LESSON 7: Real Estate Agency

Which of the following statements about dual agency is false? a. dual agency is created automatically in an in-house transaction b. dual agency is illegal in Washington c. dual agency is widely discouraged because of the inherent potential for conflict of interest d. dual agency requires comprehensive disclosure to both parties the agent is representing

dual agency is illegal in WA

A real estate broker who has taken a listing discovers that the dining room ceiling is discolored, possibly because of a leaky roof. What should he do? a. disclose the potential problem to prospective purchasers b. say nothing to the buyer because of his duty of loyalty to the seller c. disclose the roof problem to the seller, but not the buyers d. withdraw from the listing

Disclose the potential problem to prospective purchasers

The most likely evidence of environmental contamination on a property would be: a. cracked stucco on the house exterior b. old cans in the house's pantry c. discolored soil and dying plants in the backyard d. old furniture stored in a shed

Discolored soil and dying plants in the backyard

A principal entered into an agency agreement that was to last for 3 months. 2 weeks later, the principal dies. which of the following is true? a. the principal's heirs must honor the terms of the agency agreement b. the agency continues unless the principal's heirs choose to revoke it c. the agency relationship terminated automatically when the principal died d. the agency terminated as soon as the agent was informed of the principal's death

The agency relationship terminated automatically when he died

A real estate broker is: a. the principal of a subagent b. the subagent of a third party c. the agent of a buyer d. the agent of his designated broker

The agent of his designated broker is also a subagent of his client

In an in house sale: a. the listing is not submitted to the MLS b. the compensation must be paid from the principal directly to the brokerage's agents c. the buyer and seller are brought together by agents working for the same brokerage d. all of the above

The buyer and seller are brought together by agents working for the same brokerage the designated broker is the dual agent

Harrison who works for Yates realty, obtains a listing for a property and submits it to the MLS, Baker who also works for Yates firm, finds a buyer for that property. In this situation: a. baker would be considered the seller's agent b. the designated broker for Yates Realty is a dual agent, bc it is an in-house sale c. baker must be careful not to give the buyer advice, such as suggesting how much to offer for the property d. baker would be considered a dual agent

The designated broker for yates realty is a dual agent, because it is an in house sale

A seller's agent may disclose confidential info about her client: a. under no circumstances b. upon formal written demand by the buyer's agent c. under court order or subpoena d. if such disclosure complies with MLS rules

Under court order or subpoena if a court orders confidential info, the agent must comply, otherwise she would be in contempt of court

The pamphlet on agency law: a. must be given to parties before a written agreement is signed b. must be given to the seller before completing the Seller Disclosure Form c. must be available at open houses d. is not relevant in commercial transactions

must be given to parties before written agreement is signed each party must receive the pamphlet before either party signs an agency agreement, signs and offer, consents to a dual agency, or waives any agency rights, whichever of these events comes first

Dual agency is: a. improper unless the buyer pays the agent's commission b. improper unless the buyer is a friend or relative of the agent c. not improper if both agents are paid the same amount d. not improper if both principals give their informed written consent

not improper if both principals give their informed, written consent

An agency relationship may terminate: a. only if there is no termination date in the agency agreement b. only if the agent has proven to be incompetent or untrustworthy c. only with the agent's written consent d. with the mutual consent of the parties

with the mutual consent of the parties may also be terminated through the REVOCATION of the principal or the RENUNCIATION of the agen

The most common method for creating a seller agency relationship is: a. payment of a commission b. a written listing agreement c. submitting a listing to a multiple listing service d. words or conduct of the parties indicating an intent to create an agency

A written listing agreement

A cooperating agent is: a. always the listing agent b. always the buyer's agent c. any agent representing a party in the transaction d. a licensee acting as a nonagent

Any agent representing a party in the transaction

A special agent is authorized to: a. do anything that can be lawfully delegated to a representative b. conduct a specific transaction c. handle all of the principal's affairs in one or more areas d. enter into contracts on the principal's behalf

Conduct a specific transaction

A buyer's agent asks the listing agent for copies of the water and sewer bills for the listed property. the listing agent: a. must obtain copies from the seller and give them to the buyer's agent b. is not obligated to pass along this information c. must give this information only if its accuracy can be verified d. should obtain this information directly from the utilities

Must obtain copies from the seller and give them to the buyer's agent a listing agent is obligated to disclose any material facts regarding the subject property

Which of the following is always true regarding an independent contractor: a. no federal income tax is withheld from an independent contractor's commissions b. a brokerage doesn't have to provide workers' compensation insurance for an independent contractor c. an independent contractor is entitled to paid vacation time d. an independent contractor must attend all brokerage sales meetings

No federal income tax is withheld from an independent contractor's commission

When an agent works as an independent contractor: it means: a) the agent has her own office, deals directly with buyers and sellers b) the agent has a managing brokers license C) the agent is not accountable to a designated broker D) None of the above

None of the above

A licensee has a duty to investigate: a. only those things that the licensee has specifically agreed to investigate b. and verify all information passed on by the seller c. only those latent defects the seller is aware of d. none of the above

Only those things that the licensee has specifically agreed to investigate

A licensee owes to all parties, regardless of whom the licensee represents, the duty of: a. loyalty b. confidentiality c. immediately disclosing all conflicts of interest d. reasonable care and skill

Reasonable care and skill

In a listing agreement, who is the principal? a. designated broker b. buyer c. broker d. seller

Seller

A buyer's agent is most commonly compensated by the: a. buyer, through payment of a commission b. seller, thought a commission split c. buyer, through payment of a flat fee d. seller, through payment of a flat fee

Seller, through a commission split

If a licensee chooses to act as a non-agent in a transaction, the licensee: a. still owes general duties of disclosure, reasonable care, and accounting to both parties b. owes no duties to either party c. can withhold material facts from either party d. does not really need a real estate license at all

Still owes general duties of disclosure, reasonable care, and accounting to both parties

the seller tells the agent to sell his property as is. the agent learns of a major hidden defect. what should she do? a. say nothing, since the sale is as is b. don't bring it up unless asked c. cancel the listing d. tell prospective buyers about the defect

Tell prospective buyers about the defect if the defect would not be observable on casual inspection of the property, it is called a latent defect and must be disclosed to any prospective buyer

The owners of an apartment building hire a real estate brokerage as the property manager. if the owners later sell the building, their agency relationship with the property manager: a. is automatically transferred to the new owner b. terminates due to extinction of the subject matter c. can be terminated by the former owners without liability to the property manager d. continues unless terminated by the property manager

Terminates due to extinction of the subject matter

Under WA real estate agency law, if a third party provides info to the agent: a. the agent must not disclose the information to the principal b. the principal is deemed to know the information only if the agent actually discloses it to the principal c it is not necessary for the agent to disclose the information to the principal d. the agent should withdraw from the transaction

The principal is deemed to know the information only if the agent actually discloses it to the principal Imputed knowledge rule does not apply in WA principal is not assumed to have knowledge of info known by agent unless she is actually told by the agent

A buyer asks the buyers agent to write an offer on terms that don't match the listing agreement. the buyers agent refuses to write the offer and then, in writing, unilaterally terminates the agency relationship with the buyer. The buyers agent is: a. subject to disciplinary action b. permitted to unilaterally terminate the agency relationship c. allowed to terminate the agency but must write the offer first d. not permitted to write such an offer

permitted to unilaterally terminate the agency relationship an agent may unilaterally renounce an agency relationship, but may still be liable for any damages resulting from the breach

If principal gives approval after the fact to unauthorized actions, an agency relationship is established by: a. ratification b. estoppel c. implication d. implied actual authority

ratification Approval of UNAUTHORIZED ACTIONS AFTER the fact is referred to as ratification

In order to alleviate confusion among buyers and sellers regarding agency representation issues, many states, including Washington, enacted laws that: a. require agents to disclose to the parties which party they are representing in the transaction b. prohibit agents from representing buyers in residential transactions c. require designated brokers to be licensed as either seller's agents or buyer's agents d. require agents to act as seller's agents if they are member of a multiple listing service

require agents to disclose to the parties which party they are representing in the transaction

In a typical real estate transaction, there is an agency relationship between the: a. seller (principal) and listing brokerage (agent) b. seller (principal) and buyer (agent) c. seller (agent) and buyer (principal) d. buyer (principal) and listing brokerage (agent)

seller (principal) and listing brokerage (agent)

If a couple asks a broker how they should take title to a property they are purchasing, the broker should tell them: a. joint tenancy b. tenancy by the entirety c. community property d. to consult an attorney

to consult an attorney a licensee should never give legal advice