Real Estate Practice - Chapter 16 - The Law Of Agency

1. The law that governs how one person can represent another person in a business or legal transaction is called the Law of Agency.

True

False

The explanation for the given correct answer is that the Law of Agency indeed governs how one person can represent another person in a business or legal transaction. This law establishes a legal relationship between two parties, where one party (the agent) acts on behalf of and with the authority of the other party (the principal). The agent is authorized to make decisions, enter contracts, and perform actions that bind the principal. Therefore, it is true that the Law of Agency regulates the representation of individuals in business or legal matters.

Explanation

The explanation for the given correct answer is that the Law of Agency indeed governs how one person can represent another person in a business or legal transaction. This law establishes a legal relationship between two parties, where one party (the agent) acts on behalf of and with the authority of the other party (the principal). The agent is authorized to make decisions, enter contracts, and perform actions that bind the principal. Therefore, it is true that the Law of Agency regulates the representation of individuals in business or legal matters.

2. When a seller principal is represented exclusively by only one real estate listing broker or office it is known as an exclusive listing.

True

False

There are 2 types of Exclusive Agency listings:

The Exclusive Agency Listing is NOT recommended. This type of a listing does not provide a commission if the SELLER finds a buyer who purchases the property.

Exclusive Right to Sell is the most COMMON type of listing used in residential real estate. In the Exclusive Right to Sell Listing, there is also only ONE broker, however, this type of listing offers full protection of the real estate fee (commission) since the broker will receive a commission no matter who sells the property during the listing period, including the owner. The agreement includes a statement in bold face type that states this fact.

Explanation

There are 2 types of Exclusive Agency listings:

The Exclusive Agency Listing is NOT recommended. This type of a listing does not provide a commission if the SELLER finds a buyer who purchases the property.

Exclusive Right to Sell is the most COMMON type of listing used in residential real estate. In the Exclusive Right to Sell Listing, there is also only ONE broker, however, this type of listing offers full protection of the real estate fee (commission) since the broker will receive a commission no matter who sells the property during the listing period, including the owner. The agreement includes a statement in bold face type that states this fact.

3. According to the law of agency when two or more competing parties are represented by at the same time by the same agent in a business or legal transaction, it is known as dual agency.

True

False

The explanation for the correct answer is that according to the law of agency, when one agent represents two or more competing parties simultaneously in a business or legal transaction, it is referred to as dual agency. This means that the agent has a duty to act in the best interests of both parties, while also maintaining confidentiality and avoiding any conflicts of interest. Dual agency can occur in various industries, such as real estate, where an agent may represent both the buyer and seller in a transaction.

Explanation

The explanation for the correct answer is that according to the law of agency, when one agent represents two or more competing parties simultaneously in a business or legal transaction, it is referred to as dual agency. This means that the agent has a duty to act in the best interests of both parties, while also maintaining confidentiality and avoiding any conflicts of interest. Dual agency can occur in various industries, such as real estate, where an agent may represent both the buyer and seller in a transaction.

4. The common name for a system where a group of brokers agree to work together and cooperate to sell each other's listings is known asa the Multiple Listing Service.

True

False

The explanation for the given correct answer is that the Multiple Listing Service (MLS) is indeed a common name for a system where brokers agree to collaborate and sell each other's listings. In an MLS, brokers share information about their listings with other brokers who are members of the service. This allows for increased exposure and cooperation among brokers, ultimately benefiting both sellers and buyers in the real estate market.

Explanation

The explanation for the given correct answer is that the Multiple Listing Service (MLS) is indeed a common name for a system where brokers agree to collaborate and sell each other's listings. In an MLS, brokers share information about their listings with other brokers who are members of the service. This allows for increased exposure and cooperation among brokers, ultimately benefiting both sellers and buyers in the real estate market.

5. The Real Estate Seller's Disclosure Act, passed in 1996, requires all sellers to inform a prospective buyer of all known material defects in a home for sale.

True

False

The Real Estate Seller's Disclosure Act, passed in 1996, mandates that sellers must disclose any known material defects in a home to potential buyers. This ensures that buyers are fully informed about the condition of the property they are considering purchasing. By requiring sellers to disclose such defects, the act aims to protect buyers from unknowingly purchasing a property with significant issues. Therefore, the statement "True" is correct as it accurately reflects the requirement of the Real Estate Seller's Disclosure Act.

Explanation

The Real Estate Seller's Disclosure Act, passed in 1996, mandates that sellers must disclose any known material defects in a home to potential buyers. This ensures that buyers are fully informed about the condition of the property they are considering purchasing. By requiring sellers to disclose such defects, the act aims to protect buyers from unknowingly purchasing a property with significant issues. Therefore, the statement "True" is correct as it accurately reflects the requirement of the Real Estate Seller's Disclosure Act.

6. The most commonly used type of listing in the residential real estate business is the Net Listing.

True

False

The most common type of listing is The Exclusive Right to Sell Listing.

Explanation

The most common type of listing is The Exclusive Right to Sell Listing.

7. A broker who works for another broker is known as a Buying and Selling Broker.

True

False

Is known as an Associate Broker.

Explanation

Is known as an Associate Broker.

8. A document that reads in part "This analysis has not been performed in accordance with the Uniform Standards of Professional Appraisal Practice..." is NOT to be construed as an appraisal and may not be used as such for any purpose" is known as a Comparative Market Analysis.

True

False

It is the disclosure that is on the first page of a CMA.

Explanation

It is the disclosure that is on the first page of a CMA.

9. Perhaps the largest database of residential homes in the world is www.homefinder.com.

True

False

It is www.realtor.com

Explanation

It is www.realtor.com

10. When an owner is guaranteed to receive a definite amount of money for the sale of his real property or the listing broker is not paid a commmission, it is known as an Open Listing.

True

False

The listing described above is known as a Net Listing.

In an Open Listing: the property owner, principal, can have any number of real estate offices working simultaneously to find a ready, willing, and able buyer. Typically arranged by oral agreement, ONLY the broker who FINDS the BUYER will receive a commission.

Explanation

The listing described above is known as a Net Listing.

In an Open Listing: the property owner, principal, can have any number of real estate offices working simultaneously to find a ready, willing, and able buyer. Typically arranged by oral agreement, ONLY the broker who FINDS the BUYER will receive a commission.

11. When the owner informs all the brokers that a commission will be paid ONLY to the one broker who finds a buyer, this is known as an Open Listing.

True

False

An open listing is a type of real estate listing agreement in which the owner of the property allows multiple brokers to market and sell the property, with the commission being paid only to the broker who successfully finds a buyer. In this scenario, the owner has informed all the brokers that the commission will be paid only to the broker who finds a buyer, which aligns with the definition of an open listing. Therefore, the correct answer is true.

Explanation

An open listing is a type of real estate listing agreement in which the owner of the property allows multiple brokers to market and sell the property, with the commission being paid only to the broker who successfully finds a buyer. In this scenario, the owner has informed all the brokers that the commission will be paid only to the broker who finds a buyer, which aligns with the definition of an open listing. Therefore, the correct answer is true.

12. When real estate agents give a personal opinion to buyers about a seller's real estate, even to the point of exaggeration, is known in the real estate business as "broker bragging".

True

False

This is known as puffling.

Explanation

This is known as puffling.

13. The two parties involved in such a transaction would include the party wanting representation, known as the agent, and the party giving the representation, known as the principal.

True

False

Party wanting representation is known as the principal.
Party giving representation is known as the agent.

Explanation

Party wanting representation is known as the principal.
Party giving representation is known as the agent.

14. When the seller is represented as the principal, the agent is the associate broker.

True

False

The agent would be the LISTING BROKER.

Explanation

The agent would be the LISTING BROKER.

15. A form of liability protection insurance known in the real estate business is known as "broker and salesperson comprehensive umbrella coverage".

True

False

It is Errors and Omissions Insurance.

Explanation

It is Errors and Omissions Insurance.

16. The most recent major disclosure law that protects consumers was put into effect in the year 2000 and is called the Real Estate Seller's Disclosure Act.

True

False

The most recent law that protects consumers was passed in 2000 was called Act 47 - Amendments to the Agency Act. (It was an add on to the 1999 Agency Act 112 - that requires licensees to give consumers of real estate services a Consumer Notice). The Act 47 law passed in 2000 concerns inquiries about real estate that come through telephone calls. The licensee must provide an oral disclosure to the consumer if it is not done in person.

Explanation

The most recent law that protects consumers was passed in 2000 was called Act 47 - Amendments to the Agency Act. (It was an add on to the 1999 Agency Act 112 - that requires licensees to give consumers of real estate services a Consumer Notice). The Act 47 law passed in 2000 concerns inquiries about real estate that come through telephone calls. The licensee must provide an oral disclosure to the consumer if it is not done in person.