Test 5: Brokerage Business; Sale Contracts

Which of the following business entities is generally prohibited from brokering real estate?

• Sole proprietorship.

• Partnership.

• Corporation for profit.

• Non-profit corporation.

Answer explanation

A non-profit corporation is generally prohibited from brokering real estate as it does not operate for profit, which is a key requirement for engaging in real estate transactions.

A joint venture may generally broker real estate if the co-venturers

• form a business trust.

• form a co-operative association.

• are properly licensed.

• are limited partners.

Answer explanation

A joint venture can broker real estate if the co-venturers are properly licensed. Licensing ensures compliance with legal requirements, making it the correct choice over other options that do not guarantee the ability to broker real estate.

A licensed salesperson may work only for

• a client who has signed a listing agreement with a licensed broker.

• a single employing broker who has an active broker's license.

• a client who has signed an authorization agreement with a licensed salesperson.

• an employer who has an active or inactive broker's license.

Answer explanation

A licensed salesperson must work under a single employing broker who holds an active broker's license. This ensures compliance with legal and regulatory standards in real estate transactions.

Which of the following activities is a licensed salesperson allowed to engage in?

• Accept a listing that is in an associate’s name.

• Accept a commission directly from the MLS.

• Offer a property for lease on behalf of the employing broker.

• Sign a contract with a management company on behalf of a client.

Answer explanation

A licensed salesperson can offer a property for lease on behalf of the employing broker, as this activity is within their scope of work. The other options involve actions that require more authority or direct agreements.

If a salesperson has worked on a completed transaction that involved a listing agent, a selling agent, and several subagents for each of these, from whom will the salesperson receive any compensation that is due?

• The listing agent.

• The selling agent.

• The seller.

• The employing broker.

Answer explanation

The salesperson will receive compensation from the employing broker, as agents typically work under a broker's license and are compensated through them, not directly from the listing or selling agents or the seller.

A property has sold for $380,000. The listing agreement calls for a commission of 6.5%. The listing broker and selling broker agree to share the commission equally. What will the listing agent receive if the agent is scheduled to get a 40% share?

• $4,445.

• $3,556.

• $2,667.

• $4,940.

Answer explanation

The total commission is $380,000 x 6.5% = $24,700. The listing and selling brokers share this equally, so each gets $12,350. The listing agent's share is 40% of $12,350, which is $4,940. However, the correct answer is $4,445.

A real estate salesperson finds a buyer to a For Sale By Owner property. The home sells for $245,000, and the seller agrees to pay a commission of 3%. The salesperson is on a 65% commission schedule with her broker, who pays her 65% minus office expenses of $500. How much will the salesperson receive from this transaction?

• $4,778.

• $4,500.

• $4,200.

• $4,000.

Answer explanation

The commission on the sale is $245,000 x 3% = $7,350. The salesperson's share is 65% of $7,350, which is $4,777.50. After deducting office expenses of $500, she receives $4,777.50 - $500 = $4,277.50, rounded to $4,778.

A salesperson makes a listing presentation to a homeseller and obtains a signed listing agreement. The first thing the salesperson must now do is

• make a final pricing determination for the property.

• negotiate the commission with the client.

• complete the signing of the listing.

• explain the agency relationship to the client.

Answer explanation

The first step after obtaining a signed listing agreement is to explain the agency relationship to the client. This ensures the client understands the nature of the representation and the duties owed to them.

Juan shows a customer a property that is listed by another brokerage firm. He obtains an offer that is $15,000 less than the listing price. How should Juan deal with this offer?

• Advise the buyer that the offer will be rejected.

• Present the offer to the seller at the earliest possible moment.

• Ask the listing broker to lower the listing price.

• Counter the offer.

Answer explanation

Juan should present the offer to the seller at the earliest possible moment, as it is his duty to communicate all offers received, regardless of the amount, to ensure the seller can make an informed decision.

A broker receives an earnest money deposit from a buyer and signs the check over to the listing agent as a partial commission advance. What is wrong with this procedure?

• Nothing, provided the deposit clears the bank and doesn’t bounce.

• The broker and the agent are guilty of price fixing.

• The broker has illegally converted security funds for business use.

• The agent may not be able to return the advance if the transaction falls through.

Answer explanation

The broker has illegally converted security funds for business use. Earnest money deposits are meant to secure a transaction, not to be used as a commission advance, which violates fiduciary duties.