Practice Questions Flashcards

A buyer makes an offer on a home with a financing contingency. The lender denies the loan. What happens to the earnest money?

Answer: It is returned to the buyer

A valid financing contingency protects the buyer's earnest money if they cannot obtain the specified loan.

Which type of listing agreement gives the broker the exclusive right to sell AND earn a commission regardless of who finds the buyer?

Answer: Exclusive right-to-sell listing

An exclusive right-to-sell listing guarantees the broker a commission even if the seller finds the buyer independently.

Under RESPA, a kickback arrangement between a title company and a real estate broker is:

Answer: Prohibited regardless of disclosure

RESPA Section 8 prohibits kickbacks and unearned fee splitting in federally related mortgage transactions regardless of disclosure.

A property is listed at $320,000. The seller agrees to accept $305,000. The buyer offers $298,000. At this point there is:

Answer: No contract — the offer was rejected

Because the buyer's offer did not match the seller's acceptable price, no contract exists and the seller is free to reject.

The term 'procuring cause' in real estate refers to:

Answer: The agent whose efforts directly resulted in the sale

Procuring cause determines which broker is entitled to a commission by identifying whose continuous efforts led to the completed transaction.

A seller's agent who learns that the buyer is willing to pay more than the offering price must:

Answer: Share that information with the seller immediately

A seller's agent has a fiduciary duty of disclosure to the seller, including material information about the buyer's motivation.

Which document transfers title to real property from seller to buyer at closing?

Answer: Deed

A deed is the legal instrument that conveys ownership (title) of real property from the grantor (seller) to the grantee (buyer).