Real Estate Sales MCQ 1 Flashcards

A seller receives two offers simultaneously: Offer A for $350,000 with a 60-day closing and no contingencies, and Offer B for $360,000 contingent on the sale of the buyer's current home. Which statement best describes the seller's situation?

Answer: The seller should evaluate net proceeds, risk, and timeline, as the higher offer carries more uncertainty

Sellers are not obligated to accept the highest offer and must weigh factors like contingencies and closing timelines. A contingent offer introduces risk that the transaction may fall through, so the lower, cleaner offer may ultimately yield better results.

An agent represents a seller and discovers that the property has a cracked foundation that was patched and painted over by the seller before listing. What is the agent's legal and ethical obligation?

Answer: Disclose the known defect to prospective buyers

Real estate agents have a duty to disclose known material defects to prospective buyers regardless of the seller's wishes. Concealing a known structural defect exposes both the agent and seller to legal liability.

A licensee earns a salary and benefits from a real estate company and works set hours determined by the broker. How is this worker most likely classified for tax purposes?

Answer: Employee

When a broker controls not just the result of the work but also the manner and means — including set hours and a salary — the worker is classified as an employee, not an independent contractor.

A property is purchased for $250,000. The buyer makes a 20% down payment and obtains a mortgage for the remainder. After two years, the outstanding loan balance is $192,000 and the property appraises at $275,000. What is the buyer's current equity?

Answer: $83,000

Equity equals the current market value minus the outstanding loan balance: $275,000 − $192,000 = $83,000. Equity grows as the loan is paid down and/or property value increases.

Which of the following is the primary purpose of an earnest money deposit in a real estate transaction?

Answer: To demonstrate the buyer's good faith and secure the offer

Earnest money is a deposit made by the buyer to show serious intent and good faith. It is held in escrow and applied toward the purchase price at closing, but does not constitute the full down payment.

A real estate broker receives an offer on a listed property on a Friday afternoon. The seller is traveling and unreachable until Monday. What should the broker do?

Answer: Make all reasonable efforts to present the offer to the seller as soon as possible

Brokers have a fiduciary duty to present all offers to the seller promptly. The broker must make every reasonable effort to contact the seller immediately rather than holding or acting on the offer unilaterally.