Agency & Brokerage Relationships — Real Estate License practice questions

When does an agent's duty of confidentiality to a former principal generally END?

1. At the closing of the transaction
2. When the listing agreement expires
3. Typically survives termination indefinitely
4. After a 30-day cooling period ends

Answer: C — Typically survives termination indefinitely

A) Duty survives. B) Duty survives. C) Correct — survives termination. D) No 30-day rule.

Under an "exclusive right-to-sell" listing, the brokerage:

1. Earns no fee if seller sells
2. May act only as buyer's agent
3. Earns commission on any sale
4. Requires buyer to pay the fee

Answer: C — Earns commission on any sale

A) Broker paid regardless. B) It is a listing agreement. C) Correct — commission on any sale. D) Seller pays.

Seller-agent knows seller will accept less. When representing seller, the agent may:

1. Share it with buyers to speed deal
2. Not disclose to any buyer at all
3. Disclose only to full-price buyers
4. Disclose only to buyers who ask

Answer: B — Not disclose to any buyer at all

A) Breaches confidentiality. B) Correct — confidential info. C) Still a breach. D) Still a breach.

Which of these is a listing agreement type recognized in most states?

1. A blind listing with no broker or seller rights defined in it
2. A random listing in which the broker chooses the seller weekly
3. Exclusive right-to-sell, exclusive agency, open, or net listing
4. A permanent listing that never expires under any state license law

Answer: C — Exclusive right-to-sell, exclusive agency, open, or net listing

A) No such type exists. B) Not a standard listing category. C) Correct — the standard listing types. D) Perpetual listings are disallowed.

"Conversion" by a real-estate broker means:

1. Changing the property use permits
2. Assigning a purchase contract legally
3. Selling one property while listing another
4. Wrongful use of client trust funds

Answer: D — Wrongful use of client trust funds

A) Property CONVERSION trap. B) Unrelated. C) Unrelated. D) Correct — misappropriating funds.

Which type of agency relationship is created by a written agreement?

1. Express agency, created by a written listing contract
2. Implied agency, created by conduct of the parties
3. Ostensible agency, arising from a principal's holding out
4. Agency by ratification, formed by later approval of acts

Answer: A — Express agency, created by a written listing contract

A) Correct — express agency comes from an explicit written contract. B) Implied arises from conduct, not writing. C) Ostensible arises from appearances. D) Ratification confirms unauthorized acts after the fact.

An "express agency" relationship in real estate is formed by:

1. Written or oral principal-agent deal
2. The mere payment of a commission fee
3. A signed offer to purchase submitted
4. A verbal introduction without any deal

Answer: A — Written or oral principal-agent deal

A) Correct — clear agreement. B) Payment alone insufficient. C) Not enough. D) Not enough.

The most common form of agency in a listing agreement is a:

1. Universal agent for the seller broadly
2. General agent handling all matters
3. Special agent to procure a buyer
4. Attorney-in-fact under power of attorney

Answer: C — Special agent to procure a buyer

A) Too broad. B) Too broad. C) Correct — special agent role. D) Different role.

Agency relationships in real estate are BEST described as which of these?

1. Fiduciary relationships bearing OLDCAR duties from agent to client
2. Mere sales relationships with no duties beyond honest dealing
3. Pure marketing arrangements with no duty owed by the agent
4. Simple customer service without loyalty or confidentiality duty

Answer: A — Fiduciary relationships bearing OLDCAR duties from agent to client

A) Correct — agency imposes fiduciary duties on the agent. B) Understates duties owed. C) Ignores fiduciary duties. D) Understates loyalty and confidentiality duties.

In most states, dual agency is:

1. Illegal in all circumstances always
2. Permitted with written informed consent
3. Automatic in any brokerage transaction
4. Permitted only with seller consent

Answer: B — Permitted with written informed consent

A) Not universally illegal. B) Correct — written consent both. C) Not automatic. D) Buyer must consent too.

What is a listing agreement?

A contract between a property owner and a real estate broker authorizing the broker to find a buyer for the property.

An agent's broker goes out of business. What happens to the agent's listing agreements?

Listing agreements are between the client and the brokerage, not the individual agent. When the brokerage closes, all listing agreements terminate.

What is 'agency' in real estate?

A fiduciary relationship where an agent is authorized to act on behalf of a client in a real estate transaction.

Independent contractor vs. employee in real estate?

ICs control their own work, pay their own taxes, receive no benefits, and are paid by commission. Employees are supervised, have taxes withheld, and receive benefits. Most agents are ICs.