Ch 13: Listing Agreements

Question 1

A broker listed a widow1s property for a 7% commission. Later, the widow discovered that the broker had been listing other property at a 6% fee. Based on these facts:

a. Widow can recover from the Recovery Fund
b. Widow is entitled to a refund
c. Broker has done nothing wrong
d. Broker can lose his license

Answer 1

c. Broker has done nothing wrong

Commission rates are established through negotiations between the seller and the broker. Rates can vary between listings based on the negotiations and the nature of the agreed-upon project.

Question 2

While negotiating a listing, the salesperson SHOULD advise the seller that the:

a. Brokerage fee cannot be negotiated
b. Brokerage fee cannot exceed 6%
c. Sale cannot be guaranteed
d. Listing agreement must have a term of six months

Answer 2

c. Sale cannot be guaranteed

In negotiating a listing the agent should not guarantee that the sale will be made.

Question 3

Elizabeth is a salesperson with 123 Realty and is about to change firms. Should she contact all her clients and tell them she will represent them at her new firm?

a. No. A listing cannot be terminated by the buyer.
b. No. The listings belong to the broker, not the salesperson.
c. Yes. The listing is a personal service agreement and belongs to the salesperson.
d. Yes. The salesperson is the one representing the sellers and buyers

Answer 3

b. No. The listings belong to the broker, not the salesperson.

Listings belong to the employing broker and a departing licensee should not contact the clients unless the brokerage approves of such actions.

Question 4

A licensed salesperson referred a buyer to an out-of-state broker who agreed to pay a commission for the referral. The licensed salesperson would be paid by:

a. The seller
b. His or her broker
c. The buyer
d. The out-of-state broker

Answer 4

b. His or her broker

A licensed salesperson can only receive a commission from his or her broker.

Question 5

A property is listed by broker Tom and $92,500 with $30,000 down. Broker Jim brought a full price cash offer that the owner rejected. Broker Jim is entitled to:

a. The commission split agreed upon
b. Half the commission
c. The full commission
d. Nothing

Answer 5

d. Nothing

The listing is a contract between the broker and the seller for the broker to find a ready, willing and able buyer. The seller does not have to accept an offer presented by the broker; however if the offer from a qualified buyer exactly matches the terms of the listing the broker has earned the commission. In this question the listing was for $30,000 down and the offer brought by Broker Jim was a full price cash offer. Therefore, no commission is due broker Jim.

Question 6

A salesperson knows that the buyer1s closing costs on a specific sales transaction are likely to be $1,500. The buyer wants to make an offer, but is concerned about coming up with enough money for the down payment and the closing costs. In order to help the buyer decide to make the offer, the salesperson says that the seller usually pays all of the closing costs. This comforts the buyer and he makes the offer, only to find out later about the $1,500 in closing costs that he will have to pay.

What ethical or legal violations, if any, has the salesperson most likely committed?

a. Misrepresenting to the seller, the amount of the buyer1s down payment
b. Misrepresenting the buyer1s ability to repay a note to the seller.
c. Underestimating closing costs to induce the buyer to make an offer
d. Modifying the listing agreement without the buyer1s authorization

Answer 6

c. Underestimating closing costs to induce the buyer to make an offer

All of the answer choices are violations of the ethical and legal duties of the agent; however underestimating closing costs that the buyer will have to pay is the correct answer for this question.

Question 7

Real estate commissions are ordinarily a:

a. Percentage of actual cash received
b. Flat fee
c. Percentage of the sales price
d. Percentage of seller’s equity

Answer 7

c. Percentage of the sales price

Commissions are almost always a percentage of the sales price.

Question 8

A salesperson has acted in an unethical manner. His broker:

a. Would not be liable
b. Should immediately terminate the salesperson
c. May be liable for failure to supervise
d. Should ignore the problem

Answer 8

c. May be liable for failure to supervise

The broker is responsible for all acts of the licensed salespersons working for the broker. This responsibility includes the supervision of the agents; therefore the broker would be liable for the unethical conduct of a salesperson licensed with the broker.

Question 9

The amount of commission due to a licensed salesperson in Arizona is determined by:

a. Mutual agreement
b. State law
c. Court decrees
d. Local Association of REALTORS

Answer 9

a. Mutual agreement

The amount of the commission or the commission rate is determined by negotiations between the seller and the broker and finalized by their mutual agreement that is documented in the written listing agreement. The amount of commission due the licensed salesperson is the result of negotiations between the broker and his or her licensed sales person.

Question 10

A listing is a contract between the:

a. Broker and salesperson
b. Buyer and seller
c. Seller and broker
d. Buyer and broker

Answer 10

c. Seller and broker

A listing is a contract between the seller and the broker and it is considered a contract for personal services.

Question 11

The owner sold his home without the services of the broker prior to the expiration of an exclusive agency listing. The broker is entitled to:

a. One half of the commission
b. Costs
c. The full commission
d. Nothing

Answer 11

d. Nothing

The exclusive agency listing eliminates the obligation to pay a commission to the listing broker when the owner procures the buyer.

Question 12

A broker who desires to be compensated if another person sells the property during the listing period should acquire a/an:

a. Net listing
b. Exclusive right to sell listing
c. Exclusive agency listing
d. Open listing

Answer 12

b. Exclusive right to sell listing

An exclusive right to sell listing obligates a seller to pay the listing broker a commission no matter who procures the buyer. The listing broker will most likely co-operate with the buyer1s broker and pay a portion of the commission received from the seller to the buyer’s agent.

Question 13

An owner gave an exclusive listing to broker Joe and an open listing to broker Mary. Mary sold the property and was paid a commission. Which of the following statements are correct?

a. Joe got nothing because he did not handle the sale
b. Mary must share the fee with Joe
c. Joe can report Mary to the Commissioner because she took his commission.
d. Joe is due a full commission

Answer 13

d. Joe is due a full commission

Joe is due the full commission because Joe had an exclusive listing meaning no matter who procured the buyer the agreed upon commission was due him. Before Mary agreed to the open listing, she was required to inform the owner in writing that by signing the open listing the owner was agreeing to pay the commission to Joe and the commission to Mary. If Mary did not do that she was in violation of the Statutes.

Question 14

If a property was sold but the owner did NOT have to pay a commission, most likely the listing was a/an:

a. Multiple Listing
b. Exclusive Right to Sell Listing
c. Exclusive Agency Listing
d. Net Listing

Answer 14

c. Exclusive Agency Listing

An Exclusive Agency Listing engages a brokerage as the owner1s exclusive agent and a commission is required to be paid if any agent is responsible for procuring the buyer. If the owner finds the buyer without the assistance of the licensed agent then no commission is due under an Exclusive Agency Listing.

Question 15

The parties to an Unrepresented Seller Compensation Agreement are the:

a. Seller and the Broker
b. Seller and the Buyer
c. Seller and Licensed Salesperson
d. Broker and the Buyer

Answer 15

a. Seller and the Broker

The parties to the Agreement are the Seller and the Broker.

Question 16

When a property is being offered for sale or lease by an owner who is not represented by a licensed real estate agent, the document to be entered into between the seller and broker representing a potential buyer is a:

a. Open Listing
b. Net Listing
c. Unrepresented Seller Compensation Agreement
d. Buyer-Broker Exclusive Employment Agreement

Answer 16

c. Unrepresented Seller Compensation Agreement

The Unrepresented Seller Compensation Agreement is the appropriate agreement when a licensed real estate agent has a potential buyer interest in a property that is for sale by an owner that is not represented by a licensed real estate agent.

Question 17

Language requiring a broker to use his best efforts would MOST LIKELY be found in:

a. Exclusive listing
b. Offer to purchase
c. Open listing
d. MLS rules

Answer 17

a. Exclusive listing

The exclusive listing will have a requirement for the broker to use his/her best efforts to fulfill the obligation to find a ready, willing and able buyer, since the seller is agreeing to exclusively hire that agent. The Open Listing creates no obligation for the broker to use best efforts, since the seller has not agreed to hire the agent exclusively.

Question 18

An owner would MOST likely appoint multiple agents under:

a. Open listings
b. Option agreements
c. General powers of attorney
d. Exclusive agency agreements

Answer 18

a. Open listings

An owner, especially an owner of commercial property, will frequently sign several open listings.

Question 19

A listing agreement for a property that is not available for showing or sale until a later date is known as a:

a. Exclusive agency listing
b. Coming soon listing
c. Pocket listing
d. Net listing

Answer 19

b. Coming soon listing

A Coming Soon listing refers to a property that is not available for showing or sale until a later date. “Coming soon” can be a legitimate advertising technique, allowing the owners more time to complete repairs, pack or otherwise prepare the property for showing or sale.

Question 20

Which of the following statements is NOT true?

a. An exclusive agency permits the seller to sell without liability to pay a commission to the broker
b. The listing must show a definite expiration date
c. In an open listing the broker or salesperson who is the procuring cause receives the commission
d. A net listing is illegal in Arizona

Answer 20

d. A net listing is illegal in Arizona

A net listing is discouraged in Arizona, but it is not illegal.

Question 21

Paul executed a listing agreement with a broker for a six-month period and reserved the right to sell the property himself without paying a commission. This listing is called:

a. Broker protected listing
b. Exclusive agency
c. Exclusive right to sell
d. Multiple listing

Answer 21

b. Exclusive agency

Exclusive Agency means that if a real estate agent locates the buyer a commission will be paid, but if the owner locates the buyer no commission is due the broker.

Question 22

An exclusive agency may NOT be terminated:

a. Unilaterally by agent or principal
b. By the principal when the broker is making the principal’s payments to avoid foreclosure
c. Before its expiration date
d. If the broker has been using diligent effort

Answer 22

b. By the principal when the broker is making the principal’s payments to avoid foreclosure

A personal service contract, including an exclusive agency, can generally be terminated at any time by either party. However, if the personal service contract is “coupled with an interest” such as paying the mortgage, it cannot.

Question 23

A listing agreement that does not require the listing broker to arrange appointments for cooperating brokers to show the listed properties are:

a. Categorized as a limited service listing by local MLS
b. In violation of MLS Rules
c. Not accepted by local MLS
d. Illegal

Answer 23

a. Categorized as a limited service listing by local MLS

A Multiple Listing Service (MLS) may, as a matter of local discretion, categorize listings as limited service in instances where listing brokers, pursuant to their listing agreements, will not provide certain services including the arranging appointments for cooperating brokers to show listed properties to potential purchases.

Question 24

The best practices for legitimate Coming Soon listings include all of the following, EXCEPT:

a. Property is under a signed listing agreement
b. Property can be shown to clients of the listing broker only
c. Compliance with all state licensing laws and regulations
d. Have client1s informed consent

Answer 24

b. Property can be shown to clients of the listing broker only

Legitimate Coming Soon listings will restrict showings equally to all potential buyers.

Question 25

A listing agreement held by the broker that is never advertised nor entered into a multiple listing system or where advertising is limited for an agreed-upon period of time is known as a:

a. Coming soon listing
b. Pocket listing
c. Net listing
d. Exclusive agency listing

Answer 25

b. Pocket listing

A pocket listing is a real estate industry term used to denote a property where a broker holds a signed listing with the seller, whether that be an Exclusive Right to Sell or Exclusive Agency agreement, but where it is never advertised nor entered into a multiple listing system or where advertising is limited for an agreed-upon period of time.