Listing Agreements

Question 1

A broker signed a listing agreement with a definite expiration date. Which of the following is true before the expiration date?

A. The seller can get out of the listing with no recourse taken against him
B. The seller can get out of the listing with possible
recourse against him
C. The broker can abandon the listing without cause
D. The seller can terminate the contract under the 3
day right of rescission

Answer 1

B. The seller can get out of the listing with possible recourse against him

• 3 day right of rescission does not apply to purchase contracts or listings of real estate
• A broker cannot simply “abandon” a listing, nor can a seller unilaterally terminate a listing

Question 2

Betty gave an exclusive right to sell listing to Broker John, an exclusive agency listing to Broker Carole, and an open listing to several other brokers, including Broker Paul.

Paul sold the house and collected a commission while the other listings were still in effect. Which of the following statements is correct?

A. John and Carole are entitled to split commission with Paul.
B. John and Carole are entitled to a second commission to be split between them.
C. John and Carole are each entitled to a full commission.
D. Only Paul is entitled to a full commission.

Answer 2

D. Only Paul is entitled to a full commission.

• Open listing allows seller to employ any number of brokers at same time.
– Commission goes to broker who is the procuring cause.

• Exclusive agency listing (Seller’s Reserve Listing) agreement gives broker exclusive right to represent seller.
– Seller reserves right to sell property herself, or to sell or lease property to any persons exempted in the agreement without owing commission.

Question 3

Betty gave an exclusive right to sell listing to Broker John, an exclusive agency listing to Broker Carole, and an open listing to several other brokers, including Broker Paul.

Betty sold the house.

Which statement is correct?
A. John, Carole and Paul are each entitled to a full commission.
B. John and Carole are each entitled to a full commission.
C. John and Carole are entitled to split a commission.
D. John is the only broker who is entitled to a commission.

Answer 3

D. John is the only broker who is entitled to a commission.

• Exclusive Authorization and right-to-sell listing (AKA Exclusive Right to Sell) gives broker sole right to market property and actively promote its sale.
– Receives commission regardless of who produces buyer
– Most common form of listing agreement
– Greatest opportunity to earn commission
– Bilateral contract; agent promises to market and find buyer while seller promises to pay commission

Question 4

Betty gave an exclusive right to sell listing to Broker John,
an exclusive agency listing to Broker Carole,
and an open listing to several other brokers, including Broker Paul.

John sold the house. Which statement is correct?

A. John and Carole and Paul are entitled to split a
commission.
B. John and Carole are each entitled to a full
commission.
C. John is entitled to a full commission and Carole
and Paul are entitled to split a commission.
D. John is entitled to a full commission.

Answer 4

B. John and Carole are each entitled to a full commission.

Question 5

Is an employment agreement between broker and seller:

1. Established agency
2. Listing contract
3. Buying-Broker agreement
4. Both 2 and 3 above.

Answer 5

2. Listing contract

Listing Contract - Is an employment agreement between broker and seller.
• Statute of Frauds requires listings to be in writing in clear and unambiguous language.
• Seller is client or principal.
• Broker is agent.
• Salesperson is a sub-agent to their Broker
• Seller hires broker to find ready, willing, and able buyer.
• Agreement does not authorize broker to obligate client to a contract.
• Broker may not accept offer on behalf of client.
• Salesperson facilitates agreement on behalf of employing broker under supervision of designated broker.
• Salesperson can sign on behalf of their Broker.

Buyer-Broker agreement - Legally binding employment agreement between a broker and buyer.
• Agency is not established until the offer to purchase is accepted.
• Normally commission is paid by seller.
• If buyer uses another agent while buyer-broker agreement is in effect, buyer owes broker a commission.

Question 6

A listing agreement is required to have all of these except:

1. Definite duration stating the beginning and expiration dates.
2. Broker compensation.
3. Offering Price.
4. Signed by only the seller.

Answer 6

4. Signed by only the seller.

• Required elements for listing agreements:
  
  • Definite duration stating the beginning and expiration dates.
  • Broker compensation.
  • Offering Price.
  • Signed by all parties to the agreement.

Question 7

What association offers preprinted listing agreements?

1. California Association of Realtors (CAR)
2. Statute of Frauds
3. Multiple listing service (MLS)
4. National Association of Realtors

Answer 7

1. California Association of Realtors (CAR)

• CAR® (California Association of Realtors) offers preprinted listing agreements for active members.

Question 8

To be eligible to a commission, must have:

1. Active real estate license
2. Affiliated with a broker when commission is earned
3. Receive commission from any broker
4. Both 1 and 2 above

Answer 8

4. Both 1 and 2 above

Commission
• Earned when broker finds ready, willing, and able buyer
• There are NO minimum or standard commission rate agreements.

Eligibility for commission:
• Active real estate license
• Affiliated with a broker when commission is earned
• Receive commission from employing broker only
• Commissions cannot be shared with unlicensed person

Question 9

What is a cooperating broker?

1. The broker the licensee is working for
2. Pays the licensee’s commissions
3. The selling agent who finds a buyer for the listed property
4. None of the above

Answer 9

3. The selling agent who finds a buyer for the listed property

An agent who works with a listing agent to sell property in a real estate transaction.

Question 10

Advertising to sell a house requires:

1. Permission of the seller must be in writing
2. Advertising is under the supervision of the designated broker
3. requires the agents license number on the advertising
4. All of the above.

Answer 10

4. All of the above.

Advertising
• Requires expressed (in writing) permission of seller.
• All advertising is under the designated broker’s supervision.

Blind ads are illegal.
• Advertising without the name of the employing Broker

Pocket Listing
• Valid listing however the seller’s does not allow any advertising including in the MLS or yard sign.

Question 11

The type of listing that allows anyone to bring in a buyer to receive the commission is:

1. Open Listing
2. Exclusive Agency Listing
3. Exclusive Right to Sell Listing
4. Net Listing

Answer 11

1. Open Listing

Open Listing
• Allows seller to employ any number of brokers at same time.
• Unilateral contract
• only seller makes a binding promise.
• Commission goes to broker who is the Procuring Cause (The effort that brings about the desired result - Property SOLD).

If seller finds the buyer, no commission is required.

Question 12

The type of listing that is a bilateral contract that is exclusive for the agent to find a buyer, but the seller can sell the property and not pay a commission:

1. Open Listing
2. Exclusive Agency Listing
3. Exclusive Right to Sell Listing
4. Net Listing

Answer 12

2. Exclusive Agency Listing

Exclusive agency listing (AKA Seller Reserve Listing)
• Gives broker exclusive right to represent seller.
• Seller reserves right to sell or lease property to any persons without owing commission to broker.
• Bilateral contract

Example:
• Sam and Broker Smith sign an exclusive agency listing.
• Before Smith can find a buyer, Sam sells the property to a co-worker.
• Sam owes no commission to Smith.

Question 13

The type of listing where the agent receives a commission regardless of who produces a buyer:

1. Open Listing
2. Exclusive Agency Listing
3. Exclusive Right to Sell Listing
4. Net Listing

Answer 13

3. Exclusive Right to Sell Listing

Exclusive right to sell listing
• Broker has sole right to market property and actively promote its sale.
• Receives commission regardless of who produces buyer.
• Bilateral contract. Agent promises to market and find buyer while seller promises to pay commission
• Most common form of listing agreement

Question 14

The type of listing where the agent’s compensation is based on the amount of the sale:

1. Open Listing
2. Exclusive Agency Listing
3. Exclusive Right to Sell Listing
4. Net Listing

Answer 14

4. Net Listing

Net listing
• Compensation based on predetermined net base amount.
• Commission is any amount above net base amount.
• Not illegal in California.
• Many brokers will not let their agents to take net listings.

Example 1:
• A seller wants to net $500,000 for the sale of the property.
• The broker lists and sells the property for $750,000.
• The seller gets $500,000 and the broker’s commission is $250,000.
• A 6% Commission on $750,000 is $45,000.

Question 15

A seller has accepted an offer and has opened up escrow, but the agent receives another offer. The agent should:

1. Discard the offer since the seller has already accepted an offer
2. Wait to see if the accepted offer goes through and if not, then present the other offer
3. Present the offer to the seller
4. None of the above

Answer 15

3. Present the offer to the seller

Presentation of Offers - Listing Broker must
• Present all offers to seller
• Up until the day of closing
• Unless seller states in writing they do not want to see any more offers.
• Multiple offers provided to Listing Broker must be presented to seller immediately as received.
• Without consideration for the offer amount or terms.

Question 16

A house that has been listed for sale with an agent, can be terminated by the following except::

1. Agreement is fulfilled
2. Agreement has expired
3. Death of the agent
4. Mutual consent of both the seller and the agent

Answer 16

3. Death of the agent - only death or insanity of the seller of broker can terminate the agency

Termination of Listing Agreements
• Performance. Agreement purpose is fulfilled.
• Expiration. Agreement specifies definite beginning and end.
• Mutual Consent. Parties agree to end listing.
• Revocation. Seller can terminate listing; may be held liable.
• Renunciation. Broker terminates listing; may be held liable.
• Death or Insanity. Terminates if occurs for seller or self-employed broker, not agent.
• Destruction of Property. Impossible to perform.
• Transfer of Title by Operation of Law. Eminent domain.
• Bankruptcy. Terminates if seller or self-employed broker, not agent.

Question 17

What clause can allow an agent to receive a commission if the property is sold after the expired listing?

1. Procuring Cause
2. Seller reserve clause
3. Broker Protection Clause
4. None of the above

Answer 17

3. Broker Protection Clause

Provides that the listing broker is still entitled to a commission if the property is sold during a specified
timeframe after the listing has expired.
• To someone the listing broker or an affiliated licensee introduced to the property during the listing period.
• Time Period is stated in the Listing Agreement.
• Prospective Buyer (s) must be named in writing at the time the listing expired.