NAR Client Representation & Customer Service 3 — Questions and Answers
Question 1: A seller asks their listing agent to reject all offers from buyers of a specific national origin. The agent must:
- Comply since the seller controls the property
- Follow the instruction only if a business reason is documented
- Refuse and explain this violates Fair Housing laws and the Code of Ethics (Correct answer)
- Refer the matter to a transaction coordinator
Correct answer: Refuse and explain this violates Fair Housing laws and the Code of Ethics
National origin is a protected class under Fair Housing; an agent who complies with discriminatory instructions violates federal law and NAR ethics.
Question 2: The duty of 'accounting' in a fiduciary relationship requires a real estate agent to:
- Prepare the client's tax returns after closing
- Keep records of all funds and property entrusted to them and report accurately (Correct answer)
- Provide monthly profit-and-loss statements to investors
- Audit the opposing party's financial disclosures
Correct answer: Keep records of all funds and property entrusted to them and report accurately
Accounting means the agent must safeguard and accurately report all money and property received on behalf of the client.
Question 3: When a buyer's agent learns of a competing offer on a property their client wants, the agent's best course of action is to:
- Contact the competing buyer to discourage their offer
- Advise the listing agent to delay reviewing offers
- Inform the buyer client promptly so they can make a competitive decision (Correct answer)
- Do nothing since multiple offers benefit all parties
Correct answer: Inform the buyer client promptly so they can make a competitive decision
Promptly informing the buyer client of competing interest enables them to exercise their best judgment, fulfilling the agent's duty of disclosure.
Question 4: A seller's listing agreement has expired. The listing agent continues to show the property and accepts a verbal renewal. This practice is:
- Acceptable if both parties agree verbally
- Common practice in most states
- Problematic because listing agreements must be in writing to be enforceable in most states (Correct answer)
- Only valid if the MLS is notified
Correct answer: Problematic because listing agreements must be in writing to be enforceable in most states
Real estate listing agreements must be in writing to be legally enforceable in virtually all U.S. jurisdictions.
Question 5: Under designated agency, the designated agent owes fiduciary duties to:
- All clients of the brokerage equally
- Only the client to whom they have been specifically designated (Correct answer)
- The managing broker who made the designation
- Both the buyer and seller in every transaction
Correct answer: Only the client to whom they have been specifically designated
Designated agency allows one agent within a firm to represent the buyer and another the seller, with each agent owing full fiduciary duties only to their designated client.
Question 6: A buyer tells their agent they want to make a low offer to 'test' the seller's motivation. The agent should:
- Refuse to present any offer below list price
- Present the offer as instructed while providing honest counsel about likely outcomes (Correct answer)
- Rewrite the offer at a price the agent deems reasonable
- Contact the seller's agent first to gauge reaction
Correct answer: Present the offer as instructed while providing honest counsel about likely outcomes
Agents must present all offers as directed by the client while exercising their duty of counsel to share professional judgment about market realities.
Question 7: Which action best demonstrates a listing agent's duty of 'reasonable care and diligence'?
- Advising the seller to accept the first offer received
- Conducting and sharing a thorough comparative market analysis before pricing the property (Correct answer)
- Limiting showings to reduce seller inconvenience
- Pricing the property above market to secure a higher commission
Correct answer: Conducting and sharing a thorough comparative market analysis before pricing the property
Providing a thorough CMA reflects the agent's duty to apply professional skill and diligence in serving the seller's interest.
NAR Client Representation & Customer Service 3
A seller asks their listing agent to reject all offers from buyers of a specific national origin.
The agent must: