California Real Estate PRACTICE OF REAL ESTATE AND DISCLOSURES {ALREADY GRADED A+ } NEWEST VERSION

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California Real Estate PRACTICE OF REAL

ESTATE AND DISCLOSURES {ALREADY

GRADED A+ } NEWEST VERSION

• Which of the following describes a broker's duty to keep their principal informed?
• continuing responsibility
• fiduciary responsibility
• ethical responsibility
• moral responsibility

Correct Answer: b. fiduciary responsibility

• A licensee received an offer on a listing and was on her way to present it to the

seller. While on her way to present the offer, she received a phone call from another agent stating she also had an offer for the same property. That second offer was $2,000 less than the first offer, but it was "all cash". In this scenario, what should the agent do?

• present both offers at the same time
• present the first offer, and if rejected, present the second one
• only present the second offer since it was an "all cash" offer
• present the first offer and disregard the second one

Correct Answer: a. present both offers at the same time

• In order for a real estate office to be both competitive and profitable, the broker

should be highly concerned with "desk cost". This is calculated by dividing the:

• annual gross commissions earned by the number of desks
• total costs of the broker's rent, utilities, telephone, advertising, and other operating

expenses by the number of salespersons in the brokerage

• total costs of all office furniture by the number of agents in that office
• net profit of the brokerage by the number of desks available

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Correct Answer: b. total costs of the broker's rent, utilities, telephone, advertising, and other operating expenses by the number of salespersons in the brokerage Note: This is the formula used by brokers to keep their offices competitive and profitable.

• On June 1st a prospective buyer gave a check for $5,000 payable to the seller along

with a purchase agreement to buy a piece of real property. The buyer asked that the check not be cashed until June 15th. Of the following, which is correct?

• The agent can hold the check and must inform the seller that the check is being held

uncashed before the seller is to accept the offer from the prospective buyer

• the check cannot be accepted. refuse the check and ask for cash
• checks must be delivered to the escrow company. the escrow company will make a

decision.

• checks cannot be held and must be deposited immediately

Correct Answer: a. The agent can hold the check and must inform the seller that the check is being held uncashed before the seller is to accept the offer from the prospective buyer Note: When a buyer requests that an agent hold a check and not cash it until a future date, the agent may do so. However, they must make the seller aware of the situation before the seller accepts the offer.

• If a broker holds an "option" on a real property and plans on exercising their option

by selling the property to a buyer, they should inform the buyer that the broker is

acting as:

• a principal
• an optionor
• a salesperson
• a beneficiary

Correct Answer: a. a principal

Note: In this particular situation, the agent is acting as a seller, not an agent. Therefore the agent must inform the purchaser of their position as principal.

• A listing contract to sell real property is considered to be enforceable if it is:
• acknowledged

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• in writing
• all of these
• recorded

Correct Answer: b. in writing

7. The net operating income minus debt service equals an income property's:

• total monthly income
• cash flow
• capital rate
• annual profit

Correct Answer: b. cash flow

• Real estate agent Janice, specializes in selling single family dwellings in Santa

Monica. Janice can refuse to accept a property listing for which following reason?

• all of these
• the owner wishes to price the home $20,000 higher than the most expensive house for

sale

• the minority status of the resident
• the majority of homeowners are minorities in that particular neighborhood.

Correct Answer: b. the owner wishes to price the home $20,000 higher than the most expensive house for sale

9. If a real estate agent illegally uses the name REALTOR, it:

• can lead to the loss of a real estate license
• is a violation of California Real Estate Law
• both can lead to the loss of a real estate license and is a violation of California real estate

law

• will require the agent to complete an agency disclosure

Correct Answer: c. both can lead to the loss of a real estate license and is a violation of California real estate law

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• What do we call an individual who has been given a power of attorney to sign

documents on behalf of a principal?

• principal-in-place
• attorney-in-fact
• attorney-by-law
• lawyer-by-representation

Correct Answer: b. attorney-in-fact

• Maverick listed his vacation home with agent Juan for $750,000. Donald, the

prospective buyer, submitted an offer on the property of $740,000. The next day Maverick made a counteroffer to the sales price at $745,000, which Donald refused.Four days later Maverick signed the acceptance of the $740,000 offer and sent it to agent Juan to send the offer to buyer Donald. Donald decided not to go forward with

the purchase of the vacation home. Based on these actions, there is:

• a contract and it is enforceable
• a voidable contract
• a void contract
• no contract

Correct Answer: d. no contract

Note: A counter offer terminates the original offer, therefore there is no contract.

• The Agency Relationship Disclosure Act is found in Civil Code section 2079 and

went into effect in:

• 1990
• 1986
• 1988
• 1978

Correct Answer: c. 1988

• How does a brokerage calculate company dollar?
• gross income minus commissions