Real Estate Test Unit 10

Question 1

automatic extension clause

Answer 1

a listing agreement clause stating that the agreement will continue automatically for a certain period of time after its expiration date. in many states, use of this clause is discouraged or prohibited

Question 2

broker protection clause

Answer 2

clause in a contract that protects a broker from losing a commission in the event a transaction is not completed or is intentionally delayed until after the listing expires

Question 3

buyer’s representative

Answer 3

a residential real estate professional who represents the prospective purchaser in a transaction, often through a sales associate of the broker. the buyer’s representative who acts as a buyer’s agent owes the buyer-principal the common-law or statutory agency duties

Question 4

comparative market analysis (CMA)

Answer 4

a comparison of the prices of recently sold homes that are similar to a listing seller’s home in terms of location, style, and amenities

Question 5

employment contract

Answer 5

a document evidencing formal employment between employer and employee or between principal and agent or representative. In the real estate business, this generally takes the form of the agreement between broker and sales associate, client representation agreement (including a listing agreement or buyer representation agreement) or property management agreement

Question 6

exclusive agency listing

Answer 6

a listing contract under which the owner appoints a real estate professional as her exclusive agent for a designated period of time to sell the specified property, on the owner’s stated terms, for a commission. the owner reserves the right to sell the property without paying anyone a commission if the sale is to a prospect who has not been introduced or claimed by the real estate professional

Question 7

exclusive buyer representation agreement

Answer 7

agreement in which the buyer works with only one broker, although the broker is free to represent other buyer clients

Question 8

exclusive right-to-sell listing

Answer 8

a listing contract under which the owner appoints a real estate professional as his exclusive agent for a designated period of time to sell the specified property on the owner’s stated terms and agrees to pay the real estate professional a commission when the property is sold, whether by the real estate professional, the owner, or another real estate professional

Question 9

listing broker

Answer 9

the broker from whose office a listing agreement is initiated

Question 10

multiple listing clause

Answer 10

a provision in an exclusive listing for the authority and obligation on the part of the listing agent to distribute the listing to other real estate professionals in a multiple listing organization

Question 11

net listing

Answer 11

a listing based on the net price the seller will receive if the property is sold. under a net listing, the real estate professional can offer the property for sale at the highest price obtainable to increase the commission. this type of listing is illegal in many states

Question 12

open listing

Answer 12

a listing contract under which the real estate professional’s compensation is contingent on the real estate professional producing a ready, willing, and able buyer before the property is sold by the seller or another real estate professional