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Kaplan Nation RE 2
Agency Relationship
| Question | Answer |
|---|---|
| Real estate professionals owe what duties to consumers they don't represent? | Honesty, disclosure of material facts, and accounting of all funds |
| As an agent for the seller, a real estate broker can | solicit an offer to purchase the property from a prospective buyer. |
| A buyer's broker whose commission is shared via the MLS with the commission paid by the seller to the listing broker in a real estate purchase | remains the agent of the buyer. The source of compensation for a broker is not the factor that determines agency relationship. A buyer's broker whose commission is shared with the listing broker remains the agent of the buyer. A buyer's agent may be co |
| A broker helps a buyer and a seller with paperwork but does not represent either party as an agent. This arrangement is | a transaction brokerage. |
| A listing salesperson acting as the seller's agent is holding an open house. The state does not allow dual agency. A buyer starts a conversation about the property and tells the salesperson she is an investor looking for a number of properties. The salesp | is an undisclosed dual agent who acted in bad faith. The salesperson and the seller's agent should have disclosed her agency relationship, have not shared the seller's confidential information, and cannot represent the buyer in the purchase of the prop |
| Which of these BEST defines the common law of agency? | The rules of law that apply to the responsibilities and obligations of a person who acts for another |
| A salesperson has received an offer with a $5,000 earnest money check. The next step is to | hold the funds in a safe place until the offer becomes a contract. |
| Last month a broker took a listing on a property. She now learns that her client has been declared incompetent by the court. Her listing now is | terminated. A listing contract may be terminated if either party dies or becomes incapacitated. Once terminated, the contract is not binding, and there is no basis for a commission to the broker. |
| A real estate broker was responsible for a chain of events that resulted in the sale of one of his client's properties. The broker's efforts are called | procuring cause. The procuring cause in a real estate transaction is the effort and work that brings about the result stated in a brokerage agreement. A broker who starts a chain of events that results in a sale and does so without abandoning the transac |
| Pro forma is | Pro forma is a term meaning "for form only," in other words, not official. |
| is the offering of a real estate security that is not required to be registered with any state or federal agency because it is not a public offering | A private offering |
| The word "proffer" means the same as "offer," although a "proffered offer" is a term used to describe an informal, oral offer made before the start of any formal negotiations. | The word "proffer" means the same as "offer," although a "proffered offer" is a term used to describe an informal, oral offer made before the start of any formal negotiations. |
| A buyer's agent notices that the seller's property disclosure form provided to him by the listing broker is not complete because some of the boxes indicating structural damage have NOT been checked. What should the buyer's agent do? | Contact the listing broker and request a properly completed disclosure form. Because the sellers are represented by a broker, the buyer's agent should contact the listing broker and request that the sellers provide a properly completed form. A property |
| Good faith as applied to agency is BEST defined as | using honest and sincere intentions. All parties to a contract are to use their best good-faith effort to fulfill the contract. Putting a principal's interest above an agent's is loyalty. Following lawful instructions of a principal is obedienc |
| During an inspection, the inspector finds structural issues, recommends a roof certification, and states that the buyer should have a radon test. The salesperson representing the buyer should do what next? | Give the buyer a list of recommended professionals if the buyer asks Real estate professionals limit their liability by offering buyers and sellers professional assistance and also making sure there is more than one name per category. |
| A couple enters a real estate office asking to see a property listed with another brokerage office. A real estate salesperson calls the listing agent and makes an appointment to show the property. Without having the couple sign a written buyer agency cont | an implied agency relationship with the buyers. The salesperson has unintentionally created an agency relationship with the buyers. There is no formal oral or written agency contract with the buyers. Express agency occurs when two parties enter into an |
| The multiple listing service (MLS) clause in a listing contract provides that | the seller grant permission for the broker to make the listing available through an MLS. |
| A seller and real estate licensee enter into a listing agreement for the seller's home. The real estate licensee now owes fiduciary duties to the seller. Assuming that all of the following listing agreements are legal in the state where the seller's home | The net listing is illegal in some states and discouraged in others because of the potential conflict of interest between the real estate licensee (agent) and the seller. With a net listing, the seller sets a net minimum price, with anything over that goi |
| The listing contract on a residential property states that it expires on May 2. Which event would NOT terminate the listing? | A mere complaint to the broker by the principal does not end the listing, whereas expiration of the listing with no renewal, death of the owner, or destruction of the property would end the listing. |
| Offering a buyer or a seller a home warranty is | an effective way to warrant against all defects. The home warranty provides coverage for mechanical defects of the property and is not associated with the coverage of title defects. Title insurance provides coverage against title defects. |
| The seller's property disclosure form yields which of these benefits for the transaction? | It gives the buyer full knowledge of all issues with the property. The seller's property disclosure does not act as an inspection and gives the buyer full knowledge of the seller's representation of the issues asked on the form. The seller's property d |
| Which statement is TRUE of a listing contract? | The contract is an employment contract for the professional services of a brokerage firm. The listing contract obligates the brokerage firm to work only for the seller. The seller may negotiate terms through the brokerage with a ready, willing, and abl |
| In response to the question by a buyer of how much to offer, the best response of the listing agent is, | “I am not sure, but I think a full price offer should be accepted.” The answer is "I am not sure but I think a full price offer should be accepted." The listing agent is obligated to keep confidential what the seller may accept. However, the seller sho |
| An agent for a brokerage firm has six listings. Another agent for the same firm represents a buyer who wants to purchase one of the six listings. The firm's broker appoints the listing agent as an agent for the seller, while appointing the other agent to | designated agency. The brokerage firm represents both parties to the transaction as a dual agent, and the broker designates two salespersons from the company to represent opposite sides in the same transaction. Implied agency occurs when an agency re |
| A seller has sold property to a neighbor without the services of a real estate broker. However, the seller still owes the broker a commission because the seller signed | an exclusive right-to-sell listing. In an exclusive right-to-sell listing, a commission will be owed to a broker regardless of which party sells the house. In exclusive agency and open listings, the seller retains the right to sell without obligation t |
| To protect the buyer, many states require | a seller’s property condition disclosure. Most states require that the seller truthfully complete a seller's property condition disclosure statement. Some states use mandated disclosure forms. While states do not require property inspections, buyers sh |
| A buyer has signed a contract with a broker to compensate the broker even if the buyer purchases the property from a relative. This is called | an exclusive buyer agency contract. |
| A couple accompanies a property inspector during an inspection of a house on which they have a contract. The inspector points to a six-inch crack at the corner of a dining room window. The crack is an example of | A patent defect is easily visible when inspecting a property. A latent defect is a hidden defect that is not easily visible during an inspection, and may be known to a seller but not disclosed to an agent or buyer. A small crack at a window is usually not |
| A new salesperson lists a unit in a condominium building for sale. In this transaction, the salesperson | acts on behalf of the brokerage firm. Salespersons or associate brokers act as agents of their brokers. Only the broker has a direct agency relationship with the owners of the unit but not with the condominium association. Under the terms of most listi |
| In an appointment with a seller, a salesperson presents a comparative market analysis (CMA) that provides a reasonable market value for the seller's property. The seller insists on pricing the property $15,000 higher than the salesperson's suggested price | may choose to refuse the listing. An unrealistic listing price may make it difficult for the broker to properly market the property within the time period of the listing. The salesperson is not required to accept the listing with the higher listing pri |
| A seller has listed a property under an exclusive agency listing with a broker. If the seller sells the property personally during the term of the listing to someone who learns about the property through the seller, the seller will owe the broker | no commission. In an exclusive agency listing, if the property is sold by the seller, the brokerage will receive no commission. Only the exclusive right-to-sell listing earns the listing broker any commission if someone else sells the property during t |
| Fiduciary means that there is | a legal relationship between parties that creates a position of trust and confidence. The term fiduciary refers to the relationship in which the agent (the real estate broker) is held in a position of special trust and confidence by the principal (the |
| All of these events terminate an agency relationship EXCEPT A an appraisal with a value less than the selling price. B bankruptcy of the principal. C destruction of the property. D completion of the purpose of the agency. | an appraisal with a value less than the selling price. If an appraisal reveals a market value less than the stated selling price in a contract, the parties will have to renegotiate their contract if both parties are still interested in the sale. The ap |
| The type of agency that exists when a broker represents the seller or the buyer, but not both, in a transaction is | single agency. When a broker is representing only the seller or the buyer in a transaction, the agency is single agency. Dual agency exists when an agent represents two principals in the same transaction. Designated agency is created when an agent is a |
| Each of two brokerage companies claimed full commission for the sale of a property that was listed by both of the firms under an open listing agreement. The broker who is entitled to the commission is the one who | was the procuring cause of the sale. In an open listing, the seller retains the right to employ any number of brokers as agents. The brokers can act simultaneously, and the seller is obligated to pay a commission only to that broker who successfully pr |
| A listing agent loses the seller's house keys. The agent has breached her fiduciary duty of | accounting The fiduciary duty of accounting requires real estate professionals to be accountable for money and the property of others that come into their possession in the performance of the agent's duties. The duty of care requires that agents use th |
| A broker has an exclusive right-to-sell listing on a building. The owner is out of town when the broker gets an offer from a buyer to purchase the building. The buyer must have an answer from the seller before the seller is scheduled to return to the city | the broker must obtain the signature of the seller to effect a contract. A real estate broker is usually a special agent who when representing the seller is limited to finding a ready, willing, and able buyer for the property. As a special agent, the b |
| A landowner subdivides her acreage and offers the lots for sale. A broker tells her that he can sell the lots. After the broker sells some of the lots, the landowner refuses to pay him a commission. The broker can | do nothing. An oral agreement does not constitute a valid agency contract entitling the broker to a commission. Unless the broker has been employed by the seller under a valid written agency contract, the broker is not entitled to a commission. The bro |
| In a real estate transaction, the term fiduciary typically refers to | the agent's relationship to the principal. An agent's relationship to a principal involves care, obedience, accounting, loyalty, and disclosure—a fiduciary relationship. Principals do not owe fiduciary obligations to agents. Persons with legal power to |
| A listing contract will usually include all of these EXCEPT A the broker’s authority and responsibilities. B unusual deed conditions or restrictions. C the multiple listing service (MLS) standard commission rate. D termination and default provisions | B unusual deed conditions or restrictions. A listing contract will include the broker's commission. Commission rates are determined by the individual listing broker, not by an MLS. A listing contract will usually state the broker's responsibilities, re |
| A salesperson representing a seller suggests to a buyer that the seller might accept less than the listing price. The salesperson in this situation | may have unintentionally created an undisclosed dual agency by suggesting that the buyer offer less than the listing price. The salesperson in giving advice to the buyer may lead the buyer to believe that the salesperson represents the buyer's interest |
| A buyer's agent knows that a property has been on the market for a time longer than normal for the neighborhood and type of house. Her buyer decides to write an offer above the listed price of the home because the buyer is in a hurry to find a home and mo | Yes, the agent should disclose the time on the market because that fact creates a more favorable opportunity for the buyer to offer a lower price. The buyer's agent has a duty to disclose any material information to the buyer. The extended time the h |
| A listing contract is BEST described as | a personal service contract. A listing is a personal employment contract between brokers and their clients setting forth the broker's responsibilities in finding for the seller a ready, willing, and able buyer. A property management contract establishe |
| A salesperson working with a customer knows that the neighborhood he is showing is very near an airport with low-flying planes that create a lot of noise. The salesperson should disclose the level of airplane noise in the neighborhood because it is | a material fact. A material fact is information that if known could change a buyer's decision to purchase a property. Airplane noise is a material fact and should be disclosed to the buyer. |
| The law of agency is a common-law concept. As common law, it is | part of a body of law established by tradition and court decisions. The law of agency is law from judgments and decrees as opposed to law established by legislatures or other governing bodies. In many states, statutes have been enacted to further defin |
| A buyer entered into a buyer agency agreement that gave him the right to purchase property on his own and not pay the buyer's agent. This BEST describes | an exclusive agency buyer agency contract. Exclusive buyer or seller agency contracts allow the buyer find a property and buy it without owing the buyer's agent a commission. A seller under these agreements is allowed to sell the property on her own wi |
| A broker is hired as a buyer's agent. The buyer confides that he filed for bankruptcy two years ago. The buyer would like to find a seller who is willing to carry the loan. In this situation, a correct statement about the broker's responsibility regarding | required to disclose the bankruptcy because it is a material fact—information important to the seller's evaluation of the offer. The broker is obligated to disclose any material fact—something that might make the parties to the transaction change their |
| MOST states require that listing and buyer representation contracts contain | a definite contract termination date. If brokers fail to specify a specific listing contract termination date in a listing, they may be subject to suspension or revocation of their real estate license in many states. In some states, automatic extension |
| Information that is important to buyers that could change their decision to purchase a property is known as | a material fact. A material fact is any fact relevant to a person making a decision to buy a property. A latent defect is a hidden structural defect usually resulting from faulty construction that is known to a seller but not readily discoverable by in |
| A seller listed his residence with a broker with a contract that agreed to pay the broker a 5% commission. Within several weeks, the broker brought an offer at full listing price and the terms of the listing from buyers ready, willing, and able to pay cas | owes a commission to the broker. The listing contract is a binding agreement on both the seller and the broker. While the seller may refuse to sell the home to the buyer, he owes a commission to the broker, according to the listing contract. The seller |
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