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Nevada Real Estate Exam Prep (Laws of Agency)

Actual Nevada Real Estate Exam Question with Answers and explanations. Multiple Choice National and Nevada Specific.
74. A broker's fiduciary duty to a client includes all EXCEPT:
a. sell his property
b. care and diligence
c. loyalty
d. confidentiality
74. A The six components of a broker's fiduciary duty are loyalty, obedience, disclosure, confidentiality, reasonable care and diligence and accountability.
75. In a sub agency, the selling salesperson is responsible to the:
a. seller
b. buyer
c. listing broker
d. selling broker
75. D The salesperson is a subagent of the employing broker and is therefore responsible to that broker.
76. A broker allowed a person to appear to act as her agent. The broker cannot deny the agency now because of:
a. ratification
b. estoppel
c. subrogation
d. reformation
76. B When a party allows an action to take place that would make a reasonable person believe that an agency relationship exists, estoppel agency precludes the party that allowed the action to take place from denying the relationship.
77. The phrase which BEST describes the nature of a broker's duty to keep a principal
fully informed is:
a. ethical conduct
b. continuing responsibility
c. fiduciary obligation
d. trustworthy business principles
77. C Part of the fiduciary obligation is disclosure.
78. An offer has been accepted on a 10-acre parcel, when the broker learns that the buyer has been buying up land in the area at a much higher price. The broker should:
a. notify the seller of the facts
b. recommend that the seller breach the contract
c. do nothing, as the seller is obligated to convey
d. do nothing, as agency has been terminated with the procurement of the buyer
78. A The fiduciary duty of disclosure requires the agent to keep the seller informed and the obligation does not cease when the contract is in escrow.
79. A broker purchased her own listing because she knew of a purchaser who would pay more than the listing price. The broker:
a. may never purchase one of her own listings
b. has done nothing wrong if she never misrepresented the value
c. acted properly if she revealed the offer was hers
d. is liable to the seller for the profit she made
79. D Making a profit at the expense of the agent's client is a violation of the fiduciary duty of loyalty. The courts have held over the years that in such a circumstance any profit must be paid to the client.
80. "Puffing" relates to exaggerations not made as representations of fact. Puffing is:
a. legal, but discouraged
b. regulated by the Nevada Administrative Code
c. illegal
d. unethical
80. A Puffing is legal in Nevada, but it is discouraged because there is the potential that the exaggerated opinion could become a misrepresentation.
81. In a dual agency, the broker:
a. works with only one buyer at a time
b. works with both buyer and seller
c. must work with another broker
d. works for both the buyer and seller
81. D An agent works with a customer and works for a client. In dual agency the broker works for both the buyer and the seller.
82. An intentional misstatement of a material fact that a party relies on to their damage is:
a. misrepresentation
b. fraud
c. puffing
d. exaggeration
82. B Fraud or fraudulent misrepresentation is a deceitful practice or material misstatement known to be false and done with intent to deceive.
83. Which of the following is NOT an agency relationship?
a. attorney-client
b. broker-seller
c. trustee-beneficiary
d. salesperson-buyer
83. D The salesperson is an agent of the broker not the buyer. An agency relationship could be broker-buyer.
84. In order to be able to accept compensation from both the buyer and seller a broker MUST:
a. have a listing agreement
b. have a buyer broker's agreement
c. disclose that he or she is a licensed agent
d. have written permission from both parties
84. D Accepting compensation from both the buyer and the seller would create a dual agency relationship, which requires written informed consent from both parties.
85. A salesperson received 2 offers for a listed property within a 1-minute period. One offer was 2% less than the listed price and the other was 6% less than the listed price. The salesperson should present the offers to the seller as follows:
a. neither offer
b. both offers
c. highest offer
d. lowest offer
85. B An agent has a responsibility to disclose to his/her client and is required to present all offers. The agent should also advise his/her client as to the agent's opinion of each offer.
86. An instrument authorizing one person to act for another is called:
a. power of attorney
b. affidavit of title
c. estoppel
d. release deed
86. A A universal or general agent must have a written document stating that he or she is an attorney in fact, which gives that individual the power of attorney.
87. Salesman "J" shows property to buyer "T". On another day, salesman "J" tells buyer "T" that he has found a house that is perfect for him. The agency relationship would
best be described as:
a. implied agency
b. expressed agency
c. general agency
d. special agency
87. A The actions of the salesperson indicate to the buyer that the agent is working for the buyer; hence implied agency.
88. An exclusive agency listing would NOT establish a(n):
a. specific agency
b. agency by implication
c. express agency
d. fiduciary relationship
88. B An exclusive agency would not create an agency by implication, but it would create a specific and expressed agency plus a fiduciary relationship with the owner.
89. A listing which requires the seller to pay the listing broker a commission if the property is sold is a/an:
a. exclusive agency listing
b. open listing
c. exclusive right to sell listing
d. net listing
89. C An exclusive right to sell listing requires the seller to pay the listing broker the agreed commission no matter who procures the buyer.
90. A type of listing in which many brokers may be employed simultaneously is known as:
a. multiple
b. exclusive
c. open
d. exclusive right to sell
90. C The open listing is an agreement between the seller and the broker that requires the seller to pay that broker a commission only if that broker procures the buyer.
91. An owner gave an exclusive listing to broker Joe and an open listing to broker Mary. Mary sold the property and was paid a commission. The following statement is TRUE:
a. Mary must share the fee with Joe
b. Joe got nothing because he did not handle the sale
c. Joe is due a full commission
d. Joe can have a hearing with the Real Estate Commission
91. C Joe is due the full commission because Joe had an exclusive listing meaning no matter who procured the buyer the agreed upon commission was due Joe.
92. A multiple listing service deals with:
a. mostly open listings
b. only exclusive right to sell listings
c. member brokers who share information
d. owners who don't use brokers to sell
92. C Any multiple listing service is for member brokers who share information. Multiple listing services do not accept open listings, but they do generally accept exclusive right to sell and exclusive agency listings.
93. In order to collect a commission under an exclusive right to sell, it is not necessary for a broker to prove:
a. the listing was signed by the seller
b. the broker was the procuring cause
c. the listing was valid
d. the broker was licensed at the time
93. B In order to collect a commission there must be a valid listing contract between a licensed broker and signed by the seller; however, with an exclusive right to sell listing the broker does not have to prove that his/her efforts were the procuring cause.
94. A broker listed a widow's property for a 7% commission. Later, the widow discovered that the broker had been listing other property at a 6%fee. Based on these fact the:
a. broker has done nothing wrong
b. broker can lose his/her license
c. widow can recover from the Recovery Fund
d. widow is entitled to a refund
94. A Commission rates are established through negotiations between the seller and the broker. Rates can vary between listings based on the negotiations and the nature of the agreed upon project.
95. Upon the death of a broker, his daughter, also a broker, wishes to take over his clients. She MUST:
a. inform all of the owners that she is the successor in interest to her father
b. obtain approval from the probate court
c. inform the state that she has taken over the responsibility for the listings
d. renegotiate all of the listings
95. D The listings need to be renegotiated since listings cannot be transferred to another entity without the seller's consent. If the broker had been a corporation and the father was the corporation's designated broker then the daughter could have been named the new designated broker and the listings would not need to be renegotiated.
96. An agent's duties to the principal include all of the following EXCEPT:
a. loyalty
b. accountability
c. obedience
d. legal advice
96. D The fiduciary duty of a real estate agent does not include the providing of legal advice. In fact a real estate agent should not give legal advice, since to do so would be the unlicensed practice of law.
97. A real estate salesperson may NOT:
a. buy or sell real estate as a principal
b. accept a commission from another broker
c. show property on which his/her office has no listing
d. represent both buyer and seller in a transaction
97. B A real estate salesperson can only be paid a commission by the broker with whom the salesperson is licensed.
98. Which of the following is NOT essential to the creation of an agency relationship?
a. an agreement to pay consideration
b. an agreement of the parties to the agency
c. the competency of the principal
d. a right to represent the principal
98. A An agency relationship does not require an obligation to pay consideration.
99. The relationship between the seller and a listing broker is that of:
a. seller and purchaser
b. principal and broker
c. attorney and client
d. trustor and trustee
99. B In a listing the seller is the Principal and the listing broker is the Agent.