Question 1

When creating an agency relationship, agency authority

Accepted Answer

When creating an agency relationship, agency authority can be conferred by acts of the principal.

Question 2

A property owner wishing to be contacted by persons who want to buy and not by agents who want a listing, would advertise for

Accepted Answer

A property owner wishing to be contacted by persons who want to buy and not by agents who want a listing, would advertise for "principals only".

Question 3

If a broker is a little short of funds and "borrows" some money from his escrow account to pay monthly bills, this activity is called

Accepted Answer

If a broker borrows money from his escrow account to pay monthly bills, this activity is called conversion and is illegal.

Question 4

The seller has just informed the listing agent that he does not want the property shown to any Orientals or other minority buyers. The agent

Accepted Answer

The agent must explain that he cannot take the listing under these circumstances.

Question 5

If a real estate agent used clients' funds for his own personal use, he would be guilty of

Accepted Answer

If a real estate agent used clients' funds for his own personal use, he would be guilty of conversion.

Question 6

When a listing is taken, the seller would be referred to as

Accepted Answer

When a listing is taken, the seller would be referred to as the client.

Question 7

A salesperson received an earnest money check from a buyer on the listing of a co-op broker. What should the salesperson do with the check?

Accepted Answer

The salesperson should hold the check until the contract has been signed by all parties.

Question 8

All of the following are examples of fiduciary relationships EXCEPT

Accepted Answer

This is not an example of a fiduciary relationship.

Question 9

The broker and the seller know of major plumbing repairs needed on the seller's property. They, therefore, sell the house to a buyer "as is" but do not disclose plumbing problems. The buyer discovers the defects after closing and decides to sue the broker and seller. What is the most likely outcome of this decision?

Accepted Answer

The most likely outcome is that the buyer would probably win because the defects should have been disclosed.

Question 10

After an earthquake, a property manager had to meet with insurance adjusters to arrange for repairs to several properties which she managed. The property owners had given the manager what kind of agency authority?

Accepted Answer

The property manager would be considered to be a general agent.

Question 11

Traditionally, in residential sales, prior to the emphasis on buyer agency, the broker considers the buyer to be

Accepted Answer

In residential sales, prior to the emphasis on buyer agency, the broker considers the buyer to be a customer.

Question 12

Once a broker has taken a listing, he can do all of the following EXCEPT

Accepted Answer

The broker should not allow his sales staff to make an offer on the property without informing the seller of the identity of the purchasers.

Question 13

A buyer making an offer on a property writes an earnest money check to the broker. The seller will not be available for 5 days. What should the broker do with the check?

Accepted Answer

The broker should hold the check until the contract has been signed by all parties.

Question 14

When a broker takes a listing, he is acting under what kind of agency?

Accepted Answer

When a broker takes a listing, he is considered to be a special agent.

Question 15

If, in showing a property, the salesperson said, "In my opinion, this house is absolutely the greatest in the world," the salesperson

Accepted Answer

If, in showing a property, the salesperson said, "In my opinion, this house is absolutely the greatest in the world," the salesperson is puffing.

Question 16

Two buyers purchase a home through a broker. After the close of escrow, the buyers discover a structural problem with the property, which the seller had not disclosed to anyone, including the broker. The buyers attempted to rescind their agreement. If they succeed, what commission is the broker entitled to in this case?

Accepted Answer

The broker is entitled to a full commission since the transaction closed and he was not responsible for the misrepresentation.

Question 17

The purpose of a trust account is to

Accepted Answer

The purpose of a trust account is to hold money belonging to clients and customers.

Question 18

It is the responsibility of the real estate broker to

Accepted Answer

It is the responsibility of the real estate broker to quote only the listing price, but present all offers.

Question 19

The least appropriate person to choose which title and escrow company to use in closing a real estate sale would be

Accepted Answer

The least appropriate person to choose which title and escrow company to use in closing a real estate sale would be the listing agent.

Question 20

The listing salesperson was told by a prospective buyer to present an offer of $150,000 with the promise that he would increase it to $152,000 if the seller rejected $150,000. The salesperson must

Accepted Answer

The salesperson must present the offer and disclose the promise to increase the offer.

Quiz 20: The Principal-Broker Relationship: Agency