Chapter 8 Flashcards
Why have real estate license laws been put into effect?
a. To protect licensees from lawsuits
b. To protect the public and establish a standard of competence
c. To prevent licensees from engaging in profit-making activities
d. To establish maximum levels of competency and a moral marketplace
b. To protect the public and establish a standard of competence
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Real estate license laws protect the public by ensuring a standard of competence in the real estate industry.
In real estate, a sales associate is always
a. an independent contractor.
b. an employee of a licensed broker.
c. a licensee who performs real estate activities on behalf of a broker.
d. a combination office manager, marketer, and organizer with a fundamental understanding of the real estate industry, who may or may not be licensed.
c. a licensee who performs real estate activities on behalf of a broker.
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While the sales associate may be treated as an independent contractor for income tax purposes, the sales associate must work for a broker, who is responsible for the associate’s conduct.
All of these are requirements for independent contractor status used by the Internal Revenue Service EXCEPT
a. a current real estate license.
b. specific hours stated in a written agreement.
c. a written agreement that specifies that the individual will not be treated as an employee for tax purposes.
d. a substantial portion of the individual’s income is based on sales production rather than hours worked.
b. specific hours stated in a written agreement.
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The real estate broker may require an employee to follow rules, such as working a certain number of hours, but the broker may not do so if treating the affiliated sales associate as an independent contractor.
A broker does not permit his sales associates to charge less than an 8% commission in any transaction. After reading a newspaper article about this broker’s policy, the broker at another firm decides to also adopt the 8% minimum. Based on these facts, which of these statements is TRUE?
a. The first broker’s policy is price-fixing and violates the antitrust law.
b. Although the first broker’s policy was legal, the second broker’s adoption of the minimum commission may constitute an antitrust violation if both brokers are in the same real estate market.
c. Both brokers engaged in illegal price-fixing.
d. Neither broker has committed an antitrust violation.
d. Neither broker has committed an antitrust violation.
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Brokers must independently determine commission rates or fees for their own firms. Because the second broker learned about the first broker’s policy from a public source, the newspaper, and without discussing the policy with the first broker, neither broker has committed an antitrust violation.
A real estate broker had a listing agreement with a seller that specified a 6% commission. The broker showed the home to a prospective buyer. The next day, the buyer called the seller directly and offered to buy the house for 5% less than the asking price. The seller agreed to the price and informed the broker in writing that no further brokerage services would be required. The sale went to closing six weeks later. Based on these facts, which of these statements is TRUE?
a. While the broker was the procuring cause of the sale, the seller properly canceled the contract; without a valid employment agreement in force at the time of closing, the broker is not entitled to a commission.
b. The broker is entitled to a partial commission, and the buyer is obligated to pay it.
c. Under the facts as stated, the broker is not the procuring cause of this sale but is still entitled to a commission.
d. The broker was the procuring cause of the sale and is entitled to the full 6% commission.
d. The broker was the procuring cause of the sale and is entitled to the full 6% commission.
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Because the broker introduced a ready, willing, and able buyer to the seller prior to the seller’s cancellation of the listing agreement, the broker is entitled to the commission.
A qualified buyer makes a written offer on a property on March 6 by completing and signing a sales agreement. Later that day, the seller accepts and signs the agreement, keeping one copy. The seller’s broker gives a copy of the signed agreement to the buyer on March 8. The seller’s deed is delivered on May 1. The deed is recorded on May 7, and the buyer takes possession on May 15. When is the broker’s commission payable if this is a usual transaction?
a. March 8
b. May 1
c. May 7
d. May 15
b. May 1
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Although the commission was earned when the buyer was notified of the seller’s acceptance (March 8), the commission is typically paid at the time the deed is delivered.
All of these are violations of federal antitrust laws EXCEPT
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a. group boycott.
b. allocation of customers.
c. commission split.
d. tie-in agreement.
c. commission split.
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Brokers may legally share and split commissions. Price fixing, allocation of customers, and a group boycott are illegal under the antitrust laws.
All of these are ways for a broker to charge for services EXCEPT
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a. standard community rate.
b. flat fee.
c. hourly rate.
d. commission based on a percentage of the selling price.
a. standard community rate.
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Under antitrust laws, brokers may not collaborate and agree to charge the same rate to customers. Brokers may charge for services using a flat fee, an hourly rate, or a commission based on a percentage of the selling price.
What is the main value of a multiple listing service (MLS) for sellers?
a. Real estate professionals do not have to work as hard to secure property listings.
b. It simplifies closing procedures.
c. It reduces cooperation among brokers.
d. It exposes the property to a greater number of prospective buyers.
d. It exposes the property to a greater number of prospective buyers.
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The MLS exposes the property to many different real estate professionals, encouraging cooperation among brokers and expediting sales.
After license laws are enacted by the legislature, who is responsible for adopting administrative regulations?
a. A subcommittee that reports to the legislature
b. A local association of REALTORS®
c. Licensing authority (division, commission, etc.)
d. Brokers and salespeople appointed by the governor
Licensing authority (division, commission, etc.)
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Administrative regulations are written and adopted by the licensing authorities in each state. They have the same force as the law, but they are easier to change because they do not require legislative approval.
When communicating with clients or consumers via email, all of these are examples of professional email etiquette EXCEPT
a. using spell check.
b. providing useful information in the subject line.
c. avoiding sending large attachments.
d. responding to emails within one week.
d. responding to emails within one week.
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Examples of email etiquette include using the subject line in a useful and helpful manner; avoiding spelling errors; responding promptly to all email messages; and being specific, to the point, and brief. Do not send unsolicited emails.
Although state laws vary regarding internet advertising, which of these is a typical element of state policy or law?
a. Email sent by a real estate licensee needs to include the licensee’s name, phone number, and real estate license number.
b. Ads must contain true, current information and avoid misleading the potential client or customer.
c. On a website containing their ads, real estate licensees only need to identify themselves as a broker or salesperson on the site’s home page.
d. It is acceptable for only the sales associate’s name (without the broker’s name) to be shown in an ad.
b. Ads must contain true, current information and avoid misleading the potential client or customer.
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A phone number and license number are not usually required in an email. Status as a broker or sales associate should be disclosed on every page of a website with ads. Both the sales associate’s name and the broker’s name should be shown in the ads.
The broker may still be entitled to a commission in which of these situations where a pending property sale did NOT close?
a. The buyer wanted to add the kitchen appliances to the sale, but the seller refused.
b. The buyer decided not to buy the property.
c. The seller decided not to sell.
d. Financing fell through for the buyer.
c. The seller decided not to sell.
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If the sale is not completed due to the seller’s default (deciding not to sell), then the broker is generally due a commission. Courts may prevent a real estate broker from receiving a commission if the broker knew that the buyer was unable to perform.
An arrangement to sell one product only if the buyer purchases another product as well is called
a. a tie-in agreement.
b. a fee-for-services.
c. a buydown provision.
d. an allocation of customers.
a. a tie-in agreement.
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A tie-in arrangement is an agreement to sell one product only if the buyer purchases another product; the sale of the desired product is tied to the purchase of a second, less-desirable product. Fee-for-services refers to splitting apart the collection of services that a broker offers. A buydown provision is a financing option. Allocation of customers refers to dividing a market and refraining from competing.
The primary purpose of the Uniform Electronic Transactions Act (UETA) is to
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a. facilitate the use of social media.
b. protect consumers against unwanted email.
c. remove barriers in electronic commerce that would otherwise prevent enforceability of contracts.
d. allow brokers to close more deals.
c. remove barriers in electronic commerce that would otherwise prevent enforceability of contracts.
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The primary purpose of the Uniform Electronic Transactions Act (UETA) is to remove barriers in electronic commerce that would otherwise prevent enforceability of contracts. UETA sets forth basic rules for entering an enforceable contract using electronic means.
