Practical Guide to Everyday Practice

Question 1

List three factors that brokers should consider when analyzing agency compliance.

Answer 1

Establishing a best practices model for all licensees to follow considering agency compliance
Establishing a section in the broker’s company policy manual that strictly deals with agency compliance
Identifying a specific review routine internally for all paper flow including contracts, listing agreements, buyer agency agreements, and any other contractual items needed for review

Question 2

What is the most important tool a broker can use in establishing a daily routine for his or her licensees?

Answer 2

A comprehensive policy and procedures guide.

Question 3

Name three reasons for monitoring sources in real estate.

Answer 3

Changes in real estate laws, rules, and regulations
Changes in marketing principles for listing properties
Updates to training programs offered by associations

Question 4

After closing, the agent should put the new client on a list for future marketing. This list is called what?

Answer 4

Sphere of influence list

Question 5

Whether a broker represents the seller or the buyer, what three things should the broker make sure the licensees do?

Answer 5

Use Written Disclosure
Clarify his or her role in the transaction
Use the help of others when needed

Question 6

What is the most frequent basis for complaints against real estate licensees?

Answer 6

Failure to disclose material facts

Question 7

When the broker actually has two offers to present, what should the broker do?

Answer 7

The broker should prepare both presentations with the net proceed statements to present to the seller

Question 8

When should all offers be presented?

Answer 8

As soon as possible

Question 9

Explain backup offer.

Answer 9

When a buyer wants to make an offer to a seller even though the seller is under contract with another buyer

Question 10

What is not determined by who pays the commission?

Answer 10

Representation

Question 11

What is equitable title?

Answer 11

A buyer’s right to have property transferred once all conditions of the contract are met.

Question 12

When do problems and the potential for litigation concerning the disposition of earnest money arise?

Answer 12

An aggrieved party refuses to do what the contract says

Question 13

List three questions a broker should ask when identifying risk. (See screens 23 and 24 for other correct answers.)

Answer 13

Are there some agents whose specialty invites greater risk?
Does the brokerage list REO properties? While the bank may believe they do not have to disclose known material defects, the agent does in most cases.
Does the company have meetings to address some of the ethical issues?

Question 14

What is a broker opened up to if he does not have a structured way in dealing with potential problems?

Answer 14

Potential lawsuits

Question 15

When questioning the seller regarding the property, what form should the agent use?

Answer 15

A property condition disclosure form

Question 16

After identifying risks, what is the next step a broker should take?

Answer 16

The next step is to implement corrective action to reduce or eliminate known risks.

Question 17

The most important tool a broker can use in establishing a daily routine for his or her licensees

Answer 17

is to have a comprehensive policy and procedures guide to train agents and hold them accountable for their daily activities.

Question 18

Each licensee should

Answer 18

thoroughly review all buyer agency agreements, contracts, listing agreements, and any other paperwork pertinent to the transaction.

Question 19

Licensees should review any information entered into the MLS system for errors

Answer 19

and then make changes immediately if any problems are identified.

Question 20

Communication is as critical in real estate offices as it is between client and broker.

Answer 20

Open lines of communication should be practiced on a daily basis so that a licensee knows help is only a phone call away.

Question 21

Of utmost importance in a brokerage firm is continuously monitoring different sources for:

Answer 21

Changes in real estate laws, rules, and regulations
Changes in marketing principles for listing properties
Updates to training programs offered by associations
Continuing education compliance
Court cases and how they may affect the firm
Changes in the competitive environment

Question 22

Whether a broker represents the seller or the buyer, the broker should make sure licensees do these three things:

Answer 22

Use written disclosures
Clarify his or her role in the transaction
Use the help of others when needed

Question 23

Brokers should recognize that the most frequent basis for complaints against real estate licensees is

Answer 23

their failure to disclose material facts. As the listing agent, a brokerage must be prepared to prove in a legal dispute with a buyer-customer that important information was provided unless such disclosure is prohibited by law.

Question 24

A key agency component in all transactions is

Answer 24

the duty of an agent to disclose information to his or her client. Any offer made to a seller from a potential buyer must be disclosed.

Question 25

All offers

Answer 25

should be presented as soon as possible

Question 26

Only the seller has the right to

Answer 26

accept, reject, or counter an offer.

Question 27

When the broker actually has two offers to present

Answer 27

the broker should prepare both presentations with the net proceeds statements. The broker should obtain as much information about the buyers as possible to help the seller make an educated decision.

Question 28

When a buyer wants to make an offer to a seller even though the seller is under contract with another buyer

Answer 28

this creates a backup offer which would become effective only if the first offer did not proceed to closing.

Question 29

The seller should not entertain backup offers without

Answer 29

he permission of the first buyer, because the buyer has equitable title to the property.

Question 30

Equitable title

Answer 30

is the buyer’s right to have the property transferred once all conditions of the contract are met.

Question 31

Disputes over earnest money usually arise when

Answer 31

either buyer or seller perceive the other to be at fault for failing to close.

Question 32

One of the most important considerations is how to handle commissions

Answer 32

Since all commissions are negotiable, who pays the commission does not determine representation

Question 33

A realistic evaluation

Answer 33

is the best place to start when developing effective risk management guidelines. The next step is to implement corrective action to reduce or eliminate known risks.

Question 34

The most critical component in managing risk is

Answer 34

the capacity to evaluate a claim at the earliest possible time.