Psi Ch 7

Front 1

1. A agrees to buy B’s real estate for $123,000. A signs a sales contract and deposits $12,300 ear nest money with B's broker, C. B is unable to show good title, and A demands the return of his earnest money from C, as provided in the contract. What should C do?

1. Deduct the commission and return the balance to A
2. Deduct the commission and pay the balance to 5
3. Return the entire amount of earnest money to A
4. Pay the entire amount to B to dispose of as B sees fit

Back 1

1. (3) B is not entitled to any compensation, as she was responsible for breaching the contract. C cannot deduct commission because the sale did not close. (73)

Front 2

2. A broker employs several salespeople at her office. Early one day one member of the sales staff submits a written offer with an earnest money deposit on a house listed with the broker. Later the same day another salesperson submits a higher written offer on the same property, also including an earnest money deposit. The broker, in accordance with the policy of her office, does not submit a second offer unless the first has been presented and rejected by the seller. In this case the seller accepts the first offer, so the seller is not informed of the second offer. In this situation, the broker's actions are

1. permissible, provided the commission is split between the two salespeople.
2. permissible, if such arrangement is written into the salespeople's employment contracts.
3. not permissible, because the broker must submit all offers to the seller.
4. not permissible, because the broker must notify the second buyer of the existence of the first offer.

Back 2

2. (3) Brokers are responsible for submitting all offers to clients. (73-74)

Front 3

3. An owner listed her home for $98,000, and the listing broker told the prospective buyer to submit a low offer because the seller was desperate. The buyer offered $96,000 and the seller accepted. In this situation

1. the broker was unethical, but because no one was hurt, the broker's conduct is not improper.
2. the broker violated the agency relationship.
3. the broker's action was proper in obtaining a quick offer.
4. any broker is authorized to encourage bidders.

Back 3

3. (2) The broker owes loyalty to the client as part of the fiduciary responsibilities. The broker should encourage the buyer to make his or her highest and best offer. (73)

Front 4

4. A salesperson desires to advertise a property without including the brokerage name. This situation is allowed when

1. the salesperson is the listing agent.
2. the salesperson includes his or her name in the ad.
3. the salesperson is the actual owner and advertising as a for sale by owner.
4. the salesperson is willing to pay for the ad.

Back 4

4. (3) A broker is prohibited by most state laws from advertising listed property without using the name of the brokerage in the ad. Agents likewise are prohibited from running blind ads whether they are the listing agent or willing to pay for the ad. The only exception is if the agent desires to advertise the sale of his or her own property. Normally these sales don't involve the brokerage; they resemble for-sale-by-owner transactions. (74)

Front 5

5. A doctor listed his home with a broker under an exclusive-right-to-sell agreement. The listing salesperson and her broker signed the listing contract. Which of the following statements does NOT correctly describe the relationship among the parties?

1. The broker has a fiduciary relationship with the seller.
2. The salesperson has a fiduciary relationship with the broker.
3. If the salesperson dies, the listing contract will be terminated.
4. If the broker dies, the listing contract will be terminated.

Back 5

5. (3) The salesperson works on behalf of the broker but is not necessarily a party to the contracts prepared by him. While the listing contract is taken by the salesperson, the contract is between the doctor and the broker. Unless there is an agreement to the contrary, listings are considered the property of the broker. (73)

Front 6

6. A real estate broker is usually

1. a special agent.
2. a universal agent.
3. a general agent.
4. an ostensible agent.

Back 6

6. (1) A special agent has a specific responsibility as compared to a general agent who has greater responsibilities such as a property manager. A universal agent has newly unlimited authority. (73-74)

Front 7

7. Which of the following is FALSE concerning a real estate broker?

1. All offers must be presented by the broker to the principal.
2. Brokers may place blind ads.
3. A fixed place of business must be maintained by the broker.
4. The broker's commission usually is specified in the listing agreement.

Back 7

7. (2) The blind ad was discussed in Question 4. (74)

Front 8

8. Which of the following is FALSE concerning a real estate salesperson?

1. The salesperson is responsible to the broker under whom she or he is licensed.
2. All of a salesperson's activities must be carried out in the name of his or her principal broker.
3. The salesperson must work under the broker as an independent contractor.
4. A salesperson is compensated on the basis of an agreement between herself or himself and the broker.

Back 8

8. (3) A salesperson may work under a broker as either an employee or an independent contractor. (75)

Front 9

9. You are a broker who has listed a home for a neighbor. Which of the following terms describes your relationship with the seller?

1. You are a subagent of the seller.
2. The seller is your client.
3. The seller is your customer.
4. The seller is your agent.

Back 9

9. (2) The listing broker is the agent of the seller. (75)

Front 10

10. A man who owned a single-family house had his unlicensed son-in-law do the electrical work in preparing his home for sale. The man did not disclose this to the broker at the time of executing the listing. After completion of the sale, the new owner suffered a financial loss because of the faulty electrical wiring done by the owner's son-in-law. The broker

1. could be reprimanded for not forewarning the purchaser.
2. is innocent of any wrongful act.
3. will be held liable for monetary damages suffered by the purchaser.
4. should have arranged for a proper electrical inspection prior to the sale.

Back 10

10. (2) The broker would not be responsible for disclosing something which he would have no way of knowing. (73)

Front 11

11. A home is listed for $100,000 and sells for $90,000. The broker's commission is 7 percent of the selling price. The commission is

1. $630. 3. $6,300.
2. $700. 4. $7,000.

Back 11

11. (3) Commission is based on the selling. $90,000 x 7% (0.07) = $6,300. (74)

Front 12

12. You are a broker acting as a facilitator in the sale of a house without being an agent of either party. You are a(n)

1. buyer's broker.
2. cooperative broker.
3. listing broker.
4. transactional broker.

Back 12

12. (4) A transactional broker is also referred to as a non-agent whose job is to help the parties with the paperwork and procedure required to complete the transaction. (75)

Front 13

13. The responsibilities of a broker in an agency relationship include

1. managing the property.
2. providing financing.
3. accountability for funds received.
4. accepting an offer for the seller.

Back 13

13. (3) Accountability is part of the fiduciary relationship. (73)

Front 14

14. The listing broker owes fiduciary duty to the

1. buyer.
2. lender.
3. seller.
4. buyer's attorney.

Back 14

14. (3) The listing contract creates an agency relationship and thus a fiduciary duty to the seller. (73)

Front 15

15. When a broker lists a property, the broker may

1. reject an offer for the seller's property.
2. bind the seller to a contract.
3. advertise the seller's property.
4. offer legal advice to the seller.

Back 15

15. (3) The listing broker is responsible for marketing the property. The broker would not have the authority to respond to an offer for the client or to offer legal advice. (73-74)

Front 16

16. A broker has received several offers for a property he has listed. The broker must present each offer to the seller

1. promptly on receipt.
2. individually.
3. as soon as the seller has decided on any previous offer.
4. prior to the seller deciding on any previous offer.

Back 16

16. (1) The broker must present all offers simultaneously. The broker does not have the right to withhold offers from the seller. (74)

Front 17

17. A salesperson sells a property listed by her broker. The salesperson may accept her share of the commission from

1. the seller.
2. her broker.
3. the buyer.
4. the buyer's attorney.

Back 17

17. (2) A salesperson is an agent of the broker and may not accept real-estate-related compensation from anyone except his or her broker. (74)

Front 18

18. Which of the following is a violation of the broker's fiduciary relationship with a seller?

1. The broker charges no commission.
2. The broker charges a 40 percent commission.
3. The broker tells a prospective buyer the lowest price the seller will accept.
4. The broker tells a prospective buyer the highest price the seller will accept.

Back 18

18. (3) The commission is negotiable. A buyer's broker could suggest that the client offer the lowest price a seller might accept. (74)

Front 19

19. Which of the following statements does NOT correctly describe a fiduciary?

1. A fiduciary owes loyalty to the principal.
2. A fiduciary must conform to the principal's legal instructions.
3. A fiduciary is an agent.
4. A fiduciary is a neutral third party.

Back 19

19. (4) The broker has a fiduciary duty to work in the best interest of his or her client. (73)

Front 20

20. A salesperson is working under a broker. The salesperson may

1. work under the broker as an independent contractor.
2. place an ad without identifying the broker.
3. receive a commission directly from a seller.
4. receive a commission directly from another broker.

Back 20

20. (1) Blind ads are prohibited. A salesperson may receive a commission only from the broker for whom she is working. (75)

Front 21

21. A special agent is best described as someone who

1. has power of attorney.
2. has authority to sell a property.
3. has authority to represent a principal in a specific transaction.
4. has authority to represent a principal in all matters concerning an area of the principal's interest.

Back 21

21. (3) The incorrect answers reflect the authority of a universal agent. (74)

Front 22

22. A broker presents a seller with a written offer to purchase. The broker is responsible for

1. explaining the advantages or disadvantages of the offer to the seller.
2. explaining the legal implications of accepting the offer.
3. binding the seller to the offer.
4. preparing the title search once the offer is accepted.

Back 22

22. (1) A broker may not give legal advice nor bind a seller to an offer. A title company licensed by the state insurance commission or an attorney or a title insurance abstractor would do the title search. (73-74)

Front 23

23. A broker is listing her neighbor's home. The commission should be determined by

1. the size of the broker's firm.
2. rates approved by the Real Estate Commission.
3. rates approved by the local Board of REALTORS®.
4. negotiation with her neighbor.

Back 23

23. (4) Commissions are negotiable. A rate approved by more than one broker would be a violation of antitrust law. (74)

Front 24

24. A broker recently has listed a home under an exclusive-right-to-sell listing contract. The broker generally will earn his commission when

1. he submits an offer to purchase to the seller.
2. the seller signs an offer to purchase.
3. he finds a buyer ready, willing, and able to buy on the terms of the listing.
4. the closing has taken place.

Back 24

24. (3) The commission is earned when a full-price cash offer consistent with the terms in the listing is presented to the seller. The commission is received at the closing. (74)

Front 25

25. A broker has earned a commission on the sale of her listing by another broker. The listing broker may pay part of her commission to

1. the selling broker.
2. the selling salesperson.
3. the out-of-state salesperson who referred the seller to her.
4. the buyer's attorney.

Back 25

25. (1) Commissions must be shared on a broker-to-broker basis. (74)

Front 26

26. A broker has just received an earnest money payment on an offer to purchase. The broker must place the earnest money in his

1. trust account.
2. business account.
3. personal checking account.
4. savings account.

Back 26

26. (1) Brokers are required to set up a trust account for earnest money payments unless otherwise agreed to by the buyer and seller. (74)

Front 27

27. A salesperson working for a broker has just written an offer to purchase on her broker's listing in which the buyer has written a check for earnest money and stated that the broker hold the funds. Which of the following statements describes how the earnest money payment should be handled?

1. The salesperson should place the earnest money in her checking account and await the closing of the transaction.
2. The salesperson should give the earnest money check to the seller's attorney.
3. The salesperson should place the earnest money check in a safe deposit box until the transaction is concluded.
4. The salesperson should give the earnest money check to her broker for deposit in the broker's trust account.

Back 27

27. (4) The salesperson is required to give all earnest money to her broker. The listing broker is responsible for holding the earnest money in his trust account. (75)

Front 28

28. A licensed real estate broker who engages the services of a licensed salesperson on the basis that the broker can direct what the salesperson can do but not how it is done has

1. engaged an independent contractor.
2. discriminated illegally.
3. practiced steering.
4. established an employer-employee relationship.

Back 28

28. (1) A broker cannot control salespeople's working conditions as in an employer-employee relationship. An agent is not required to follow illegal instructions such as discrimination. (75)

Front 29

29. A broker's license can be revoked if he or she

1. advertises property for sale without including the salesperson's name in the ad.
2. negotiates a commission based on what the broker says is the rate set by the local board of REALTORS.
3. pays a commission that exceeds the customary rate.
4. advertises free market analysis as a means of obtaining listings.

Back 29

29. (2) Negotiating commissions on the basis of the board rate would be an example of violating antitrust laws dealing with price-fixing. The broker's name must be included in an ad but it is not necessary to include the name of the salesperson. It is perfectly legal for the broker to advertise a free market analysis as a means of soliciting listings. (76)

Front 30

30. What is the listing broker's legal responsibility to a prospective purchaser?

1. The broker must not use fraud or deceit.
2. The broker must help the buyer get the lowest price possible.
3. The broker is only a middleperson. Neither the buyer nor the seller can charge her or him with avoiding a legal duty.
4. There is none at all.

Back 30

30. (1) The listing broker must treat the customer fairly, but is required to get the seller the highest price possible. (75-76)

Front 31

31. To create agency requires two things: delegated authority and

1. a compensation agreement.
2. a written agency agreement.
3. reasonable care.
4. consent to act.

Back 31

31. (4) Neither compensation nor a written agreement is necessary to create agency. Delegated authority and consent to act are the only two things necessary to create agency. (73)

Front 32

32. A designated broker authorized an agent to singularly represent a seller, to the exclusion of everyone else in the office. This agent is called

1. a subagent.
2. a dual agent.
3. an appointed agent.
4. an affiliated licensee.

Back 32

32. (3) In states that allow appointed agency, a designated broker appoints agents to singularly represent either buyers or sellers. An appointed agent is authorized to represent either the seller or a buyer to the exclusion of everyone else in the office. Consensual dual agency takes place when the appointed agent simultaneously represents both the buyer and seller in the same transaction. (75)