Practice Quiz 3

Question 1

Natural Hazard Disclosure (NHD)

Answer 1

A report provided by a local agency or NHD vendor and used by sellers and seller’s agents to disclose natural hazards which exist on a property held out for sale.

Question 2

Negative Fraud

Answer 2

Deceitfully withholding or failing to disclose information to someone.

Question 3

Guarantee

Answer 3

A statement by an agent concerning an event or condition which has not yet occurred based on readily available facts.

Question 4

Financial Services Representatives (FSRs)

Answer 4

Bona fide employees of brokers who generate business for their employing broker.

Question 5

Implied Promise

Answer 5

The presumption that a buyer or seller entering into an agreement will in good faith fulfill their obligation to close the transaction.

Question 6

Third Party Beneficiary

Answer 6

A person for whose benefit two other persons place a provision in an agreement, such as a provision for payment of broker fees.

Question 7

Projection

Answer 7

An opinion about an income property’s future performance based on its performance during the preceding 12-month period, adjusted for presently known trends.

Question 8

Transfer Disclosure Statement (TDS)

Answer 8

A mandatory disclosure prepared by a seller and given to prospective buyers setting forth any property defects known or suspected to exist by the seller, generically called a condition of property disclosure. (See RPI Form 304)

Question 9

Best Effort obligation

Answer 9

Obligations under an open listing requiring the agent to take reasonable steps to achieve the objective of the client but requiring no affirmative action until match is located at which point due diligence is required.

Question 10

Material Fact

Answer 10

Information about a listed property which may affect the property’s value or alter a client’s decision to purchase or sell the property and, thus, needs to be disclosed.

Question 11

Multiple Listing Service (MLS)

Answer 11

A subscription available to real estate brokers which pools preliminary information on property listings for publication.

Question 12

Preliminary Title Report (Prelim)

Answer 12

A report constituting a revocable offer by a title insurer to issue a policy of title insurance used by a buyer and escrow for initial review of the vesting encumbrances recorded and currently affecting title to a property.

Question 13

Estimate

Answer 13

Prediction of future amounts which have not yet actually occurred.

Question 14

Finder’s Fee

Answer 14

Forecast

Question 15

Seller’s Net Sheet

Answer 15

A document prepared by a seller’s agent to disclose the financial consequences of a sale when setting the listing price and on acceptance of a buyer’s price in a purchase offer. (See RPI Form 310)

Question 16

Fee-Splitting

Answer 16

When fees made to a broker are split vertically with employed agents or split horizontally among other brokers.

Question 17

Referral Fee

Answer 17

A fee paid illegally by one service provider to another, both rendering services in a real estate transaction, in exchange for the referral of a principal when the buyer’s mortgage financing subjects the transaction to RESPA Regulation X rules.

Question 18

Real Estate Settlement Procedures Act (RESPA)

Answer 18

A federal law promoting lender transparency in their mortgage origination process to protect consumers from kickbacks and uncompetitive or duplicated fees. RESPA rules are implemented through Regulation X.

Question 19

Fiduciary Duty

Answer 19

The duty owed by an agent to act in the highest good faith toward their client and not to obtain any advantage over the client by the slightest misrepresentation, concealment, duress or undue influence.

Question 20

Marketing Package

Answer 20

A property information package handed to prospective buyers containing all the disclosures compiled by the seller’s agent on the listed property.

Question 21

Contingency Fee Provision

Answer 21

A provision in purchase agreements and escrow instructions calling for a specific event to occur or act to be performed before the broker’s fee is payable. (See RPI Form 150)

Question 22

Fact

Answer 22

An existing condition which is presently known or readily knowable by the agent.

Question 23

Affirmative Fraud

Answer 23

Intentionally and knowingly misrepresenting information to someone.

Question 24

Finder

Answer 24

An individual who solicits, identifies and refers potential clients to brokers, agents or principals in exchange for the promise of a fee. (See RPI Form 115)

Question 25

Opinion

Answer 25

An irrevocable right granted for consideration to purchase or lease a property on specific terms within a period of time, without obligating the person who acquires the right to purchase or lease the property

Question 26

Separate Fee Agreement

Answer 26

An agreement between the seller and the seller’s broker in a sales transaction, separate from the buyer’s purchase agreement offer, that obligates the seller to pay a broker fee to their agent.

Question 27

Property Profile

Answer 27

A report from a title company providing information about a property’s ownership, encumbrances, use restrictions and comparable sales data.

Question 28

Exclusive Right-to-Buy Listing Agreement

Answer 28

A written employment agreement by a broker and a prospective buyer of real estate employing and entitling the broker to a fee when property is purchased during the listing period. (See RPI Form 103).

Question 29

Annual Property Operating Data Sheet (APOD)

Answer 29

A worksheet used when gathering income and expenses on the operation of an income producing property, to analyze its suitability for investment. (See RPI Form 352)

Question 30

Title Conditions

Answer 30

Encumbrances such as liens, covenants, conditions and restrictions and easements which affect title to property.

Question 31

Unilateral Fee Instructions

Answer 31

Instructions signed only by the seller which authorize escrow to pay the broker fee from their net proceeds of the sale.

Question 32

Due Diligence

Answer 32

The concerted and continuing efforts taken by an agent to meet the objectives of their client.