Question 1

As an agent for the buyer or seller, a broker has 6 basic fiduciary responsibilities. Which of the following definitions best describes the responsibility of "Obedience"?

Accepted Answer

A)   Broker must follow the instructions of the principal to the limits of what is legal and ethical
B)   Broker must keep principal informed of all changes in the financials of the negotiation
C)   Broker must not convey information about principal's financial status or motivations
D)   Broker must never subordinate the best interest of the principal to the interests of others, including himself/herself A

Question 2

In an open-listing contract, an individual broker is entitled to a commission if:

Accepted Answer

A)   anyone, including the seller sells the property
B)   anyone, excluding the seller sells the property
C)   she procures the buyer of the property
D)   she markets the property, but it does not sell C

Question 3

The recent emergence of discount brokerage services has had a modest 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

A)   1-2%
B)   3-4%
C)   5-6%
D)   7-10% C

Question 4

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

A)   Refusing to sell or rent to a person because of race.
B)   Refusing to sell or rent based on familial status (i.e. having children) .
C)   Refusing to sell or rent to persons based on age.
D)   Refusing to sell or rent a single-family home based on religion provided the owners do not employ the services of a broker or agent.

Question 5

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)   Single agency agreement
B)   Subagency agreement
C)   Dual agency agreement
D)   Designated agent agreement

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 anyone, other than the owner, sells the property during the contract period?

Accepted Answer

A)   Open listing
B)   FSBO listing
C)   Exclusive agency listing
D)   Exclusive right of sale listing

Question 7

Which of the following duties refers to a broker's obligation to represent the interests of their principals to the best of their ability in the same way they would represent themselves, acquiring and applying the necessary knowledge and information about relevant laws and regulations, the market, and subject property?

Accepted Answer

A)   Disclosure
B)   Accounting
C)   Loyalty
D)   Skill and care

Question 8

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. In the basic principal-agent relationship of real estate brokerage, real estate brokers act in the capacity of a:

Accepted Answer

A)   Universal agent
B)   General agent
C)   Special agent
D)   Undercover agent

Question 9

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

A)   Relative to residential transactions, commercial transactions tend to be larger
B)   The parties in commercial mortgage transactions are typically less knowledgeable than those in residential transactions.
C)   An important part of the commercial broker's service is to provide the prospective buyer with reports that enable him to complete due diligence for the property
D)   Commercial brokers are often required to lower their commission in order to negotiate compromises between buyers and sellers when they reach an impasse over price.

Question 10

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

A)   Handling money in trust for clients
B)   Taking kickbacks without the employer's knowledge
C)   Offering the property at terms other than those specified by clients
D)   Failure to submit all offers to the client

Question 11

Christopher has hired a real estate broker to help facilitate the sale of his home. Realizing that Christopher is most likely going to realize a loss on his investment due to the recent decline in housing values in his neighborhood, the broker has agreed to charge Christopher a lower commission rate as long as Christopher enters into an exclusive right of sale listing contract. If Christopher ends up selling his house for $364,583 and takes home $350,000 after paying the real estate broker's commission, what was the commission rate that the broker ended up charging?

Accepted Answer

A)   4.0%
B)   4.2%
C)   8.0%
D)   14.6%

Question 12

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

A)   Riegle Community Development and Regulatory Improvement Act
B)   Secure and Fair Enforcement for Mortgage Licensing Act
C)   Fair Housing Act (Title VIII of the Civil Rights Act) 
D)   Equal Credit Opportunity Act

Question 13

Jonathan recently sold his home and was able to take home $423,000 after paying the real estate broker's commission of 6%. If the buyer was ultimately found through a buyer broker, the dollar commission will need to be split between the listing broker and buyer broker. If the buyer broker is entitled to 40% of the commission, what is her share of the commission rounded to the nearest dollar?

Accepted Answer

A)   $10,800
B)   $13,500
C)   $16,200
D)   $27,000

Question 14

Amy is trying to decide whether or not it would be beneficial to employ the services of a real estate broker in order to facilitate the sale of her home. She has estimated that the marketing costs and opportunity cost associated with time spent dealing with prospective buyers amounts to $5,000. If Amy were to sell the house on her own for $200,000, but a broker would have been able to negotiate a higher price of $206,350, what commission rate should Amy have been willing to accept from a real estate broker to make her indifferent between selling the house on her own and hiring a real estate broker?

Accepted Answer

A)   2.4%
B)   3.1%
C)   5.0%
D)   5.5%

Question 15

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

A)   Broker
B)   Real estate commission
C)   National Association of Realtors
D)   Salesperson

Question 16

Suppose that a recent purchase of a residential home has been facilitated equally by a listing agent and a buyer broker. Based on your understanding of how commissions are determined, which of the following scenarios best describes who would be entitled a commission upon sale of the property (Note: For simplicity, you can assume the seller did not procure the buyer on their own)?

Accepted Answer

A)   Only the listing broker
B)   Only the buyer broker
C)   Both the listing broker and the buyer broker
D)   Neither the listing broker nor the buyer broker

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

A)   If the seller refuses to sell upon being presented with an offer meeting the original terms and conditions
B)   If the seller cannot deliver the property for any reason due to his or her fault.
C)   If both the buyer and seller sign a contract but then agree to cancel it.
D)   If a contract is contingent upon the buyer obtaining financing and the buyer is unable to do so.

Question 18

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

A)   Private mortgage insurance (PMI) 
B)   Errors and omission insurance
C)   Deposit insurance
D)   Hazard insurance

Question 19

Which of the following duties refers to a broker's obligation to never subordinate the best interest of their principal to the interests of others?

Accepted Answer

A)   Disclosure
B)   Confidentiality
C)   Loyalty
D)   Obedience

Question 20

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

A)   Open listing
B)   Single listing
C)   Exclusive agency listing
D)   Exclusive right of sale listing

Exam 12: Brokerage and Listing Contracts