Real Estate Contracts & Agency 1 — Questions and Answers
Question 1: In an exclusive right-to-sell listing, the listing broker earns a commission if the property is sold by:
- Only the listing agent
- Any cooperating agent
- The owner themselves
- Any of the above (Correct answer)
Correct answer: Any of the above
Under an exclusive right-to-sell listing, the broker earns a commission regardless of who procures the buyer, including the seller.
Question 2: Earnest money in a purchase transaction is best described as:
- The down payment amount
- A good-faith deposit demonstrating buyer's intent to purchase (Correct answer)
- The broker's commission
- A non-refundable fee
Correct answer: A good-faith deposit demonstrating buyer's intent to purchase
Earnest money is a deposit made by the buyer to show serious intent; it is typically applied toward the purchase price at closing.
Question 3: For a real estate contract to be legally valid, it must include all EXCEPT:
- Offer and acceptance
- Consideration
- Notarization (Correct answer)
- Competent parties
Correct answer: Notarization
Notarization is required for recording a deed but is not one of the essential elements for a contract to be valid and enforceable.
Question 4: Dual agency occurs when:
- Two brokers co-list a property
- One agent represents both buyer and seller in the same transaction (Correct answer)
- A property is listed on two MLS systems
- Two buyers compete for one property
Correct answer: One agent represents both buyer and seller in the same transaction
Dual agency exists when the same broker or agent represents both the buyer and seller, requiring disclosure and consent from all parties.
Question 5: A buyer's agency agreement creates a fiduciary relationship in which the agent owes primary loyalty to the:
- Seller
- Lender
- Buyer (Correct answer)
- Listing broker
Correct answer: Buyer
A buyer's agency agreement legally obligates the agent to represent the buyer's best interests, creating full fiduciary duties to the buyer.
Question 6: Which listing agreement allows a seller to also sell the property themselves without owing a commission?
- Exclusive right-to-sell
- Exclusive agency listing (Correct answer)
- Net listing
- Open listing
Correct answer: Exclusive agency listing
In an exclusive agency listing, only one broker is authorized, but the seller retains the right to sell without owing a commission if they find the buyer themselves.
Real Estate Contracts & Agency 1
In an exclusive right-to-sell listing, the listing broker earns a commission if the property is sold by: