Unit 3.4 - Agency in Sales Transactions (LTP Quiz)

Question 1

If authorized, designated agency could be practiced between all the following licensees EXCEPT:
Choose only ONE best answer.

A
Two provisional brokers affiliated with the same real estate firm.
B
The broker-in-charge and a non-provisional broker in the same real estate firm.
C
Two non-provisional brokers affiliated with different real estate firms.
D
A provisional broker and a non-provisional broker in the same real estate firm.

Answer 1

C
Two non-provisional brokers affiliated with different real estate firms.

If the two brokers are in different firms, this is not any form of dual agency, much less designated dual agency. Remember that dual agency of any type involves one firm representing two clients.

Question 2

A house which is owned by Bob is listed for sale with National Realty and placed in the MLS. Jill, a newcomer to the area, goes to Jack, a provisional broker with World Realty, for assistance in buying a home. World Realty does not practice buyer agency. Jill submits an offer to purchase the home through Jack and the offer is accepted by Bob. Which party to the transaction does Jack represent in the transaction?

Choose only ONE best answer.

A
Bob

B
National Realty

C
World Realty

D
Jill

Answer 2

A
Bob

Jack cannot offer to represent Jill as his firm World Realty does not practice buyer agency.

Since there are two firms involved here, we are not talking about dual agency. That leaves only one choice for Jack and World Realty…they must be representing the seller.

Jack can act as a subagent of the seller, write up an offer for the buyer, owing his allegiance is to the seller, Bob.

Question 3

A provisional broker receives a call from a prospective buyer on a property that he has listed. The buyer and provisional broker meet at the property. The provisional broker realizes that they left the Working with Real Estate Agents Brochure at the office. The provisional broker orally explained the brochure and the buyer consented to representation and authorized dual agency. Is the provisional broker’s actions lawful?

Choose only ONE best answer.

A
No. The Working with Real Estate Agent’s Brochure must be provided in writing at first substantial contact.

B
No. A buyer cannot consent to oral buyer agency unless the Working with Real Estate Agent’s Brochure has been signed by the prospective buyer.

C
Yes. The provisional broker has met the disclosure responsibility and the buyer can enter into oral buyer agency agreement.

D
Yes. The provisional broker may orally explain the Working with Real Estate Agent’s Brochure, however must send the buyer a copy of the brochure within 3 calendar days.

Answer 3

D
Yes. The provisional broker may orally explain the Working with Real Estate Agent’s Brochure, however must send the buyer a copy of the brochure within 3 calendar days.

A broker must explain the Working with Real Estate Agent’s Brochure at first substantial contact. If it is not reasonable to deliver a copy of the form in person, or if in this instance the broker does not have a copy available, they must still explain the brochure and then have 3 calendar days to send a copy to the prospective client / customer.

A client that has not signed the form may still consent to oral buyer’s agency and authorize dual/designated agency.

Question 4

A buyer decides not to sign an Exclusive Buyer Agency Agreement with a firm, and still wants to see property without representation. The agent must:

Choose only ONE best answer.

A
Have the buyer sign Non-exclusive Buyer Agency Agreement prior to showing any property.

B
Reduce the oral buyer agency relationship to writing no later than closing.

C
Prepare a comparative market analysis detailing a probable sales price range.

D
Disclose all facts that are deemed material regarding the transaction.

Answer 4

D
Disclose all facts that are deemed material regarding the transaction.

When a broker does not represent the buyer, they can act as a seller’s subagent or agent of the seller. A broker must represent at least 1 party in the transaction. The broker has a duty to discover and disclose material facts to all parties in the transaction. When a broker represents the seller they are not permitted to prepare a comparative market analysis and can only recommend the listing price if an unrepresented buyer asks how much they should offer.

Question 5

Designated Agency can be practiced within the same firm in all of the following situations EXCEPT:
Choose only ONE best answer.

A
Provisional broker working with a non-provisional broker in the office

B
Broker-in-charge working with a provisional broker in the office

C
Non-provisional broker working with another non-provisional broker in the office

D
Provisional broker working with another provisional broker in the office.

Answer 5

B
Broker-in-charge working with a provisional broker in the office

Even when designated agency is practiced by the firm and authorized by both the buyer and seller, it cannot be practiced by the broker in charge and a provisional broker within the office. All other combinations of provisional broker and non-provisional broker will be permitted to practice designated agency unless they have personal or confidential information about the other party. The BIC will appoint the brokers (PB or Non-PB) that will act as designated agents.

Question 6

Samir is a nonprovisional broker affiliate of XYZ Realty and is holding an open house at his new listing of 540 Oakmont Street in Knightdale. Candace, a potential buyer, tours the property during the open house and has a relatively long discussion with Samir regarding the home, its features, and the surrounding neighborhood. Which of the following statements is accurate regarding this interaction?
Choose only ONE best answer.

A
Samir should disclose to Candace his agency relationship with the seller before Candace gives any motivating information regarding her potential home purchase.

B
Samir must give Candace the Working With Real Estate Agents brochure and explain agency options to her (including a warning that he represents the seller) when Candace first enters the open house

C
Samir need not make any disclosure to Candace regarding Agency since his relationship is with the sellerÂ

D
Samir must obtain Candace’s signature on the Working With Real Estate Agents brochure if Candace gives any personal/confidential information that might harm her in the transaction.

Answer 6

A
Samir should disclose to Candace his agency relationship with the seller before Candace gives any motivating information regarding her potential home purchase.

When representing a seller and speaking with a buyer, the licensee does not have to disclose their agency relationship immediately at the beginning of the conversation. They must do so at or before “first substantial contact”, which is the moment the buyer gives any personal/confidential information that might harm them in the transaction. Statement #4 is incorrect because consumers are never required to sign the Working with Real Estate Agents Brochure

Question 7

Which of the following would create an agency relationship between a brokerage and a seller?
Choose only ONE best answer.

A
When an agent of the firm prepares a comparative market analysis.

B
When the seller orally agrees to representation by the firm so long as it is reduced to writing prior to an offer.

C
By written agreement between the seller and the firm.

D
When an agent presents the Working with Real Estate Agents Brochure and the seller signs it.

Answer 7

C
By written agreement between the seller and the firm.

Agency is formed by agreement between the client and the firm. A listing agreement must be in writing from inception – provide for a definite end date, contain non-discriminatory language and disclosure of the broker’s license number. A broker should prepare a CMA to present to the seller during the listing process, however it does not create agency. The Working with Real Estate Agents Brochure must be presented a first substantial contact, which explains the various forms of agency, however does not create an agency relationship. A buyer agency agreement may be oral so long as it is non-exclusive and open ended, and must be reduced to writing prior to presentation of an offer.

Question 8

Which of the following statements is true regarding a dual agency transaction in North Carolina?
Choose only ONE best answer.

A
Brokers and firms who sign a buyer agency agreement after first showing the property to the buyer as a subagent of the seller are dual agents.

B
The firm in a dual agency transaction will represent both clients but may not seek the best possible outcome for either of the clients.

C
Both of the above are true

D
Neither of the above are true

Answer 8

C
Both of the above are true

In statement I, the broker shows the property as a “subagent of the seller”. This means the broker is affiliated with the listing firm….they work for the firm who represents the seller and therefore they personally also represent the seller. If they later (subsequently) execute a buyer agency agreement with the same buyer on that same property, the firm would then be representing both the seller and the buyer in the transaction….this creates dual agency. Statement II is correct of all true dual agency transactions. Because the firm represents both seller and buyer, it is impossible in dual agency to seek the best possible outcome for one without harming the other.

Question 9

Suzy, a licensee with All Stars Realty, is the on-site agent at Babbling Brook subdivision. She held a busy open house on Sunday with 25 visitors attending. The following day a potential buyer comes to the sales center without an agent and wants to be shown all currently available listings. What, if anything, must Suzy give them?
Choose only ONE best answer.

A
Disclosure to Buyer from Seller’s Agent or Subagent

B
Babbling Brook’s brochure regarding service offered

C
Working With Real Estate Agents Disclosure

D
Nothing is required

Answer 9

C
Working With Real Estate Agents Disclosure

When a brokers holding open house there is no obligation to disclose the Working with Real Estate Agents Brochure unless the conversation shifts from facts about the property to personal / confidential information. When a buyer is requesting an individual showing, this is considered first substantial contact and therefore the broker must disclose the Working with Real Estate Agents Brochure and determine the type of agency that will be practiced.

Question 10

Connie Cautious wishes to buy a property listed with Delta Realty. Company policy allows dual agency but Connie insists upon exclusive buyer’s representation. She still wants to purchase the property. Delta Realty
Choose only ONE best answer.

A
May act as an exclusive buyer’s agent in the purchase of the property

B
Should explain that Connie must go to another firm for exclusive buyer’s representation

C
Should tell her she can get the same representation with disclosed dual agency as she can with exclusive buyer’s agency

D
May represent both the buyer and the seller exclusively so long as one of the brokers in not on provisional status

Answer 10

B
Should explain that Connie must go to another firm for exclusive buyer’s representation

When a brokerage represents both the buyer and seller in a transaction dual agency arises. The brokerage cannot act as an exclusive agent to the buyer when the already represent the seller. If the buyer only wants exclusive buyer representation, then they should refer the buyer to another firm.

Question 11

All of the following statements are true of the Working With Real Estate Agents Disclosure form in North Carolina EXCEPT:

Choose only ONE best answer.

A
The WWREA disclosure is properly presented to any potential client no later than the time that person first shares personal and confidential information about themselves.

B
Should a seller refuse to sign the WWREA disclosure, the broker and their affiliated firm may still be engaged through an Exclusive Right to Sell Listing to represent that seller in a transaction

C
There is a separate location on the WWREA disclosure where a buyer can be made aware that the broker working with them is functioning as a “subagent of the seller”

D
Working With Real Estate Agents is a Commission-provided form appropriate for use in all real estate transactions in North Carolina

Answer 11

D
Working With Real Estate Agents is a Commission-provided form appropriate for use in all real estate transactions in North Carolina

Statements A, B, and C are all correct. Statement D is not true because the Working With Real Estate Agents Disclosure is only used in sales transactions. You really need to stop and think about that rule. This will absolutely show up on a license exam and it’s silly to miss it. If there is property being SOLD, then the WWREA disclosure should be used. It does not matter whether the licensee is talking to a buyer or a seller or who the licensee represents. If a real estate licensee in North Carolina is talking with a buyer or a seller and has “first substantial contact” by receiving confidential information about that buyer or seller, the licensee must present the WWREA disclosure and explain it. The form is NOT used in all real estate transactions…..that would include leases and property management, which is incorrect.

Question 12

Ann Agent is working with Bob Buyer and knows that Bob is willing to pay the asking price of a property listed with her firm. She must keep this confidential if
Choose only ONE best answer.

A
she is a Dual Agent

B
she is a Seller’s Subagent

C
she is a Non-Provisional Agent representing the Seller

D
she used to represent Bob under a buyer’s agency agreement

Answer 12

A
she is a Dual Agent

When an agent is aware of personal / confidential information that could weaken a client’s bargaining position they are obligated to keep it private (conceal the info), unless it rises to the level of material fact. A broker that is representing the seller exclusively or as a designated agent, and becomes aware of the fact that the buyer would pay more, they have an obligation to disclose it to their client. When an agency agreement terminates, the broker is no longer obligated to keep the clients information confidential if they are involved in a transaction where they represent the seller.

Question 13

A prospective buyer is approached by Billy of HPW Real Estate. The buyer introduces himself and inquires generically about properties for sale in a particular neighborhood wanting to know square footage and list price. Abruptly the buyer takes a cell phone call and walks away ending the conversation. Based on this interaction, which of the following is true?
Choose only ONE best answer.

A
Billy’s interaction with the buyer probably would not represent first substantial contact and thus would not trigger a disclosure of Billy’s relationship to the transactions.

B
HPW Real Estate would be required to have a signed copy of the Working With Real Estate Agents disclosure in this situation.

C
Should Billy wish to represent this buyer in the future, he would not need to formally present the Working With Real Estate Agents disclosure.

D
Having discussed personal or motivating information regarding this particular buyer, Billy is operating outside of license law by not presenting the Working With Real Estate Agents brochure.

Answer 13

A
Billy’s interaction with the buyer probably would not represent first substantial contact and thus would not trigger a disclosure of Billy’s relationship to the transactions.

Billy has likely not had “first substantial contact” with this buyer because no personal/motivating information has been shared by the buyer about themselves. If and when the buyer does go further and disclose something personal/motivating about themselves, Billy and HPW would need to present the WWREA disclosure at that time.

Question 14

In co-brokered residential real estate sales transactions where the selling agent is a subagent of the seller, which agent owes his primary loyalty to the buyer?

Choose only ONE best answer.

A
Listing agent

B
Selling agent

C
Both the listing and selling agent

D
Neither the listing nor the selling agent

Answer 14

D
Neither the listing nor the selling agent

Remember that the “ing” words (listing, selling) talk about actions. The listing broker brings the listing to the market. The selling broker brings the buyer to the transaction.

A selling broker brings the buyer but does not always represent that buyer. All buyer’s agents are selling agents but not all selling agents are buyer’s agents.

The seller’s agent (listing agent) represents the seller. The selling agent in this case is acting as subagent – which means that they represent the seller as well.

Therefore the buyer is not represented.

Question 15

A North Carolina real estate firm consists of just a broker-in-charge and one provisional broker. The broker-in-charge is the listing agent for a residential property. The listing agreement authorizes dual agency. The provisional broker enters into a written buyer agency agreement with a potential buyer authorizing dual agency. The provisional broker shows buyer the listed property and the buyer decides to make an offer. The provisional broker’s relationship with the buyer is
Choose only ONE best answer.

A
buyers agent.

B
designated agent.

C
dual agent.

D
seller sub-agent.

Answer 15

C
dual agent.

Since the same firm is representing both the buyer and the seller in this transaction, it must be a form of dual agency. This particular case CANNOT be designated dual agency because that would be a Broker in Charge designated against a provisional broker under their supervision. That leaves dual agency as the only possible choice here.

Question 16

Bob Broker is BIC of XYZ Realty and has listed Mr. Smith’s property. Sue is a provisional licensee with XYZ Realty and has been representing a buyer who now wants to buy Mr. Smith’s property. XYZ offers all forms of agency allowable in North Carolina. Which of the following best describes Sue?
Choose only ONE best answer.

A
Subagent of Seller

B
Buyer Agent

C
Dual Agent

D
Designated Agent of Buyer

Answer 16

C
Dual Agent

When both the buyer and seller are represented by the same brokerage firm, dual agency arises. The next question would be – does the firm practice dual/designated agency and have the buyer and seller agreed to both. There are two things that will prevent designated agency even when both the buyer and seller have agreed – PB and BIC and already possessing personal / confidential information. A provisional broker and the broker in charge cannot act as designated agents – they can act as dual agents.

Question 17

A North Carolina buyer’s agent who is a provisional broker makes an appointment to show her buyer-client a property listed by a cooperating firm. After having made the appointment but before showing the property, the buyer’s agent learns that the listing firm is offering a $500 incentive bonus to any agent who procures the sale of the property. Given these circumstances, how must the buyer’s agent disclose the incentive bonus to her buyer-client?
Choose only ONE best answer.

A
Written disclosure must be made prior to showing her buyer-client the property.

B
Written disclosure must be made before the buyer-client makes an offer to purchase the property.

C
Oral disclosure is sufficient because the bonus did not influence the brokerÂ’s decision to select the property for showing.

D
Oral disclosure prior to showing the property is sufficient because the bonus amount is considered nominal.

Answer 17

B
Written disclosure must be made before the buyer-client makes an offer to purchase the property.

Buyers must always be informed of all commissions, bonuses, payments, etc in a transaction before they are allowed to make an offer. This disclosure must be made in writing.

Question 18

A prospective buyer arrives to view a North Carolina residential property during an open house. The broker on duty must
Choose only ONE best answer.

A
disclose his/her agency status immediately before answering any questions from the prospective buyer.

B
disclose his/her agency status before the conversation moves from information about the property to personal information about the prospective buyer.

C
explain the North Carolina Real Estate Commission’s Working with Real Estate Agents publication before providing any information about the house to the prospective buyer.

D
explain his/her agency status only if the prospective buyer requests more information after walking through the house.

Answer 18

B
disclose his/her agency status before the conversation moves from information about the property to personal information about the prospective buyer.

This is a question regarding when we present the Working With Real Estate Agents brochure, which we do at “first substantial contact”. This happens when a buyer or seller gives personal/motivating information (why they want to buy or sell, how much they would pay, they are in a hurry, etc) about themselves.

Question 19

Which of the following statements regarding Designated Dual Agency in North Carolina is correct?
Choose only ONE best answer.

A
A Broker in Charge of a firm may lawfully appoint any two nonprovisional brokers to represent the buyer and seller individually and while providing advice so long as the brokers have no knowledge of the competing side of the transaction.

B
A provisional broker may not be appointed as a Designated Dual Agent unless they are also assigned a nonprovisional broker to supervise them in the transaction.

C
Both I and II

D
Neither I nor II

Answer 19

A
A Broker in Charge of a firm may lawfully appoint any two nonprovisional brokers to represent the buyer and seller individually and while providing advice so long as the brokers have no knowledge of the competing side of the transaction.

Statement I is true. Any two nonprovisional brokers (even if one is the BIC) can be appointed in a transaction as long as they do not know confidential information about the opposing party before being designated. Statement II is false. Provisional Brokers can be designated dual agents in the exact same way as nonprovisional brokers with only one exception. A provisional broker cannot be designated against (on the opposite side of) their Broker in Charge.

Question 20

All of the following statements are true of Buyer Agency in North Carolina EXCEPT:
Choose only ONE best answer.

A
An oral buyer agreement may exist binding the firm and client to one another exclusively so long as the agreement is reduced to writing at a later time

B
Oral buyer agency is an option available to both provisional and nonprovisional brokers prior to presentation of an offer on behalf of the buyer

C
Should the firm execute a Buyer Agency Agreement with a buyer interested in one of the firm’s listings, that Agreement should provide for the firm’s functioning as a dual agent

D
Exclusive Buyer Agency agreements must have an expiration date just as Exclusive listing agreements do.

Answer 20

A
An oral buyer agreement may exist binding the firm and client to one another exclusively so long as the agreement is reduced to writing at a later time

Oral buyer agency is never binding on either the client or the firm. It cannot tie the two together in any way or for any period of time. In order for the agreement to be binding, it MUST be put into writing.

Question 21

Agency Disclosure should be made no later than the moment confidential information is shared with a licensee by a buyer or seller in all of the following situations EXCEPT
Choose only ONE best answer.

A
Bobby the BIC is giving a listing presentation to a seller who is considering hiring Bobby’s firm and the seller states that they are relocating due to family emergency and need to sell quickly.

B
Larry the listing agent is holding an open house and is told by a visitor that they aren’t really interested in making an offer because they have poor credit due to bankruptcy

C
Betty broker who is emailing properties to a potential new buyer client first hears that the buyer needs to purchase quickly due to a work relocation

D
Salesperson Sam who is working as a buyer’s agent reaches out to Lisa the listing agent to schedule an appointment to view the listed property.

Answer 21

D
Salesperson Sam who is working as a buyer’s agent reaches out to Lisa the listing agent to schedule an appointment to view the listed property.

In this context, “agency disclosure” means giving the buyer or seller the Working With Real Estate Agents brochure. This is done in all sales transactions whenever a buyer or seller gives confidential information. It can be done sooner, but there is no requirement to do it sooner. There is ONE EXCEPTION to this rule. When a licensee/agent/broker/salesperson is representing a buyer as a buyer’s agent and that licensee is reaching out to a seller or seller’s agent, agency disclosure must be made at first contact. This is a key distinction that will absolutely show up on the state side of the exam. MAKE SURE YOU KNOW IT.

Question 22

Herb Smith listed his house with Sam Shepherd, a provisional broker with ABC Realty. ABC offers all types of agency allowed in North Carolina. Sam also represents Barb Buyer. Barb now wants to see Herb’s house. Can Sam represent both parties in the transaction?

Choose only ONE best answer.

A
Yes, if he acts as a subagent of the seller

B
Yes, if he acts as a dual agent for both

C
No, he must be authorized as a designated dual agent.

D
No, he must refer either the buyer or seller to a different agency

Answer 22

B
Yes, if he acts as a dual agent for both

When one a broker represents both the buyer and the seller in a transaction, the only option is dual agency. The broker is not permitted to advocate for one party over the other and cannot disclose personal / confidential information about the buyer to the seller or the seller to the buyer, unless it rises to the level of material fact.

Question 23

Jack is working with Sally of Keller Williams Cary as he purchases his new home. Sally has shown him several listings and eventually Jack agreed to sign a buyer agency agreement with KW Cary for the transaction. Upon inquiring about the home at 123 Main Street, he found that Sally is affiliated with the listing firm of the property. Based on this new information, what is the most likely course of action that will need to be taken by Sally?
Choose only ONE best answer.

A
Since the property in question is listed by Sally’s firm, she will automatically be considered a dual agent and no further action is required.

B
Sally must obtain written authorization for dual agency prior to showing Jack the property listed by her firm

C
Sally should disclose the status of the listing and explain the implications of dual agency before obtaining the verbal permission of the buyer and seller to show the property

D
Since the seller has previously agreed to dual agency, the buyer need only be disclosed the status and give their permission before they make an offer on the listed property.

Answer 23

B
Sally must obtain written authorization for dual agency prior to showing Jack the property listed by her firm

Sally and KW Cary are Jack’s buyer agent. Sally and KW Cary are also the listing firm for this home. This is dual agency. A firm needs permission from BOTH THE BUYER AND THE SELLER in order to practice dual agency. This permission needs to come from both before the property can even be shown to the buyer. The question is whether that permission must be in writing or can it be oral? When getting permission from a buyer or seller for dual agency, the buyer and/or seller may give oral permission for dual agency in order to show the property if the buyer has an oral buyer agency agreement. Stop and read that again! If the buyer has an ORAL agreement, then permission for dual agency showings (from both seller and buyer) can be ORAL. If the buyer has a written buyer agency agreement, the permission must be from BOTH parties IN WRITING prior to even showing the property. Since Jack has a written buyer agency agreement with KW Cary and KW Cary is the listing firm of the property he is interested in seeing, written permission must be obtained from both Jack (buyer) and the seller before Jack can be shown the property by anyone affiliated with KW Cary.

Question 24

The doctrine of “caveat emptor” still applies to some extent to the relationship between
Choose only ONE best answer.

A
Seller and broker
B
Buyer and broker
C
Listing broker and selling broker
D
Seller and buyer

Answer 24

D
Seller and buyer

Caveat emptor, meaning let the buyer beware, applies to the seller and the buyer. The agent or agents have a duty to disclose material facts – disclosing what they know or reasonably should have known.

Question 25

A prospective purchaser asks the showing broker, a subagent of the seller, whether the seller would accept $5,000 less than the asking price. The broker thinks that the seller would accept $7,000 less than the asking price. How should the broker respond?
Choose only ONE best answer.

A
I don’t know. You will need to submit an offer to see what the seller will accept.
B
The seller is firm on his list price, and I don’t think you should submit an offer less than that.
C
The seller is having marital difficulties and needs to liquidate quickly even if he can’t get his asking price.
D
I’ve heard that the seller would accept $7,000 less than his list price.

Answer 25

A
I don’t know. You will need to submit an offer to see what the seller will accept.

The buyer is not represented in the transaction as the broker is acting as a subagent. Both the listing broker and the subagent must promote the seller’s interest. Neither of the agents can weaken the seller’s bargaining position by recommending a lower offer. The broker must keep the seller’s information confidential and not disclose it.

Question 26

Gregory is a licensed North Carolina provisional broker who is affiliated with ABC Real Estate and is working with a buyer client named Richard who has been viewing homes for the last several weeks. Richard is interested in making an offer on one of the properties Gregory has shown him but has further questions about the home. Gregory reaches out to the listing agent on the property to obtain this information on Richard’s behalf. Which of the following statements is accurate regarding this communication?

Choose only ONE best answer.

A
Gregory must inform the listing agent of his representation of a buyer client who has interest in the property no later than the time he gives personal or confidential information about Richard to the listing Broker

B
Gregory does not owe the listing broker any duty of disclosure because he represents the buyer in the transactionÂ

C
Gregory should inform the listing agent that he represents a buyer should Richard decide to move forward with an offer

D
Gregory must inform the listing broker or the seller immediately at first communication/contact that he represents a buyer in the transaction

Answer 26

D
Gregory must inform the listing broker or the seller immediately at first communication/contact that he represents a buyer in the transaction

When a licensee is representing a buyer and contacting a seller or seller’s agent, they should ALWAYS disclose that they represent a buyer immediately at the beginning of the conversation. They do not wait for substantial contact. This is a very specific rule and it will be tested in this way.

Question 27

The legal practice of oral buyer agency in North Carolina must meet all of the following requirements EXCEPT:
Choose only ONE best answer.

A
The duration of the oral buyer agency agreement must be limited to a maximum of thirty days.

B
An oral buyer agency agreement must allow the buyer to work with more than one real estate agent.

C
The prospective buyerÂ’s agent must explain agency choices available to the buyer prior to entering into any buyer agency agreement.

D
An oral agency agreement must be reduced to writing before the buyerÂ’s agent may present an offer on behalf of the buyer.

Answer 27

A
The duration of the oral buyer agency agreement must be limited to a maximum of thirty days.

Oral buyer agency is not binding….at all….for any period of time.

Question 28

A North Carolina buyer’s agent has found three listed properties that meet his/her client’s detailed list of required features. Although all three of the properties are listed for very similar prices in the same neighborhood, one of the listings offers the selling agent a $2000 bonus for procuring a signed contract by the end of the month. Given these facts, must the buyer’s agent disclose the bonus to his/her buyer-client before writing an offer?
Choose only ONE best answer.

A
No, because the bonus does not constitute a material fact concerning the property.
B
Yes, because the bonus is in excess of $500.
C
No, because the buyer-client will see the bonus on the settlement statement which will satisfy the CommissionÂ’s disclosure requirement.
D
Yes, because licensees must disclose to their clients in a timely manner all compensation to be received from others.

Answer 28

D
Yes, because licensees must disclose to their clients in a timely manner all compensation to be received from others.

All compensation must be disclosed in writing before a buyer makes an offer.

Question 29

As agent of the seller, a real estate broker is usually authorized to do all of the following EXCEPT:
Choose only ONE best answer.

A
Accept an offer on behalf of their principal
B
Advertise the property for sale
C
Place a “For Sale” sign on the property
D
Cooperate with other brokers to effect a sale

Answer 29

A
Accept an offer on behalf of their principal

A broker represents a seller as a special agent. A special agent can gather information and advise his or her client (unless practicing dual agency), however cannot sign on behalf of their principal / client, even with the seller’s verbal permission. A broker must present all offers and let the seller decide how to proceed.

Question 30

A seller confided to his listing broker that he was eager to sell his property as soon as possible due to financial hardship. During the term of the listing agreement, the broker’s sister moved to the town where the listed property was located. Knowing that the seller was becoming desperate and that the listed property had many features that his sister desired in a house, the broker encouraged his sister to make a low offer on the property. His sister agreed and the broker helped her prepare a written offer without entering into any kind of express agency agreement with his sister. When the broker presented the offer, he did not disclose to the seller his relationship to the prospective buyer. The seller thought the offer was very low, but the broker encouraged him to make a counteroffer and eventually the parties went under contract. Given these facts, each of the following statements is true EXCEPT:
Choose only ONE best answer.

A
The broker should have disclosed his relationship with the buyer to the seller.
B
The broker violated his agency duties to the seller by encouraging the buyer to make a low offer.
C
The broker did not violate his agency duties because the seller-client got the quick sale he requested.
D
A court would probably find that the broker had an implied agency relationship with the buyer and had engaged in undisclosed dual agency.

Answer 30

C
The broker did not violate his agency duties because the seller-client got the quick sale he requested.

The broker should DEFINITELY have disclosed this relationship and should DEFINITELY have never given advice to a buyer (not their client in this case) to make a low offer on a property where the broker represented the seller. It is also very likely that a court would find that this broker is acting as a buyer’s agent/dual agent even though they don’t have a buyer agency agreement. This is the definition of implied agency…acting as if a broker has authority even though the client never actually hired them. Because the broker likely engaged in undisclosed dual agency and worked against the best interests of their seller client, they have violated North Carolina license law.

Question 31

What form of agency exists under the a standard real estate listing contract between the broker and the client?

Choose only ONE best answer.

A
Universal agency

B
Special agency

C
General Agency

D
Independent agency

Answer 31

B
Special agency

When a broker represents a seller under a listing agreement, a buyer under a buyer agency agreement or a tenant under a tenant agency agreement they act as a special agent. Brokers are permitted to gather information and present it back to their client. They have no ability to sign on the client’s behalf or make decisions. General agency arises between a broker and owner in a property management agreement or when a broker affiliates with a brokerage. Universal agency is accomplished by signing a power of attorney or acting as attorney in fact.

Question 32

The North Carolina Real Estate Commission’s Working with Real Estate Agents disclosure is
Choose only ONE best answer.

A
a consumer protection publication that must be given to consumers in all real estate transactions.

B
given to consumers no later than initial contact with a broker at an open house.

C
a document that can be used to create an agency relationship

D
proof that a broker has disclosed agency options to a consumer.

Answer 32

D
proof that a broker has disclosed agency options to a consumer.

The purpose of the document is to disclose agency choices that are available to consumers who are involved in the sale of real property and warn them not to give further confidential information unless they hire the salesperson/firm they are talking to. Think of it like a menu. The agent must go over the menu choices and we give the brochure as proof that we have explained the choices to the consumer. A is false because of the “in all real estate transactions”. Remember this document is only used in SALES transactions.

Question 33

Sharon is a buyer looking for a home. She knows Tim, a buyer’s agent, but is not ready to sign any agreement with him. She is pretty sure she’ll want to work with him exclusively, but wants to look at a few houses first. Which statement BEST describes her situation?

Choose only ONE best answer.

A
She must sign a Buyer Agency Agreement BEFORE she can see any homes.

B
She must sign a Buyer Agency Agreement BEFORE she makes her first offer.

C
She must sign a Buyer Agency Agreement at closing.

D
She is not required to sign an agency agreement until settlement.

Answer 33

B
She must sign a Buyer Agency Agreement BEFORE she makes her first offer.

The buyers agency agreement may be oral up until the point that the buyer wants to make the first offer. Then it must be reduced to writing. In oral buyers agency agreement must be nonexclusive – the client can see other people and open ended – no end date. If the buyer refuses to sign a written buyers agency agreement, the agent can no longer represent them. If they presented an offer to the seller, acting as a subagent, they have a duty to disclose any personal or confidential information learned about the buyer.

Question 34

Carlos is a licensee who has a listing at 112 Maple Way. The seller has agreed to dual and/or designated. A potential buyer, Tom, calls Carlos from the sign in the yard. Since Tom does not have an agent, Carlos asks if he would like representation. Tom wants to delay signing an agency agreement as long as possible and agrees to oral buyer’s agency. Carlos asks Tom if he is pre-qualified and other financial questions which Tom answers truthfully. Which statement BEST describes Carlos’ agency position in this transaction?

Choose only ONE best answer.

A
Single / Exclusive Agency

B
Designated Agency

C
Designated Dual Agency

D
Dual Agency

Answer 34

D
Dual Agency

When one broker of the firm represents both the buyer and the seller, the only option for the agent is dual agency. When the firm represents both the buyer and the seller in a transaction dual agency arises. The question then becomes can the firm designate agents or not. A provisional broker and a broker in charge can never be designated agents. A firm cannot practice designated agency if they are aware of personal or confidential information about the other party at the point that they would designate. Single or exclusive agency would mean that the firm represents only one party.

Question 35

Under which of the following situations would a broker not have to disclose the Working with Real Estate Agents disclosure?

Choose only ONE best answer.

A
When an unrepresented commercial buyer wants the broker to show one of his listings.

B
When a tenant living at a property listed by the broker decides to purchase the home.

C
When a buyer, acting under a power of attorney, asks to see one of the brokers residential listings.

D
When a broker is holding an auction in cooperation with a licensed auctioneer.

Answer 35

D
When a broker is holding an auction in cooperation with a licensed auctioneer.

When a property is being auctioned off, it is impractical for a broker to disclose the Working with Real Estate Agents Brochure (WWREA). WWREA is not required in residential lease transactions, however a broker can still choose to provide it to a prospective tenant. WWREA is required in residential and commercial purchase transactions. Since a tenant wants to purchase a property (buyer), the broker must disclose WWREA at first substantial contact.

Question 36

First substantial contact occurs when a
Choose only ONE best answer.

A
consumer signs an agency agreement.

B
licensee meets a consumer for the first time face-to-face.

C
consumer’s motivation for participation in a real estate transaction is disclosed.

D
broker speaks to a consumer for the first time about anything related to a property listed with the broker.

Answer 36

C
consumer’s motivation for participation in a real estate transaction is disclosed.

First substantial contact is not first contact. It is the first time a buyer or seller gives personal information about themselves that could be used against them in the transaction.