Chapter 13

Question 1

anti-trust
laws

Answer 1

Laws and regulations aimed
at promoting fair competition
and preventing monopolistic
practices in the marketplace,
including price-fixing,
collusion, and market
allocation.

Question 1

brokerage

Answer 1

real estate brokerage is a
company or agency that
employs real estate agents to
facilitate real estate
transactions on behalf of
clients

Question 2

business
brokerage

Answer 2

specialized field of real
estate brokerage focused on
facilitating the sale or
purchase of businesses,
including small businesses,
franchises, and commercial
enterprises

Question 3

co-brokerage

Answer 3

cooperative agreement
between two or more
brokerage firms to share
commissions and work
together on a real estate
transaction.

Question 4

collusion

Answer 4

illegal agreement or
secret cooperation between
competitors to deceive,
manipulate, or control the
market to their advantage,
typically involving price-fixing
or market allocation

Question 5

commingling

Answer 5

Mixing or combining client
funds with personal or
business funds, which is
prohibited in real estate
transactions to protect client
funds from misuse

Question 6

commission

Answer 6

fee paid to a real estate
agent or broker for their
services in facilitating a real
estate transaction, usually
calculated as a percentage of
the property’s sale price or
lease value

Question 7

employee

Answer 7

person who works for an
employer under a contract of
employment, receiving
wages or salary and typically
subject to the employer’s
direction and control.

Question 8

goodwill

Answer 8

The intangible value or
reputation associated with a
business, including its brand,
customer loyalty, reputation,
and positive relationships,
which can contribute to its
market value

Question 9

independent
contractor

Answer 9

A person who works for
themselves and is not
considered an employee of
another company, typically
responsible for managing
their own work schedule,
taxes, and business
expenses

Question 10

market
allocation

Answer 10

An illegal practice where
competitors agree to divide
markets or territories among
themselves, eliminating
competition and depriving
consumers of choice

Question 11

price
fixing

Answer 11

An illegal practice where
competitors agree to set
prices at a certain level,
eliminating competition and
artificially inflating prices for
consumers

Question 12

prospecting

Answer 12

process of identifying
and pursuing potential
clients or leads for real estate
transactions, typically
through networking,
marketing, and outreach
efforts

Question 13

securities

Answer 13

Financial instruments or
investments that represent
ownership interests, debt
obligations, or rights to
income or profits, such as
stocks, bonds, and mutual
funds.

Question 14

The objective of the listing presentation is to

Answer 14

provide all information necessary for the owner to execute the listing

Question 15

In business brokerage, the notion of goodwill is best defined as

Answer 15

the value or price of the business over and above the value of its other assets

Question 16

Real estate sales agents are legally authorized to

Answer 16

represent their employing broker in procuring clients and customers

Question 17

A corporation would like an agent to sell its country grocery store. Included in the sale are the inventory, equipment, and real property. The agent locates a full-price buyer who does not want to acquire any of the business’s actual or potential liabilities. To do this transaction, the corporation would most likely

Answer 17

propose an asset sale

Question 18

What is an asset sale?

Answer 18

the purchaser takes possession of some or all of the assets of the business, as well as the real estate, in exchange for the sale price

Question 19

Three brokers from different firms are having lunch together after a downtown business club meeting. In their conversation, a fourth broker from another firm is mentioned. The three brokers agree that they dont like this other broker, and decide they will no longer show her listings to potential buyers. If they act on this decision, they may be guilty of an illegal act of

Answer 19

group boycotting.

Question 20

Which of the following statements about the handling of trust funds is TRUE?

Answer 20

Funds being held for a client must be placed in a trust account within a required number of days after all parties have accepted an offer to purchase.

Question 21

What is an independent brokerage?

Answer 21

A brokerage that is not affiliated with a franchisor

Question 22

A salesperson working with a customer shows a property that is listed by a brokerage firm other than the salesperson’s and obtains an offer that is $50,000 less than the listing price. What must the salesperson do about this offer?

Answer 22

Present the offer to the seller at the earliest possible moment

Question 23

Obtaining exclusive listings for the broker is traditionally one of the salesperson’s most fundamental tasks because

Answer 23

a commission is assured if a buyer is procured

Question 24

A joint venture may generally broker real estate if the co-venturers

Answer 24

are properly licensed

Question 25

The practice of competing brokers in a local market agreeing on a standard commission rate is a violation of

Answer 25

fair trade and anti-trust laws

Question 26

The three principal brokerage firms in a market agree to pay sales agents 15% more than any other competitor currently in practice. This is an example of

Answer 26

collusion

Question 27

To engage in business brokerage, a broker generally must hold a real estate license because

Answer 27

a business sale usually involves a transfer of a real property interest

Question 28

What offense is broker Smith committing if she fails to deposit earnest money into escrow in a timely manner?

Answer 28

Commingling

Question 29

One similarity between a general partnership and a limited partnership is that

Answer 29

both may broker real estate if properly licensed

Question 30

When a property is “under contract,”

Answer 30

the principals have entered into a sale contract and must satisfy any contingencies prior to closing