Chapter 2 Agency And The Practice Of Real Estate

Front 1

A salesperson advertises a property
without including the name of the broker.
This practice is allowed in which of the
following instances?

a. The salesperson is the listing agent.
b. The salesperson owns the property
and is selling it as a “for sale by
owner.”
c. Permission has been given by the
agency to exclude the broker’s
name.
d. The salesperson is paying 100% of
the cost of the ad.

Back 1

B) the salesperson owns the property and is selling it as a for sale by owner

Front 2

A salesperson sold a short sale property
which was listed by her broker a year ago
on an exclusive right to sell basis. The
salesperson may accept her commission
payment from:

a. the buyer.
b. the seller.
c. the listing broker.
d. the listing broker’s attorney.

Back 2

C) the listing broker

Front 3

A real estate broker is usually which type of
agent?

a. General Agent
b. Special Agent
c. Universal Agent
d. Free Agent

Back 3

B) special agent

Front 4

A listing broker has earned a commission
because her listing was sold by a
cooperating broker and his salesperson.
The listing broker must pay some portion of
her earned commission to which other
party?

a. The salesperson who made the sale.
b. The broker of the salesperson who
made the sale.
c. Whoever is listed in the purchase
contract as “listing broker.”
d. Only the listing salesperson.

Back 4

B) the broker of the sales person who made the sale

Front 5

In a real estate transaction, the listing
broker has an agency relationship with:

a. the seller.
b. the buyer.
c. all parties in the transaction.
d. none of the parties in the
transaction.

Back 5

A) the seller

Front 6

Broker Tiffany is a “special agent” of
principal Bob. Her responsibilities to Bob
are as follows:

a. represent Bob in a specific
transaction.
b. represent Bob’s interests in all real
estate transactions.
c. exercise a power of attorney for
Bob.
d. exercise authority for all of Bob’s
affairs.

Back 6

A) represent Bob in a specific transaction

Front 7

A broker manages a large, busy office with
over 100 salespeople, so she has had to
establish policies and procedures to avoid
chaos and confusion. A salesperson from
another brokerage submitted a written
offer on one of her listings, which she
quickly e‐mailed to her client. Later that
day, two more offers came in: one lower
and one higher than the first. According to
her policy, she waited to present these two
new offers until her client, the seller, has
considered the first offer. Before the end
of the day, the seller accepted the first
offer. In this case the broker’s actions
were:
a. permissible, provided that the agent
formally rejected the second and
third offers.
b. not permissible, because the broker
must submit all offers to the seller
in a timely manner.
c. not permissible, because the broker
must notify the second and third
buyers that an offer is already being
considered by the seller.
d. permissible, because the broker
followed her own procedures.

Back 7

B) not permissible, because the broker
must submit all offers to the seller
in a timely manner.

Front 8

When a broker lists a property for sale, the
broker has the power to do which of the
following?

a. bind the seller to a higher‐than‐list
contract
b. reject a much‐lower‐than‐list offer
on the seller’s property
c. advertise the seller’s property
d. offer legal advice to the seller

Back 8

C) advertise the seller's property

Front 9

Jean Philips, the broker for Empty Nest
Realty, just took an exclusive‐right‐to‐sell
listing on Bob Williams’ hilltop house in the
valley. Jean will legally earn her
commission when which of the following
events occur?

a. when the transaction closes
b. when Bob signs an offer to purchase
c. when all counteroffers are accepted
by all parties
d. when she finds a qualified buyer
who is ready willing, and able to
purchase the home under the terms
advertised on the listing

Back 9

D) when she finds a qualified buyer
who is ready willing, and able to
purchase the home under the terms
advertised on the listing

Front 10

As used in the real estate profession, the
word “agency” describes:

a. a mandatory part of the name of
any company dealing in real estate
transactions.
b. the fiduciary relationship between
an agent and a principal.
c. the relationship between a real
estate broker and the associated
salespeople.
d. the relationship between an agent
and a customer.

Back 10

B) the fiduciary relationship between an agent and a principal

Front 11

As a real estate broker, Ann has entered
into a fiduciary relationship with a buyer,
John, who wants to purchase a home.
Which of the following statements does
NOT describe Ann’s relationship with John?

a. Ann is John’s agent.
b. Ann owes loyalty to John.
c. Ann is a neutral third‐party.
d. Ann must conform to John’s legal
instructions.

Back 11

C) Ann is a neutral third- party

Front 12

Broker Bradley appoints Alice agent, and
only Alice, to represent a seller. Alice
would be:

a. an appointed or designated agent.
b. a dual agent.
c. an affiliated agent.
d. a representative agent.

Back 12

A) an appointed or designated agent

Front 13

Our modern system of agency is one of
well‐defined fiduciary responsibilities.
These are:

a. obedience, loyalty, disclosure,
accountability, confidentiality.
b. care, obedience, loyalty, disclosure,
accountability, confidentiality.
c. trust, care, obedience, loyalty,
disclosure, confidentiality.
d. trust, care, obedience, loyalty,
disclosure.

Back 13

B) care, obedience, loyalty, disclosure, accountability, confidentiality

Front 14

A salesperson who has just listed a home
for a neighbor has the following
relationship with the neighbor?

a. The neighbor is the customer.
b. The neighbor is the client of the
broker.
c. The neighbor is the listing broker’s
customer and not the salesperson’s.
d. The neighbor is the salesperson’s
customer.

Back 14

B) the neighbor is the client of the broker

Front 15

During the course of a showing, the seller’s
broker makes a number of statements.
Which of these is a violation of the broker’s
fiduciary relationship with the seller?

a. “The pool equipment was stolen
yesterday.”
b. “This the best buy on the market at
$220,000.”
c. “The lowest price that the seller will
accept is $200,000.”
d. “The homeowners’ association is
active in school and education
issues.”

Back 15

C) the lowest price that the seller will accept is $200,000

Front 16

A real estate agent has the responsibility to
disclose the following to third parties in a
transaction:

a. material facts
b. buyers’ preferences
c. sellers’ preferences
d. home value stated in the latest
appraisal

Back 16

A) material facts

Front 17

Representing both buyer and seller in a
transaction may be legal in your state, but
only if the following is accomplished first:

a. full disclosure to the seller
b. full disclosure to the buyer
c. full disclosure to both seller and
buyer
d. never legal in any state

Back 17

C) full disclosure to both seller ad buyer

Front 18

Salesperson Sam is licensed through broker
Brandy. Which of the following statements is
TRUE concerning their relationship?

a. Sam is responsible to broker
Brandy.
b. Sam can work for another broker
holding open houses on weekends.
c. Sam must work for broker Brandy as
an independent contractor.
d. Broker Brandy must pay Sam the
generally accepted commission rate
for his work.

Back 18

A) Sam is responsible to broker Brandy

Front 19

Which of the following statements is FALSE
concerning a sub‐agent?

a. A sub‐agent has powers that have
been delegated by an agent.
b. A sub‐agent needs employment by
the principal in order to perform.
c. A sub‐agent has fewer fiduciary
duties to the principal than the
agent.
d. A sub‐agent represents the
principal.

Back 19

C) a sub-agent has fewer fiduciary duties to the principal than the agent

Front 20

The Federal Fair Housing Act (as amended)
specifically addresses and prohibits
discrimination on the basis of all of the
following, except:

a. race.
b. religion.
c. gender.
d. sexual orientation.

Back 20

D) sexual orientation

Front 21

The practice of trying to talk homebuyers
of a protected group into buying in a
specific area of a city, and other groups into
other areas is known as:

a. blockbusting.
b. redlining.
c. Steering.
d. Testing

Back 21

C) steering

Front 22

Which of the following statements is FALSE
concerning fraud?

a. Fraud can involve the taking of a
“legal right” from someone using a
dishonest means.
b. If multiple people are involved in a
fraud, they may all be held liable for
the whole amount.
c. Perpetrators of fraud face criminal,
not civil, punishment.
d. For real estate agents, fraud can be
not communicating an important
fact that should have been
communicated.

Back 22

C) Perpetrators of fraud face criminal,
not civil, punishment

Front 23

Which of the following acts would be
prohibited under the federal fair housing
laws?

a. A Brazilian advertising his house for
rent “to Brazilians only.”
b. A Greek Orthodox Church giving
preferential treatment to
parishioners in the rental of its
housing.
c. The American Legion operating a
home for veterans as well as the
general public.
d. A Catholic organization renting out
rooms in a guest house near one of
its hospitals.

Back 23

A) A Brazilian advertising his house for rent to brazilians only

Front 24

Which of the following rental practices
would be permitted under federal fair
housing laws?

a. refusing to rent to a hearing‐
impaired woman with a service dog
because the property does not
allow dogs
b. charging a family with a three‐year
old boy a higher security deposit
than a family with no children
c. refusing to rent a home to a person
who was convicted of marijuana
distribution
d. a property manager disclosing to an
owner that a prospective tenant is a
minority

Back 24

C) refusing to rent a home to someone who was convicted of marijuana distribution

Front 25

The first major civil rights legislation
dealing with housing was passed in:

a. 1826
b. 1866
c. 1875
d. 1975

Back 25

B) 1866

Front 26

Which of the following types of disabled
persons are not protected under the
Americans with Disabilities Act (ADA)?

a. people confined to wheelchairs
b. HIV positive individuals
c. alcoholics or drug users if enrolled
in a recognized treatment program
d. cancer patients

Back 26

D) cancer patients

Front 27

Dual agency is a situation where a seller
and a buyer on the same transaction are
represented by a single, individual agent.
Which of the following statements about
dual agency is INCORRECT?

a. Dual agency is legal in all states.
b. Dual agency is not allowed unless all
represented parties agree to it.
c. Beyond being informed, the parties
must also give their written
consent.
d. Dual agency often has inherent
conflicts of interest.

Back 27

A) dual agency is legal in all states

Front 28

Which of the following would be classified
as a latent defect?

a. a cracked heat exchanger in the
furnace
b. a wobbly stair rail
c. a large crack in the kitchen ceiling
d. a chimney that is broken away from
the house and leaning

Back 28

A) a cracked heat exchanger in the furnace

Front 29

The owner committed suicide inside the
listed property, 1401 S. Elm, last year and
the buyer’s agent knows it. The buyer does
not have any idea, however. Does the
buyer’s agent have an obligation to disclose
this information?

a. Yes. This is a material fact and the
buyer’s agent must disclose it.
b. Yes. The suicide affects the
desirability of the home.
c. No, this is not important or
material.
d. Could be yes or no. State laws vary
about disclosing facts of this nature.

Back 29

D) could be yes or no. state laws vary about disclosing facts of this nature

Front 30

Which of the following would probably
NOT have to be disclosed as a material fact
dealing the condition of the electrical
system in a home?

a. Some copper wires have been
stripped from the circuit breaker
panel.
b. Half of the bulbs in the chandelier in
the foyer are burned out.
c. The inside workings of the A/C units
have been stolen.
d. The spa tub in the master bathroom
does not have a safety shut off.

Back 30

B) half the bulbs in the chandelier in the foyer are out