Chapter 1 Multiple Choice

Question 1

How long does a salesperson have to close transactions if the salesperson is no longer associated with a firm?

A. A salsas person cannot practice real estate unless associated with a firm.
B. 10 days
C. 10 days from the date the salesperson sends a notice to the DSPS
D. The DSPS will notify the salesperson of the grace period for closing transactions.

Answer 1

A. If a salesperson is no longer associated with a firm, the salesperson must stop practicing real estate until associated with another firm. There is no grace period during which a salesperson can conclude transactions, even if the salesperson is without fault in the situation.

Question 2

To whom does a licensee owe the duties of providing brokerage services fairly and honestly, providing accurate market conditions, safeguarding trust funds, using reasonable skill and care, disclosure of all material adverse facts, confidentiality and objectively presenting offers?

A. The seller.
B. The selling firm.
C. All parties to the transaction
D. The buyer.

Answer 2

C. All parties to the transaction.

Question 3

What or whom does the seller hire with an agency agreement?

A. The listing licensee
B. The listing firm.
C. The selling licensee.
D. The selling firm.

Answer 3

B. The listing firm is the agent of the seller. The seller hires the firm with a listing contract. The listing firm engages licensees as the firm’s agents.

Question 4

Which activity can an unlicensed personal assistant NOT do?

A. Create marketing pieces for the licensee’s listings.
B. Negotiate an offer on behalf of a licensee’s buyer.
C. Complete an approved form at the direction of the licensee.
D. Conduct an open house with a licensee present.

Answer 4

B. Wis. Stat. 452.34 states that an unlicensed personal assistant can perform clerical duties on behalf of a salesperson including creating marketing pieces and filling in the blanks on an approved form. An unlicensed personal assistant could not conduct an open house unless a licensed person supervises the event and could not negotiate an offer on a buyer’s behalf.

Question 5

Which must occur when a licensee terminates association with a firm?

A. The licensee must surrender the person’s real estate license to the DSPS within 10 days of terminating association with the firm.
B. The licensee must send termination paperwork to the licensee’s firm 10 days before the date of termination.
C. The licensee must send termination paperwork to all former clients of the licensee.
D. The licensee must notify the DSPS in writing of the termination within 10 days.

Answer 5

D. Wis. Stat. 452.30: A licensee that ceases to be associated with a firm shall, through the use of a form prescribed by the department, send written notice to the department within 10 days after the date on which the licensee ceases to be associated with the firm.

Question 6

When must a licensee inform a client about multiple representation relationships?

A. When presenting the closing statement.
B. Prior to or at the time of entering into the agency agreement.
C. Before commission is paid.
D. Any time.

Answer 6

B. A firm must disclose agency to clients prior to or at the time of entering into an agency agreement. A client chooses whether to consent to multiple representation relationships when executing an agency agreement. A firm must provide agency disclosure to customers before negotiations.

Question 7

Which of the following describes the relationship when a seller lists a property with a firm?

A. The seller is the firm’s customer.
B. The seller is a fiduciary of the firm.
C. The firm is the selling firm.
D. The seller is the firm’s client.

Answer 7

D. The listing contract is an agency agreement, making the seller the firm’s client.

Question 8

What should a salesperson do if the DSPS suspends the licensee’s firm’s license?

A. Amend all agency agreements to remove the firm’s name and replace it with the licensee’s name.
B. Conclude all transactions within the 10-day grace period.
C. Stop participating in any real estate transactions.
D. Notify all buyers and sellers before the two-week conclusion period.

Answer 8

C. A salesperson can only practice real estate when associated with a firm and under the supervision of a supervising broker. There is no grace period, and if the salesperson is no longer associated with a firm, the salesperson must stop participating in all real estate transactions.

Question 9

Which of the following statements is true of multiple representation relationships with designated agency?

A. One party cannot withdraw consent to designated agency unless the other party also withdraws consent.
B. Both the buyer and the seller are customers of the same firm in the same transaction.
C. Clients who select designated agency must consent in writing.
D. Both the buyer and the seller may be represented by the same person.

Answer 9

C. When a buyer and a seller are clients of the same firm in the same transaction, the firm is representing multiple parties, and the parties must consent in writing. Because they have agency agreement, the buyer and the seller are not customers, and because they chose designated agency, the firm must assign an agent for each party. Either party can withdraw consent to multiple representation with or without designated agency at any time.

Question 10

A licensee’s son wants to list property with the licensee’s firm. What are the licensee’s ethical obligations?

A. The licensee can list it as long as the licensee notifies the DSPS of the relationship.
B. The licensee can list it as long as the licensee does not accept a commmission when the property sells.
C. The licensee must disclose the relationship between the licensee and the seller.
D. The licensee must refuse to list the property because of the potential conflict of interest.

Answer 10

C. The licensee can list it as long as the licensee discloses the relationship to the parties. Wis. Admin. Code REEB 24.05(2): A licensee acting as an agent in a real estate or business opportunity transaction may not act in the transaction on the licensee’s own behalf, on behalf of the licensee’s firm, on behalf of any member of the licensee’s immediate family or any combination of members of the licensee’s immediate family, or on behalf off any other organization or business entity in which the licensee has an interest without the prior written consent of all parties to the transaction. For the purpose of this subsection, a licensee shall obtain the written consent in the offer to purchase, option, lease or other transaction contract.

Question 11

Who is NOT acting as a licensee?

A. A property manager who signs leases on behalf of the landlord.
B. A broker.
C. A salesperson.
D. An unlicensed personal assistant who holds a valid real estate license.

Answer 11

D. A firm can hire a person who holds a real estate license to do unlicensed work for the firm. In this case, the person is functioning as an unlicensed personal assistant even though the person holds a real estate license.

Question 12

Unlicensed individuals working in a real estate office may:

A. Show properties to buyers.
B. Conduct open houses.
C. Be paid on commission.
D. Be employed by licensed salespeople.

Answer 12

D. A licensee associated with a firm, prior to retaining an individual to serve as an unlicensed personal assistant, shall enter into a written agreement with the licensee’s firm, setting forth the duties of the unlicensed personal assistant, the manner in which the unlicensed personal assistant will be compensated for their services, and the responsibilities of the licensee and the firm with respect to supervision of the unlicensed personal assistant’s activities.

Question 13

What must a licensee do for the licensee’s client?

A. Fulfill all seller requests and put the seller’s interests ahead of all other parties.
B. Fulfill the requirements of the agency agreement.
C. Disclose confidential information if it is beneficial to the client.
D. Refuse to present offers unless the seller will net sufficient proceeds on the sale.

Answer 13

B. The licensee must fulfill the requirements of the agency agreements. The licensee cannot refuse to present offers based on the licensee’s opinion of the offer. A licensee cannot disclose confidential information even if it would be beneficial to the licensee’s client. A licensee should fulfill a client’s requests,, except in the case of unlawful requests or where fulfilling the requests requires the licensee to engage in unlawful conduct, such as housing discrimination. The licensee cannot put the seller’s interests ahead of all other parties in the transaction because if a duty to the client conflicts with a duty to all parties, the licensee must comply with the duties to all parties.

Question 14

A listing firm lists a property. A buyer’s firm successfully writes the offer on the property. How do you describe the firms?

A. Unethical.
B. Sub agent firms.
C. Multiple representation firms.
D. Cooperating firms.

Answer 14

D. When two firms are engaged in a transaction, they are called cooperating firms.

Question 15

What is a licensee’s deadline for providing agency disclosure to a client?

A. Before negotiating on the client’s behalf.
B. Before or at the time of entering into an agency agreement with the client.
C. Before closing.
D. Before writing the offer.

Answer 15

B. A licensee must provide agency disclosure to a client before or at the time of entering into an agency agreement with the client.

Question 16

A firm operates a home staging company. The firm takes a listing for a seller, and the firm wants to offer home staging services to the seller. Can a licensee associated with the firm contact the seller and offer home staging services?

A. Yes, the firm can offer home staging services to the seller as long as the firm has an unlicensed personal assistant contact the seller and no licensee discusses home staging services.
B. Yes, the firm can offer home staging services to the seller as long as the firm discloses the firm’s interest in the home staging business.
C. No, it is an illegal tie-in arrangement to offer a different service to a client seeking real estate services.
D. No, the firm must conduct real estate and home staging transactions from two separate offices and cannot mix business or contacts between the two operations.

Answer 16

B. Wis. Admin. Cod REEB 24.05(1)(b): A licensee acting as an agent in real estate or business opportunity transaction may not recommend or suggest to a party to the transaction the services of another individual or entity from which the licensee may receive compensation for a referral or in which the licensee has an interest, unless the licensee, prior to or at the time of referral, disclose to the party in writing the fact that he or she may receive compensation for the referral of that he or she has an interest in the individual or entity providing services.

Question 17

Which activity requires a real estate license?

A. A loan officer completing a loan application.
B. An attorney representing a client in a real estate transaction.
C. An individual negotiating the terms of another’s business sale.
D. A sheriff conducting a foreclosure sale.

Answer 17

C. Wis. Stat. 452.01: A broker does not include 1) receivers, trustees, administrators, executors, guardians or other persons appointed by or acting under the judgement or order of any court; 2) public officers while performing their official duties; 3) attorneys licensed to practice in this state while acting within the scope of their attorney’s license; 4) any lender when engaged in the transaction of business within the scope of its corporate powers as provided by law.

Question 18

A seller executes a listing contract with a licensee for the listing firm. Which of the following statements INCORRECTLY describes the parties’ relationship?

A. The listing licensee is the firm’s agent.
B. The listing firm is the seller’s agent.
C. If the listing licensee dies, the agency agreement terminates.
D. The listing licensee and the listing firm owe fiduciary duties to the seller.

Answer 18

C. The agency relationship is between the firm and the client, so the unfortunate death of the listing licensee does not change the agency relationship between the firm and the seller.

Question 19

When can a licensee draft an offer for a family member?

A. When the licensee refuses the sign a buyer agency agreement with the buyer.
B. When the licensee does not disclose it.
C. When the licensee discloses the relationship and the buyer and the seller consent.
D. Never.

Answer 19

C. Representing family members in a real estate transaction is permitted as long as there is consent and disclosure to all parties.

Question 20

When can a client waive the duty of negotiation?

A. When the client waive the duty fully and hires and attorney for settlement services.
B. Only if the firm agrees to reduce the commission on a transaction.
C. As long as the client waives it before a firm advertises a property.
D. When the waiver is in writing and a firm provides mandatory disclosure of the effect of a waiver of the duty of negotiation.

Answer 20

D. A client can waive the duty of negotiation in full or in part. The written waiver must contain a copy of the text of the duty the client is waiving, a statement that the firm will not have a legal duty to negotiate, and a warning that the client may need to hire an attorney or other service provider because of the waiver.

Question 21

A firm list a property for a husband and wife for $157,000. The wife’s employer transferred her position to another state, and the couple needs to sell quickly. To assist the couple and entice some offers for the couple to consider, the listing licensee decides to tell a buyer that the couple will probably accept slightly below list price. The buyer wrote an offer that the sellers accepted. What did the licensee do?

A. Violated the duties to all parties in a transaction by not telling the buyer that the sellers needed to sell quickly.
B. Violated the duties to a client.
C. Fulfilled agency obligations under the contract by finding. A buyer.
D. Protected the seller’s interest by generating offers for the sellers to review.

Answer 21

B. The licensee violated the duties to a client even though the licensee’s action may have benefited the sellers by enticing buyers to submit offers. Unless the sellers authorized the licensee to reveal that they might take less than list price because they needed to sell quickly, the licensee violated the duty of confidentiality and loyalty.

Question 22

A homeowner is selling a residential property without listing it to a buyer who is not working with a firm. What do the seller and the buyer need to do to fill out the state-approved offer to purchase?

A. The seller or the buyer must hire a licensee to complete the form.
B. The seller or the buyer must hire an attorney to complete the form.
C. Nothing.
D. One party needs to obtain a real estate license.

Answer 22

C. Buyers and sellers can complete state-approved real estate forms without the assistance of a licensee or an attorney. Individual buyers and sellers do not need a real estate license to complete the forms or the transaction.

Question 23

What is presumptive evidence of a pattern of sales?

A. 10 sales in five years or one sale in 10 years.
B. Five sales in five years or 10sales in 10 years.
C. Five sales in one year or 10 sales in five years.
D. 10 sales in one year or five sales in five years.

Answer 23

C. Wis. Stat. 452.01: A broker is engaged wholly or in part in the business of selling or exchanging interests or estates in real estate or business, including businesses’ goodwill, inventory or fixtures, whether or not the business includes real property, to the extent that a pattern of sales or exchanges is established, whether or not the person owns the real estate or business. Five sales in one year or 10 sales in five years is presumptive evidence of a pattern of sales or exchanges.

Question 24

A licensee wants to write an offer on a property listed with the licensee’s firm. Which duty to the client is the licensee in danger of violating?

A. Care
B. Confidentiality
C. Obedience
D. Loyalty

Answer 24

D. If a licensee tried to purchase a property listed with the licensee’s firm, the licensee’s own interests are competing with the interests of the seller, which would prevent the licensee from placing the seller’s interests ahead of the licensee’s interests. This violates the licensee’s duty of loyalty to the seller.

Question 25

Which of the following statements INCORRECTLY describes a multiple representation relationship?

A. The firm owes both parties the duty of confidentiality.
B. The firm owes loyalty to the party who first signed an agency agreement with the firm.
C. All parties must consent in writing to a firm representing multiple parties in a transaction.
D. A firm must disclose multiple representation to all parties in writing.

Answer 25

B. Wis. Stat. 452.134: If a firm’s client in a multiple representation relationship does not consent to designated agency or withdraws consent to designated agency, the firm and any licensee associated with the firm may not place the interests of any client ahead of the interests of any other in the negotiations.

Question 26

How does multiple representation with designated agency affect clients?

A. If both parties consent to designated agency in writing, each designated agent negotiates on behalf of the agent’s client, even if negotiation places the interests of one client ahead of another.
B. If a client consents to designated agency, a licensee may place the firm’s interest ahead of the clients.
C. If a client consents to designated agency, the firm and the firm’s licensees must remain neutral.
D. After a client consents to designated agency, the client cannot withdraw consent unless the other client agrees because clients’ agency choices must match.

Answer 26

A. When both parties consent to designated agency, a firm assigns each party an agent who negotiates on behalf of the agent’s client even if the negotiation places the interests of one of the firm’s client’s ahead of the other. If the clients do not consent to designated agency, the firm must remain neutral in the negotiation. A client can withdraw consent to designated agency at anytime.

Question 27

What is a fiduciary?

A. A set of principles that govern how a firm cooperates with other firms.
B. A person who is responsible for the property of another.
C. A set of laws that describe the responsiblities and obligations of a person who acts for another.
D. A person who starts an action that fulfills the goals of a principle.

Answer 27

B. A fiduciary is a person who is responsible for the property of another. Fiduciary duties are the set of laws that describe the responsibilities and obligations of a person who is a fiduciary for another.

Question 28

A builder owns several lots in a subdivision. The builder sells a lot contingent on the buyer’s agreement to use the builder to construct a home on the lot. Can the builder do this?

A. No, it is an illegal tie-in arrangement that violates Wisconsin administrative rules.
B. No, it is an illegal tie-in arrangement that violates antitrust laws.
C. Yes, it is a legal tie-in arrangement as long as the builder offers a home warranty.
D. Yes, it is a legal tie-in arrangement according to Wisconsin administrative rules.

Answer 28

D. Wis. Admin. Code REEB 24.075: Licensees shall not condition the sale of vacant real estate owned by the licensee or whose sale is effectively controlled by the licensee upon the buyer’s agreement to employ one or more specific builders to make improvements on the real estate unless the builder owns a bona fide interest in the real estate and there is full disclosure.

Question 29

Which of the following statements is true of a licensee’s agency disclosure duties?

A. The licensee must provide agency disclosure before giving information about a property to a buyer.
B. The licensee does not have to provide agency disclosure in nonresidential transactions.
C. A licensee does not have to provide agency disclosure in nonresidential transactions.
D. The licensee must provide agency disclosure and request acknowledgement from the recipient of the disclosure when listing a single-family home.

Answer 29

D. A licensee must provide agency disclosure in all real estate transactions. For a client, the licensee must provide it when entering into the agency contract; and for customers, the licensee must provide it prior to negotiations. Just providing a customer with information about a property is not negotiation. A licensee only has to ask for acknowledgment of receipt of agency disclosure in transactions in involving residential properties with one to four dwelling units.

Question 30

A buyer executes an option to purchase with a seller. Which of the following statements is true?

A. The buyer is the optionor.
B. The buyer must purchase the property.
C. The seller is the optionee.
D. The seller must sell if the buyer chooses to buy.

Answer 30

D. The seller (the optionor) must sell the property if the buyer (the optionee) chooses to purchase the property.

Question 31

Which of the following statements INCORRECTLY describes a firm’s supervision responsibilities?

A. The firm cannot delegate supervision to a supervising broker.
B. The firm must provide reasonable review of all documents and records related to transactions.
C. The firm must ensure licensee associated with a firm are properly licenses.
D. The firm must provide licensees associated with a firm with a written statement of office procedures for handling transaction documents.

Answer 31

A. A firm’s supervision responsibilities include reasonable review of all documents and records relating to transaction, ensuring all licensees associated with the firm are properly licensed, and providing all licenses associated with the firm a written statement of office procedures on handling transaction documents. A firm can delegate supervision responsibilities to a supervising broker.

Question 32

Which agreement gives a buyer the right to acquire a property at a fixed price for a period of time?

A. An exchange
B. A lease
C. An option to purchase
D. An offer to purchase

Answer 32

C. An option to purchase is an agreement between a buyer and a seller where the buyer has the right to purchase a property for a fixed price for a period of time.

Question 33

When can a firm collect compensation from both a buyer and a seller?

A. Never
B. When the firm holds a Wisconsin real estate license.
C. When the firm’s client consents.
D. When the buyer and the seller are related.

Answer 33

C. Wis. Admin. Code REEB 24.05: A licensee acting as an agent in a real estate or business opportunity transaction may not accept any fee or compensation related to the transaction from any person, other that the licensee’s client, principal firm or firm the licensee is associated with without prior written consent from all parties to the transaction.