Unit 7 Flashcards
1
Q
- The real estate broker’s fiduciary responsibility to keep the principal informed of all facts that could affect a transaction is the duty of
a. skill, care, and diligence.
b. disclosure.
c. obedience.
d. accounting.
A
b. disclosure.
2
Q
- The amount of compensation due to a broker licensee from the brokerage firm is determined by the
a. state real estate regulator to ensure the public the most protection from incompetent licensees.
b. local real estate board’s minimum wage guarantee to agents.
c. in-house employment contract.
d. listing agreement.
A
c. in-house employment contract.
3
Q
- Which of these would be an example of dual agency?
a. A broker-in-charge assisting a buyer client in the purchase of a property that was listed by a provisional broker of the firm
b. A provisional broker and a broker licensee from firms that are cooperating in a transaction
c. A firm that represents buyers and sellers
d. A broker finding a buyer for a for sale by owner property
A
a. A broker-in-charge assisting a buyer client in the purchase of a property that was listed by a provisional broker of the firm
4
Q
- If a real estate licensee is an independent contractor affiliated with a real estate brokerage firm, the licensee is solely responsible for all of the following EXCEPT
a. paying local, state, and federal income taxes.
b. determining daily and weekly work hours.
c. violations of state licensing law.
d. setting individual business goals.
A
c. violations of state licensing law.
5
Q
- The relationship of a broker to a client is that of
a. a trustee.
b. a subagent.
c. a fiduciary.
d. an attorney in fact.
A
c. a fiduciary.
6
Q
- A real estate broker was responsible for a chain of events that resulted in the sale of one of his client’s properties. This is referred to as a
a. pro forma.
b. procuring cause.
c. private offering.
d. proffered offer.
A
b. procuring cause.
7
Q
- A real estate broker acting as the agent of the seller
a. is obligated to render faithful service to the principal.
is allowed, but not required, to disclose the seller’s minimum price.
c. should present to the seller only the highest offer for the property.
d. can accept an offer on behalf of the seller.
A
a. is obligated to render faithful service to the principal.
is allowed, but not required, to disclose the seller’s minimum price.
8
Q
- Opinion statements by an agent exaggerating the benefits of a property are called
a. polishing.
b. puffing.
c. prospecting.
d. marketing.
A
b. puffing.
9
Q
A broker is permitted to represent both the seller and the buyer in the same transaction when
a. the broker decides principals will benefit from the dual representation.
b. the broker is a subagent rather than the agent of the seller.
c. commission is paid by the seller.
d. both parties have been informed and agreed (in writing) to the dual representation.
A
d. both parties have been informed and agreed (in writing) to the dual representation.
10
Q
- Unless some other written agreement has been made, the broker will usually receive the sales commission from the seller when
a. the purchaser takes possession of the property.
b. the seller lists the property with the broker.
c. the transaction is closed.
d. an offer is procured from a ready, willing, and able buyer.
A
c. the transaction is closed.
11
Q
- All of the following could legally be considered fraudulent EXCEPT
a. deceitful or dishonest practices.
b. exaggerated opinions about the property.
c. omitted statements of material fact.
d. misstatements about the property.
A
b. exaggerated opinions about the property.
12
Q
- A real estate licensee who is an independent contractor with a real estate brokerage firm usually receives
a. a monthly salary or hourly wage.
b. company-provided health insurance.
c. a company-provided automobile.
d. negotiated commissions on transactions.
A
d. negotiated commissions on transactions.
13
Q
- As an agent for the seller, a real estate broker can
a. guarantee a prospective buyer that the seller will accept an offer at the listed price and terms.
b. solicit an offer to purchase the property from a prospective buyer.
c. advise a prospective buyer of the best manner of taking title to the property.
d. change the terms of the listing contract on behalf of the seller.
A
b. solicit an offer to purchase the property from a prospective buyer.
14
Q
- A seller has listed a home with a broker for $90,000, and the broker suggests to a prospective buyer-customer to submit a low offer because of the seller’s urgent need to sell. The buyer offers $85,000, and the seller accepts it. In this situation,
a. the broker has violated his agency relationship with the seller.
b. the broker’s action was acceptable since the seller accepted the offer.
c. the broker acted properly to obtain a quick offer on the property.
d. any broker is encouraged to solicit such bids for the property.
A
a. the broker has violated his agency relationship with the seller.
15
Q
- A broker was told by his seller-principal not to advertise her property in the newspaper, which was just across the state line. The broker must comply with the seller’s wishes because he
a. is required to comply with the Interstate Land Sales Full Disclosure Act.
b. must obey the lawful instructions of his principal.
c. only has an advertising contract with another newspaper.
d. is allowed to advertise only in local newspapers.
A
b. must obey the lawful instructions of his principal.
16
Q
- In a typical agency relationship between a broker and client, the broker’s commission is determined by
a. state law.
b. the local real estate board.
c. mutual agreement.
d. minimums based on the property type.
A
c. mutual agreement.
17
Q
- It is the duty of an agent to disclose to a buyer client all the facts and conditions pertaining to the transaction involving the client because the
a. amount of commission may be adjusted based upon the agent’s efforts.
b. agent has fiduciary obligations to the principal.
c. the local Realtor® board strongly endorses full disclosure.
d. terms of the purchase contract require the agent to do so.
A
b. agent has fiduciary obligations to the principal.
18
Q
- Upon discovering a latent defect in the property, the listing agent should discuss the problem with the seller and then
a. inform the seller that the defect must be repaired.
b. arrange for the repairs himself or herself as required by the terms of a typical listing contract.
c. inform any prospective buyers of the defect.
d. contact the city building inspector about the defect.
A
c. inform any prospective buyers of the defect.
19
Q
- A firm that represents both the buyer and the seller in the same transaction is
a. a designated agent.
b. a dual agent.
c. in violation of license law and Commission Rules unless they have a comprehensive written agency policy.
d. primarily representing the seller as they normally pay the commission.
A
b. a dual agent.
20
Q
- To be entitled to collect a real estate commission, a North Carolina broker must meet all of the following criteria EXCEPT
a. the broker had an active North Carolina real estate broker’s license.
b. the broker was a procuring cause for the transaction.
c. the broker was employed to perform certain activities in the transaction.
d. the broker was an active member of the local Realtor® board.
A
d. the broker was an active member of the local Realtor® board.
21
Q
- A broker lists a property for sale at $100,000 with a 5% commission. The broker obtains a verbal offer to purchase the property from a prospective buyer. The seller indicates to the broker that the offer would be acceptable if submitted in writing. Before it can be put into writing, the buyer withdraws the verbal offer. In this situation, the broker would be entitled to
a. a commission of $5,000.
b. only a partial commission.
c. no commission.
d. sue the buyer for breach of contract.
A
c. no commission.
22
Q
- A developer subdivides acreage and offers individual lots for sale. A broker member of the local trade association lists and sells several of the lots. The developer refuses to pay the promised commission. Using his best efforts to obtain the earned commission, the broker should
a. report the developer to the state real estate commission.
b. file a mortgage against the developer’s remaining lots.
c. file a complaint with the local Realtor® board.
d. file a civil suit against the developer for breach of contract.
A
d. file a civil suit against the developer for breach of contract.
23
Q
- Which of the following is NOT a material fact in North Carolina?
a. A leak around the flashing of the chimney
b. A cracked heat exchange in the heating system
c. The imminent widening of the road in front of the property to four lanes
d. Polybutylene pipes that have never leaked
A
d. Polybutylene pipes that have never leaked
24
Q
- An agent employed by a listing broker told a prospective buyer customer that the listed house was “the best house in the area.” This statement would be considered
a. fraud on the part of the individual agent.
b. fraud on the part of the broker-in-charge because the employing broker is responsible for the actions of any agent representing the firm.
c. legal puffing.
d. fraud only if the buyer purchased the house based on the statement.
A
c. legal puffing.
25
25. Which of the following BEST defines the common law of agency?
a. The disclosure requirement by the agent to third parties no later than first substantial contact
b. Case law establishing the responsibilities of a person who acts for another
c. The Code of Ethics prescribed by the local trade association
d. State license law and rules
b. Case law establishing the responsibilities of a person who acts for another
26
26. A broker who is the agent of the buyer should
a. disclose to the buyer that the seller is a member of a minority group.
b. disclose to the seller the maximum price the buyer is willing to pay.
c. present to the seller only the offer(s) containing a price and terms recommended by the agent.
d. advise the buyer, if in the agent’s opinion, the listing price of a listed property is unrealistic.
d. advise the buyer, if in the agent’s opinion, the listing price of a listed property is unrealistic.
27
27. A North Carolina broker verbally agrees to represent a prospective buyer even though the buyer declined to sign a buyer agency agreement. The broker neglected to revisit the agency issue before showing the buyer a suitable property. Therefore, while showing property, the agent has a fiduciary duty to
a. the seller.
b. the buyer.
c. no one.
d. the public.
b. the buyer.
28
28. If a real estate licensee will be treated as an employee, the employing broker must do all the following EXCEPT
a. provide a W-2 that reflects all monies paid to the employee.
b. withhold appropriate local, state, and federal employment taxes.
c. specify work hours and task requirements.
d. provide employee benefits.
d. provide employee benefits.
29
29. A real estate agent working for a brokerage firm lists a unit for sale in a condominium building. In this transaction, the agent
a. is now personally obligated as the seller’s agent.
b. is acting on behalf of the brokerage firm, the seller’s agent.
c. is representing the condominium association.
d. must personally find a buyer for the unit in order for the firm to earn a commission.
b. is acting on behalf of the brokerage firm, the seller’s agent.
30
30. Which of the following would NOT be considered a stigmatized property in North Carolina?
a. A tenant committed suicide in the basement.
b. Local people consider the house to be haunted.
c. The elderly owner died peacefully in her bedroom.
d. The property was flooded during a hurricane.
d. The property was flooded during a hurricane.
31
31. A buyer-client has instructed the agent to show only properties where the seller is willing to pay the buyer agent’s commission. The agent contacts an owner selling property without the assistance of a real estate agent with the hope that the seller would be willing to pay her commission if the buyer decided to purchase the seller’s property. In order to comply with North Carolina Real Estate Commission Rules, the agent must do all of the following EXCEPT
a. obtain permission from her buyer-client in order to receive compensation from the seller.
b. disclose her agency status to the seller at initial contact.
c. convince the seller to list with her and authorize dual agency.
d. review the Working with Real Estate Agents brochure with the seller.
c. convince the seller to list with her and authorize dual agency.
32
32. The listing broker tells a prospective buyer that the seller is on the verge of bankruptcy. The broker’s actions are
a. acceptable since they may promote an offer from the buyer.
b. acceptable as long as the broker does not disclose any additional specific financial information concerning his client’s credit history.
c. unacceptable unless there are multiple offers on the property.
d. unacceptable unless the seller has authorized the broker to share the information with potential buyers.
d. unacceptable unless the seller has authorized the broker to share the information with potential buyers.
33
33. A listing agent is showing a house to a prospective buyer customer. The seller told the listing agent that during the past 10 winters, the sellers have been unable to rid the house of rodents. The seller has hidden rodent damage by the strategic placement of a large sofa. Which of the following statements is TRUE?
a. This information may be withheld since the agent never saw any evidence of infestation or damage.
b. Disclosing the information could create a fiduciary relationship with the buyer and, thereby, create an unauthorized dual agency situation.
c. Withholding the information prevents an informed buyer decision.
d. Disclosing the information violates the agency duties with the seller.
c. Withholding the information prevents an informed buyer decision.
34
34. A North Carolina provisional broker may accept compensation
a. from his employing broker.
b. directly from his consumer-principal.
c. from another licensee representing the broker.
d. all these.
a. from his employing broker.
35
35. A listing agent has an obligation to disclose to the seller
a. only offers that meet the seller’s specifications.
b. if the buyer intends to resell the property quickly for a profit.
c. the name and nationality of the purchaser.
d. the in-house commission split between the firm and the listing licensee.
b. if the buyer intends to resell the property quickly for a profit.
36
36. A real estate firm practices all legal forms of agency allowed in North Carolina. If a firm’s buyer-client is interested in buying property listed with the firm, the firm must:
a. decline to act as dual agent and refer the buyer to another firm.
b. require both clients to sign agency agreements prior to the close of the transaction.
c. disclose the agency options available and obtain written consent from both clients to act as dual agent.
d. act as a facilitator rather than a fiduciary.
c. disclose the agency options available and obtain written consent from both clients to act as dual agent.
37
37. Which of the following statements is TRUE about types of agency?
a. A property manager usually acts as a special agent of the landlord.
b. A listing agent usually acts as a general agent of the seller.
c. A real estate licensee usually acts as a general agent of an affiliated firm.
d. A buyer’s agent usually acts as a universal agent for the buyer.
c. A real estate licensee usually acts as a general agent of an affiliated firm.
38
38. Which of the following BEST describes a designated agency transaction?
a. The listing firm appointing an agent to represent the seller
b. The selling firm appointing an agent to represent the buyer
c. Some agents in the same firm representing buyers exclusively and other agents in the same firm representing sellers exclusively
d. A broker-in-charge appointing one agent to exclusively represent the seller as the client and appointing a different agent to exclusively represent the buyer as a client while the firm remains in dual agency
d. A broker-in-charge appointing one agent to exclusively represent the seller as the client and appointing a different agent to exclusively represent the buyer as a client while the firm remains in dual agency
