Virginia Real Estate Principles - Unit 8: Real Estate Brokerage Part 2
This deck covers key concepts and legal principles related to real estate brokerage, including antitrust laws, brokerage definitions, and ethical standards.
The Counselors of Real Estate (CRE), Commercial Investment Real Estate Institute (CIREI), and Institute of Real Estate Management (IREM) are affiliated institutes of A) National Association of REALTORS® (NAR). B) National Organization of REALTORS® (NOR). C) National Association of Real Estate Agents (NAREA). D) American Realty Association (ARA).
The answer is National Association of REALTORS® (NAR). NAR has the following affiliated institutes, societies, and councils: Counselors of Real Estate (CRE), Commercial Investment Real Estate Institute (CIREI), and Institute of Real Estate Management (IREM), among others.
Key Terms
The Counselors of Real Estate (CRE), Commercial Investment Real Estate Institute (CIREI), and Institute of Real Estate Management (IREM) are affiliated institutes of A) National Association of REALTORS® (NAR). B) National Organization of REALTORS® (NOR). C) National Association of Real Estate Agents (NAREA). D) American Realty Association (ARA).
The answer is National Association of REALTORS® (NAR). NAR has the following affiliated institutes, societies, and councils: Counselors of Real Est...
Under the Sherman Antitrust Act, market allocation is punishable by A) a minimum $1 million fine and 5 years in prison. B) up to a $1 million fine and 10 years in prison. C) up to a $3 million fine and 10 years in prison. D) a minimum $10 million fine and 5 years in prison.
The answer is up to a $1 million fine and 10 years in prison. Price-fixing or market allocation is a violation of the Sherman Antitrust Act and, a ...
When acting as an employee rather than an independent contractor, a sales associate may be obligated to
A) accept a commission from another broker. B) personally pay all withholding taxes. C) list properties in the sales associate's own name. D) work set hours.
The answer is work set hours. An employee not only accepts the actual duties assigned by the employer but also agrees to the manner in which the em...
National Association of Real Estate Brokers (NAREB) A) no longer concerns itself with equal housing opportunity. B) members are known as REALTORS®. C) members are known as Realtists. D) is part of the National Association of REALTORS®.
The answer is members are known as Realtists. Members of the National Association of Real Estate Brokers (NAREB) are known as Realtists.
A broker can agree upon which of the following with an independent contractor? A) Sales meetings the person would need to attend B) Number of hours the person would have to work C) Work schedule the person would have to follow D) Compensation the person would receive
The answer is compensation the person would receive. Brokers may agree upon the compensation that their independent contractors will receive for wo...
Which statement BEST explains this sentence: “To recover a commission for brokerage services, a broker must be employed by a client”? A) The broker must have a sales associate employed in the office. B) The broker must work in a real estate office. C) The client must make an express or implied agreement to pay a commission to the broker. D) The broker must express an interest in representing the client.
The answer is the client must make an express or implied agreement to pay a commission to the broker. A broker’s contract of employment by a client...
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| Term | Definition |
|---|---|
The Counselors of Real Estate (CRE), Commercial Investment Real Estate Institute (CIREI), and Institute of Real Estate Management (IREM) are affiliated institutes of A) National Association of REALTORS® (NAR). B) National Organization of REALTORS® (NOR). C) National Association of Real Estate Agents (NAREA). D) American Realty Association (ARA). | The answer is National Association of REALTORS® (NAR). NAR has the following affiliated institutes, societies, and councils: Counselors of Real Estate (CRE), Commercial Investment Real Estate Institute (CIREI), and Institute of Real Estate Management (IREM), among others. |
Under the Sherman Antitrust Act, market allocation is punishable by A) a minimum $1 million fine and 5 years in prison. B) up to a $1 million fine and 10 years in prison. C) up to a $3 million fine and 10 years in prison. D) a minimum $10 million fine and 5 years in prison. | The answer is up to a $1 million fine and 10 years in prison. Price-fixing or market allocation is a violation of the Sherman Antitrust Act and, a penalty can be up to a maximum $1 million fine and 10 years in prison. For corporations, the penalty may be as high as $100 million. |
When acting as an employee rather than an independent contractor, a sales associate may be obligated to A) accept a commission from another broker. B) personally pay all withholding taxes. C) list properties in the sales associate's own name. D) work set hours. | The answer is work set hours. An employee not only accepts the actual duties assigned by the employer but also agrees to the manner in which the employer wants them performed. |
National Association of Real Estate Brokers (NAREB) A) no longer concerns itself with equal housing opportunity. B) members are known as REALTORS®. C) members are known as Realtists. D) is part of the National Association of REALTORS®. | The answer is members are known as Realtists. Members of the National Association of Real Estate Brokers (NAREB) are known as Realtists. |
A broker can agree upon which of the following with an independent contractor? A) Sales meetings the person would need to attend B) Number of hours the person would have to work C) Work schedule the person would have to follow D) Compensation the person would receive | The answer is compensation the person would receive. Brokers may agree upon the compensation that their independent contractors will receive for work not yet done, but they may not dictate working schedules or attendance at sales meetings. |
Which statement BEST explains this sentence: “To recover a commission for brokerage services, a broker must be employed by a client”? A) The broker must have a sales associate employed in the office. B) The broker must work in a real estate office. C) The client must make an express or implied agreement to pay a commission to the broker. D) The broker must express an interest in representing the client. | The answer is the client must make an express or implied agreement to pay a commission to the broker. A broker’s contract of employment by a client is the listing or buyer representation agreement signed by them both. A valid employment agreement is one of the usual requirements in a suit for a brokerage commission; it is proof of employment. |
A broker’s policy requires a 7% commission on all listings; no lower commission rate is acceptable. Which statement is TRUE? A) A homeowner may sue the broker for violating the antitrust law’s prohibition against price-fixing. B) The broker must present the uniform commission policy to the local professional association for approval. C) The broker may legally set the minimum commission rate acceptable for the firm. D) The sales associates associated with the brokerage will not be bound by the requirement and may negotiate any commission rate they choose. | The answer is the broker may legally set the minimum commission rate acceptable for the firm. Brokers have the right to set commissions within their own firm. This is not an antitrust violation. Sales associates who wish to continue with that broker can be required to comply. |
Even if a consumer has requested placement on the National Do Not Call Registry, a real estate professional may call the consumer up to how many months after the consumer’s last purchase, delivery, or payment? A) 6 months B) 3 months C) 12 months D) 18 months | The answer is 18 months. Real estate professionals may call consumers with whom they have an established business relationship for up to 18 months after the consumer’s last purchase, delivery, or payment, even if the consumer is listed on the National Do Not Call Registry. However, if the consumer specifically asks the company not to call, then the company must stop calling. |
A broker asks a neighbor who is thinking of selling the family home if the broker can present an offer from a prospective buyer, and the neighbor agrees. At this point, which statement is TRUE? A) The neighbor is not obligated to pay the broker a commission. B) The broker may not be considered the procuring cause without a written contract. C) The buyer is obligated to pay the broker for locating the property. D) The neighbor is obligated to pay the broker a commission for producing an offer to purchase. | The answer is the neighbor is not obligated to pay the broker a commission. At this point, there is no agreement between owner and broker for a service in return for compensation. The broker has done nothing yet that relies on the response of the seller. The buyer might have signed an offer and be ready, willing, and able to buy, but with no contract of employment with the homeowner—either written or oral—there can be no claim for a commission. Moreover, state real estate brokerage regulations generally require that a representation agreement be in writing and signed. |
The use of electronic signatures makes routine paperwork more efficient and has been encouraged by adoption by most states of A) the Uniform Electronic Transactions Act. B) the Uniform Brokerage Transactions Act. C) the real estate licensing laws. D) the Real Estate Transactions Act. | The answer is the Uniform Electronic Transactions Act. The Electronic Signatures in Global and National Commerce Act (E-Sign) applies to those states that have not adopted UETA, and some sections of the law also apply to those states that have adopted UETA. |
The amount of commission paid to a sales associate is determined by A) mutual agreement with the broker. B) state law. C) the local real estate board. D) mutual agreement with the client. | Answer: The answer is mutual agreement with the broker. All commissions must be paid through the broker, and the amount the sales associate receives is set by mutual agreement between these two parties. |
The National Association of REALTORS®(NAR) A) is the largest real estate trade association in the country. B) is the second-largest trade association in the country. C) is the tenth-largest trade association in the country. D) has somewhat less than one million members. | The answer is is the largest real estate trade association in the country. The National Association of REALTORS® (NAR) is the largest real estate trade association in the country. |
Many states have modified the traditional terms broker and salesperson to stress that all licensees must be knowledgeable of and comply with the law. The person who performs licensed activities under the authority of a broker is frequently called A) a managing broker. B) a junior licensee. C) a junior broker. D) a sales associate. | The answer is a sales associate. Some states require all real estate licensees to have a broker’s license, but a managing broker is always distinguished from those employed by the brokerage as sales associates. |
A qualified buyer makes a written offer on a property on March 6 by filling out and signing a purchase offer. Later that day, the seller accepts and signs the offer, keeping one copy. The broker gives a copy of the signed agreement to the buyer on March 8. The seller’s deed is delivered on May 1. The deed is recorded on May 7, and the buyer takes possession on May 15. When is the broker’s commission payable if this is a usual transaction? A) May 1 B) May 7 C) March 8 D) May 15 | The answer is May 1. Although the commission was earned when the buyer was notified of the seller’s acceptance (March 8), the commission is typically paid at the time the transaction is closed; that is, the purchase price is paid by the buyer and the buyer receives the deed. |
The real estate industry, including all licensed real estate brokers and sales associates, is subject to A) fair competition laws. B) social security taxation. C) antitrust laws. D) more regulations for smaller firms. | The answer is antitrust laws. Even though individual real estate sales associates are subject to supervision by the employing real estate broker, both are subject to both federal and state antitrust laws. |
Do-not-call registries and laws such as the Telephone Consumer Protection Act, Junk Fax Prevention Act, and rules of the Federal Communications Commission dictate A) how often a business person can contact a customer. B) prohibited communications. C) communications that are permitted. D) how many direct mail solicitations can be sent to a single address. | The answer is prohibited communications. Telephone calls, faxes, and emails are all subject to such prohibitions. |
What is the main value of a multiple listing service (MLS) for sellers? A) It exposes the property to a greater number of prospective buyers. B) It simplifies closing procedures. C) Real estate professionals do not have to work as hard to secure property listings. D) It reduces cooperation among brokers. | The answer is it exposes the property to a greater number of prospective buyers. The MLS exposes the property to many different real estate professionals, encouraging cooperation among brokers and expediting sales. |
An arrangement to sell one product only if the buyer purchases another product as well is called A) a buydown provision. B) a fee-for-services. C) a tie-in agreement. D) an allocation of customers. | The answer is a tie-in agreement. A tie-in arrangement is an agreement to sell one product only if the buyer purchases another product. Fee-for- services refers to splitting apart the collection of services that a broker offers. A buydown provision is a financing option. Allocation of customers refers to dividing a market and refraining from competing. |
Regulations of agencies that administer real estate license laws A) can be modified, if necessary, to insure compliance by large real estate firms. B) have the same force and effect as statutory law. C) are optional for licensees, though their adherence is always recommended. D) can only be changed by the legislature. | The answer is have the same force and effect as statutory law. Administrative regulations are created to enforce statutory law and must be complied with by all licensees. They are created by the licensing authority and can be changed by the licensing authority. |
Which act encourages the use of electronic signatures, making routine paperwork much more efficient? A) Uniform Electronic Transactions Act B) Real Estate Licensing Act C) Uniform Brokerage Transactions Act D) Real Estate Transactions Act | The answer is Uniform Electronic Transactions Act. The Electronic Signatures in Global and National Commerce Act (E-Sign) applies to those states that have not adopted UETA, and some sections of the law also apply to those states that have adopted UETA. |
A broker has established the following office policy: “All listings taken by any sales associate of this real estate brokerage must include compensation based on a 7% commission. No lower commission rate is acceptable.” If the broker attempts to impose this uniform commission requirement, which statement is TRUE? A) The sales associates of the brokerage will not be bound by the requirement and may negotiate any commission rate they choose. B) The broker must present the uniform commission policy to the local professional association for approval. C) The broker may, as a matter of office policy, legally set the minimum commission rate acceptable for the firm. D) A homeowner may sue the broker for violating the antitrust law’s prohibition against price-fixing. | The answer is the broker may, as a matter of office policy, legally set the minimum commission rate acceptable for the firm. Brokers have the right to set commissions within their own firm. This is not an antitrust violation. Sales associates who wish to continue with that broker can be required to comply. |
To be entitled to receive compensation from a real estate sales transaction, an individual must be all of the following EXCEPT A) employed by the buyer or the seller under a valid contract. B) a licensed real estate broker. C) the procuring cause of the sale. D) unrelated to either the buyer or the seller. | The answer is unrelated to either the buyer or the seller. All parties should be notified of the broker’s relationship to either buyer or seller. |
The National Association of REALTORS® has adopted a code of ethics for A) all real estate licensees. B) states that have adopted its code. C) its members. D) all real estate professionals. | The answer is its members. The National Association of REALTORS® adopted a code of ethics for its members in 1913. |
All of the following are required of a broker who is seeking to collect a commission for brokering the sale of a property EXCEPT A) complying with a commission rate set by a trade organization. B) having had a contract of employment—an agency representation agreement. C) having a valid real estate broker’s license. D) having been the procuring cause in the transaction or having an exclusive-right-to-sell agreement. | The answer is complying with a commission rate set by a trade organization. Professional organizations may not set fees or commissions splits. |
The primary reason real estate license laws exist is to protect A) licensees from unlicensed individuals. B) real estate firms. C) government agencies. D) consumers. | The answer is consumers. The main objective of real estate license laws is to make sure that the rights of purchasers, sellers, tenants, and owners are protected from unscrupulous or negligent practice |