Unit 8: Real Estate Brokerage-6% Flashcards Preview

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Flashcards in Unit 8: Real Estate Brokerage-6% Deck (50)
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1
Q

Antitrust Laws

A

Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Most violations of antitrust laws in the real estate business involve either price-fixing (real estate professionals conspiring to set fixed compensation rates) or allo

2
Q

Boycott

A

When individuals or businesses withhold their patronage to a business as a protest or to reduce competition.

3
Q

Brokerage

A

The bringing together of parties interested in making a real estate transaction.

4
Q

Code Of Ethics

A

A written system of standards for ethical conduct.

5
Q

Commission

A

Payment to a real estate professional for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.

6
Q

Disclaimer

A

A statement indicating no legal responsibility for information; no warranties or representations have been made.

7
Q

Electronic Contracting

A

A process of integrating information electronically in a real estate transaction between clients, lender, and title and closing agents.

8
Q

Electronic Signatures In Global And National Commerce Act (E-Sign)

A

An act that makes contracts (including signatures) and records legally enforceable regardless of the medium in which they are created.

9
Q

Employee

A

For tax purposes, someone who works as a direct employee of an employer and has employee status. The employer is obligated to withhold income taxes and Social Security taxes from the compensation of employees. See also independent contractor.

10
Q

Independent Contractor

A

The broker-licensee relationship where at least 75% of the compensation is based on commissions earned and the broker does not withhold payroll taxes.

11
Q

Internet Data Exchange (IDX) Policy

A

Policy that allows all multiple listing service (MLS) members to restrict internet access to MLS property listings.

12
Q

Managing Broker

A

The real estate professional who is responsible for supervision of the real estate professionals who act on behalf of the brokerage; may also be called a supervising broker.

13
Q

Minimum Level Of Services

A

The services that real estate professionals must provide to clients, as prescribed differently by certain states; for example, assisting clients in negotiation and answering questions from clients about offers, counteroffers, and contingencies.

14
Q

Multiple Listing Service (MLS)

A

A marketing organization composed of member real estate professionals who agree to share their listing agreements with one another in the hope of procuring ready, willing, and able buyers for their properties more quickly than they could on their own. Most multiple listing services accept exclusive right-to-sell or exclusive agency listings from their member real estate professionals.

15
Q

National Do Not Call Registry

A

See Do Not Call Registry.

16
Q

Price-fixing

A

See antitrust laws.

Price-fixing is a practice in which competitors agree to set prices or other terms and conditions for products or services rather than letting competition in the open market establish those prices. In real estate, price-fixing occurs when competing brokers agree to set sales commissions, fees, or management rates. Price-fixing is illegal. Real estate brokers must independently determine commission rates or fees for their own firms only.

17
Q

Procuring Cause

A

The effort that brings about the desired result. Under an open listing, the real estate professional who is the procuring cause of the sale receives the commission.

18
Q

Ready, Willing, And Able Buyer

A

Person who is prepared to buy property on the seller’s terms and is ready to take positive steps to consummate the transaction.

19
Q

Uniform Electronic Transactions Act (UETA)

A

Sets forth rules for entering into an enforceable contract using electronic means.

20
Q

An independent contractor and a broker can agree upon which of the following?

A

A)
Sales meetings the contractor would need to attend
B)
Work schedule the contractor would have to follow
C)
Number of hours the contractor would have to work
D)
Compensation the contractor would receive

The answer is compensation the contractor would receive. Brokers may agree upon the compensation that their independent contractors will receive for work not yet done, but they may not dictate working schedules or attendance at sales meetings.

21
Q

When communicating with clients or consumers via email, all of these are examples of professional email etiquette EXCEPT

A
A)
responding to emails within one week.
 B)
providing useful information in the subject line.
 C)
using spell check.
 D)
avoiding sending large attachments.

The answer is responding to emails within one week. Examples of email etiquette include using the subject line in a useful and helpful manner; avoiding spelling errors; responding promptly to all email messages; and being specific, to the point, and brief. Do not send unsolicited emails.

22
Q

A state has recently updated its Rules and Regulations for the Real Estate Profession. Which statement is most likely TRUE regarding this update?

A

A)
• The rules and regulations are not enforceable against real estate professionals.
B)
• The rules and regulations are state laws enacted by the legislature.
C)
• The rules and regulations have the same force and effect as the license law itself.
D)
• The rules and regulations do not have the same force and effect as the statutory license law.

The answer is the rules and regulations have the same force and effect as the license law itself. Each state has a licensing authority with power to issue licenses and create regulations that enforce the statutes of the real estate law.

23
Q

A sales associate’s contract with her broker states that she is not an employee. In the past year, less than half her income was commission, with the rest an hourly wage paid by the broker. The IRS would classify her as

A
A)
self-employed.
 B)
an employee.
 C)
an independent contractor.
 D)
a part-time real estate salesperson.

The answer is an employee. Because her earnings were more than half in hourly wages, the IRS would not consider her to be an independent contractor within the definition of a qualified real estate agent, but would treat her as an employee of the broker.

24
Q

The sale of a single-family house produced a total commission of $45,825. The sales associate who was responsible for bringing the buyer to the transaction has a 60/40 commission split arrangement with the employing broker, with the sales associate receiving the 60 percent. If the total commission was split between the listing and selling firms, what is the commission that the buyer’s sales associate will receive?

A
A)
$27,495
 B)
$13,747.50
 C)
$9,165
 D)
$8,784.25

The answer is $13,747.50. Fifty percent of $45,825 is $22,912.50, and 60 percent of that amount is $13,747.50, which is the buyer’s sales associate’s compensation for the transaction.

25
Q

Practical applications of the articles of the REALTORS® Code of Ethics are known as

A
A)
Covenants of Practice.
 B)
Standards of Business.
 C)
Standards of Practice.
 D)
Covenants of Business.

The answer is Standards of Practice. Practical applications of the articles of the REALTORS® Code of Ethics are known as Standards of Practice.

26
Q

The Counselors of Real Estate (CRE), Commercial Investment Real Estate Institute (CIREI), and Institute of Real Estate Management (IREM) are affiliated institutes of

A
A)
National Association of REALTORS® (NAR).
 B)
National Organization of REALTORS® (NOR).
 C)
National Association of Real Estate Agents (NAREA).
 D)
American Realty Association (ARA).

The answer is National Association of REALTORS® (NAR). NAR has the following affiliated institutes, societies, and councils: Counselors of Real Estate (CRE), Commercial Investment Real Estate Institute (CIREI), and Institute of Real Estate Management (IREM), among others.

27
Q

Under the Sherman Antitrust Act, market allocation is punishable by

A

A)
a minimum $1 million fine and 5 years in prison.
B)
up to a $1 million fine and 10 years in prison.
C)
up to a $3 million fine and 10 years in prison.
D)
a minimum $10 million fine and 5 years in prison.

The answer is up to a $1 million fine and 10 years in prison. Price-fixing or market allocation is a violation of the Sherman Antitrust Act and, a penalty can be up to a maximum $1 million fine and 10 years in prison. For corporations, the penalty may be as high as $100 million.

28
Q

When acting as an employee rather than an independent contractor, a sales associate may be obligated to

A
A)
accept a commission from another broker.
 B)
personally pay all withholding taxes.
 C)
list properties in the sales associate's own name.
 D)
work set hours.

The answer is work set hours. An employee not only accepts the actual duties assigned by the employer but also agrees to the manner in which the employer wants them performed.

29
Q

National Association of Real Estate Brokers (NAREB)

A
A)
no longer concerns itself with equal housing opportunity.
 B)
members are known as REALTORS®.
 C)
members are known as Realtists.
 D)
is part of the National Association of REALTORS®.

The answer is members are known as Realtists. Members of the National Association of Real Estate Brokers (NAREB) are known as Realtists.

30
Q

A broker can agree upon which of the following with an independent contractor?

A

A)
Sales meetings the person would need to attend
B)
Number of hours the person would have to work
C)
Work schedule the person would have to follow
D)
Compensation the person would receive

The answer is compensation the person would receive. Brokers may agree upon the compensation that their independent contractors will receive for work not yet done, but they may not dictate working schedules or attendance at sales meetings.

31
Q

Which statement BEST explains this sentence: “To recover a commission for brokerage services, a broker must be employed by a client”?

A

A)
The broker must have a sales associate employed in the office.
B)
The broker must work in a real estate office.
C)
The client must make an express or implied agreement to pay a commission to the broker.
D)
The broker must express an interest in representing the client.

The answer is the client must make an express or implied agreement to pay a commission to the broker. A broker’s contract of employment by a client is the listing or buyer representation agreement signed by them both. A valid employment agreement is one of the usual requirements in a suit for a brokerage commission; it is proof of employment.

32
Q

A broker’s policy requires a 7% commission on all listings; no lower commission rate is acceptable. Which statement is TRUE?

A

A)
A homeowner may sue the broker for violating the antitrust law’s prohibition against price-fixing.
B)
The broker must present the uniform commission policy to the local professional association for approval.
C)
The broker may legally set the minimum commission rate acceptable for the firm.
D)
The sales associates associated with the brokerage will not be bound by the requirement and may negotiate any commission rate they choose.

The answer is the broker may legally set the minimum commission rate acceptable for the firm. Brokers have the right to set commissions within their own firm. This is not an antitrust violation. Sales associates who wish to continue with that broker can be required to comply.

33
Q

Even if a consumer has requested placement on the National Do Not Call Registry, a real estate professional may call the consumer up to how many months after the consumer’s last purchase, delivery, or payment?

A
A)
6 months
 B)
3 months
 C)
12 months
 D)
18 months

The answer is 18 months. Real estate professionals may call consumers with whom they have an established business relationship for up to 18 months after the consumer’s last purchase, delivery, or payment, even if the consumer is listed on the National Do Not Call Registry. However, if the consumer specifically asks the company not to call, then the company must stop calling.

34
Q

A broker asks a neighbor who is thinking of selling the family home if the broker can present an offer from a prospective buyer, and the neighbor agrees. At this point, which statement is TRUE?

A

A)
The neighbor is not obligated to pay the broker a commission.
B)
The broker may not be considered the procuring cause without a written contract.
C)
The buyer is obligated to pay the broker for locating the property.
D)
The neighbor is obligated to pay the broker a commission for producing an offer to purchase.

The answer is the neighbor is not obligated to pay the broker a commission. At this point, there is no agreement between owner and broker for a service in return for compensation. The broker has done nothing yet that relies on the response of the seller. The buyer might have signed an offer and be ready, willing, and able to buy, but with no contract of employment with the homeowner—either written or oral—there can be no claim for a commission. Moreover, state real estate brokerage regulations generally require that a representation agreement be in writing and signed.

35
Q

The use of electronic signatures makes routine paperwork more efficient and has been encouraged by adoption by most states of

A
A)
the Uniform Electronic Transactions Act.
 B)
the Uniform Brokerage Transactions Act.
 C)
the real estate licensing laws.
 D)
the Real Estate Transactions Act.

The answer is the Uniform Electronic Transactions Act. The Electronic Signatures in Global and National Commerce Act (E-Sign) applies to those states that have not adopted UETA, and some sections of the law also apply to those states that have adopted UETA.

36
Q

The amount of commission paid to a sales associate is determined by

A
A)
mutual agreement with the broker.
 B)
state law.
 C)
the local real estate board.
 D)
mutual agreement with the client.

The answer is mutual agreement with the broker. All commissions must be paid through the broker, and the amount the sales associate receives is set by mutual agreement between these two parties.

37
Q

The National Association of REALTORS®(NAR)

A

A)
is the largest real estate trade association in the country.
B)
is the second-largest trade association in the country.
C)
is the tenth-largest trade association in the country.
D)
has somewhat less than one million members.

The answer is is the largest real estate trade association in the country. The National Association of REALTORS® (NAR) is the largest real estate trade association in the country.

38
Q

Many states have modified the traditional terms broker and salesperson to stress that all licensees must be knowledgeable of and comply with the law. The person who performs licensed activities under the authority of a broker is frequently called

A
A)
a managing broker.
 B)
a junior licensee.
 C)
a junior broker.
 D)
a sales associate.

The answer is a sales associate. Some states require all real estate licensees to have a broker’s license, but a managing broker is always distinguished from those employed by the brokerage as sales associates.

39
Q

A qualified buyer makes a written offer on a property on March 6 by filling out and signing a purchase offer. Later that day, the seller accepts and signs the offer, keeping one copy. The broker gives a copy of the signed agreement to the buyer on March 8. The seller’s deed is delivered on May 1. The deed is recorded on May 7, and the buyer takes possession on May 15. When is the broker’s commission payable if this is a usual transaction?

A
A)
May 1
 B)
May 7
 C)
March 8
 D)
May 15

The answer is May 1. Although the commission was earned when the buyer was notified of the seller’s acceptance (March 8), the commission is typically paid at the time the transaction is closed; that is, the purchase price is paid by the buyer and the buyer receives the deed.

40
Q

The real estate industry, including all licensed real estate brokers and sales associates, is subject to

A
A)
fair competition laws.
 B)
social security taxation.
 C)
antitrust laws.
 D)
more regulations for smaller firms.

The answer is antitrust laws. Even though individual real estate sales associates are subject to supervision by the employing real estate broker, both are subject to both federal and state antitrust laws.

41
Q

Do-not-call registries and laws such as the Telephone Consumer Protection Act, Junk Fax Prevention Act, and rules of the Federal Communications Commission dictate

A
A)
how often a business person can contact a customer.
 B)
prohibited communications.
 C)
communications that are permitted.
 D)
how many direct mail solicitations can be sent to a single address.

The answer is prohibited communications. Telephone calls, faxes, and emails are all subject to such prohibitions.

42
Q

What is the main value of a multiple listing service (MLS) for sellers?

A
A)
It exposes the property to a greater number of prospective buyers.
 B)
It simplifies closing procedures.
 C)
Real estate professionals do not have to work as hard to secure property listings.
 D)
It reduces cooperation among brokers.

The answer is it exposes the property to a greater number of prospective buyers. The MLS exposes the property to many different real estate professionals, encouraging cooperation among brokers and expediting sales.

43
Q

An arrangement to sell one product only if the buyer purchases another product as well is called

A
A)
a buydown provision.
 B)
a fee-for-services.
 C)
a tie-in agreement.
 D)
an allocation of customers.

The answer is a tie-in agreement. A tie-in arrangement is an agreement to sell one product only if the buyer purchases another product. Fee-for- services refers to splitting apart the collection of services that a broker offers. A buydown provision is a financing option. Allocation of customers refers to dividing a market and refraining from competing.

44
Q

Regulations of agencies that administer real estate license laws

A

A)
can be modified, if necessary, to insure compliance by large real estate firms.
B)
have the same force and effect as statutory law.
C)
are optional for licensees, though their adherence is always recommended.
D)
can only be changed by the legislature.

The answer is have the same force and effect as statutory law. Administrative regulations are created to enforce statutory law and must be complied with by all licensees. They are created by the licensing authority and can be changed by the licensing authority.

45
Q

Which act encourages the use of electronic signatures, making routine paperwork much more efficient?

A
A)
Uniform Electronic Transactions Act
 B)
Real Estate Licensing Act
 C)
Uniform Brokerage Transactions Act
 D)
Real Estate Transactions Act

The answer is Uniform Electronic Transactions Act. The Electronic Signatures in Global and National Commerce Act (E-Sign) applies to those states that have not adopted UETA, and some sections of the law also apply to those states that have adopted UETA.

46
Q

A broker has established the following office policy: “All listings taken by any sales associate of this real estate brokerage must include compensation based on a 7% commission. No lower commission rate is acceptable.” If the broker attempts to impose this uniform commission requirement, which statement is TRUE?

A

A)
The sales associates of the brokerage will not be bound by the requirement and may negotiate any commission rate they choose.
B)
The broker must present the uniform commission policy to the local professional association for approval.
C)
The broker may, as a matter of office policy, legally set the minimum commission rate acceptable for the firm.
D)
A homeowner may sue the broker for violating the antitrust law’s prohibition against price-fixing.

The answer is the broker may, as a matter of office policy, legally set the minimum commission rate acceptable for the firm. Brokers have the right to set commissions within their own firm. This is not an antitrust violation. Sales associates who wish to continue with that broker can be required to comply.

47
Q

To be entitled to receive compensation from a real estate sales transaction, an individual must be all of the following EXCEPT

A
A)
employed by the buyer or the seller under a valid contract.
 B)
a licensed real estate broker.
 C)
the procuring cause of the sale.
 D)
unrelated to either the buyer or the seller.

The answer is unrelated to either the buyer or the seller. All parties should be notified of the broker’s relationship to either buyer or seller.

48
Q

The National Association of REALTORS® has adopted a code of ethics for

A
A)
all real estate licensees.
 B)
states that have adopted its code.
 C)
its members.
 D)
all real estate professionals.

The answer is its members. The National Association of REALTORS® adopted a code of ethics for its members in 1913.

49
Q

All of the following are required of a broker who is seeking to collect a commission for brokering the sale of a property EXCEPT

A

A)
complying with a commission rate set by a trade organization.
B)
having had a contract of employment—an agency representation agreement.
C)
having a valid real estate broker’s license.
D)
having been the procuring cause in the transaction or having an exclusive-right-to-sell agreement.

The answer is complying with a commission rate set by a trade organization. Professional organizations may not set fees or commissions splits.

50
Q

The primary reason real estate license laws exist is to protect

A
A)
licensees from unlicensed individuals.
 B)
real estate firms.
 C)
government agencies.
 D)
consumers.

The answer is consumers. The main objective of real estate license laws is to make sure that the rights of purchasers, sellers, tenants, and owners are protected from unscrupulous or negligent practices.