Practicce Flashcards
If a licensee is a(n) ___, a sponsoring broker is required by law to withhold Social Security tax and income tax from wages paid.
Employee
With independent contractors, a sponsoring broker is required by law to withhold Social Security tax and income tax from wages paid to those independent contractors. True or false?
False
While business plans are important in many industries, they are not needed in a real estate brokerage, and in fact can be a waste of precious time. True or false?
False
Only a ___ may collect commission in Illinois.
sponsoring broker
It is illegal for a sponsoring broker to split a commission with a sponsored licensee. True or false?
false
When a sponsoring broker takes a certain percentage of their sponsored licensee’s commission, this is a(n) ___.
Commission split
Price-fixing, group boycotting, allocation of customers, allocation of markets, and tie-in agreements are all ___.
Antitrust violations
Tie-in agreements are ___.
illegal
The 3 types of real estate licenses in Illinois are
Broker
Managing broker
Leasing agent
What are the 3 specific requirements for a licensee to be treated as an independent contractor for federal tax purposes?
1) Hold an active real estate license
2) Must agree in writing not to be treated as an employee for tax purposes
3) at least 90% of income must be based on sales production
At least ___% of an independent contractor’s income must be based on sales production.
90%
All licensees must have a(n) ___ agreement with their sponsoring broker, regardless if they are an independent contractor or regular employee.
Employment agreement
In Illinois, what serves as proof that a listing broker earned a commission from the sale?
Closing of sale
Procuring cause disputes between brokers are usually settled through a(n) ___ hearing.
arbitration
Disputes between a broker and a client may either be settled through a(n) ___ hearing, or they may go to court
arbitration
All money coming in and out of a real estate office are handled by…
the sponsoring broker
Who is responsible for handling escrows?
Sponsoring broker
Who is responsible for paying commissions?
Sponsoring broker
Harry is a sponsoring broker who oversaw Ed. Ed took a listing on a $73,000 house at a 6% commission rate. Tom was the broker on the opposite end of this transaction who found a buyer for the property, and he was sponsored by Matt. The two brokerages split the commission equally. Matt’s brokerage kept 45% of Tom’s commission. How much was Tom’s share of commission?
$1204.50
What are 5 antitrust law violations?
1) Price fixing
2) Group boycotting
3) Allocation of customers
4) Allocation of markets
5) tie in agreements
A sponsoring broker owns a vacant lot in a popular area of town. A builder wants to buy the lot and build 3 new homes on it. The sponsoring broker refuses to sell the lot to the builder unless the builder also agrees to purchase 3 other less desirable lots further east. What antitrust violation occurred?
Tie-in agreement
The amount of commission paid to a sponsored licensee is determined by…
Mutual agreement with the sponsoring broker
In Illinois, the ___ is the usual proof in a court of law that the broker has produced a buyer and earned a commission.
closing of sale
Real estate licensees who are paid in a lump sum and who are personally responsible for paying their own taxes are probably:
independent contractors
Independent contractors are responsible for paying their own ___ and ___.
Income taxes
Social security
“To recover a commission for brokerage services, a sponsoring broker must be employed as the agent of the seller.” Therefore, the seller must have made a(n) ___ or ___ to pay a commission to the sponsoring broker for selling the property.
Express agreement
or
Implied agreement
Federal regulations require unsolicited commercial email to be identified as a(n) ___ and include the sender’s valid ___.
advertisement
physical address
A broker received $2,520 as the firm’s 50% share of a commission. If the property sold for $72,000, what was the commission rate?
7%
A broker listed the seller’s home for $300,000. Before the listing contract expired, the broker brought the seller a full-price offer on the seller’s terms, containing no contingencies. Who is probably liable for the commission?
The seller
A new sponsored real estate licensee wants to find new business among the firm’s expired listings. Under the National Do Not Call Registry, for how long after the listing has expired may the licensee solicit business from the firm’s previous listings?
18 months
Who is authorized to collect a commission in Illinois?
Managing broker or sponsoring broker
To collect a ___ on a real estate transaction, the agent must have been “hired” by way of an agreement in which the principal (seller or buyer) agreed to pay.
commission
A sponsored broker must have a written employment agreement with…
the sponsoring broker
A real estate licensee may not legally send an unsolicited commercial fax message without express ___ or without ___ with the recipient.
written consent
an established business relationship
Under Illinois law, one of the permitted activities an UNLICENSED real estate assistant of a licensee is that they may sit at a property for a broker tour that is not open to the public. True or false?
True
A sponsoring broker may dictate ___ to an independent contractor
compensation
The ___ defines the employment or independent contractor relationship, including supervision, duties, compensation, and termination.
employment agreement
A sponsored licensee wants to receive a lump-sum payment at the end of each transaction. At least 90% of the individual’s income as a licensee must be based on ___.
Sales production
A sponsored licensee wants to receive a lump-sum payment at the end of each transaction. The sponsored licensee must agree in writing not to be treated as a(n) ___ for federal tax purposes
employee
A sponsored licensee wants to receive a lump-sum payment at the end of each transaction. The sponsored licensee must hold an active…
real estate license
A sponsored licensee wants to receive a lump-sum payment at the end of each transaction. At least 90% of the individual’s income as a licensee must be based on hours worked. True or false?
False
A sponsored licensee wants to receive a lump-sum payment at the end of each transaction. The sponsored licensee must agree in writing not to be treated as an independent contractor for federal tax purposes. True or false?
False
A sponsored licensee wants to receive a lump-sum payment at the end of each transaction. Is the sponsoring broker obligated to withhold social security from their pay?
No
A sponsored licensee wants to receive a lump-sum payment at the end of each transaction. The licensee is an ___.
Independent contractor
Two real estate companies agreed to boycott the services of a title company so that a new title company can take over the corresponding market share. The two real estate companies are violating the ___.
Sherman Antitrust Act
According to the Illinois license law, a sponsored real estate licensee may not accept a commission from another sponsoring broker unless…
it was was previously earned
The ___ is a list of phone numbers of consumers who do not want to be contacted by commercial telemarketers
National Do Not Call Registry
The broker’s commission was $8,200. If the commission rate was 6%, what was the selling price of the property?
$136,666.67
After a particularly challenging transaction finally closes, the client gives the sponsored broker representing the client a check for $500 “for all your extra work. Can the sponsored broker accept this? Why or why not?
No, because only a licensed managing or sponsoring broker may collect a commission in Illinois
A licensee entered into a contract with her sponsoring broker, specifying that she is not an employee. In the past year, just less than half of the licensee’s income from real estate activities came from sales commissions. The remainder was based on an hourly wage paid by the sponsoring broker for office administrative duties. The IRS would MOST likely classify the licensee as an ___.
employee
Compensation for an ___ is determined by hours worked
Employee
Membership of this service provides an opportunity for the marketing of property
Multiple Listing Service
An illegal division of territories to avoid competition
Allocation of markets
Laws that prohibit price fixing and tie-in agreements
Antitrust Laws
A form of compensation computed as a percentage of the total sales price of a property
Commission
A person who is licensed only to perform real estate activities on behalf of a broker
Sales associate
The business of bringing parties together
Brokerage
A sales associate who works under the terms of a written contract and receives a substantial portion of her income from sales production rather than hours worked
Independent contractor
The device by which a state licensing authority administers and enforces the statutory law
Administrative regulations
A sales associate whose activities are closely controlled, and who is entitled to benefits, unemployment compensation, and income tax withholding
Employee
A person who is prepared to buy on the seller’s terms and is ready to take positive steps towards consummation of the transaction
Ready, willing, able buyer
An individual who is licensed to buy, sell, exchange, or lease property for others, and to charge a fee for those services.
Real Estate Broker
The broker who starts an uninterrupted chain of events that results in the sale of a property.
Procuring Cause
An analysis performed to assist a seller in pricing a property
Comparative Market Analysis (CMA)
Statutes enacted by state legislatures to protect the public and ensure a standard of competence in the real estate industry.
Real Estate License Laws
When two or more businesses conspire against another business to withhold patronage to reduce competition.
Group boycot
How many states regulate the activities of real estate?
All 50 states + District of Columbia
___ laws set up a disciplinary system to enforce the acceptable standards of conduct and practice for licensees
Real estate license
a real estate ___ is licensed to buy, sell, exchange, or lease real property for others and to charge a fee for those services
broker
The internal revenue services have established criteria for determining whether a sales associate is classified as an ___ or an __ for income tax purposes
employee or non-employee
___ is the practice of illegally setting standard prices for products or services
price fixing
A real estate ___ is an individual who is licensed to perform real estate activities on behalf of a licensed broker
sales associate
A broker is considered the procuring cause of a sale if the broker…
started an uninterrupted chain of events that resulted in the sale
Price-fixing, group boycotting, and allocation of markets are three examples of ___.
antitrust violations
Under the ___, people who fix prices or allocate markets may be subject to a maximum $1 million fine or 10 years in prison
Sherman Antitrust Act
Even if a consumer has requested placement on the National Do Not Call Registry, a real estate professional may call the consumer up to how many months after the consumer’s last purchase?
18
All of the following are required of a broker when seeking to collect a commission for brokering the sale of a property EXCEPT
A. Having been procuring cause in the transaction or having an exclusive-right-to-sell agreement
B. Having had a contract of employment—an agency representation agreement
C. Complying with a set commission rate set by a trade organization
D. Having a valid real estate broker’s license
Complying with a set commission rate set by a trade organization
Professional organizations may set fees or commissions splits. True or false?
False
All of these are ways for a broker to charge for services EXCEPT
A. standard community rate
B. commission based on a percentage of the selling price
C. flat fees
D. hourly rate
standard community rate
What is the practice called when a consumer selects specific services to use and only pays the real estate professional for those services?
Unbundling services
Federal antitrust law permits commission splitting. True or false?
True
The listing and the selling broker agree to split a 7% commission 50-50 on a $196,900 sale. The listing broker gives the listing salesperson 30% of his commission, and the selling broker gives the selling salesperson 35% of his commission. How much does the selling salesperson earn from the sale?
$2,412.93
Salesperson Nellie finally concluded some extremely difficult negotiations that resulted in the sale of a listed parcel of land. For all of her extra efforts, she can legally receive a performance bonus from ___.
Her sponsoring broker
Who pays commission to the real estate licensee?
The sponsoring or managing broker
A broker who owns a realty agency does not permit his salespeople to charge less than 8% commission in any transaction. After reading a newspaper article about this realty agency’s policies, the broker of another realty agency decides to also adopt the 8% minimum. Based on these facts, who committed an antitrust violation?
Neither broker
The the main value of a ___ for sellers Is that it exposes the property to a greater number of prospective buyers
multiple listing service (MLS)
Real estate broker Todd was responsible for a chain of events that resulted in the sale of one of his client’s properties. This is referred to as ___.
Procuring cause
A broker, who starts a chain of events that results in a sale, and does so without abandoning the transaction, may be considered the ___ of the sale
procuring cause
After license laws are enacted by legislature, who is responsible for adopting administrative regulations?
Licensing authority
Two real estate companies agreed to boycott the services of a title company so that a new title company can take over the corresponding market share. What type of antitrust violation is this?
Group Boycotting
