Chapter 2 True/False

Question 1

It is illegal for a firm to pay a referral fee to a secretary for business the secretary refers to the firm.

True
False

Answer 1

True-Wisconsin law declares that no licensed firm or corporation may pay a fee for a referral to any person who is not licensed to practice real estate.

Question 2

A listing agreement typically creates a special agency.

True
False

Answer 2

True-Unless the listing contract sates the contrary, the listing firm is giving the right to represent the seller in one specific transaction.

Question 3

A real estate firm that charges a high commission to create an impression that the firm’s licensees are sophisticated and offer excellent customer service is price fixing in violation of the Sherman Antitrust Act.

True
False

Answer 3

False-An individual company making independent decisions about commission rates and structures is not price fixing. Two or more firms working together to develop policies setting commissions is price fixing.

Question 4

A listing firm lists five parcels of land using five listing contracts. The listing firm is acting as a special agent.

True
False

Answer 4

True-A special agency relationship gives the agent the authority to represent the principal in a single transaction.

Question 5

A firm can pay an unlicensed personal assistant $50.00 for each lead the assistant generates through a telemarketing campaign.

True
False

Answer 5

False-An unlicensed personal assistant must be paid an hourly wage or salary. Compensation based on success or sales, such as commission or bonuses, is illegal fee splitting with a non-licensee.

Question 6

A listing firm lists five parcels of land using one listing contract. The listing firm is acting as a general agent.

True
False

Answer 6

True-A general agency relationship gives the agent the authority to represent the principal in a range of matters.

Question 7

Wisconsin law requires that all sellers sign the listing contract.

True
False

Answer 7

False-Wisconsin law requires the party paying the commission to sign the agency agreement. Usually this is a buyer or a seller, but the law does not require that it be the buyer or the seller. Only the person who is agreeing to pay the commission must sign the agency agreement.

Question 8

There is typically not a single act that determines procuring cause.

True
False

Answer 8

True-Procurement is generally defined as the uninterrupted chain of events that led to a sale

Question 9

A buyer pays the buyer’s firm according to the terms of the listing contract.

True
False

Answer 9

False-A buyer pays a buyer’s firm according to the terms of the buyer agency agreement.

Question 10

A salesperson is associated with Firm A. The salesperson is going to transfer to Firm B. The salesperson should contact her current listings to discuss early termination so she can transfer them to new listing agreements when she is at Firm B.

True
False

Answer 10

False-Agency agreements are between the firm and the client. Licensees do not have the legal authority to terminate or shorten the term of an agency agreement or reduce the commission without the written consent of the supervising broker.

Question 11

A listing firm and a seller use an exclusive right to sell listing contract to create implied agency.

True
False

Answer 11

False-Parties using a written contract create an express agency relationship.

Question 12

To create an open listing, the parties would modify the exclusive agency contract.

True
False

Answer 12

False-To create an open listing, the parties would modify the exclusive right to sell listing contract rather than an exclusive agency contract. The exclusive right to sell listing contract is the only state-approved listing contract.