California Real Estate Salesperson Final Exam Questions and Answers, Exams of Nursing

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California Real Estate Salesperson Final Exam QUESTIONS

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Stock in a mutual water company is best described as: - ANSWER-Real Property When two ore more parties own real property as co-owners with the right of survivorship, what is the tenancy called? - ANSWER-Joint Tenancy How long must one use another's land open and notoriously to obtain an easement by prescription? - ANSWER-5 years Adverse possession is an example of how title to land an be acquired by: - ANSWER-Occupancy In the Rectangular Survey System, what would one call the lines running East and West? - ANSWER-Base lines All property acquired by a husband and wife during a valid marriage (except for separate property) is called: - ANSWER-Community Property What is the fullest freehold estate in fee that one can hold? A) Life Estate B) Fee Simple Absolute C) Fee Simple Conditional D) Lease Hold Estate - ANSWER-B) Fee Simple Absolute That which is immovable by law is also known as: - ANSWER-Real property

The most common way to create an agency relationship is: - ANSWER-Agency by agreement If an agent provides the buyer with the Real Estate Transfer Disclosure Statement after the offer is presented, how long does the buyer have to rescind the agreement? - ANSWER-3 days A seller's agent may do all of the following except: - ANSWER-Say, "Leave it to me. I can get you the house at the price you want." As a result of the decision in (Easton v. Strassburger, 1984) real estate agents can be held liable for not only for defect they know about but also: - ANSWER-Defects they should have known about through a reasonable inspection. A broker is considered which of the following to the principal? - ANSWER-Special agent What properties are touched and concerned by Agency Disclosure Law? - ANSWER- 1 - 4 unit residential property. When underwriting a loan application, a mortgage company is usually interested in which of these values? - ANSWER-Market Value Which of the following would not be depreciated? - ANSWER-Unimproved land leases for open storage. An investor buys an apartment building for $140,000 after estimating that it will have a net income of $40,000 annually. Which value principle is at work here? - ANSWER-Principle of anticipation In order to discover the fair income of the property, an appraiser looks at what? - ANSWER-Economic rent The life cycle of a neighborhood occurs in these four stages, in this order: - ANSWER-Growth, Stability, Decline, Revitalization.

According to the principle of conformity, a residential property maintains a higher value when it - ANSWER-Is in the center of its subdivision. The note that calls for payment of interest only is called a/an: - ANSWER-Straight note The note that calls for periodic payment of both principal and interest so both are paid by the end of the term is called a/an: - ANSWER-Fully amortized installment note. A process which allows a borrower to remain in possession of the property while using it to secure a loan is called: - ANSWER-Hypothecation The term that describes the interest of a creditor in the property of a debtor: - ANSWER-Security Interest The deed of trust is considered to be: - ANSWER-Security for the debt Who is the borrower in the written promise to pay a debt? - ANSWER-Maker A couple is divorcing. The husband is ordered to convey his interest to the wife. When must she receive the Transfer Disclosure Statement? - ANSWER-It is not requried. What law applies to the sale of a business? - ANSWER-Bulk transfer laws. Real property may be transferred or alienated by all of the following except: - ANSWER-Inheritance. When title to land is conveyed from a trustee to a borrower after the borrower pays off the loan, the instrument used is a/an: - ANSWER-Reconveyance deed. A real estate firm has an in-house title company, mortgage broker and home inspection company under one business entity. This is allowable only if: - ANSWER-Control business arrangements are clearly disclosed to the consumer and the consumer is aware that other providers are available.

What is a trust fund account exclusively used for? - ANSWER-Holding clients' money. The laws that affect the licensing and conduct of real estate agents are called: - ANSWER-Real estate law. What funds the Real Estate Recovery Fund? - ANSWER-License Fees After first reneweal, how many hours of continuing education does an agent need every four years? - ANSWER-45 hours Which act prohibits discrimination in housing transactions? - ANSWER-The Rumford Act How much can be paid on behalf of the licensee out of the Real Estate Recovery Fund per licensee? - ANSWER-$250, A contract in which something remains to be done by one or both parties is best described as a/an: - ANSWER-Executory contract All of the following people need a license to practice real estate except: - ANSWER-Any trustee selling under a deed of trust. A seller who lives in a small town has posters made up advertising his house for sale. He posts the posters on many telephone poles around the neighborhood. As part of the poster, he advertises that he will pay 3% to any broker who brings him a buyer. This type of listing is: - ANSWER-Open listing During a 90 day listing agreement, the seller dies: - ANSWER-The listing agreement is terminated. Seller S calls a real estate agent to list his home. S tells the agent that he wants $156,000 in his pocket at closing and the agent can have the rest for the commission. What type of listing would this be? - ANSWER-A net listing. A listing agreement is a contract between: - ANSWER-The seller and the broker.

A seller signs an exclusive right to sell listing agreement with a broker. However, the seller's brother-in- law makes an offer on the property the next day, not realizing it has been placed in a listing. Which of the following statements is true? - ANSWER-The broker is entitled to a commission. The commercial broker listed a store front for rent. A tenant was procured. After the lease was signed, the owner refused to pay the listing broker. In order to get his fee, the broker could: - ANSWER-Lien the property. The term Ad Valorem refers to: A) A clause in a mortgage that pledges the property as security for repayment of the debt. B) A tax to be paid based upon a value set by the government. C) The process of reducing or decreasing the assessed value of property for computation of property taxes. D) A clause in a mortgage that allows the mortgage lender to call the loan immediately due and payable. C) D) - ANSWER-B) A tax to be paid based upon a value set by the government. Vegetation would be best described as: A) Real property B) Chattel C) Chattel real D) Trade fixture - ANSWER-A) Real property The term appurtenance: A) Means "runs with the land" B) Refers to the rights owned by a tenant in the landlord's property C) Refers to rights that only last for a certain period of time. D) Is best exemplified by an easement in gross. - ANSWER-A) Means "runs with the land"

What do we call the interest in which two or more persons, whose interests are not necessarily equal, have no right of survivorship? A) Tenancy in common B) Joint Tenancy C) Tenancy by partnership D) Community property - ANSWER-A) Tenancy in common The addition of soil to property by the gradual operation of natural causes is termed: A) Ad Valorem B) Erosion C) Alluvium D) Accretion - ANSWER-D) Accretion When a firm is not paid after furnishing material for the construction of an apartment building, the firm may file: A) An estoppel certificate B) A deficiency judgment C) A mechanics lein D) A writ of liability - ANSWER-C) A mechanics lein The owner of a undivided interest in land with no rights of survivorship owns it by: A) Tenancy in common B) A joint tenancy C) Severalty D) Absolute ownership - ANSWER-A) Tenancy in common The power of the government to regulate and supervise real estate law is called? A) Act of congress

B) Contract law C) Police power D) License law - ANSWER-C) Police power Which is not real property? A) Built-in dishwasher B) Drapes C) In-ground swimming pool D) Sump pump - ANSWER-B) Drapes Which of the following deeds is most preferential from the point of view of the seller? A) A limited warranty deed B) A general warranty deed C) A quit claim deed D) A special warranty deed - ANSWER-C) A quit clam deed What type of legal description would a new residential sub-developer most likely use? A) Sections and townships B) Government rectangular C) Meets and bounds D) Lot and block - ANSWER-D) Lot and block What do we call the imaginary lines that run north and south under the U.S. government rectangular survey system? A) Meridians B) Monuments C) Boundaries D) Base lines - ANSWER-A) Meridians

The local city council decides to reduce the assessment rate for a major corporation relocating to the area and building a manufacturing plant. Such a reduction is termed: A) Abatement B) Assignment C) Amortization D) Ad Valorem - ANSWER-A) Abatement To find out whether there is an encroachment on a property, a person should purchase: A) Homeowners' insurance B) Title insurance C) A survey D) Mortgagee insurance - ANSWER-C) A survey The open, notorious, hostile, and uninterrupted possession of the property of another under claim or color of title is called: A) Easement by prescription B) Acceleration C) Easement by necessity D) Adverse possession - ANSWER-D) Adverse possession Tom wants to purchase Mary's white cottage on the lake and Mary agrees to sell - but only if Tom will agree that if the cottage is ever structurally altered or painted any color but white the title will revert to Mary. When this restrictive provision appears in the deed, it will be: A) A covenant B) An easement C) A condition D) A license - ANSWER-C) A condition Which is not limited common area? A) Open garage for units 1, 2, 3 & 4

B) Foyer in a unit C) Patio of a unit D) Assigned parking - ANSWER-B) Foyer in a unit The area owned together by all owners of a condominium project and available for all owners' use is termed: A) Limited common element B) Community property C) Common area D) Cooperative element - ANSWER-C) Common area Tony works as a barber in the shop his grandfather built 50 years ago on the street in front of the family home. If the area was zoned residential 25 years ago, the barbershop is best described as: A) A non-conforming use B) An eyesore C) A nuisance D) A conditional use - ANSWER-A) A non-conforming use A section of land legally described as the north one-half of the northwest quarter of the southeast quarter of a section of land, contains: A) 20 acres B) 10 acres C) 80 acres D) 40 acres - ANSWER-A) 20 acres A parcel of land that separates two other parcels (i.e. a parcel between a residential and commercial strip of land) is called: A) Assessed property B) Bill of sale C) A buffer zone

D) A fully capitalized property - ANSWER-C) A buffer zone Which of the following would enhance the value of real property? A) A two-car garage B) An above-ground pool C) A picture of the Mona Lisa hanging in the hallway of the home D) A toxic waste dump being built next door to your home - ANSWER-A) A two-car garage Which of the following would be considered a private control on property? A) Escheat B) Eminent domain C) Taxation D) Deed restriction - ANSWER-D) Deed restriction Joint tenancy is severed when: A) One of the owners sells his interest to a third party B) One of the owners files for bankruptcy C) The leasehold expires D) One of the parties becomes disabled - ANSWER-A) One of the owners sells his interest to a third party The right to use, enjoy, possess and dispose of real property is commonly referred to as: A) Bundle of rights B) Bill of sale C) Encumbrances D) Billing codes - ANSWER-A) Bundle of rights Government regulations that specify minimum construction and building standards to safe guard health, safety and welfare of the public are known as: A) Deed restrictions

B) Building codes C) Assessed property D) Buffer zones - ANSWER-B) Building codes A system of ownership and fee simple title to designated areas of air space plus a percentage of ownership of common elements in the property is termed: A) Cooperative B) Chattel C) Condemnation D) Condominium - ANSWER-D) Condominium Fee simple title to a designated unit of air space plus a percentage ownership of common elements in the property is called: A) Planned unit development B) Condominium C) Commingle D) Cooperative - ANSWER-B) Condominium Real property rights are defined in terms of a "bundle of rights" that includes which of the following? A) The right to build a house B) The right to sell at a cheap price C) All of the answers D) The right to grow flowers - ANSWER-C) All of the answers John dies and leaves the township 10 acres to use as it wishes, but not on Sunday. If the land is used for any purpose on Sunday, ownership will pass to his son, Bill. Which describes the interests of the township and Bill respectively? A) Township - a fee simple conditional estate; Bill - a remainder interest B) Township - a fee simple absolute estate; Bill - a life estate C) Township - an estate for years; Bill - a periodic tenancy

D) Township - a fee simple defeasible estate; Bill - a reversionary interest - ANSWER-D) Township - a fee simple defeasible estate; Bill - a reversionary interest Mr. Green gives a life estate to Sandra. Upon Sandra's death the estate is to go to Mr. Blue. Mr. Blue's interest is known as: A) Remainder B) Reversionary C) Contract for deed D) Leasehold - ANSWER-A) Remainder Which of the following would be considered a chattel? A) A new furnace B) Goods or other items of personal property which have not been annexed to the real property C) A fence D) An in-ground swimming pool - ANSWER-B) Goods or other items of personal property which have not been annexed to the real property As defined in local zoning ordinances, the distances between lot lines and improvements are known as: A) Depth B) Buffer zones C) Frontage D) Set back - ANSWER-D) Set back An exception granted to existing zoning regulations for special reasons is a: A) Variance B) Non-conforming use C) Subdivision D) Subdivision map act - ANSWER-A) Variance Which of the following statements is not true regarding deed restrictions?

A) They are called restrictive covenants B) They terminate upon the death of the grantor C) They are frequently encountered in residential subdivisions D) Once established they run with the land and are limitations on the use of future grantees - ANSWER- B) They terminate upon the death of the grantor Land owner A buys a tract of land and receives an easement to cross the neighbor's property to access a community lake. Owner A is benefiting from the easement and thus has: A) A servient estate B) A dominant estate C) An encroachment D) A subservient estate - ANSWER-B) A dominant estate How many square feet are there in an acre? A) 46, B) 43, C) 45, D) 34,560 - ANSWER-B) 43, Developer Lenny purchased 20 acres and had an engineer/land planner survey it and draw up a plan subdividing the land into 20 residential lots and two streets. The plan indicates the dimensions and number of each lot, the required setbacks, and the location of easements for utilities. What is this document commonly called? A) A topographic survey B) A P.U.D. C) A plat D) A deed - ANSWER-C) A plat A special kind of easement by implication that occurs when the dominant tenement would be completely useless without an easement, even if it is not a long-standing, apparent use. - ANSWER- Easement by Necessity

The right to undisturbed use and control of the airspace over a parcel of land (within reasonable limits for air travel); may be transferred separately from the land. - ANSWER-Air rights. Deed clause stating a grantor's intent to transfer an interest in real property. - ANSWER-Granting clause. The transfer of an interest in property against the will of the owner, or without action by the owner, occurring through operation of law, natural processes, or adverse possession. - ANSWER-Involuntary Alienation A lien against all property of a debtor, instead of a particular piece of property. - ANSWER-General lien

1. A government's valuation of property for tax purposes. 2. A special assessment. - ANSWER- Assessment An easement granted to another in a deed or other document. Also: Easement by Express Grant - ANSWER-Express Grant Ownership by a single individual, as opposed to co-ownership. - ANSWER-Ownership in Severalty An easement created in a deed when a landowner is dividing the property, transferring the servient tenement but retaining the dominant tenement. - ANSWER-Easement by Express Reservation A recipient of real property under a will. - ANSWER-Devisee An easement granted to another in a deed or other document. - ANSWER-Easement by Express Grant An easement created by operation of law (not express grant or reservation) when land is divided, if there is a long-standing, apparent use that is reasonably necessary for enjoyment of the dominant tenement. Also called an implied easement. - ANSWER-Easement by Implication

1. A court's binding determination of the rights and duties of the parties in a lawsuit. 2. A court order requiring one party to pay the other damages. - ANSWER-Judgment Receiving money by will. - ANSWER-Legacy Personal property transferred by a will. - ANSWER-Bequest A lien that attaches only to a particular piece of property (as opposed to a general lien, which attaches to all of the debtor's property). - ANSWER-Specific Lien A life estate 'for the life of another,' where the measuring life is someone other than the life tenant. - ANSWER-Pur Autre Vie Any claim, lien, charge, or liability that affects or limits the fee simple title to real property. - ANSWER- Encumbrance
2. A contract. 2. A promise. 3. A guarantee (express or implied) in a document such as a deed or lease. 4. A restrictive covenant. (Typical covenants compel or prevent certain actions by the property owner or uses for the property.) - ANSWER-Covenant An easement acquired by prescription. Also called: Easement by Prescription - ANSWER-Prescriptive Easement Clause included after granting clause in many deeds; begins 'to have and to hold,' describing the type of estate granted. - ANSWER-Habendum Clause An easement created in a deed when a landowner is dividing the property, transferring the servient tenement but retaining the dominant tenement. Also: Easement by Express Reservation - ANSWER- Express Reservation A right that goes along with ownership of real property; usually transferred with the property, but may be sold separately. - ANSWER-Appurtenance

A lender who accepts a mortgage as security for repayment of the loan. - ANSWER-Mortgagee A restriction on real property use, imposed by a former owner; promise to do or not do an act relating to real property; usually owner's promise to not use property in a particular way. May or may not run with land. Also called: Restrictive Covenant - ANSWER-Deed restriction A physical object intruding onto neighboring property, often due to a mistake regarding the boundary. - ANSWER-Encroachment A specific lien claimed by someone who performed work on the property (construction, repairs, or improvements) and has not been paid. This term is often used in a general sense, referring to materialmen's liens as well as actual mechanics' liens. - ANSWER-Mechanic's Lien A Latin phrase meaning 'according to value'; used to refer to taxes assessed on the value of property. - ANSWER-Ad Valorem

1. Taking private property for public use, through the government's power of eminent domain. Also called appropriation. 2. A declaration that a structure is unfit for occupancy and must be closed or demolished. - ANSWER-Condemnation Actual lawful ownership of real property. (This is NOT a document, but rather a concept or theory dealing with ownership.) - ANSWER-Title The water rights of a landowner whose property is adjacent to a lake or contains a lake; often called riparian rights (although that term really refers only to the water rights of a landowner on a river). - ANSWER-Littoral Rights An easement created by open and notorious, hostile, and adverse use of another person's land for a specific period of time determined by state law. Prescriptive use does not have to be exclusive (the owner may be using the property, too), and the user does not acquire title to the property. Also called Prescriptive Easement. - ANSWER-Easement by Prescription A recorded notice stating that there is a lawsuit pending that may affect title to the defendant's real estate. - ANSWER-Lis Pendens

A judicial proceeding in which the validity of a will is established and the executor is authorized to distribute the estate property; or, when there is no valid will, a judicial proceeding in which an administrator is appointed to distribute the estate to heirs according to the laws of intestate succession.

• ANSWER-Probate An easement that benefits a person or company, rather than benefiting another parcel of land. - ANSWER-Easement in Gross A gradual addition to dry land by the forces of nature, as when the tide deposits water-borne sediment on shoreline property. - ANSWER-Accretion An instrument authorizing one person (called an attorney in fact) to act as another's agent, to the extent stated in the instrument. - ANSWER-Power of Attorney An agency relationship should be created by which of the following methods? A) Ratification B) Expressed written agreement C) Implication D) Estoppel - ANSWER-B) Expressed written agreement The best description of "principal" is: A) A landlord B) A customer C) An owner of real estate D) One who employs a broker to represent his interest in matters of real estate - ANSWER-D) One who employs a broker to represent his interest in matters of real estate When an agent does not disclose that he/she is representing the seller in an ad, the agent may be guilty of which of the following: A) False advertising B) Permissible advertising

C) Blind advertising D) Deceptive advertising - ANSWER-C) Blind advertising An agency disclosure is necessary in order to: A) Let the client know that the agent represents him B) Let the customer know that the agent represents him C) Let the seller know that agent represents the broker D) Let the buyer know that the agent represents the broker - ANSWER-A) Let the client know that the agent represents him While a listing agent is showing some rental property, it becomes clear that the buyers are about to disclose a confidentiality (they recently won a large settlement in a personal injury case and have unlimited funds to spend on the property). The agent: A) Owes no duty to disclose to the buyers any relationship between the agent and the seller B) Is a buyer's agent, and will keep the buyers' confidentiality C) Should tell the buyers (before showing the property) not to disclose any confidentiality D) Is a dual agent, so it is okay if the buyers tell the agent this information - ANSWER-C) Should tell the buyers (before showing the property) not to disclose any confidentiality A licensee who has both a listing and the option to buy must inform the principal of which of the following? A) The amount of profit the licensee will make B) How much the web page cost C) Agency relationship D) How much the ads cost - ANSWER-A) The amount of profit the licensee will make A principal dies. The agent is not aware that the principal has passed away and continues to act on behalf of the principal several days past the principal's death. Which statement is true? A) The agency relationship has been renounced by the agent B) Any representations or contracts entered into by the agent on behalf of the principal are binding upon the principal and/or the principal's estate

C) The agency relationship has been revoked by the agent D) Any contracts or representation made by the agent are void since the principal has already died - ANSWER-B) Any representations or contracts entered into by the agent on behalf of the principal are binding upon the principal and/or the principal's estate Death of the broker or principal, or incapacity, insanity or bankruptcy of the principal are all ways agency can be terminated by: A) Full performance B) Operation of law C) Acts of the parties D) Expiration of its term - ANSWER-B) Operation of law X lists a property. X finds a buyer. Is X allowed to write an offer as a buyer's representative? A) Yes - if it is specifically written in the offer B) No - an agent cannot collect both commissions C) Yes - as long as both parties agree to it in writing correct! D) No - it's against Federal Trade Laws - ANSWER-C) Yes - as long as both parties agree to it in writing correct! What would one call a selling agent who is not the listing agent? A) General agent B) Cooperating agent C) Sellers agent D) Universal agent - ANSWER-B) Cooperating agent While at an open house, the listing agent encounters an unrepresented buyer. The agent is asked by the buyer to prepare an offer to purchase. At the meeting to prepare the offer, the agent tells the buyer, "I'm sure I can get the seller to agree to this price and get the financing you need." What has the listing agent just done? A) May have created an implied agency B) Made the seller very happy

C) Has done nothing inappropriate D) Is being a good fiduciary to the client - ANSWER-A) May have created an implied agency Under California workers' compensation law, the broker is responsible for: A) Salespeople B) Employees and salespeople C) Clients and employees D) Employees - ANSWER-B) Employees and salespeople What would be a violation of agency? A) The agent does not advocate for either buyer or seller B) The agent does not reveal any confidential information to either client C) The agent gets the informed consent to act as a dual agent D) The agent discloses to the buyer what the seller is willing to accept - ANSWER-D) The agent discloses to the buyer what the seller is willing to accept An agent realizes that one of the houses in her routine farm area would be a good fit for her buyer customer. The agent gets the seller to agree to pay her broker a commission if the buyer makes an acceptable offer. What kind of agency has been created if no listing agreement was entered into? A) Agency by agreement B) Agency by ratification C) Ostensible agency D) Agency by estoppel - ANSWER-B) Agency by ratification What is impossible for a listing agent to do? A) Be a dual agent B) Represent the seller only C) Represent a buyer and seller D) Represent a buyer only - ANSWER-D) Represent a buyer only

A sales agent is selling his own personal property, the condition of which he misrepresents. The agent is sued and raises the defense that he was not acting as an agent in this sale, but rather, was selling his own property personally. The probable outcome of the case is: A) The case will be dismissed for no cause of action B) The sales agent will be held liable C) The sales agent will win D) The broker will be liable - ANSWER-B) The sales agent will be held liable An attorney in fact is best described as a: A) An attorney at law B) A principal C) A fiduciary to his principal D) A power of attorney - ANSWER-C) A fiduciary to his principal A month after taking a listing, the listing agent decides that he wants to make an offer to purchase the listing. What special agency disclosure is required? A) That the seller is no longer represented and should seek representation B) No additional disclosure is required C) That the agent will continue to represent the seller D) That the agent will now be a dual agent - ANSWER-A) That the seller is no longer represented and should seek representation Under common law, an agent's fiduciary obligations to his/her client include: A) Communication, obedience, loyalty, agency and notice B) Notification, obedience, loyalty and confidentiality C) Care, obedience, loyalty, accountability and notice D) Concern, discretion, accountability and loyalty - ANSWER-C) Care, obedience, loyalty, accountability and notice When two brokers are working with the same buyer, which broker will have earned the commission?

A) Second broker to make contact with the buyer B) First broker to make contact with the buyer C) Broker of procuring cause D) Listing broker - ANSWER-C) Broker of procuring cause Misappropriating property or funds belonging to another - ANSWER-Conversion An intentional or negligent misrepresentation or concealment of a material fact; making statements that a person knows, or should realize, are false or misleading. - ANSWER-Fraud

1. A person who grants another person (an agent) authority to represent him or her in dealings with third parties. 2. One of the parties to a transaction (such as a buyer or seller), as opposed to those who are involved as agents or employees (such as a broker or escrow agent). 3. With regard to a loan, the amount originally borrowed, as opposed to the interest. - ANSWER-Principle A real estate installment agreement where buyer makes payment to seller in exchange for right to occupy and use property, but no deed or title is transferred until all, or a specified portion of, payments have been made. Also called installment land contract, installment sales contract, land sales contract, real estate contract, and other names. - ANSWER-Land Installment Contract Person licensed exclusively to sell cemetery interment rights for a fee. - ANSWER-Limited Real Estate Broker/Salesperson Illegally mixing personal or business funds with money held in trust on behalf of a client. - ANSWER- Commingling A person licensed to represent another in a real estate transaction; or a person authorized to represent another (the principal) in dealings with third parties. - ANSWER-Agent A listing agreement that entitles the broker to a commission if anyone other than the seller finds a buyer for the property during the listing term. - ANSWER-Exclusive Agency

One who is licensed to represent one of the parties in a real estate transaction, for compensation. - ANSWER-Broker An agent with limited authority to do a specific thing or conduct a specific transaction. - ANSWER-Special Agent A broker's business. - ANSWER-Brokerage When a real estate broker acts as an agent to only the seller or only the buyer - ANSWER-Single Agency Superlative statements about the quality of a property that should not be considered assertions of fact. 'The best buy in town,' or 'A fabulous location' are examples of puffing. - ANSWER-Puffing A false or misleading statement. - ANSWER-Misrepresentation A listing agreement that entitles the broker to a commission if anyone including the seller finds a buyer for the property during the listing term. - ANSWER-Exclusive Right to Sell Person in a position of trust, held by law to high standards of good faith and loyalty. - ANSWER-Fiduciary A contract that has not been put into words, but is implied by the actions of the parties. - ANSWER- Implied Contract An agent authorized to handle all of the principal's affairs in one area or in specified areas. - ANSWER- General Agent The system in which things of value (e.g. money or documents) are held on behalf of the parties to a transaction by a disinterested third party, until the specified conditions have all been complied with. - ANSWER-Escrow agent When a broker or salesperson represents both parties (buyer and seller) in a transaction, AND all management level licensees at a brokerage. - ANSWER-Dual Agency

A relationship of trust and confidence, in which one party owes the other (or both parties owe each other) loyalty and a higher standard of good faith than they owe to third parties. For example, an agent is a fiduciary in relation to the principal; husband and wife are fiduciaries in relation to each other. Can be referred to as a client. - ANSWER-Fiduciary Relationship Any public notification of property being offered for sale, and thus must follow guidelines of Regulation Z of Truth-In-Lending Act. - ANSWER-Advertisements A relationship of trust created when one person (the principal) gives another person (the agent) the right to represent the principal in dealings with third parties. - ANSWER-Agency All information the client directs to be confidential, which, if disclosed, would have an adverse effect on the client's position. - ANSWER-Confidential Information Form that states whether an agent is representing the seller or the buyer, or both, in a transaction. - ANSWER-Agency Disclosure Statement Transaction in which the buyer and seller are both represented by the same brokerage. - ANSWER-In- Company Contract A written agency contract between seller and a real estate broker, stating the broker will be paid a commission for finding (or attempting to find) a buyer for the seller's real property. - ANSWER-Listing Person who employs a broker, lawyer or other professional. Real estate clients can be sellers, buyers, or both. - ANSWER-Client A party in a transaction to whom an agent does not have a fiduciary duty or relationship, but to whom an agent must still be fair and honest. - ANSWER-Customer An agent of an agent; a person that an agent has delegated authority to, so that the they can assist in carrying out the principal's orders. - ANSWER-subagent

Compensation paid a broker for services in a real estate transaction; usually a percentage of sales price, rather than a flat fee. - ANSWER-Commission When something outside the control of a property makes it less desirable. Also called economic obsolescence. - ANSWER-External Obsolescence Actual wear and tear on something due to age, the elements or other forces. - ANSWER-Physical Deterioration A principle that says the value of a home is helped up by the other homes in an area. (Usually said about the "worst" home in the "best" area.) - ANSWER-Progression The need or desire for a specific good or service by others. - ANSWER-Demand A method of determining the approximate market value of a home by comparing the subject property to other homes that have sold, are presently for sale, or did not sell in a given area. - ANSWER-Competitive Market Analysis A situation in the housing market when a large number of buyers are looking for housing in an area of limited availability. - ANSWER-Seller's Market A principle that says the value of a home is held down by the other homes in an area. (Usually said about the "best" home in the "worst" area.) - ANSWER-Regression A condition that exists in the real estate market when there are slightly more homes available than buyers. - ANSWER-Balance A way to convert a property's income figure into an estimated value. - ANSWER-Capitalization The appraisal process of analyzing the values derived from the different appraisal approaches to arrive at a final value estimate or opinion. - ANSWER-Reconciliation