent dies

C. The listing broker is the agent of record in a listing. A listing is an employment agreement; therefore, when an employee dies, the agreement is void. This is not the salesperson's listing; the listing belongs to the broker of record in every transaction, not to the agent.

Joe's real estate brokerage practices designated agency. One of his agents brings Joe a listing agreement with a seller. Another of his agents brings Joe a brokerbuyer contract with a potential buyer for that property. As sponsoring broker, what type of relationship does Joe have with the seller? A. designated agent B. dual agent C. seller's agent D. selling agent

C. The sponsoring broker is the one with whom the seller creates an agency agreement. He also appoints licensees as designated agents for his clients.

Sponsoring broker Greg practices designated agency at the outset of every agency agreement. Kim and Jeff are both brokers working for Greg. Kim has a buyer client interested in Jeff's listing. Who is a dual agent in this scenario? A. Greg only B. Greg, Kim, and Jeff only C. Greg and every one of his other affiliated licensees D. no one

D. If Kim was immediately designated as the buyer's agent, and Jeff was immediately designated as the seller's agent, no one would be considered a dual agent.

Pam, a broker at Rob Realty, is the listing broker for Brian's house. Mary sees the house on Rob's website and calls Greg, another broker for Rob, to see if he'll show her the house. At this point, who does Greg have an agency relationship with? A. Brian, Pam's client B. Mary, his customer C. Pam, the listing broker D. Rob, his broker

D. In this situation, Greg is an agent of his employing broker, Rob. He has no fiduciary obligation with anyone else in this scenario at this point.

Who could NOT be a selling agent? A. buyer's agent B. dual agent C. listing agent D. All of these could be a selling agent.

D. The selling agent is the one who procured a buyer. Any of these could be a selling agent.