Professional Standards and Ethics Flashcards

A buyer calls an unlicensed transaction coordinator asking whether they should lower their offer after the inspection. What is the most appropriate response?

Answer: Refer the buyer to their licensed agent for negotiation advice

Negotiating or advising on price is licensed activity, so an unlicensed TC must refer the client to the agent.

A TC notices a signed purchase agreement has the wrong closing date. What should the TC do?

Answer: Notify the agent so a properly executed amendment or initialed change can be prepared

Changes to executed contracts require the parties' agreement through an amendment or initialed change, never unilateral alteration.

Under RESPA Section 8, which arrangement would most likely be prohibited for a TC?

Answer: Accepting a payment from a title company for referring closings to it

RESPA Section 8 prohibits kickbacks or referral fees for referring settlement service business.

A TC working for both the listing and buyer's agents on the same deal learns the buyer's maximum price. What is the ethical obligation?

Answer: Keep it confidential and not disclose it to the other side

Confidential client information must not be shared with the opposing party, even when the TC serves both agents.

Which practice best protects clients from wire fraud during a transaction?

Answer: Advising clients to verify wiring instructions by phone using a known, independently verified number

Independent verification by phone with a known number is the standard defense against business email compromise.

A TC is asked by a seller whether a known roof leak must be disclosed. What should the TC do?

Answer: Direct the seller to their agent and, if needed, an attorney, while noting disclosure laws generally require known material defects

TCs should not give legal advice and must never help conceal known material defects.

Which statement about TC record retention is most accurate?

Answer: Retention periods are set by state law and broker policy, and the TC must follow them

Record retention requirements vary by state and brokerage, so TCs follow the applicable rules.