Washington Real Estate Practices: 30-hour Broker Prelicensing v3.0 Questions and Answers

Washington Real Estate Practices: 30-hour Broker Prelicensing v3.0 Questions and Answers A new broker doesn't like the idea that he is unable to retain the original listings, buyer representation agreements, and purchase agreements that have been signed by buyers and sellers who have been obtained by the firm through his efforts. He voices this objection to his designated broker. Why is the designated broker unable to comply with the new broker's request to retain these documents? A) The designated broker is following his accountant's advice. B) The designated broker's firm has a tradition of keeping these documents. C) The designated broker's firm is required by law to keep the original forms. D) The designated broker is concerned that the brokers will misplace the documents. C If you are submitting the business plan to lenders, the MOST important section is A) the executive summary. B) the strategic plan. C) the marketing plan. D) the financial information. D Washington law and regulations require brokers to A) take a variety of required and elective courses. B) join a local multiple listing service. C) attend yearly seminars on real estate practices. D) retake the broker's exam every five years. A The most common sources of revenue for a real estate brokerage include all of the following EXCEPT A) inducement income. B) investment income. C) referral income. D) property management fees. A A principal financial statement to be included in a business plan is called A) an Inequity Statement. B) a Statement of Cash Position. C) a Statement of Retained Earnings. D) a Statement of Profits. C Which of the following financial statements is used to determine the net income (or net loss) of a company over a period of time? A) Cash flow statement B) Statement of Retained Equity C) Income statement D) Balance sheet C Under Washington State law, real estate licensees are considered A) employees. B) statutory independent contractors. C) independent contractors. D) statutory employees. A The most common sections of a business plan include A) executive summary, market analysis, and company description. B) income statement and balance sheet. C) statement of cash flow and strategic plan. D) executive summary, market analysis, and statement of shareholders' equity. A Brokers and managing brokers must submit complete paperwork of their transactions to their firm, which is required to be maintained for A) three years. B) two years. C) six years. D) one year. A Which of the following financial statements only includes the monies that are exchanged between the company and outside entities over a period of time? A) Statement of Retained Equity B) Cash flow statement C) Income statement D) Balance sheet B A natural person acting on behalf of a real estate firm to perform real estate brokerage services under the supervision of the designated broker and who may supervise other brokers licensed to the firm is called A) a supervising agent. B) a supervising broker. C) a managing agent. D) a managing broker. D A rookie broker can make a number of mistakes if she is not careful. One issue a broker can encounter is to become disorganized. To help avoid this, a broker should A) avoid spending time on vacations and family in order to maximize opportunities to work. B) prospect only when it is listed on the schedule and avoid chance meetings and social engagements that might interfere with your prospecting activity days. C) set goals and break the goals down into steps that can be easily accomplished. D) don't waste time speaking with clients already committed to a listing or buyer representation agreement. C Which of the following financial statements is a snapshot of the assets and the liabilities of a company at a fixed point of time? A) Balance sheet B) Statement of Profits C) Statement of Retained Equity D) Cash flow statement A A real estate brokerage is constructing its annual operating budget. The designated and managing brokers meet to discuss how they will be positioning the firm in the market now that several factors have changed about the community, where most of the firm's listings are generated. To inform the public about their decision regarding their new target markets, they will plan for the variable expense of A) insurance. B) promotional activities. C) rent. D) wages. B There are forms available that set out an independent contractor agreement between a A) licensed firm and a broker. B) broker on the Real Estate Commission. C) managing broker and MLS. D) broker and real estate board. A All of the following statements are correct regarding universal agents under common law in Washington State EXCEPT A) universal agents have the broadest agency authority and therefore step into the shoes of the principal for all matters. B) universal agency is a form of agency that is rarely found in listing agreements, meaning that all offers must be submitted to the seller for acceptance or rejection. C) universal agents must be appointed with a document specifying that the broker has at least two years of experience in real estate under the active supervision of a managing broker. D) universal agents have authority to do all acts that can lawfully be performed by the principal, including the power to sign contracts and other documents. C Which of the following applies to The Law of Real Estate Agency pamphlet? A) It mandates disclosure of a broker's previous disciplinary history with the Department of Licensing. B) It authorizes voluntary disclosure of a broker's previous agency experience. C) It authorizes a listing agent to require inspections for suspected structural problems with a dwelling. D) It describes the difference between a seller's agent, a buyer's agent, and a dual agent. D Under Washington law, a broker who performs real estate brokerage services for a buyer is considered to be a buyer's agent unless A) the broker entered into a subagency agreement with the seller's agent, in which case the broker is also a seller's agent. B) the broker shows the buyer homes the broker has listed. C) the broker is the seller or one of the customers. D) the broker entered into an oral agency agreement with the seller, in which case the designated broker is a dual agent. A A broker has been asked by her mother to list her mother's home. Knowing the home very well, the broker realizes that it is the perfect home for a buyer she represents. May the broker legally represent both the buyer and the seller in this transaction? A) Yes; Washington statutes allow dual agency under these circumstances. B) No; Washington does not allow dual agency in any real estate transactions. C) Yes; Washington statutes allow dual agency, but not if one of the parties is a close family member. D) No, Washington statutes only allow for dual agency in commercial transactions. A Which of the following is TRUE about vicarious liability? A) It is a punishment for religious discrimination under the Fair Housing Act. B) In Washington, a principal's potential vicarious liability for the conduct of an agent is now abolished, except cases in which the agent is insolvent. C) Washington law does not statutorily limit the vicarious liability of a designated broker for the conduct of a subagent affiliated with another designated broker. D) It is a form of derivative liability imposed by a court for failure to submit a signed acknowledgment of receipt of the mandated Real Estate Liability, Errors, and Omissions pamphlet. B The Law of Real Estate Agency pamphlet must be given before certain events take place. Which of the following is NOT one of those events? A) Before signing a real estate offer in a transaction handled by a broker B) Before signing a dual agency agreement C) Before signing an agency agreement D) Before speaking to a potential client D Which of the following does NOT accurately describe a customer? A) If a broker is employed by a seller to find a buyer, all potential buyers are customers. B) If a broker is engaged to lease and manage property for an owner, the tenants are customers. C) If a broker assigns a task that involves handling money to another broker in his office, that broker becomes a customer. D) If a broker is employed by a buyer to locate property, the potential sellers are customers. C A broker is trying to decide whether or not to submit a listing to the multiple listing service. Why might the broker be hesitant to use the MLS? A) The MLS only allows white male brokers to use its service as it is exempt from non-discrimination laws because it is a privately-owned service. B) Using the MLS will decrease the listing broker's commission. C) Once the broker submits the listing, it becomes the property of the MLS and the MLS keeps all the commission if it sells through this service. D) The MLS is a relatively new service with untested technology and procedures that few brokers use. B Which of the following is TRUE concerning buyer's agents? A) They represent the oldest form of real estate agency in Washington. B) They become sellers' agents by operation of law when a buyer client successfully purchases a dwelling. C) It is not inherently wrong for brokers affiliated with the same firm to represent clients in competing transactions for the same property. D) They must pay for structural inspections on homes that they or their company show to more than one client. C A seller's broker learns that the property across the street from one of his listings is likely to be rezoned as industrial and will become the southern boundary of an industrial park. Realizing that such information would greatly reduce the property's selling price, he withholds the information from the seller. The plans for the industrial park are announced soon after the sale. Angry, the buyer asks his broker to find out if the seller or the seller's broker knew about this. It didn't take long for the broker to learn that the seller's broker knew about these plans but had told no one. Does the buyer have a cause of action against the seller? A) Yes, the seller is legally assumed to know about this because the knowledge of his agent (the broker) is imputed to the principal (the seller). B) Yes, because the seller is required to research in depth every possible situation that might occur with the surrounding propert D Which of the following is FALSE with respect to real estate brokers? A) Brokers with varying degrees of experience in real estate are held to the same standard of practice. B) A broker cannot escape responsibility for negligence or incompetence by pleading ignorance of accepted industry practice and standards. C) Brokers owe the duties of loyalty and confidentiality to customers. D) A broker showing a buyer homes in an area where the broker has little experience must exercise the same degree of care in the exercise of duties as would a broker who regularly practices in that area. C A seller's agent is contacted by a buyer's agent. During their conversation, the buyer's agent discloses that the buyer needs to move quickly as he is being relocated by his employer. The seller's agent encourages the seller to be inflexible during the negotiations on the listing price, believing that the buyer will pay whatever price is necessary because the buyer's time is limited. What statute was violated in this scenario? A) The statute requiring that the broker provide timely disclosure of conflicts of interest has been violated. B) The statute requiring that the broker use expert knowledge has been violated. C) The statute requiring good faith and continuing effort to find suitable property for the buyer has been violated. D) The statute requiring nondisclosure of confidential information from or about the buyer has been violated. D Who of the following must take an examination in order to be licensed in Washington? A) General home inspectors B) Structural pest inspectors C) Real estate repair specialists D) Grounds inspectors B Which statement regarding the paying of a commission in a real estate transaction is TRUE under Washington law? A) A seller's designated broker may not share a commission paid by the seller with another designated broker. B) It is a violation of antitrust laws for a designated broker to split a commission with a nonaffiliated designated broker. C) The source of the payment of a commission always determines to whom a designated broker owes an agency obligation. D) Under certain circumstances, a designated broker may be compensated by more than one party for real estate brokerage services in a real estate transaction. D Which of the following is NOT true with respect to a dual agent broker? A) It is possible under Washington law for a broker to represent both parties in the same transaction. B) A dual agent works for either the seller or the buyer in a given real estate transaction and advises the other party as a customer instead of as a client. C) The Brokerage Relationships Act specifies that a broker may act as a dual agent only with the written consent of both parties to the transaction and after the agent has provided to both parties a pamphlet explaining agency law and including a statement of the terms of compensation. D) In order for dual agency to be valid, there must be an agreement in writing signed by both parties confirming the dual agency. B A real estate company sold a property for $328,000 and collected a commission from the seller of $16,400. To find the commission rate earned by the company, A) subtract $16,400 from $328,000 and multiply by 94%. B) divide $16,400 by $328,000. C) divide $328,000 by $16,400. D) multiply $328,000 by $16,400. B A tiny bit of black mold that is in the corner where the tile wall meets the bathtub A) is nothing to worry about. B) is likely caused by escaping radon gas. C) always requires that the walls and the bathtub be torn out. D) could indicate the possible presence of toxic mold. D The state of Washington requires residential real estate property to have a seller's disclosure statement if it is A) a building with five or more units. B) a gift to a son or daughter. C) vacant land. D) a foreclosure property. C A buyer and seller met at the seller's home and discussed the following terms of a contract for the sale of the seller's house: $100,000 in cash, payable at closing with a cashier's check; a closing date in 30 days; the refrigerator, washer, dryer, and riding lawnmower to be included; and the front porch floor to be repaired where the boards are broken and then painted. Because the buyer and seller were first cousins and good friends, they saw no need for a written contract. As the closing date neared, a controversy arose over whether the seller's riding lawnmower was included in the purchase price of $100,000. They were unable to resolve this issue and grew more hostile in their conversations with each other, so the buyer took the seller to court. The court declared the contract to be unenforceable. Why did the court do this? A) The contract should be enforceable, so the court's decision will probably be overturned B Who has the authority "to amend, modify, bind, create, rescind, terminate, or release real estate brokerage service contracts on behalf of the real estate firm"? A) No one B) The designated broker or the designated broker's delegate C) The real estate commission D) Only the designated broker B The listing agreement calls for the seller to permit the listing A) to be published in the MLS. B) to refer the listing to any other cooperating MLS at the discretion of the MLS. C) to be referred by the broker to only one MLS. D) to remain in place for as long as possible until a ready, willing, and able buyer is found. A Who is protected under Washington state fair housing law, but is NOT protected under the federal fair housing laws? A) A Baptist man B) A black woman C) A married gay couple D) A man in a wheelchair C The property tax number is a very useful tool that brokers can use in preparation to list a property. All of the following information can be learned from the property tax record EXCEPT A) the assessed value of the property. B) the property tax number. C) the value that should be used as the listing price. D) the square footage of the property, as calculated and used by the property tax appraiser. C Which of the following is NOT one of the four elements of a valid contract? A) Legal (lawful) object or purpose B) Money C) Competent parties D) Offer and acceptance B Which form is used when the sellers have given the firm the right to collect a commission for the successful sale and closing of the sellers' residential real property if it is sold through the firm's brokers or any other licensed real estate firm or its brokers, but if the sellers sell the property with no real estate broker or firm involved, the listing firm may NOT collect a commission? A) Open agency sale and listing agreement B) Designated agency sale and listing agreement C) Exclusive sale and listing agreement D) Exclusive agency sale and listing agreement D