Question 1

Although the function of commercial brokerage is the same as that of residential brokerage,the activities of commercial brokers usually differ considerably from those of residential brokers due to fundamental differences in these two markets.All of the following statements regarding commercial brokerage are true EXCEPT:

Accepted Answer

The statement "The parties in commercial mortgage transactions are typically less knowledgeable than those in residential transactions" is not true, as commercial real estate investors and borrowers are typically more experienced and knowledgeable about the market and transactions than residential buyers and sellers.

Question 2

In determining the appropriate listing contract to be used,it is important to know whether a multiple listing service (MLS)will be employed.A MLS only accepts which of the following types of listing contracts?

Accepted Answer

A multiple listing service (MLS) only accepts multiple listing contracts.

Question 3

State licensing laws prescribe behavioral requirements with which licensees must comply to keep their licenses.Licensing laws generally seek to prevent brokers from partaking in all of the following activities EXCEPT:

Accepted Answer

Handling money in trust for clients is a common and acceptable practice for brokers, as long as it is done in accordance with the law and ethical standards. This activity involves managing escrow accounts or holding deposits, which is a standard part of real estate transactions. The other options (B, C, D) are unethical or illegal practices that licensing laws aim to prevent.

Question 4

In dual agency,conflicts of interest may arise since a single broker has both the listing contract with the seller and a buyer agency agreement with the purchaser.One way that states have attempted to deal with this issue is to develop a new type of brokerage relationship in which the broker assists the buyer and seller,but does not represent either party.This type of brokerage relationship is commonly referred to as:

Accepted Answer

This type of brokerage relationship is commonly referred to as transaction brokerage, where the broker assists the buyer and seller but does not represent either party, thereby minimizing conflicts of interest that may arise in dual agency. Other options such as unintended dual agency, universal agency, and multiple listing do not accurately describe this type of brokerage relationship.

Question 5

According to the law of agency,real estate brokers are required to observe several duties as they act as an agent for an individual trying to buy or sell a property.Which of the following duties refers to a broker's obligation to be completely open and honest with the principal?

Accepted Answer

Disclosure refers to a broker's obligation to provide all relevant and important information to the principal, including any potential conflicts of interest, material defects with the property, and any other important details that may impact the sale or purchase of the property. This duty requires the broker to be completely open and honest with the principal. Confidentiality refers to a broker's obligation to keep certain information confidential and not disclose it to third parties without the principal's consent, loyalty refers to a broker's obligation to act in the best interest of the principal and avoid any conflicts of interest, and obedience refers to a broker's obligation to follow the lawful instructions of the principal.

Question 6

There are a number of different types of listing contracts that can be used when marketing a property.Which of the following types of listings requires the broker to be paid a commission if any other broker,or even the owner,sells the property during the contract period?

Accepted Answer

An exclusive right of sale listing gives the broker the exclusive right to earn a commission by representing the owner and bringing a buyer, but also provides for the broker to be paid a commission if the owner sells the property to anyone during the contract period. This provides the highest level of protection for the broker and is the most common type of listing contract used by real estate agents.

Question 7

All 50 states have licensing laws that regulate persons and companies that engage in the brokerage business.Interpreting and enforcing state licensing laws falls under the responsibilities of which of the following parties?

Accepted Answer

State licensing laws are enforced by the Real Estate Commission, which is responsible for regulating and overseeing the activities of licensed brokers and salespersons within the state. The National Association of Realtors is a trade organization that represents real estate professionals and does not have the authority to interpret or enforce state licensing laws. Brokers and salespersons are subject to state licensing laws but do not have the responsibility of enforcing them.

Question 8

The importance of brokers in the real estate market is often overlooked.In the absence of a real estate broker,one would expect all of the following to be true EXCEPT:

Accepted Answer

The absence of a real estate broker would not necessarily cause real estate values to increase. In fact, it could result in less efficient pricing due to the lack of market information and expertise provided by brokers. Options B, C, and D are all likely outcomes of the absence of a broker.

Question 9

In acting as an agent for another person,the broker carries several special responsibilities,which by law must be adhered here to throughout the transaction process.These responsibilities constitute what is commonly referred to as a:

Accepted Answer

A fiduciary relationship is a legal relationship in which one party (the broker) has a duty to act in the best interest of another (the client). The broker must uphold this duty throughout the entire transaction process, including providing full disclosure of all material facts, maintaining confidentiality, and ensuring that all actions are in the client's best interest. Subagency, dual agency, and open listing relationships do not carry the same level of fiduciary responsibility.

Question 10

The recent emergence of discount brokerage services has had a modes effect on the price of brokerage services.The average commission that a broker could expect to receive today would most likely range between:

Accepted Answer

The answer of The recent emergence of discount brokerage services...

Question 11

Modern real estate brokerage normally relies on a multiple listing service (MLS)through which brokers have access to each other's listings.Which of the following types of agency agreements is established with the use of a MLS?

Accepted Answer

A subagency agreement is established when a listing broker and their agents share the commission with a cooperating broker and their agents. This is common practice through the use of MLS. The cooperating broker becomes a subagent of the listing broker and owes fiduciary duties to the seller. Therefore, the correct answer is B. Single agency agreements involve a brokerage representing only one party in a transaction, while dual agency agreements occur when a brokerage represents both the buyer and the seller. Designated agent agreements allow brokers to assign specific agents to represent each party in a transaction.

Question 12

Real estate brokers operate under the law of agency,which gives a broker the right to act for a principal in trying to buy or sell a property.Which of the following types of agents is authorized by the principal to act primarily within the confines of a business or employment relationship?

Accepted Answer

A general agent is authorized by the principal to act primarily within the confines of a specific business or employment relationship. A universal agent has authority to act on behalf of the principal in all matters, while a special agent is authorized to perform a specific task or act within a limited scope of authority. A listing agent is a type of special agent who is authorized to market and advertise the principal's property for sale.

Question 13

It is common for real estate firms to identify submarkets,such as property types or particular sections of a city,in which they can specialize and concentrate their transaction activity.This practice is referred to as:

Accepted Answer

The practice of identifying submarkets in which to specialize is known as market segmentation. This allows real estate firms to focus their efforts and become experts in a particular area or property type. It is not related to internet marketing, open listings, or discount brokerages.

Question 14

In recent years,many U.S.investors have expanded their purchases of real estate into foreign countries,and many foreign investors have held interests in U.S.real estate.This is an example of what is commonly referred to as ________________ of real estate markets.

Accepted Answer

The expansion of real estate investments across borders is a result of globalization, the increasing interconnectedness and interdependence of economies around the world. Deregulation refers to the removal of government control from a market or industry, which may or may not have an impact on real estate. Disintermediation refers to the removal of intermediaries (such as brokers) from a market or transaction, which is not directly relevant to the expansion of real estate investments across borders. Industrialization refers to the development of industries and the shift from manual labor to machines, which is not directly relevant to real estate markets.

Question 15

Real estate brokers serve as intermediaries by bringing buyers and sellers together in the real estate market.For this service,brokers are paid what is commonly referred to as a:

Accepted Answer

Real estate brokers are typically paid a commission based on the sale price of the property. This commission is usually a percentage of the total sale price and is split between the buyer's agent and the seller's agent.

Question 16

State licensing laws generally prescribe two levels of real estate brokerage licensing: the broker license and the salesperson license.Which of the following responsibilities is an individual with a salesperson license permitted to do?

Accepted Answer

An individual with a salesperson license is permitted to negotiate listing contracts or contracts for sale, but is not allowed to own and operate a real estate brokerage business, handle money in trust for clients, or complete legal documents used in sales and leases in their own name. These responsibilities are reserved for individuals with a broker license.

Question 17

Critical to any listing contract is the question of when the broker becomes entitled to a commission.Traditionally,the broker is still entitled to a commission in all of the following scenarios EXCEPT:

Accepted Answer

The broker typically earns a commission when they fulfill their part of the agreement, which is usually finding a buyer who is ready, willing, and able to purchase the property on the terms agreed upon by the seller. If a contract is contingent upon the buyer obtaining financing and the buyer is unable to secure financing, the broker has still performed their duty by finding a qualified buyer under the agreed terms. The failure to obtain financing is a condition beyond the broker's control and does not negate their right to a commission in traditional agreements. However, in this scenario, it is stated as an exception, which is not typically the case in standard real estate practices.

Question 18

Blockbusting,which involves persuading an individual to sell her home by telling her that minority groups are moving into the neighborhood,is one form of discrimination in housing that is prohibited by which of the following acts of Congress?

Accepted Answer

The Fair Housing Act (Title VIII of the Civil Rights Act) prohibits discrimination in the sale, rental, and financing of housing based on race, color, religion, national origin, sex, familial status, and disability. Blockbusting is a form of racial discrimination in housing, which involves creating fear in white homeowners that minority groups are moving into the neighborhood and encouraging them to sell their homes as a result. Therefore, the Fair Housing Act explicitly prohibits this practice.

Question 19

Federal and state laws prohibit discrimination in housing.However,exemptions do exist depending on the particular type of property that is being considered.All of the following activities could be considered exempt in specific scenarios EXCEPT:

Accepted Answer

Refusing to sell or rent to a person because of race is never considered an exempt activity, regardless of the type of property being considered. It is always illegal under federal and state fair housing laws.

Question 20

One of the traditional requirements for individuals who wish to obtain a brokerage license has been to demonstrate financial capacity to cover damage judgments brought against them by clients.In order to address this concern,some states have required licensees to first obtain:

Accepted Answer

Errors and omission insurance is a type of insurance coverage that protects professionals, including brokers, from liability for wrongful acts or mistakes they may make in the course of their work. It can cover legal fees, settlements, and judgments resulting from such claims. Requiring licensees to obtain errors and omission insurance can serve as a way to ensure they have the financial capacity to cover potential damages brought against them by clients.

Quiz 12: Real Estate Brokerage and Listing Contracts

In determining the appropriate listing contract to be used,it is important to know whether a multiple listing service (MLS) will be employed.A MLS only accepts which of the following types of listing contracts?