Questions - Chapter 7

Question 1

A real estate listing agent advised a buyer (customer) that a property was zoned for the type of commercial use for which the buyer intended to use the property. Relying on the agent’s advice, the buyer contracted to purchase the property. In making the statement regarding the zoning, the agent did not know what zoning applied to the property. The buyer subsequently learned that the zoning was such that he could not use the property as he intended. Which of the following is correct?

A. The agent committed an act of misrepresentation and is liable to the buyer for any loss the buyer suffered as a consequence.
B. Since the agent did not know the true facts regarding the zoning, no misrepresentation of the property to the buyer took place; therefore, the agent is not liable.
C. Since the listing agent was not representing the interests of the buyer in this case, he is not liable for his statement.
D. Commercial transactions are exempt from liability for brokers since these type facts can easily be determined by the buyer.

Answer 1

7-1 A

Question 2

Misrepresentation occurs when:

A. the party making a false representation knows it to be false.
B. the party making a false representation does not know if the statement is true or false, but should have known.
C. the party making the false representation makes no effort to determine if it is true.
D. all of the above.

Answer 2

7-2 D

Question 3

A broker is NOT held liable for misrepresentation or omission of material fact when:

A. the broker fails to disclose a defect he reasonably should have known.
B. the broker, who does not know the answer to the buyer’s question, answers without regard for the facts of the situation.
C. the misrepresentation or omission was made to a buyer the broker did not represent.
D. the broker was not aware of the mis-statement and there was no way he reasonably could have been expected to know.

Answer 3

7-3 D

Question 4

A contract in which a property owner employs a broker to market her property creates an agency relationship between which of the following?

A. buyer and seller
B. buyer and broker
C. broker and seller
D. broker, seller, and buyer

Answer 4

7-4 C

Question 5

An agent’s duties to the principal include all of the following EXCEPT:

A. loyalty.
B. accountability.
C. obedience.
D. legal advice.

Answer 5

7-5 D

Question 6

Which of the following is NOT an agency relationship?

A. the relationship between a sales associate and the broker with whom the associate is associated
B. the relationship between a listing broker and a cooperating broker acting as a subagent of the seller
C. the relationship between a seller’s agent and a buyer’s agent
D. the relationship between a seller and the listing agent

Answer 6

7-6 C

Question 7

A real estate broker presented an offer to the property owner during the listing term for the listed price payable in cash with no contingencies and a 10% deposit. This offer met all the terms of the listing agreement. In this situation, which of the following is correct?

A. The property owner is required to accept the offer.
B. The listing brokerage company is legally entitled to the commission agreed upon in the listing contract only if the property owner accepts the offer.
C. The property owner is not required to accept the offer but is legally obligated to pay the listing company the commission agreed upon in the listing agreement.
D. The buyer can sue the property owner for damages if the owner refuses to accept the buyer’s offer.

Answer 7

7-7 C

Question 8

A broker should present:

A. all offers even if the property is currently under contract to be sold.
B. only those offers that appear to be in the seller’s best interest.
C. only those offers the broker knows have been properly pre-qualified for the mortgage.
D. only those offers that are for more money than the seller has indicated as his minimum for consideration.

Answer 8

7-8 A

Question 9

The employment authority of the listing agreement:

A. binds the broker to the best interests of the seller.
B. gives the broker authority to screen offers for the seller.
C. gives the broker the authority to either sell or rent the property.
D. authorizes the broker to reject any offers that the broker feels are unacceptable.

Answer 9

7-9 A

Question 10

A listing broker has the duty to disclose to the buyer (customer):

A. the amount of the commission.
B. the seller’s financial status.
C. the seller’s reason for selling.
D. structural defects.

Answer 10

7-10 D

Question 11

Working for Beth Buyer under an exclusive buyer agency agreement, Babs Broker of ABC Realty sells Beth a house listed by XYZ Realty. Sabrina Seller pays Babs Broker’s commission through Sabrina’s listing agent at XYZ Realty, Lois Lister. Which one of the following statements is TRUE?

A. Beth Buyer is Babs Broker’s customer.
B. Beth Buyer is Lois Lister’s client.
C. Sabrina Seller is Lois Lister’s customer.
D. Beth Buyer is Babs Broker’s client.

Answer 11

7-11 D

Question 12

The Residential Property Owners and Disclosure Statement (RPOADS) form must be provided to purchasers in which of the following transactions?

A. transaction where the purchaser already occupies the property
B. transaction where the parties agree to exempt each other from compliance
C. new construction never occupied
D. property purchased where the buyer will not be the new occupant

Answer 12

7-12 D

Question 13

Which of the following statements is true regarding the Residential Property Disclosure Act?

A. The Act relieves agents of the responsibility to discover and disclose material facts regarding a property.
B. Once a seller has completed the disclosure statement, he is under no obligation to amend the statement if the condition of the property changes.
C. A seller of residential property who does not complete the Residential Property Disclosure Statement may be fined $500.
D. A disclosure statement should be provided to the buyer no later than the time at which an offer to purchase and contract is signed by the buyer.

Answer 13

7-13 D

Question 14

Barbara, an agent at ABC Realty, presented an offer to Sandra of XYZ Realty. Barbara is a buyer’s agent, and Sandra is the listing agent. Sandra presents a counteroffer from her seller to Barbara, who contacts her buyer. At 11:30 a.m., the buyer accepts the counteroffer in Barbara’s presence. Meanwhile, at 11:45 a.m. on the same day, Sandra’s seller receives a better offer, which she wants to accept, and tells Sandra to withdraw the counteroffer. Sandra immediately communicates this to Barbara before Barbara can tell her of her buyer’s acceptance. Which of the following is (are) true?

A. Sandra’s seller cannot withdraw the counteroffer since Barbara has been notified of the acceptance of the counteroffer.
B. Sandra’s seller can withdraw the counteroffer since neither Sandra nor her seller has been notified of acceptance.
C. Sandra’s seller cannot withdraw the counteroffer because it was accepted before the seller received the new offer.
D. Sandra must provide Barbara’s buyer with an equal opportunity to match or exceed the new buyer’s offer.

Answer 14

7-14 B

Question 15

Sally Smith and Bob Broker are dual agents at XYZ Realty. Bob presented an offer to Sally on one of her listings. Sally presents a counteroffer from the seller to Bob, who contacts his buyer/client. At 11:30 a.m., the buyer accepts the counteroffer in Bob’s presence. Meanwhile, at 11:45 a.m. on the same day, the seller receives a better offer, which he wants to accept, and tells Sally to withdraw the counteroffer. Sally immediately communicates this to Bob before Bob can tell her of the buyer’s acceptance. Which of the following is true?

A. Sally’s seller cannot withdraw the counteroffer because acceptance in Bob’s presence provides notification to the seller.
B. Sally’s seller can withdraw the counteroffer because the new offer is a better offer.
C. Sally’s seller can withdraw the counteroffer because Bob did not notify Sally of the acceptance before the seller asked Sally to withdraw the counteroffer.
D. Sally must provide Bob’s buyer with an equal opportunity to match or exceed the new buyer’s offer.

Answer 15

7-15 A

Because Sally Smith and Bob Broker are dual agents communication to one of them is communication to the other side.

Question 16

Which of the following statements is true concerning designated dual agency?

A. A broker-in-charge can be a designated dual agent if the other agent is a provisional broker under his direct supervision.
B. A broker cannot be appointed as a designated dual agent if the broker has prior knowledge of confidential information about the other party to the transaction.
C. Only the broker-in-charge can serve as a designated agent for both parties in a transaction.
D. There is no provision that allows for an oral designated dual agency to exist.

Answer 16

7-16 B

Question 17

Oral buyer agency:

A. is no longer permitted in North Carolina since buyer agency agreements must be in writing from the inception.
B. is permitted in North Carolina until the time an offer is presented on the buyer’s behalf
C. must be converted to writing no later than the time of acceptance of offer by the seller.
D. is allowed only if the buyer agrees not to work with another agent.

Answer 17

7-17 B

Question 18

The Working with Real Estate Agents brochure:

A. must be presented at first substantial contact.
B. has the same legal weight as the listing or buyer’s agency contract.
C. should not be used if the customer desires oral buyer agency.
D. should be presented at the same time as the Offer to Purchase.

Answer 18

7-18 A

Question 19

Designated agency is permitted:

A. only when the designated agents each work within the same office for the firm.
B. as long as the designated agent does not learn any confidential information about the other agent’s principal after becoming designated.
C. when the listing agent is also the buyer agent and has the written consent of both parties.
D. if the designated agent is not directly supervised by the other designated agent.

Answer 19

7-19 D

Question 20

Which type of agency agreement does NOT have to be in writing from the time of its inception?

A. Exclusive Right to Sell agreements
B. Exclusive Right to Represent Buyer agreements
C. Non-exclusive buyer agency agreements
D. Property management agreements

Answer 20

7-20 C

Question 21

Which of the following is NOT an appropriate action for the broker to undertake when acting as a seller subagent?

A. disclosure of all known material facts even when disadvantageous to the seller
B. preparing a CMA for a buyer
C. showing the buyer some comparables of similar properties to the one listed
D. disclosing to the seller how high the buyer is willing to pay

Answer 21

7-21 B

Question 22

Which of the following must be disclosed to a buyer/customer by the listing agent?

A. the reason the seller needs to sell quickly
B. the death of the previous occupant from AIDS
C. only the material facts the seller has authorized the agent to disclose
D. all material facts including those detrimental to the seller

Answer 22

7-22 D

Question 23

Which of the following does NOT constitute a material fact?

A. a readily noticeable crack in the foundation
B. the location of a landfill nearby the house that cannot be observed
C. pending zoning changes
D. willingness of the seller to accept a lower offer

Answer 23

7-23 D

Question 24

The typical listing contract is a form of:

A. universal agency.
B. general agency.
C. special agency.
D. free agency.

Answer 24

7-24 C

Question 25

An agent meets prospective buyers at an open house he is holding. The buyers walk through the property but have no interest in the house because it does not serve their needs. Which of the following best describes the broker’s role in this transaction?

A. The broker was required to provide them a copy of the Working with Real Estate Agents brochure as soon as they entered the open house.
B. The broker was not required to provide the buyers with a copy of Working with Real Estate Agents brochure as he was considered a buyer agent already.
C. The broker would only have to provide the Working with Real Estate Agents brochure at the time the buyers decided to actually make an offer.
D. The broker was not required to provide a copy of the Working with Real Estate Agents brochure or discuss agency alternatives with them.

Answer 25

7-25 D

Question 26

Allen Agent of ABC Realty is working with Betty Buyer under an oral buyer agency agreement. He shows her a house listed by Beatrice Broker of XYZ Realty. Betty wants to buy the home. Which contract does Allen
prepare first?

A. the Residential Property Owners and Disclosure Statement
B. the Oral Agency Conversion
C. the Exclusive Right to Represent Buyer
D. the Offer to Purchase

Answer 26

7-26 C

Question 27

The real estate broker’s fiduciary responsibility to keep the principal informed of all facts, including property condition and issues that affect a seller’s willingness to sell and a buyer’s willingness to buy, is the duty of:

A. skill, care and diligence
B. disclosure
C. obedience
D. accounting

Answer 27

T7-1 B

A real estate licensee has a duty to disclose to all parties, including their principal and the firm’s client all material facts. A material fact about the property is any issue that would affect a seller’s willingness to sell and a buyer’s willingness to buy.

Question 28

Designated agency in North Carolina is considered: I. A form of dual agency II. Mandatory if you practice dual agency

A. I only
B. II only
C. Both I and II
D. Neither I nor II

Answer 28

T7-2 A

Designated agency is a form of dual agency. It is an optional practice permitted in North Carolina when one firm represents both the buyer and seller. In order to offer designated agency firms must have policies and procedures to insure that the confidential information of the parties is protected. Within the firm one licensee is designated to represent the seller and one licensee is designated to represent the buyer. Firms do not have to offer designated agency to clients.

Question 29

Designated agency can be practiced: I. Between two firms II. Between a broker-in-charge and a provisional broker licensee in their office

A. I only
B. II only
C. Both I and II
D. Neither I nor II

Answer 29

T7-3 D

Designated agency is never practiced between two firms. It occurs when the same firm represents both the buyer and the seller. A broker-in-charge and a provisional broker can never be designated agents in the same transaction.

Question 30

An agent must have the buyer sign a written agency agreement by what specific point in time? l. At the time of first substantial contact ll. Prior to the submission of an offer on the buyer’s behalf lll. At the time the agent attempts to limit the buyer’s ability to work with another agent

A. l only
B. l and ll only
C. ll and lll only
D. l, ll and lll

Answer 30

T7-4 C

Licensees are permitted to practice non-exclusive oral agency with buyers. They must still disclose agency at first substantial contact but may work under an oral agreement up until the submission of an offer on the buyer’s behalf. At the time of submission of an offer the licensee must have a written buyer representation agreement. Oral buyer representation cannot be exclusive (prevent a buyer from working with another agent) and it cannot involve a specific time period.

Question 31

Under the general principles of agency, when a licensee is acting on behalf of a client and acts improperly who is liable for the acts of the licensee?

A. only the client
B. only the licensee and the broker-in-charge
C. only the client and the licensee
D. the client, the licensee, the firm and or the broker-in-charge

Answer 31

T7-5 D

The concept of agency means that someone is legally acting on behalf of another. Therefore the agent’s actions are considered the actions of the principal and the firm or broker in charge also had duties of supervision.

Question 32

A disclosure of agency status should be made by a buyer’s agent to the seller: l. With a written confirmation in the offer to purchase and contract ll. At the initial contact with the seller’s agent, orally or in writing

A. l only
B. ll only
C. Both l and ll
D. Neither l nor ll

Answer 32

T7-6 C

The Offer to Purchase and Contract contains a confirmation of agency status as do the written employment agreements. The agency status must also be disclosed to other licensee’s at initial contact. Disclosure to consumers occurs at first substantial contact.

Question 33

Iris, a subagent of the seller who is working with a buyer customer, is told by the buyer customer that he wants to offer a low price on a property. The buyer customer says to Iris, “I want to offer $85,000 initially; however, I’ll go as high as $90,000 to get the property.” Iris wrote the offer and delivered the offer to the listing agent, Lucy. Iris told Listing Agent Lucy that the buyer customer is offering $85,000 initially, but he will go as high as $90,000 to get the property. Listing Agent Lucy did not tell the seller the buyer would be willing to go for a higher price. The seller accepted the buyer’s offer of $85,000. Who violated the Law of Agency? l. Lucy ll. Iris

A. l only
B. ll only
C. Both l and ll
D. Neither l nor ll

Answer 33

T7-7 A

Iris is working as a seller’s subagent and therefore her fiduciary duties are to the seller. Iris had a duty to disclose the information she possessed regarding the buyer to Lucy. Iris properly fulfilled her agency duties. Lucy also had a duty as the seller’s representative to disclose this information, but did not disclose it with the offer. Lucy violated her fiduciary duties to the seller.

Question 34

The amount of compensation due to a licensee from the brokerage firm is determined by:

A. state real estate regulators to ensure the public the most protection from incompetent licensees
B. local real estate board’s minimum wage guarantee to agents
C. in-house employment contracts
D. listing agreements

Answer 34

T7-8 C

The commission splits and amounts paid by brokerages to their individual licensees is contained in their independent contractor agreements. These splits do not appear in listings, buyer-broker agreements or the Offer to Purchase and Contract. They are a matter of private agreements and are not regulated by either the state regulatory agencies or local real estate boards.

Question 35

Which of the following would be dual agency?

A. a broker-in-charge assisting a buyer client in the purchase of property that was listed by a provisional broker of another firm
B. a provisional broker and a broker licensee from firms that are cooperating in a transaction
C. a firm that represents buyers and sellers
D. a broker having a buyer client for a property the broker personally listed

Answer 35

T7-9 D

Dual agency never exists when two different firms are involved. Dual agency is created when the same firm that represents the buyer in a transaction also represents the seller in the same transaction.

Question 36

A real estate broker was responsible for a chain of events that resulted in the sale of one of his client’s properties. This is referred to as:

A. chain of title
B. procuring cause
C. private offering
D. ready, willing and able buyer

Answer 36

T7-10 B

Procuring cause is a concept that allows for a licensee to be entitled to a commission when they are involved in a chain of events that resulted in the sale, even if the client eventually purchased through another licensee or firm.

Question 37

A parcel of vacant land 80 feet wide and 200 feet deep was sold for $200 per front foot. How much money would an individual agent receive for a 60% share of the 10% commission earned?

A. $640
B. $960
C. $1,600
D. $2,400

Answer 37

T7-11 B

The sales price is based on front footage. $200 x 80 = $16,000 sales price. The commission was $1,600 ($16,000 x 10%). Of the $1,600 received by the brokerage, the agent receives $960 ($1,600 x 60%).

Question 38

All of the following could legally be considered fraudulent, EXCEPT:

A. deceitful or dishonest practices
B. generalized exaggerated opinions about the property
C. omitted statements of material fact
D. misstatements about the property

Answer 38

T7-12 B

Generalized and exaggerated opinions about a property such as “great neighborhood” “wonderful location” are broad statements that are considered puffing and are legal and permitted.

Question 39

A seller has listed a home with a broker for $90,000, and the broker suggests to a prospective buyer-customer that they submit a low offer because of the seller’s urgent need to sell. The buyer offers $85,000, and the seller accepts it. In this situation:

A. the broker has violated his agency relationship with the seller
B. the broker’s action was acceptable since the seller accepted the offer
C. the broker acted properly to obtain a quick offer on the property
D. any broker is encouraged to solicit such bids for the property

Answer 39

T7-13 A

The broker licensee represents the seller. Their fiduciary duties are to the seller. In this instance the broker provided the seller’s confidential urgency to a buyer customer and violated the law of agency to protect and promote their client’s interest.

Question 40

Upon discovering a latent defect in the property, the listing agent should discuss the problem with the seller, and then:

A. inform the seller that the defect must be repaired
B. arrange for the repairs himself or herself as required by the terms of a typical listing contract
C. inform any prospective buyers of the defect
D. contact the city building inspector about the defect

Answer 40

T7-14 C

A latent defect is a defect that is not readily apparent or is hidden. The seller does not have an obligation to disclose such defects, but a real estate licensee has a duty to disclose to all prospective buyers material facts which the licensee knows or should have known.

Question 41

A provisional broker sells another firm’s listing for $150,000. The commission is 6.5% of the sales price. Of this amount, 55% goes to the listing broker and the remaining 45% belongs to the cooperating broker. If the provisional broker receives 60% of any commission that he generates for the office, he is entitled to receive:

A. $2,632.50
B. $3,217.50
C. $4,387.50
D. $5,850

Answer 41

T7-15 A

The total commission was $9,750 ($150,000 x 6.5%). The provisional broker sold another firm’s listing. The cooperating firm (the provisional broker’s firm) received $4,387.50 ($9,850 x 45%). The provisional broker received $2,632.50 ($4,387.50 x 60%).

Question 42

Which of the following BEST describes the common law of agency?

A. the disclosure requirement by the agent to third parties no later than first substantial contact
B. case law establishing the responsibilities of a person who acts for another
C. the Code of Ethics prescribed by the local trade association
D. state license laws and statutes

Answer 42

T7-16 B

Agency is a legal relationship that governs the responsibilities and obligations when one person legally acts on behalf of another. The agent acting on behalf of a principal owes the principal fiduciary duties.

Question 43

A buyer-client has instructed the agent to show only properties where the seller is willing to pay the buyer agent’s commission. The agent contacts an owner selling a property without the assistance of a real estate agent with the hope that the seller would be willing to pay her commission if the buyer decided to purchase the seller’s property. In order to comply with North Carolina Real Estate Commission Rules, the agent must do all of the following, EXCEPT:

A. obtain permission from her buyer-client in order to obtain compensation from the seller
B. disclose her agency status to the seller at initial contact
C. convince the seller to list with her and authorize dual agency
D. provide the Working with Real Estate Agents brochure to the seller

Answer 43

T7-17 C

The buyer’s representative is working for the buyer not the unrepresented seller. The licensee would need to disclose their agency status to the seller, provide the Working with Real Estate Agents brochure and have their client’s permission to seek compensation from the seller. The licensee should have the seller sign a Commission Protection Agreement to pay the fee, but would remain the representative of the buyer.

Question 44

The listing broker tells a prospective buyer that the seller is on the verge of bankruptcy. The broker’s actions are:

A. acceptable since they may promote an offer from the buyer
B. acceptable as long as the broker does not disclose any additional specific financial information concerning his client’s credit history
C. unacceptable unless there are multiple offers on the property
D. unacceptable unless the seller has authorized the broker to share the information with potential buyers

Answer 44

T7-18 D

A licensee must keep the financial and personal information confidential unless they are specifically authorized by their client to disclose such information.

Question 45

A listing agent is showing a house to a prospective buyer customer. The seller told the listing agent that during the past 10 winters, they have been unable to rid the house of rodents. The seller has hidden rodent damage by the strategic placement of a large sofa. Which of the following statements is TRUE?

A. This information may be withheld since the agent never saw any evidence of infestation or damage.
B. Disclosing the information could create a fiduciary relationship with the buyer and, thereby, create an unauthorized dual agency situation.
C. Withholding the information prevents the disclosure of a material fact.
D. Disclosing the information violates the agency duties with the seller.

Answer 45

T7-19 C

A licensee is required to disclose all material facts. A material fact is any information about the property which could affect a seller’s willingness to sell or a buyer’s willingness to buy. Material facts must be disclosed to both clients and customers.

Question 46

Which of the following BEST describes a designated agency transaction?

A. the listing firm appointing an agent to represent the seller
B. the selling firm appointing an agent to represent the buyer
C. some agents in the same firm representing buyers exclusively and other agents in the same firm representing sellers exclusively
D. a broker-in-charge appointing one agent to exclusively represent the seller as the client and appointing a different agent to exclusively represent the buyer as a client while the firm remains in dual agency

Answer 46

T7-20 D

It’s only designated agency (a form of dual agency) when the same firm represents both the buyer and the seller in the same transaction and the firm has designated two different licensees to each represent the respective interests of a client.

Question 47

If the broker-in-charge (BIC) is to act as one of the designated agents on a North Carolina in-house transaction, which of the following may be appointed as a designated agent for the other party to the transaction?

A. an actively licensed provisional broker within the firm, so long as disclosure is made to both clients
B. a full broker within the firm who has no prior confidential knowledge of the party that the BIC will represent
C. a broker-in-charge cannot be appointed as a designated agent
D. a licensed broker who has prior confidential knowledge about the party that the BIC will represent

Answer 47

T7-21 B

In order to be appointed a designated agent a licensee may not already possess prior confidential information about the client and if one of the designated agents is the BIC, the other designated agent must be a full broker.

Question 48

Which of the following describes designated agency in North Carolina?

A. designated agency is optional, not mandatory
B. designated agency does not eliminate dual agency
C. designated agents cannot have prior confidential knowledge of the other party to the transaction
D. all of the above

Answer 48

T7-22 D

These are all true statements about designated agency in NC. Designated agency is a form of dual agency and no firm is forced to practice designated agency, it is an optional form of agency that is permitted but not required.

Question 49

The North Carolina Working With Real Estate Agents brochure must be given:

A. to property owners upon initial contact
B. to all consumers prior to first substantial contact
C. only to buyers in a real estate transaction
D. to all consumers in a sales transaction no later than first substantial contact

Answer 49

T7-23 D

The WWREA brochure is a mandatory agency disclosure that requires licensees and consumers to discuss, disclose and decide on agency options. It must be provided to all consumers in sales transactions no later than first substantial contact.

Question 50

All of the following situations will terminate a listing, EXCEPT:

A. mutual agreement by the parties
B. breach by either party
C. death of the individual listing licensee
D. bankruptcy of the firm

Answer 50

T7-24 C

Employment agreements typically end with the death of the parties. However, the death of the licensee does not end the listing because the licensee is not a party to the agreement. The agreement is between the seller and the firm.

Question 51

A licensee is an actively licensed real estate broker who has a written contract with his firm that specifies that he will not be treated like an employee. The licensee’s entire income is from sales commissions rather than an hourly wage. Based on these facts, the licensee will be treated by the IRS as:

A. a real estate assistant
B. an employee
C. a subagent
D. an independent contractor

Answer 51

T7-25 D

There is a specific IRS statute which states that a licensed real estate professional with whom a firm has a written independent contractor agreement and who is paid based on commissions, not hourly wages, will be considered an independent contractor.

Question 52

All of the following are TRUE regarding the North Carolina Working With Real Estate Agents brochure, EXCEPT:

A. the consumer is not required to sign the brochure
B. if the first substantial contact is by phone, the brochure must be provided within 3 calendar days
C. the brochure’s use is mandatory in all real estate transactions, including residential sales, commercial transactions and property management
D. the brochure must be given in all sales transactions at first substantial contact

Answer 52

T7-26 C

Use of the brochure is not required in property management.

Question 53

Jack is a NC real estate licensee. He has decided to sell his own house which he is doing outside of his brokerage as a For Sale by Owner. Jill, a prospective buyer has approached Jack at one of his open houses and has expressed an interest in buying the home. Which of the following is a proper course of action for Jack?

A. Exclusively represent Jill, but only after full disclosure of his interest in the property.
B. Enter in a dual agency relationship where Jack represents himself as the seller and also represents Jill as the buyer.
C. Fully disclose his interest in the property and treat Jill as a customer.
D. Represent Jill, but do so only on a non-exclusive basis since he has an interest in the property.

Answer 53

T7-27 C

As a NC licensee Jack is prohibited from representing Jill regarding any property in which he has an interest. He cannot represent Jill on any basis, must disclose his interest in the property, disclose agency to Jill and treat her as a customer.

Question 54

Rite Stuff Realty is a NC real estate firm that buys and flips homes. All of the homes that Rite Stuff handles are owned by the firm entity. In regard to the listing and sale of these homes, which of the following is a correct statement?

A. None of the agents of Rite Stuff may act as representatives of buyers and must treat all buyers as customers since the firm owns the properties
B. Rite Stuff must act as dual agents in the sale of their homes because they are the owners
C. The North Carolina Real Estate Commission is not concerned with whom Rite Stuff represents so long as agency is properly disclosed
D. Rite Stuff may offer exclusive buyer representation, dual agency or designated agency to prospective purchasers of their homes

Answer 54

T7-28 A

When the properties are owned by the firm, none of the firm’s licensees may represent a buyer and the buyer must be treated as a customer.

Question 55

All of the following are true of The Residential Property and Owners Association Disclosure Statement, EXCEPT
:
A. It requires a seller to disclose material defects in their home prior to sale
B. It must be provided to the buyer prior to submission of an offer
C. It is intended for 1-4 unit residential properties
D. Failure to provide the disclosure form creates a 3 day right of rescission for the buyer

Answer 55

T7-29 A

NC is not a seller disclosure state. While a seller is required to complete the form, they may answer questions by indicating “no representation.”

Question 56

All of the following are exempt from the requirement to provide an RPOADS and MOG, EXCEPT

A. Transfers between spouses
B. First sale of a dwelling not yet inhabited
C. Both parties agree not to complete the form
D. A For Sale by Owner

Answer 56

T7-30 D

The RPOADS and MOG are required to be provided by private sellers as well as those represented by a real estate licensee