Chapter 6 - Listing Presentations and Contracts

Question 1

An Open Listing is…

Answer 1

A nonexclusive written memorandum that when signed by the seller or buyer, authorizes the broker to serve as an agent for the sale or purchase of property. Under an open listing, the owner agrees to pay a commission if the broker procures a buyer or property that is purchased.

Question 2

True or False:

An open listing is considered to be a unilateral contract

Answer 2

True - the broker is not obligated to use diligence to locate a buyer or property

Question 3

What is an Exclusive-authorization-and-right-to-sell listing?

Answer 3

An exclusive-authorization-and-right-to-sell listing gives a broker the sole right to procure a purchaser for a property. With this type of listing, the broker is the sole agent and has the right to a commission if a buyer is found for the property by anyone-even the owner-during the term of the listing. It entitles the listing agent to the compensation no matter who sells the property.

Question 4

What is an Exclusive-agency Listing?

Answer 4

An exclusive-agency listing differs from the exclusive-authorization-and-right-to-sell listing in one major respect: the seller will pay a commission to the listing broker regardless of which agency makes the sale, but it does not prevent owners from selling their own property and paying no commission.

Question 5

What is a Net Listing?

Answer 5

A net listing is not truly a type of listing. Net listings could be open, exclusive-right-to-sell, or exclusive-agency listings. Net refers to commission. A clause in the agreement states that the owner is asking a certain sum of money from the sale of property. All expenses, including the broker’s commission, are to be covered by any sum the broker is able to obtain in excess of the selling price (net) specified by the seller.

Question 6

True or False:
An agent’s failure to disclose the selling price under a net listing is cause for revocation or suspension of his or her license

Answer 6

True - If a broker takes a net listing, California law requires that the broker disclose in writing the selling price and broker’s compensation prior to the acceptance of any offer.

Question 7

What is an Option Combined With a Listing?

Answer 7

An option is an irrevocable right to buy a property at an agreed price. An option combined with a listing entitles the broker to compensation under the listing if the property is sold to a third person as well as the agent’s right to buy the property himself or herself.

Question 8

True or False:

Law forbids a listing broker who has an option combined with a listing to profit at the expense of the owner

Answer 8

True