Unit 8 Agency Contracts

Question 1

In North Carolina, a listing agreement
A can allow automatic renewal until either party gives notice.
B with an override clause protects the listing firm’s commission in all situations for the prescribed time period.
C is allowed to be oral prior to presentation of an offer.
D is required by North Carolina License Law to be written from formation.

Answer 1

D is required by North Carolina License Law to be written from formation.

Question 2

How are an exclusive-agency listing and an exclusive right-to-sell listing alike?
A The seller retains the right to sell the real estate without the broker’s help and without paying the broker a commission.
B The seller authorizes only one particular agent to show the property.
C The responsibility of representing the seller is given to one broker only.
D There is no similarity between the two listing types.

Answer 2

C The responsibility of representing the seller is given to one broker only.

Question 3

All of the following would terminate a listing EXCEPT
A expiration of the contract period.
B death or incapacity of the seller.
C nonpayment of the commission by the seller.
D destruction of the improvements on the property.

Answer 3

C nonpayment of the commission by the seller.

Question 4

The parties to the listing contract are the
A seller and the buyer.
B seller and the broker.
C buyer and the broker.
D broker and the MLS.

Answer 4

B seller and the broker.

Question 5

A listing taken by a real estate broker belongs to the
A firm.
B seller.
C agent.
D agent and firm equally.

Answer 5

A firm.

Question 6

A seller’s residence is listed with a broker, and the seller stipulates that she wants to receive $85,000 from the sale, but the broker can sell the property for as much as possible and keep the difference as the commission. The broker agrees. This is what type of listing?
A Exclusive right to sell
B Exclusive agency
C Open listing
D Net listing

Answer 6

D Net listing

Question 7

A real estate commission rate is set by the
A local real estate board.
B North Carolina Real Estate Commission.
C principal and the agent.
D local multiple listing service.

Answer 7

C principal and the agent.

Question 8

In a sales transaction, which of the following statements is/are TRUE of a listing agreement?
I It must be in writing to be legal and enforceable.
II It requires the seller to sell the property if terms of an offer match the terms in the listing.
A I only
B II only
C Both I and II
D Neither I nor II

Answer 8

A I only

Question 9

A listing contract contains a clause that gives the broker the right to collect a commission after the listing contract terminates if the owner sells the property to someone the broker introduced to the property. This is what type of clause?
A Extender
B Subordination
C Exclusivity
D Procurement

Answer 9

A Extender

Question 10

A broker listed a property at an 8% commission rate. After the sale closed, the seller discovered that the broker had been listing similar properties at a 7% commission rate. Based on this information, which of the following statements is/are TRUE?
I The broker has violated antitrust laws.
II The seller can cancel the listing agreement without penalty.
A I only
B II only
C Both I and II
D Neither I nor II

Answer 10

D Neither I nor II

Question 11

A broker gets a commission if her listed property is sold, no matter who sells it, if she used what type of listing agreement?
A Net
B Open
C Exclusive agency
D Exclusive right to sell

Answer 11

D Exclusive right to sell

Question 12

Under the North Carolina Residential Property Disclosure Act, the seller must
I provide a completed property disclosure form to the buyer before the buyer makes an offer.
II disclose all known property defects on the mandatory form.
A I only
B II only
C Both I and II
D Neither I nor II

Answer 12

A I only

Question 13

Which of the following statements is NOT true about the North Carolina Residential Property Disclosure Act?
A If the form is not provided per the statute, the buyer may be able to cancel any resulting contract.
B If the seller marks “no representation” on the form, the agent is relieved of their duty to discover and disclose material facts.
C If the buyer rescinds the contract within the allowed time period, all deposit monies will be refunded to the buyer.
D Act compliance is required of the seller even if there is no real estate broker involved in the transaction.

Answer 13

B If the seller marks “no representation” on the form, the agent is relieved of their duty to discover and disclose material facts.

Question 14

Which of the following transactions is exempt from the Mineral and Oil and Gas Rights Mandatory Disclosure Statement?
A Residential sales of one to four dwellings
B New construction
C A lease with an option where the tenant intends to occupy
D Vacant land

Answer 14

D Vacant land

Question 15

Which statement about listing contracts is FALSE?
A A listing agreement is an employment contract rather than a real estate contract.
B With a listing agreement, the broker/firm is hired to represent the seller-principal.
C Real property is transferred when a listing agreement is signed by the seller.
D An agreement for brokerage services between a broker and an owner of real property must be in writing from the outset of the relationship.

Answer 15

C Real property is transferred when a listing agreement is signed by the seller.

Question 16

Do not contact laws govern all the following areas EXCEPT
A faxes.
B email.
C postal mail.
D telephone calls.

Answer 16

C postal mail.

Question 17

Placing listing in an MLS may be advantageous because
A the MLS establishes a set commission split between co-brokers.
B sellers have more marketing exposure for their property.
C brokers agree to show only MLS properties and not show any for-sale-by-owner properties.
D brokers have a smaller number of properties available for showings.

Answer 17

B sellers have more marketing exposure for their property.

Question 18

The responsibilities of the listing agent regarding the Residential Property and Owners Association Disclosure include all of the following EXCEPT
A the duty to fill out the form for property owner.
B the duty to disclose material facts to consumers even if the property owner indicated “no representation” on the form.
C the duty to inform the seller that it is the seller’s responsibility to complete and provide the mandatory disclosure form to prospective buyers.
D assisting the seller in providing a complete and up-to-date form to the buyer or their agent.

Answer 18

A the duty to fill out the form for property owner.

Question 19

Which statement is FALSE regarding issues that must be discussed by a broker and a buyer before signing a buyer agency agreement?
A The Mineral and Oil and Gas Rights Mandatory Disclosure Statement must be completed by the buyer.
B The licensee should explain the forms of agency available and the parties’ rights and responsibilities under each type.
C The specific services provided to a buyer-client should be clearly explained.
D Compensation issues must be discussed.

Answer 19

A The Mineral and Oil and Gas Rights Mandatory Disclosure Statement must be completed by the buyer.

Question 20

If a broker shows a property to a buyer-consumer who chooses NOT to be represented by any type of buyer agency, after proper review by the broker of all agency choices in the Working with Real Estate Agents brochure, the buyer must
A complete and sign a buyer representation agreement.
B hire an attorney.
C sign a dual agency consent form.
D initial the “Disclosure of Seller Subagency” statement at the bottom of the brochure panel authorizing the broker to work as a seller’s subagent.

Answer 20

D initial the “Disclosure of Seller Subagency” statement at the bottom of the brochure panel authorizing the broker to work as a seller’s subagent.

Question 21

Which statement is FALSE regarding oral buyer agency relationships?
A A buyer/tenant consumer may wish representation but elect to postpone the execution of a written agency agreement.
B The oral agreement should address issues of compensation and whether the client authorizes dual agency, if the situation arises.
C All oral buyer agency agreements must be exclusive.
D Any oral agency agreement must be open-ended with no definite termination date.

Answer 21

C All oral buyer agency agreements must be exclusive.

Question 22

A buyer’s agent must
A disclose the possible presence of sex offenders in an area, if asked.
B properly qualify the prospective buyer/client.
C show the buyer at least 20 properties.
D guarantee that the contract price represents a good investment for the buyer.

Answer 22

B properly qualify the prospective buyer/client.

Question 23

When a buyer broker has an opportunity to work with a limited services listing broker, the buyer’s agent
A will act as a dual agent.
B will be paid by the seller.
C should boycott those opportunities.
D should be very clear about expected compensation arrangements before entering a transaction.

Answer 23

D should be very clear about expected compensation arrangements before entering a transaction.

Question 24

Typical matters addressed in a buyer agency agreement include the following EXCEPT
A the type of property that the buyer is seeking.
B whether or not the brokers may disclose the name of the buyer.
C the broker’s requirement to disclose the nature of the buyer’s offers to other buyer clients.
D the need for the buyer to retain specialized assistance.

Answer 24

C the broker’s requirement to disclose the nature of the buyer’s offers to other buyer clients.

Question 25

Broker Ginny is showing her buyer-client William several properties one afternoon when William sees a property listed by Ginny’s firm. Ginny should explain to William that
A Ginny will continue to be William’s exclusive agent if he makes an offer on that property.
B Ginny’s firm will act as a dual agent if he makes an offer on that property.
C Ginny must serve as a designated agent if William makes an offer on that property.
D William will not have to sign any modified representation agreement as long as he consents to dual agency verbally.

Answer 25

B Ginny’s firm will act as a dual agent if he makes an offer on that property.

Question 26

All agency agreements for property owners
A may be oral for some period of time.
B must have a definite termination date.
C can automatically renew.
D must only allow exclusive representation.

Answer 26

B must have a definite termination date.

Question 27

The seller has signed a listing agreement with a listing firm that authorizes the listing firm to collect a 6% commission. According to company policy, the firm offers 40% of the total commission to any cooperating broker that sells the listing. If another firm sells the listing for $125,000, what commission amount will the listing firm retain?
A $3,000
B $4,500
C $5,000
D $7,500

Answer 27

B $4,500

Question 28

A listing agent received $4,287.50 as her portion of the commission earned on the sale of her listing. She received 70% of the commission retained by the listing firm. The firm split the 5% listing commission equally with the selling firm. What was the sales price of the property?
A $245,000
B $171,500
C $122,500
D $120,000

Answer 28

A $245,000

Question 29

Two firms split a 6% commission equally on a $73,000 home. The selling agent was paid 70% of his broker’s share. The listing agent was paid 30% of her broker’s share. How much did the listing agent receive?
A $657
B $1,314
C $1,533
D $4,380

Answer 29

A $657

Question 30

A house recently sold for $135,000 at a commission rate of 6.5%. The MLS service received 5% of the commission as a listing fee. The listing broker got 40% of the commission with 55% going to the selling broker. You, the selling agent, have an in-house split of 60% to you, 40% to your broker. What was your earned commission?
A $1,930.50
B $2,106.00
C $2,750.96
D $2,895.75

Answer 30

D $2,895.75

Question 31

A seller wishes to provide an incentive to his listing broker by offering this compensation structure: the broker will receive 5% on the first $100,000 of purchase price offered; 6% on the next $100,000 of purchase price offered; and 7% on any price offered above the first $200,000. If the seller receives an offer of $310,000 and accepts it, how much will the broker receive?
A $15,500
B $18,000
C $18,700
D $21,700

Answer 31

C $18,700

Question 32

A seller needs $120,000 to pay off their mortgage loan and $1,000 for other closing expenses, plus he would like to net $50,000 to use to purchase his next home. If the listing firm charges a 5% listing fee, what is the minimum sales price that will meet these requirements?
A $162,450
B $171,000
C $179,550
D $180,000

Answer 32

D $180,000

Question 33

The seller wants to net $85,000 cash from the sales transaction. The sales commission is 7%, the seller’s closing costs are $1,000, and the seller’s loan payoff figure is $65,000. What must the sales price be to accomplish the seller’s goal?
A $151,000
B $155,000
C $161,750
D $162,366

Answer 33

D $162,366