REAL ESTATE LICENSE EXAM PREP (GENERAL) QUESTIONS WITH LATEST UPDATE
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Course
Licensed Realtor
Institution
Licensed Realtor
Agent/Agency - Answer-A person who performs acts on behalf of others is deemed to be an agent under the common law of every state.
Principal (client relationship): - Answer-The one for whom action is taken and who benefits.
Agent - Answer-The one who is entrusted to act.
Customer - Answer-...
REAL ESTATE LICENSE EXAM PREP
(GENERAL) QUESTIONS WITH LATEST
UPDATE
Agent/Agency - Answer-A person who performs acts on behalf of others is deemed to
be an agent under the common law of every state.
Principal (client relationship): - Answer-The one for whom action is taken and who
benefits.
Agent - Answer-The one who is entrusted to act.
Customer - Answer-A buyer or seller for whom service is provided in an honest and fair
manner, but NOT in the capacity as an agent.
Non-Agent - Answer-An intermediary between a buyer and seller who assists with the
transaction without representing either party as an agent.
Levels of Service Provided by an Agent to the Principal (Client) versus a Non-Agent to
the Customer - Answer-An agent is entrusted with confidential information and fiduciary
responsibility from the principal, whereas a customer should not reveal anything. Most
states have statutes that disclose these relationships to sellers and buyers.
Loyalty - Answer-Act at all times solely in the best interests of the principal to the
exclusion of all other interests, including the broker's own self-interest
Obedience - Answer-Obey lawful instruction
Disclosure - Answer-An agent is obligated to disclose to the principal all relevant and
material information the agent knows pertaining to the scope of the agency
Any facts affecting the value of property
All known facts about the buyer
Information known about a buyer's willingness to purchase, complete sale, and highest
price
Broker's relationship to, or interest in the prospective purchaser
A buyer's intention to subdivide to make a profit
Any other information that might affect highest and best price.
Note: Real estate agent must disclose known material defects to buyers and must treat
all persons honestly and fairly with no misrepresentation or fraud.
Confidentiality - Answer-Safeguarding the principal's confidence and secrets. Must not
weaken the principal's position. Example: Must not disclose clients are divorcing or
being foreclosed upon, etc.
,Reasonable Care and Diligence - Answer-Discovering of relevant facts that a
reasonable real estate agent could discover—zoning, school closure, new roads, etc.
Sub-Agent - Answer-An agent of an agent. In the past, MLS participants agreed to be
Sub-Agents of each other, guaranteeing to the seller that all Realtors would be working
on the seller's behalf. Today, this practice is basically gone with the advent of buyer
agency. Licensees who have their licenses with managing brokers are Sub-Agents of
the broker.
Dual Agency - Answer-Working for both parties (buyer and seller) in the same
transaction as their agent. In the strictest sense, it cannot really be done since as an
agent, you must work in the best interest of both principals, and their best interests are
really at odds.
Undisclosed Dual Agency is considered fraud- Buying on own account without
disclosureTelling buyer what to offerFuture dealings with buyer concerning said
propertyCompensation from buyer without seller permissionBuyer's broker selling own
listing (must renounce agency)
Disclosed Dual Agency- All parties acknowledge and agree to the dual agent role
Becomes a special agent. Usually in writing, stating what agent will and can do and
what the agent will and cannot do
Termination of Agency - Answer-Expiration: Expiration of the agency time period
Death: Death of the principal or the agent
Incapacity or Bankruptcy: Incapacity or bankruptcy of either the principal or the agent
Performance: When the agent has performed his/her duties
Repudiation: Agency requires consent; therefore, either party can terminate an agency.
However, if terminated by wrongful breach, the injured party may sue for damages.
Destruction or Condemnation
Agency Coupled with an Interest: An agent receives an interest in the subject of the
agency. This cannot be revoked by the principal or terminated because of the death of
the principal.
Remedies for an Agent's Breach of Fiduciary Duties - Answer-Rescission
Forfeiture of Commission
Damages
, Power of Attorney - Answer-A written legal document that authorizes a person, who
becomes an agent of the principal, to act on behalf of the principal. If the principal is not
available at the time of closing, the agent who has power of attorney acts on the
principal's behalf. The power of attorney form must be notarized and must be recorded if
real property is being conveyed.
Facilitator-Intermediary (customer relationship) - Answer-Works for both the seller and
the buyer to complete a transaction but not in an agency relationship with either party.
No fiduciary relationship with either buyer or seller but must be fair with both parties. All
material facts must be disclosed to both the seller and buyer.
Written agreement between all parties stating what the broker (non-agent) shall and
shall not do
Cannot help one party to the transaction to the detriment of the other party
General Agent - Answer-A general agent represents the principal in a wide variety of
matters within a specific business activity. Property managers are general agents
performing a variety of tasks for the owner/principal.
Special or Specific Agent - Answer-Real estate agents generally work as special
agents. A buyer agent has the limited authority to locate a property that meets the
buyer's criteria, while a seller's agent has the limited authority to find a buyer for the
seller's property.
Single Agent - Answer-The agent could be a buyer's agent, landlord's agent, seller's
agent, tenant's agent, or sub-agent. The agent represents only one party in any single
transaction, and any third party is a customer.
Disclosure of Agency - Answer-Mandatory Agency Disclosure Laws now exist in all
states. Most require a written form
Licensees are required to disclose seller and buyer agency services so customers can
decide whether they want or need an agency relationship versus a facilitator/customer
relationship
Brokerage Relationships - Answer-The broker/salesperson who obtains a listing to sell a
property is known as the listing broker, however the listing is a contract between the
property owner and the brokerage company that the broker/salesperson where they are
employed. The broker/salesperson who is working with the buyer is known as the
cooperating broker because he or she cooperates with the listing broker to close the
transaction.
True or false, a facilitator makes sure both parties understand the transaction and
makes sure the terms of the contract are carried out? - Answer-True
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