Unit 10 Quiz Questions

Question 1

In a buyer representation agreement, the broker acts as the agent of the buyer and must protect the buyer’s interests

a. at all points in the transaction.
b. only during property showings.
c. until the representation agreement is signed.
d. only when negotiating on behalf of the buyer.

Answer 1

At all points in the transaction.

In a buyer representation agreement, the broker acts as the agent of the buyer and must protect the buyer’s interests at all points in the transaction.

Question 2

A homeowner listed the home for sale with a broker. When the owner sold the home without the broker’s assistance, no one was owed a commission. Based on these facts, what type of
listing did the broker and the owner most likely sign?

a. Exclusive right-to-sell listing
b. Net listing
c. Multiple listing
d. Open listing

Answer 2

Open Listing

Under an open listing, the seller is permitted to sell the house without the broker’s assistance and is not obligated to pay a commission.

Question 3

Information in a listing agreement generally includes

a. block size.
b. termination clause.
c. client’s specific requirements for a suitable property to buy.
d. neighborhood condition disclosures.

Answer 3

Termination clause

Question 4

A broker’s agreement to represent a property buyer may be terminated when

a. the property buyer dislikes all of the properties shown by the broker.
b. the buyer becomes a seller.
c. the broker and buyer mutually agree to cancel the agreement.
d. there are very few properties on the market.

Answer 4

The broker and buyer mutually agree to cancel the agreement

A broker’s agreement to represent a property buyer may be terminated for various reasons, one of which is mutual agreement between the broker and buyer.

Question 5

A listing agreement is

a. a contract between the buyer and the seller.
b. a contract to purchase real property.
c. an employment agreement between the broker and the sales associate.
d. an employment contract between the seller and the broker.

Answer 5

An employment contract between the seller and the broker.

Although the broker can subcontract the work to sales associates, the listing agreement is an employment contract between the seller and the broker.

Question 6

Who are the parties to a listing agreement?

a. Buyer and seller
b. Seller and broker
c. Seller and sales associate
d. Buyer and sales associate

Answer 6

Seller and broker.

The seller and broker are parties to the listing agreement. Listings remain the property of the broker even if the sales associate who represented the broker in securing the listing leaves the company.

Question 7

There are five different brokerage signs in the front yard of a home for sale. Evidently, the seller has signed

a. an exclusive agency listing.
b. an exclusive right-to-sell listing.
c. a net listing.
d. an open listing.

Answer 7

An open listing

In an open listing, the seller retains the right to sell the property and may employ more than one broker to perform agency duties.

Question 8

A broker just explained the value of signing an exclusive agency listing with a broker who is a member of the multiple listing service. The broker is trying to overcome the misconceptions of
the seller who asked about

a. an open listing.
b. an option listing.
c. an exclusive right-to-sell listing.
d. a net listing.

Answer 8

An open listing

Sellers are often confused, thinking that the only way to find buyers from a number of brokers is to enter into an open listing. Explaining the advantages of a multiple listing service can
overcome the misconception.

Question 9

What kind of listing agreement is illegal in many states because of the potential for conflict of interest between a broker’s fiduciary responsibility to the seller and the broker’s profit
motive?

a. Open listing
b. Net listing
c. Exclusive right-to-sell
d. Exclusive agency listing

Answer 9

Net Listing

Because a broker is free to offer the property at any price greater than the net amount, a net listing can create a conflict of interest between the broker’s fiduciary responsibility to the
seller and the broker’s profit motive. Thus, net listings are illegal in many states and discouraged in others.

Question 10

Buyer agents typically are compensated by a

a. flat fee for service.
b. percentage of selling price.
c. hourly rate.
d. percentage of list price.

Answer 10

Percentage of selling price

Question 11

A listing agreement will be terminated by

a. performance.
b. a downturn in the market.
c. an offer to purchase.
d. abandonment by the sales associate.

Answer 11

Performance

Because an offer to purchase may not be accepted, it would not terminate the listing agreement. The state of the market will not terminate the agreement and neither would the abandonment of the listing by the sales associate. The listing still remains with the broker.

Question 12

A broker is retiring and wants to submit the firm’s listings to another broker. How can the broker do this?

a. The broker must sign over the listings to the new broker.
b. The new broker has to sign an acceptance agreement.
c. Each sales associate must sign over the listings to the new broker.
d. Each seller must agree to a new listing with the new broker.

Answer 12

Each seller must agree to a new listing with the new broker.

Because the listing agreement is a contract for the personal services of the original broker, each seller has the right to cancel the listing agreement and not be represented by the new
broker.

Question 13

In which of these types of listing agreements is the broker appointed as the seller’s only agent?

a. Exclusive right-to-sell and exclusive agency listings
b. Open listing
c. Net listing
d. Option listing

Answer 13

Exclusive right to sell and exclusive agency listings

Under an exclusive right-to-sell or exclusive agency listing, one broker is appointed as the seller’s sole agent. Open and option listings do not specifically exclude other brokers from acting as the seller’s agent.

Question 14

In most states, a broker’s license can be suspended or revoked if the broker

a. breaches the terms of the listing agreement.
b. cancels the listing agreement without cause.
c. takes a listing that does not include a date on which the listing expires.
d. does not include an automatic extension clause in the listing agreement

Answer 14

Takes a listing that does not include a date on which the listing expires

If the broker breaches the listing contract or cancels it without cause, the broker may be liable for damages; however, it is not usually grounds for suspension or revocation of the
license. Courts discourage the use of automatic extension clauses, and these clauses are even illegal in some states.

Question 15

A listing agreement may include

a. the dimensions of the block.
b. the possibility of seller financing.
c. the age of the seller.
d. the history of the property’s taxes.

Answer 15

The possibility of seller financing

Information needed for a listing agreement may include the possibility of seller financing. The age of the seller is not needed. The dimensions of the block are not relevant and only the most
recent property tax bill is included

Question 16

An example of personal property that a seller may leave with the real estate and which, therefore, must be identified on the listing agreement is

a. a built-in dishwasher.
b. the door key.
c. stacked firewood.
d. a ceiling light fixture.

Answer 16

Stacked Firewood

Firewood is not attached to the real estate and is therefore considered personal property. All the other items, even the door key, are normally considered to be part of the real estate.

Question 17

A brokerage charged the seller $1,000 as an advertising fee and 4% of the selling price. The house was listed for $439,500 and sold for $429,350. What was the total amount the seller
paid the brokerage?

a. $15,174
b. $15,580
c. $16,580
d. None of these

Answer 17

None of these.

The seller paid the brokerage none of these: The sales price is $429,350 × 4% + $1,000 =
$18,174.

Question 18

A seller agreed to a 5% commission on a sale price of $175,000. The brokerage split with salespeople is 30/70, with 30% remaining with the company. How much is the sales
associate’s share if the sales associate both lists and sells the property?

a. $2,625
b. $6,125
c. $8,750
d. None of these

Answer 18

$6125

The sales associate’s share is $6,125: $175,000 × 5% × 70% = $6,125.

Question 19

It is the broker’s office policy that a sales associate keep 60% of the firm’s share of any commission earned from any property the associate lists. A sales associate listed a property
that was later sold by a cooperating broker for $285,000. If the two brokers agree to split the 6.5% commission equally, what will the salesperson receive?

a. $5,557.50
b. $6,092.00
c. $7,235.25
d. $7,654.00

Answer 19

$5,557.50

The sales associate receives $5,557.50: $285,000 × 6.5% × 50% × 60% = $5,557.50

Question 20

The commission on the sale of a house was $16,500, which was based on a 7.5% commission rate. What was the final selling price of the house?

a. $127,000
b. $145,000
c. $199,000
d. $220,000

Answer 20

$220,000

The selling price was $220,000: $16,500 / 7.5% = $220,000

Question 21

The broker listed a home for $360,000 under a 90-day exclusive right-to-sell listing agreement with a 6% commission. The next week, the broker began advertising the home in a local
paper and showed the property to two prospective buyers. Later that week, the seller announced that the property would be sold to a relative for $340,000. The seller is liable to the
broker for

a. $1,200.
b. $20,400.
c. $21,600.
d. none of these

Answer 21

$20,400

The seller is liable to the broker for $20,400: $340,000 × 6% = $20,400. Because the seller had signed an exclusive right-to-sell listing agreement, the seller is responsible for paying a commission regardless of who finds the buyer.

Question 22

A property listing taken by a real estate sales associate is technically an employment agreement between the seller and

A. the broker.
B. the local multiple listing service.
C. the sales associate.
D. the sales associate and broker together.

Answer 22

The Broker

The answer is the broker. Only a licensed broker may enter into brokerage agreements. The broker’s sales associates have authority only to assist in negotiating the agreements. The sales associate is the agent of the broker, but only the broker is the agent of the client and a party to the representation agreement. The sales associate is not a party to it

Question 23

Which of the following is a similarity between an exclusive agency listing and an exclusive right-to-sell listing?

A. Under each, the seller retains the right to sell the real estate without the broker’s help and without paying the broker a commission.
B. Under each, the seller authorizes only one particular sales associate to show the property.
C. Both types of listings give the responsibility of representing the seller to one broker only.
D. Both types of listings are open listings.

Answer 23

Both types of listings give the responsibility of representing the seller to one broker only.

The answer is both types of listings give the responsibility of representing the seller to one broker only. Each listing is exclusive, meaning it is granted to one broker exclusively. While the exclusive agency listing would allow the seller to find a buyer without paying a commission, the exclusive right-to-sell listing would require a commission to be paid even if the seller alone procured the buyer. Open listings impose no limit on the number of additional brokers that might be hired by the seller.

Question 24

The listing agreement on a residential property states that it expires on May 2. Which event would terminate the listing before that date?

A. The agreement is renewed before May 2.
B. The owner becomes ill on April 29.
C. On April 15, the owner and agent cancel the agreement.
D. The house is destroyed by fire on May 3.

Answer 24

On April 15, the owner and agent cancel the agreement.

The answer is on April 15, the owner and agent cancel the agreement. Mutual agreement by the owner and the agent would terminate a listing agreement before its expiration date. The death of the owner or the destruction of the property also would end the listing agreement before the expiration date.

Question 25

A seller listed a property with a broker under an exclusive agency listing agreement. If the seller finds a buyer, the seller will owe the broker

A. no commission.
B. the full commission.
C. a partial commission.
D. only reimbursement for the broker’s costs.

Answer 25

No Commission

The answer is no commission. Only the exclusive right-to-sell listing earns the listing broker a commission if someone else sells the property during the term of the agreement.

Question 26

A broker sold a residence for $485,000 and received $26,675 as commission in accordance with the terms of the listing agreement. What was the broker’s commission rate?

A. 5%
B. 5.5%
C. 6%
D. 6.5%

Answer 26

5.5%

The answer is 5.5%. Commission rate × selling price = commission, so commission ÷ selling price = commission rate; therefore, $26,675 commission ÷ $485,000 selling price = 0.055, or 5.5% commission rate.

Question 27

Under a brokerage agreement with a property owner, the broker is entitled to sell the property for any price, as long as the seller receives $85,000. The broker may keep any amount over $85,000 as a commission. This type of listing might be illegal and is called

A. an exclusive right-to-sell listing.
B. an exclusive agency listing.
C. an open listing.
D. a net listing.

Answer 27

Net Listing

The answer is a net listing. Whether an open, an exclusive agency, or an exclusive right-to-sell, any listing that allows the broker to keep all of the selling price over the net amount that the seller requires is a net listing. Net listings are illegal in many states

Question 28

Which of the following is a similarity between an open listing and an exclusive agency listing?

A.Under each, the seller avoids paying the broker a commission if the seller sells the property to someone the broker did not procure.
B. Each grants a commission to any broker who procures a buyer for the seller’s property.
C. Under each, the broker earns a commission regardless of who sells the property, as long as it is sold within the listing period.
D. Each grants the exclusive right to sell to whatever broker produces a buyer for the seller’s property.

Answer 28

Under each, the seller avoids paying the broker a commission if the seller sells the property to someone the broker did not procure.

The answer is under each, the seller avoids paying the broker a commission if the seller sells the property to someone the broker did not procure. Both open and exclusive agency listings allow owners to sell without broker aid and thus avoid paying a commission.

Question 29

The final decision on a property’s asking price should be made by

A. the seller’s broker.
B. the appraised value.
C. the seller.
D. the seller’s attorney

Answer 29

The Seller

The answer is the seller. Although a listing agent, an appraiser, and an attorney voice their opinions, the seller finally sets the listing (offering) price for a property.

Question 30

Which statement is TRUE of a listing agreement?

A. It is an employment contract for the professional services of the broker.
B. It obligates the seller to transfer the property if the broker procures a ready, willing, and able buyer.
C. It obligates the broker to work diligently for both the seller and the buyer.
D. It automatically binds the owner, the broker, and the MLS to its agreed provisions.

Answer 30

It is an employment contract for the professional services of the broker.

The answer is it is an employment contract for the professional services of the broker. The listing is the broker’s contract of employment by the seller. It is not a contract between the seller and any buyer and so cannot be enforced on the seller by a buyer, even though the buyer might make an offer that is the “mirror image” of the terms of the listing. In such an event, however, the seller may owe the broker a full commission for having produced the result the listing called for: an able buyer who is ready and willing to buy according to the terms of the listing.

Question 31

A broker sold a property that was owned by a bank that had acquired it through foreclosure, and the broker received a 6.5% commission. The broker gave the listing sales associate $3,575, which was 30% of the firm’s commission. What was the selling price of the property?

A. $55,000
B. $95,775
C. $152,580
D. $183,333

Answer 31

$183,333

The answer is $183,333. Two steps are involved: (1) Find the firm’s full commission. (2) Find the selling price using the full commission and the rate. (1) $3,575 amount to salesperson = 30% × full commission; $3,575 amount to salesperson ÷ 30% = $11,916.67 full commission (rounded to the nearest cent). (2) $11,916.67 full commission ÷ 6.5% brokerage rate = $183,333.38 sales price (rounded to the nearest cent). The closest answer is $183,333.

Question 32

A seller hired a broker under the terms of an open listing agreement. While that agreement was still in effect, the seller—without informing the first broker—hired another broker from a separate firm under an exclusive right-to-sell listing for the same property. If the first broker produces a buyer for the property whose offer the seller accepts, the seller must pay a full commission to

A. only the first broker.
B. only the second broker.
C. both brokers.
D. neither broker.

Answer 32

Both brokers

The answer is both brokers. The broker with the open listing who procures the buyer is due a full commission. The broker with an exclusive right-to-sell listing is due a full commission if the listed property is sold by anyone during the term of the listing. Both these events occurred. Two full commissions are due.

Question 33

A seller listed a residence with a broker. The broker brought an offer at full price and terms of the listing agreement from a buyer who is ready, willing, and able to pay cash for the property, but the seller rejected the buyer’s offer. In this situation, the seller

A. must sell the property.
B. owes a commission to the broker.
C. is liable to the buyer for specific performance.
D. is liable to the buyer for compensatory damages.

Answer 33

Owes a commission to the broker

The answer is owes a commission to the broker. The broker has fulfilled all the requirements. Even though no contract is signed with the willing buyer, the broker is due a full commission. The seller does not have to sell, just pay the commission.

Question 34

A buyer signed an agreement with a broker to compensate the broker even if the buyer purchases the property from a relative. This is called

A. an open buyer representation agreement.
B. an exclusive agency buyer representation agreement.
C. an exclusive buyer representation agreement.
D. an invalid agreement

Answer 34

an exclusive buyer representation agreement.

The answer is an exclusive buyer representation agreement. An exclusive buyer representation agreement binds the buyer to compensate the agent whenever the buyer purchases a property of the type described in the contract, even if the buyer finds the property independently.

Question 35

A prospective buyer signs an agreement with a broker to find a property for the buyer, and the buyer agrees to work only with that broker. While this agreement is in effect,

A. only one sales associate of the broker can work with the buyer.
B. the broker can represent other buyers.
C. the broker cannot show the buyer a property that is listed by the broker.
D. the sales associate working with the buyer cannot work with other buyers.

Answer 35

B. the broker can represent other buyers.

The answer is the broker can represent other buyers. The broker is free to represent other buyers; the buyer cannot sign an agreement or work with another broker while the first agreement is still in effect.

Question 36

A seller sold property to a neighbor without the services of a real estate broker; however, the seller still owes a broker a commission because the seller signed

A. an exclusive agency listing agreement.
B. an open listing agreement.
C. an exclusive right-to-sell listing agreement.
D. a net listing agreement.

Answer 36

An exclusive right to sell listing agreement

The answer is an exclusive right-to-sell listing. In an exclusive right to sell listing, a commission will be owed to a broker regardless of which party sells the house. In exclusive agency and open listings, the seller retains the right to sell without obligation to the broker.

Question 37

Most states require that a real estate listing agreement contain

A. a multiple listing service (MLS) clause.
B. a definite contract termination date.
C. an automatic extension clause.
D. a broker protection clause.

Answer 37

A definite contract termination date

The answer is a definite contract termination date. Failing to specify a definite termination date in a real estate listing can be grounds for suspension or revocation of a license in most states. Automatic extensions have been discouraged by courts. Broker protection clauses and MLS clauses are not required.

Question 38

Which type of listing is prohibited in some states?

A. Exclusive right-to-sell
B. Net listing
C. Buyer representation
D. Open listing

Answer 38

Net listing

The answer is net listing. A net listing may be prohibited by state law.

Question 39

By executing a listing agreement with a seller, a real estate broker becomes

A. a procuring cause.
B. obligated to open a special trust account.
C. the agent of the seller.
D. responsible for sharing the commission.

Answer 39

The agent of the seller

The answer is the agent of the seller. As agent, the broker represents the seller with whom the brokerexecuted the listing agreement.

Question 40

The provision in a contract with a property seller that gives additional authority to the broker and obligates the broker to alert other brokers to the availability of the property is

A. a joint listing clause.
B. a multiple listing clause.
C. a net listing clause.
D. an open listing clause.

Answer 40

a multiple listing clause

The answer is a multiple listing clause. A multiple listing service (MLS) is a marketing organization whose broker members make their own exclusive listings available through other brokers.

Question 41

A valid reason for terminating a buyer representation agreement is

A. the desire of the buyer to see properties in an expanded area.
B. the death of the broker.
C. the agreement of the parties on increasing the price range of the buyer.
D. the death of the sales associate who worked with the buyer.

Answer 41

The death of the broker.

The answer is the death of the broker. A listing agreement is a personal service agreement between a broker and a seller, not between a sales associate and a seller.)