CH8: NC Real Estate Exam Practice Questions | Agency Contracts

Question 1

Samuel Seller lists his property with Exclusive Realty. Eventually, Samuel convinces a co-worker, Wanda ish to purchase his home. In which situation would Samuel not owe a commission to Exclusive Reality?

a. an open listing
b. a percentage listing
c. an exclusive right to sell listing
d. a net lisitng

Answer 1

a. an open listing

Question 2

Earnest money is:

a. synonymous with consideration
b. typically held in a trust account
c. a minimum of $250
d. all of the above

Answer 2

b. typically held in a trust account

Question 3

Which of the following clauses is required by the NC Real Estate Commission to be contained within every listing agreement?

a. protection clause
b. antitrust clause
c. compensation clause
d. anti-discrimination clause

Answer 3

d. anti-discrimination clause

Question 4

Steve Seller needs to receive $180,500 from the sale of his house after paying the broker a 5% commission. How much must the house sell for?

a. $190,000

b, $`180,500

c. $189,525
d. $171,475

Answer 4

a. $190,000

Step #1: 100% minus 5% = 95%
Step #2: $180,500 divided by 95% =

Question 5

Exclusive Right to Represent Buyer Agreement must have all of the following characteristics EXCEPT:

a. being in writing
b. having a definite termination
c. specifying provisions for an automatic renewal
d. incorporating conspicuously the commission prescribed “Description of Agent Duties and Relationships.”

Answer 5

c. specifying provisions for an automatic renewal

Question 6

Lewis purchased a home two years ago for $120,000 by paying $30,000 as a down payment. Assuming that the value of the home has increased by 10% by what percentage has his equity increased?

a. 6.8%
b. 31.8%
c. 40%
d. 46.7%

Answer 6

c. 40%

Step #1: $30,000 is the initial equity put in
Step #2: $120,000 x 10% = $12,000
Step #3: $12,000 divided by $30,000 = 40%

Question 7

the type of listing agreement for which the seller will owe the listing agency a commission regardless of who sells the property is a:

a. open listing
b. exclusive agency listing
c. exclusive right to sell listing
d. co-brokered listing

Answer 7

c. exclusive right to sell listing

Question 8

Which is true of a valid listing agreement in North Carolina?

a. it must contain a nondiscriminatory clause
b. it may be oral up to the presentation of the first offer
c. t requires the seller to sell if a full price offer is made by the buyer
d. it can contain an automatic renewal clause if both parties agree to it in writing

Answer 8

a. it must contain a nondiscriminatory clause

Question 9

The buyer originally paid $150,000 for his house by paying $25,000 down. If the house is now valued at $160,000 by what percentage has his equity increased?

a. 22%
b. 40%
c. 6.25%
d. 5%

Answer 9

Step #1: 160,000 minus 150,000 = 10,000 increase

Step #2: 10,000 divided by 25,000 = 40% gain

Question 10

All of the following will automatically terminate a residential listing agreement EXCEPT:

a. expiration of the listing period
b. death of the seller
c. death of the listing broker who works at a large residential firm with many agents
d. sale of the house

Answer 10

c. death of the listing broker who works at a large residential firm with many agents

Question 11

Christy has sold a property that was listed at a 5% commission rate with another firm for $240,000. The listing firm agrees to a 50/50 commission split with the seller firm. Christy’s company will charge a 5% franchise fee on all earned commissions and will then pay her 65% of the remainder. How much did Christy earn?

a. $4,200
b. $3,705
c. $3,900
d. $5,700

Answer 11

b. $3,705

Step #1: 5% of $240,00 sale is $12,000
Step #2 $12,000 divided by 2 = $6,000
Step #3: $6,000 x 95% (firm takes 5%) =$5700
Step #4: $5700 x 65% = $3,705

Question 12

The clause in a listing contract that protects the buyers commission entitlement beyond the listing term in the event of a sale of the property by the owner to a prospect who was shown the property by the listing firm or its agent is called a:

a. forfeiture clause
b. extender clause
c. settlement clause
d. exclusive right clause

Answer 12

b. extender clause

Question 13

Which of the following would likely not constitute a violation of the Sherman Antitrust Act?

a. a boycott of a discount brokerage’s listing
b. agreement with competitors to set commission rates
c. refusal to place advertisements in a local paper that accepts ads for sale by owners
d. a firm raising of its own commission rates

Answer 13

d. a firm raising of its own commission rates

Question 14

The rate of commission to be lawfully charged in a real estate transaction is set by:

a. the local MLS
b. the association of realtors
c. the Sherman antitrust law
d. the firm and the seller

Answer 14

d. the firm and the seller

Question 15

An investor paid $150,000 for a property that he sold four years later for $210,000. What was his average annual rate of profit?

a. 10%
b. 4.5%
c. 7.25%
d. 40%

Answer 15

a. 10%

Step #1: 210,000-150,000 = 60,000
Step #2: 60,000 divided by 150,000 = 40%
Step #3: 40% divided by four = 10%

Question 16

The primary difference between an open listing and an exclusive agency agreement would be:

a. seller retains the right to sell the property himself and is not liable for a commission
b. seller can list with as many brokerages as he wishes in the open listing
c. exclusive agency agreement stipulates the firm is the only one that can sell the property and be entitled to a commission regardless of who sells it even the seller
d. seller can sell it himself in the exclusive agency agreement but isn’t allowed to sell it himself in the open listing without being liable for the commission

Answer 16

b. seller can list with as many brokerages as he wishes in the open listing

Question 17

A property recently sold for $225,000 at a commission rate of 6%. if the firm collects a 6% franchise fee from the total commission and then pays the agent 55% of the remainder, how much did the agent make on this transaction?

a. $8,235
b. $7,425
c. $6,979.50
d. $5,710

Answer 17

c. $6,979.50

Step #1: $225,000 x 6% = $13,500
Step #2: $13,500 x 6%= $810.00
Step #3: $13,500 minus $810.00 = $12,690
Step #4: $11,690 x 55% = $6,979.50

Step #2:

Question 18

Angela wishes to net $25,000 from the sale of her house after paying off her loan of $121,900, miscellaneous costs of $3,500, and a commission of 6%. What should be the selling price of the property?

a. $141,376
b. $158,404
c. $159,424
d. $160,000

Answer 18

d. $160,000

Step #1: $25,000 plus $121,900 plus $3500 = 150,400
Step #2: 100% minus 6% = 94%
Step #3: 94% divided 150,400 = $160,000