Chapter 3 Quiz

Question 1

What is a real estate listing contract?

A. An implied employment contract between a seller and a firm.
B. A promise to sell to a buyer when the seller accepts the buyer’s offer.
C. A promise to pay the listing firm a commission if the firm finds a buyer.
D. A unilateral contract that obligates a seller to sell if a buyer submits an offer.

Answer 1

C. The listing contract is not an agreement between a buyer and a seller, but it is a promise by the seller to pay the firm a commission if the firm procures a buyer. It is not an implied contract because the parties created it intentionally. Implied contracts occur when a party’s behavior leads another party to believe there is a contractual relationship.

Question 2

What should a buyer do if the buyer wants a seller to pay the buyer’s firm?

A. The buyer and the seller must have an attorney draft a buyer’s firm’s payment agreement.
B. The buyer should include a request for direct payment of the fee from the listing firm in the offer to purchase.
C. They buyer should include a request for direct payment of the fee from the seller in the offer to purchase.
D. The buyer must purchase a “for sale by owner” property.

Answer 2

C. The parties to the offer to purchase are the buyer and the seller - not the listing firm and the buyer. If a buyer wants a seller to pay the buyer’s firm, the buyer can make that a condition of the offer to purchase. The WB-36 Buyer Agency Agreement authorizes the buyer’s firm to seek compensation form the seller or the listing agent.

Question 3

Which of the following statements does NOT correctly describe a buyer agency agreement?

A. A buyer must sign a buyer agency agreement for all property transactions.
B. A buyer’s agent is allowed to represent more than one buyer.
C. A buyer can purchase a property with a licensee other than the buyer’s agent.
D. A buyer may owe a commission to the buyer’s firm even if the buyer’s firm does not locate the property the buyer purchased.

Answer 3

A. The WB-36 Buyer Agency Agreement can be used by buyers looking to purchase property. A buyer does not need a buyer agency agreement when purchasing real estate. Many buyers do so without entering into a buyer agency agreement. The terms of the WB-36 state that a buyer’s firm can act as an agent for other buyers. A buyer agency agreement does not prohibit a buyer from working with another licensee or even negotiating a transaction without a licensee, but the buyer may still owe a commission to the firm depending on the terms of the agency agreement.

Question 4

Which statement is true of the extension of the listing provision in the WB-1 Residential Listing Contract?

A. It extends the listing for any buyer who attended an open house.
B. It does not permit a firm to include anonymous buyers.
C. The listing firm must provide a list of protected buyer to a new listing firm within 24 hours of the new listing.
D. Buyers who negotiate directly with sellers are automatically protected buyers for the listing firm.

Answer 4

D. Lines 169-176, 215-229, and 230-234 of the WB-1 Residential Listing Contract define protected buyers and how the listing is extended for protected buyers.

Question 5

When does a firm with a WB-1 Residential Listing Contract earn a commission?

A. When a seller reduces the listing price without the listing firm’s permission.
B. When an LLC own the property and new owners acquire the LLC.
C. When the property is sold within one year of the termination of the listing contract.
D. When a seller signs another listing contract that begins the day after the current listing contract expires.

Answer 5

B. Lines 34 fo the WB-1 states that the “Seller shall pay firm’s commission, which shall be earned if….during the term of the listing a transaction occurs which causes an effective change in ownership or control of all or any part of the property.”

Question 6

What is the status of a firm’s commission if a seller accepts an offer two weeks after the expiration of the listing from a buyer who attended an individual showing during the term of the listing?

A. The seller owes a commission, but the listing firm must share it with the seller’s new listing firm if the seller listed the property with another firm.
B. The seller does not owe a commission because the buyer submitted the offer after the expiration of the listing contract.
C. The seller owes the listing firm a commission if the buyer is a protected buyer.
D. The seller owes the listing firm a commission.

Answer 6

C. Lines 215-229 and lines 230-234 of the WB-1 Residential Listing Contract create the protected buyer provisions. If the buyer attended an individual showing and the firm followed the protected buyer requirements, the seller owes the firm a commission.

Question 7

On which lines of the WB-1 Residential Listing Contract does a licensee indicate how much compensation a seller authorized the listing firm to offer to cooperating firms?

A. Lines 30-33
B. Lines 58-59
C. Lines 19-20
D. Lines 157-158

Answer 7

B. One lines 58-59 of the WB-1 Residential Listing Contract, a listing firm indicates how much compensation the listing firm is authorized to offer to a cooperating firm.

Question 8

The WB-36 Buyer Agency Agreement:

A. Requires a buyer to fill in a specific price for the property sought.
B. Prohibits a firm from working with other buyers.
C. Is a mandatory form that must be used buy anyone purchasing property.
D. Creates an agency agreement between a purchaser and a firm.

Answer 8

D. Lines 1-4 of the WB-36 Buyer Agency Agreement indicate that the agreement is between the buyer and the firm.

Question 9

The WB-36 Buyer Agency Agreement:

A. Prohibits payment of a firm’s fee from a party other than the principal.
B. Terminates the agency relationship as soon as an interest in property is acquired.
C. Always grants the exclusive right to negotiate.
D. Can be used to create general agency.

Answer 9

D. The WB-36 Buyer Agency Agreement can be modifies to carry out the intention of the parties, and that includes the creation of a general agency agreement.

Question 10

Over the past year, a seller has paid $850 in condominium association fees of which $600 has been used. According to the listing contract, what happens to the surplus at closing?

A. It is a credit to the buyer.
B. It is owed to the seller.
C. It can be used to pay the listing firm’s commission.
D. It stays with the association.

Answer 10

D. Lines 9-10 of the WB-4 Residential Condominium Listing Contract - Exclusive Right to Sell: “Seller is including in the list price the Property, Seller’s interests in any common surplus and reserves of the Condominium allocated to the Property…”

Question 11

What must a firm do when working with a buyer?

A. A firm must use a WB-36 Buyer Agency Agreement if the buyer will be a customer.
B. A firm must use a WB-36 Buyer Agency Agreement if the buyer will be a client.
C. A firm must only work with a buyer-customer.
D. A firm can only work with a buyer if the buyer is a client of the firm.

Answer 11

B. The WB-36 Buyer Agency Agreement creates an agency relationship between the firm and the buyer. If the firm and the buyer do not have a signed agency agreement, the buyer is the firm’s customer - not a client.

Question 12

A buyer attends an individual showing with a licensee. The buyer contacts the seller directly, and they agree to have a third party buy the house after the listing firm’s exclusive right to sell expires. The third party then transfers the house to the buyer. Does the seller owe the listing firm a commission?

A. If the listing firm can prove collusion, the seller will owe a commission.
B. The seller does not owe the firm a commission because the listing expired before the sale.
C. The firm did not earn a commission because the sale did not occur during the term of the listing.
D. The firm must sue both the buyer and the seller for a commission.

Answer 12

A. Lines 169-176, 215-229, and 230-234 of the WB-1 Residential Listing Contract create a firm’s right to collect a commission if a property sells to a protected buyer during the extension of listing period. The buyer’s and the seller’s use of a third party would probably not defeat a firm’s claim to a commission under the protected buyer and extension of listing provisions.

Question 13

What authority does a listing licensee have under the WB-1?

A. Terminate the listing.
B. Shorten the term of the listing.
C. Sign the listing on the listing firm’s behalf.
D. Reduce the commission amount.

Answer 13

C. The WB-1 Residential Listing Contract states on lines 275-275 that listing licensees do not have the authority to terminate the listing, amend the commission, or shorten the term of the listing because the listing contract is between the firm and the seller.

Question 14

Whose employment terms are governed by a listing agreement?

A. The listing firm and the firm’s licensees.
B. The listing firm, the firm’s licensees and the cooperating firm.
C. The listing firm, the firm’s licensees, the cooperating firm and the buyer’s firm.
D. The listing firm.

Answer 14

D. The listing contract employs only the listing firm. The listing firm engages licensees to provide services on behalf of the listing firm.

Question 15

Which state-approved form includes the terms for payment of a buyer’s agent?

A. WB-47 Amendment to the Buyer Agency or Tenant Representation Agreement.
B. WB-11 Offer to Purchase
C. WB-36 Buyer Agency Agreement
D. WB-1 Residential Listing Contract

Answer 15

C. See lines 30-60 of the WB-36 Buyer Agency Agreement.

Question 16

What must a valid listing contract include?

A. Both the legal description and the street address.
B. The dimensions of a property.
C. A description of the property.
D. A complete legal description of the property.

Answer 16

C. Wis. Stat. 240.10 Fraudulent Conveyances and Contracts Relating to Real Estate: “Every contract to pay a commission to a real estate agent or broker or to any other person for selling or buying real estate shall be void unless such contract or note or memorandum thereof describes that real estate; expresses the price for which the same may be sold or purchased; the commission to be paid and the period during which the agent or broker shall procure a buyer or seller; is in writing; and is subscribed by the person agreeing to pay such commission, except that a contract to pay a commission to a person for locating a type of property need not describe the property.”

Question 17

A seller gives an exclusive right to sell listing to a firm for six months. The seller also gives an open listing to another firm during that same six-month period. The firm with the open listing procures a buyer. To which firm does the seller owe a commission?

A. The seller owes a commission to the firm with the exclusive right to sell.
B. The seller owes a full commission to each firm as stated in the respective listing contracts.
C. The seller pays one commission amount, and each firm receives half of the amount.
D. The seller owes a commission only to the firm that procured the buyer.

Answer 17

B. The seller’s exclusive right to sell listing contract states the firm earns a commission regardless of who find the buyer. The seller’s open listing contract states that the seller will pay a commission if that firm finds a buyer. The firm with the open listing found a buyer and earned a commission.

Question 18

What can a firm do if a buyer breaches the offer to purchase contract?

A. Promptly return the earnest money to the buyer.
B. Advise the seller that if the seller elects to keep earnest money as liquidated damages, the firm’s advance fees will be paid first and the balance will be shared between the firm and the seller.
C. Advise the seller to sue the buyer for specific performance.
D. Advise the seller to retain the earnest money as liquidated damages.

Answer 18

B. Lines 285-287 of the WB-1 Residential Listing Contract inform a seller that in the case of a buyer’s breach of the sales contract, if the seller chooses to retain the earnest money as liquidated damages, the seller must pay the firm’s advance fee first, and then the seller and the firm will share any remaining amount.

Question 19

What must a seller and a listing firm include in a listing contact?

A. A listing period of not less than four months.
B. An automatic termination clause after six months.
C. An automatic extension of the listing contract if the property does not sell during there original term.
D. The period for which the listing contract is in effect.

Answer 19

D. Every contract to pay a commission to a real estate agent or broker or to any other person for selling or buying real estate shall be void unless such contract or note or memorandum thereof describes that real estate; expresses the price for which the same may be sold or purchased; the commission to be paid and the period during which the agent or broker shall procure a buyer or seller; is in writing; and is subscribed by the person agreeing to pay such commission, except that a contract to pay a commission to a person for locating a type of property need not describe the property.

Question 20

Which of the following is true of the WB-1 Residential Listing Contract?

A. It does not address cooperation issues because firms do not cooperate in transactions.
B. It warns a seller that limiting a firm’s cooperation with other firms may reduce the marketability of the property.
C. It prohibits a listing firm from limiting cooperation with subagents.
D. It prohibits a listing firm from cooperating with buyer’s agents.

Answer 20

B. Line 168 states, “Limiting the Firm’s cooperation with other firms may reduce the marketability of the Property.”

Question 21

A home is listed for $100,000 and sells for $90,000. If the firm’s commission is 7% of the sale price, what did the firm earn on this transaction?

A. $6,300
B. $630
C. $7,000
D. $700

Answer 21

A. $90,000 (selling price of property) x .07 (7% commission) = $6,300 commission paid to the firm. In this transaction, commission is a percentage of the purchase price - not the listing price.