Unit 4: Real Estate Agency

Which of these BEST describes an agent?

A) A person who gives someone else the legal power to act on her behalf

B) A person who is in a customer-agent relationship

C) Two agents who work for the same brokerage firm

D) A person who is placed in a position of trust and confidence

D) A person who is placed in a position of trust and confidence

A seller listed his property with a brokerage company. The agency relationship between the seller and the sponsoring broker is what type of agency?

A) Special

B) General

C) Implied

D) Universal

A) Special

Which of these statements is TRUE of a real estate broker acting as the agent of the seller?

A) The broker can disclose personal information to a buyer if it increases the likelihood of a sale.

B) The broker is obligated to render faithful service to the seller.

C) The broker can agree to a change in price without the seller’s approval.

D) The broker can accept a commission from the buyer without notifying the seller.

B) The broker is obligated to render faithful service to the seller.

A seller lists his home with a real estate broker for $289,500 and has given written permission for dual agency. Later the same day, a potential buyer comes into the broker’s office and asks for general information about homes for sale in the $250,000–$300,000 price range. Based on these facts, which of these statements is TRUE?

A) The seller and potential buyer are both the broker’s customers.

B) The broker owes fiduciary duties to both the seller and the potential buyer.

C) The seller is the broker’s client; the broker must obtain written consent for dual agency from the buyer if intending to show his own listing.

D) If the potential buyer asks the broker to be his buyer representative, the broker must decline because of the pre-existing agreement with the seller.

C) The seller is the broker’s client; the broker must obtain written consent for dual agency from the buyer if intending to show his own listing.

A licensee who has contracted with an apartment building owner to manage a highrise apartment is probably:

A) a general agent.

B) a transactional broker.

C) a buyer’s agent.

D) a special agent.

A) a general agent.

Which of these events will terminate an agency in a broker-seller relationship?

A) The owner declares personal bankruptcy.

B) The broker discovers that the market value of the property is such that she will not make an adequate commission.

C) The owner abandons the property.

D) The broker appoints other brokers to help sell the property.

A) The owner declares personal bankruptcy.

In Illinois, a real estate broker hired by an owner to sell a parcel of real estate must comply with the:

A) federal common law of compensation.

B) Illinois statute called the Real Estate License Act of 2000.

C) concept of market value as codified in Illinois law.

D) concept of caveat emptor as codified in Illinois law.

B) Illinois statute called the Real Estate License Act of 2000.

The six common law fiduciary duties are:

A) care, obedience, loyalty, disclosure, accounting, and confidentiality.

B) accounting, appraisal, negotiation, confidentiality, obedience, and loyalty.

C) obedience, negotiation, care, accounting, loyalty, and efficiency.

D) care, obedience, loyalty, disclosure, accounting, and efficiency.

A) care, obedience, loyalty, disclosure, accounting, and confidentiality.

A broker lists a residence. The owner of the residence must sell the house quickly. To expedite the sale, the broker tells a prospective purchaser that the seller will accept at least $5,000 less than the asking price for the property. Based on these facts, which of these statements is TRUE?

A) The broker has not violated his agency responsibilities to the seller.

B) Unless given written permission from the seller to do so, the disclosure was improper, regardless of the broker’s motive.

C) The broker should have disclosed this information, regardless of its accuracy.

D) The relationship between the broker and the seller is called a general agency relationship.

B) Unless given written permission from the seller to do so, the disclosure was improper, regardless of the broker’s motive.

A buyer who is a client of the broker wants to purchase a house that the broker has listed for sale. Which of these statements is TRUE?

A) Illinois law no longer regulates this situation.

B) The broker should refer the buyer to another broker to negotiate the sale.

C) The seller and the buyer must give written consent for the broker to represent them both.

D) The buyer should not have been shown a house listed by the broker.

C) The seller and the buyer must give written consent for the broker to represent them both.

A buyer comes into a real estate broker’s office and asks the broker to represent her while searching for a home in the $190,000–$200,000 price range. The broker recalls a house for sale by an owner listed at $198,000. The broker calls the owner of the house, asking for permission for his client to see the house. Based on these facts, which of these statements is TRUE?

A) The for-sale-by-owner seller is the broker’s customer; the buyer is a client.

B) Both the buyer and for-sale-by-owner seller are customers of the broker.

C) The buyer is the broker’s customer; the for-sale-by-owner seller is the broker’s client.

D) The broker is now a dual agent.

A) The for-sale-by-owner seller is the broker’s customer; the buyer is a client.

A real estate licensee was representing a buyer. At their first meeting, the buyer explained that he planned to operate a dog grooming business out of any house he bought. The licensee did not verify that the properties he showed his client were zoned for that specific use. Which agency duty did the licensee violate?

A) Obedience

B) Care

C) Loyalty

D) Accountability

B) Care

Broker A tells a prospective buyer, “This property has the most beautiful view.” In fact, the view includes the back of a shopping center. In a separate transaction, broker B fails to mention to some enthusiastic potential buyers that a six-lane highway is planned for construction within 10 feet of a house the buyers think is perfect. Based on these facts, which of these statements is TRUE?

A) Broker A has committed fraud.

B) Broker B has committed puffing.

C) Both brokers are guilty of intentional misrepresentation.

D) Broker A is merely puffing; broker B has misrepresented the property.

D) Broker A is merely puffing; broker B has misrepresented the property.

Under Illinois agency law, which of these is TRUE?

A) Sponsoring brokers designate which sponsored licensee represents the client.

B) The law codifies the common-law concept of caveat emptor by eliminating any assumption of a buyer’s right to representation or disclosure.

C) Sellers are not legally obligated to make any disclosures regarding the known physical condition of the property.

D) Dual agency is illegal.

A) Sponsoring brokers designate which sponsored licensee represents the client.

A sponsoring broker listed and sold a home. The seller had told the sponsoring broker that the home was structurally sound. This information was passed on to a prospective buyer by one of the licensee’s sponsored by the broker. If the sponsoring broker has no way of knowing that this information is false, who will likely be held liable if a latent defect is later discovered?

A) The sponsored licensee

B) The seller and the sponsored licensee

C) The seller

D) The buyer

C) The seller

In real estate transactions, the term fiduciary typically refers to the:

A) sale of real property.

B) person who gives someone else the legal power to act on her behalf.

C) person who has legal power to act on behalf of another.

D) agent’s relationship to the principal.

D) agent’s relationship to the principal.

A real estate licensee’s responsibility to keep the principal informed of all the facts that could affect a transaction is the duty of:

A) disclosure.

B) confidentiality.

C) obedience.

D) accounting.

A) disclosure.

Which of these is considered dual agency?

A) A licensee acting for both the buyer and the seller in the same transaction

B) Two brokerage companies cooperating with each other

C) A licensee representing two or more sellers at the same time

D) A licensee listing and then selling the same property

A) A licensee acting for both the buyer and the seller in the same transaction

In a dual agency situation, a licensee may represent both the seller and the buyer if:

A) the licensee informs either the buyer or the seller of this fact.

B) both parties give their informed consent, in writing, to the dual agency.

C) the buyer and the seller are related by blood or marriage.

D) both parties are represented by attorneys.

B) both parties give their informed consent, in writing, to the dual agency.

In Illinois, which of these is TRUE concerning designated agency?

A) Designated agency is always illegal.

B) Designated agency is the same as creating an implied agency.

C) License law requires the licensee to disclose, in writing, that a designated agency relationship exists.

D) License law requires that the seller and the buyer be represented by different companies.

C) License law requires the licensee to disclose, in writing, that a designated agency relationship exists.