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PA RE Broker practice questions

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Question 1Real Estate Law, Rules and Regulations

Under the Pennsylvania Real Estate Commission regulations, a broker's escrow (trust) account must be maintained in which manner?

  1. As a separate account designated as a trust or escrow account, with records available for Commission inspection Correct answer.
  2. As a pooled account shared with the broker's commission income, reconciled monthly
  3. As a certificate of deposit pledged to the brokerage's landlord
  4. As a general business operating account, provided the broker keeps a running ledger of deposits

Explanation

Commission regulations require a broker who holds funds belonging to others to deposit them in a separate escrow or trust account and to keep records the Commission may inspect. Commingling trust funds with the broker's own operating money is prohibited.

Question 2Real Estate Law, Rules and Regulations

A Pennsylvania salesperson receives a $5,000 deposit from a buyer and a $1,000 option fee from a seller in separate transactions. To whom must the salesperson turn these funds?

  1. The Commission, which holds deposits until closing
  2. The salesperson's own escrow account, opened in the salesperson's name
  3. The sponsoring broker, who is responsible for depositing and accounting for the funds Correct answer.
  4. The listing brokerage's title company, which holds all transaction deposits

Explanation

A salesperson may not hold or deposit money belonging to others; the funds must be delivered to the employing broker, who maintains the escrow account and accounting records. The broker bears responsibility for proper handling of the trust funds.

Question 3Real Estate Law, Rules and Regulations

Which statement accurately describes the Pennsylvania Real Estate Commission's authority over real estate licensees?

  1. It licenses brokers and salespersons, promulgates regulations, and may discipline licensees Correct answer.
  2. It enforces the federal Fair Housing Act in place of HUD
  3. It hears appeals of common pleas court judgments in real estate cases
  4. It sets commission rates that licensees may charge consumers

Explanation

The Commission is the state licensing and regulatory body for real estate brokers and salespersons, with rulemaking and disciplinary authority. It does not set commission rates, which are negotiable, and it is not a court of appeals.

Question 4Real Estate Law, Rules and Regulations

A licensee advertises a property for sale in a newspaper. Which advertising practice complies with Pennsylvania licensing law?

  1. Advertising under a fictitious team name without disclosing the broker
  2. Advertising a guaranteed sale price without the seller's authorization
  3. Advertising under the name of the employing broker as required by regulation Correct answer.
  4. Advertising under the salesperson's name only, with no broker identification

Explanation

Regulations require advertising by a salesperson to identify the employing broker and to be conducted under the broker's authority. Blind or team-name advertising that omits the broker violates that requirement.

Question 5Real Estate Law, Rules and Regulations

A buyer gives a broker a $2,000 good-faith deposit that the purchase agreement states is nonrefundable except upon seller default. Before closing, the broker receives written demands from both parties for the money. What should the broker do?

  1. Release the funds to whichever party the broker believes has the better legal claim
  2. Return the funds to the buyer because the buyer supplied them
  3. Deposit the funds into the broker's operating account until a court rules
  4. Continue holding the funds and, if the dispute persists, follow the agreement or interplead the funds Correct answer.

Explanation

When a broker holding escrow funds receives conflicting demands, the broker should not unilaterally decide who wins. The broker continues to hold the money and may seek a court determination, such as interpleader, if the parties do not resolve the dispute.

Question 6Real Estate Law, Rules and Regulations

Which activity requires a Pennsylvania real estate license?

  1. Negotiating the sale of a neighbor's house for a fee on behalf of the owner Correct answer.
  2. Appraising a property for a federally regulated lender as a certified appraiser
  3. Preparing a lease for your own commercial building with a tenant
  4. Managing a single-family home you own as a long-term rental

Explanation

Pennsylvania licensing law covers persons who, for another and for compensation, negotiate or assist in the sale, exchange, or lease of real estate. Acting for a neighbor for a fee is brokerage activity requiring a license.

Question 7Real Estate Law, Rules and Regulations

A Pennsylvania salesperson's license is issued in connection with a sponsoring broker. What happens to the salesperson's license if that broker's license is suspended?

  1. The salesperson's license converts to a broker's license
  2. The salesperson's license becomes inactive until a new sponsoring broker is obtained Correct answer.
  3. The salesperson's license remains fully active for independent practice
  4. The salesperson's license is automatically revoked permanently

Explanation

A salesperson's authority derives from the employing broker. If the broker relationship ends or the broker's license is suspended, the salesperson cannot practice independently and the license is placed inactive until properly sponsored again.

Question 8Real Estate Law, Rules and Regulations

A broker wants to pay a $500 referral fee to an unlicensed person who introduced a buyer to the broker. Under Pennsylvania law, this payment is:

  1. Permitted, if the unlicensed person signs a written disclosure
  2. Permitted, if the fee does not exceed one percent of the sale price
  3. Prohibited, because compensation for brokerage services may not be paid to an unlicensed person Correct answer.
  4. Permitted, because referral fees are not brokerage activity

Explanation

Pennsylvania law bars paying compensation to unlicensed persons for performing acts requiring a license, including procuring prospects for a fee. Sharing commissions with unlicensed individuals is generally prohibited, with limited statutory exceptions.

Question 9Real Estate Law, Rules and Regulations

Which best describes the standard for obtaining a Pennsylvania broker's license?

  1. Meeting experience, education, and examination requirements and being at least 21 years old Correct answer.
  2. Passing the salesperson examination and paying an additional fee
  3. Being employed as a salesperson for any period without further requirements
  4. Owning investment real estate worth a specified minimum amount

Explanation

Broker licensure requires the applicant to satisfy statutory age, experience, education, and examination criteria set by the Commission. Simply passing the salesperson exam or holding property does not qualify a person for a broker license.

Question 10Real Estate Law, Rules and Regulations

A licensee is convicted of a felony involving fraud. What is the Commission's authority regarding the license?

  1. It may suspend or revoke the license or impose other discipline after a hearing Correct answer.
  2. It may only issue a private reprimand
  3. It has no authority because the conviction is a criminal matter only
  4. It must wait until the criminal appeal is exhausted before any action

Explanation

Conviction of certain crimes, particularly those involving fraud or dishonesty, is grounds for disciplinary action by the Commission, which may suspend, revoke, or otherwise discipline after following required procedures. Criminal and licensing consequences can proceed independently.

Question 11Real Estate Law, Rules and Regulations

A seller tells a licensee that the basement floods during heavy rain. The licensee lists the property and says nothing about it to prospective buyers. Which statement is correct under Pennsylvania law?

  1. The licensee has no duty because caveat emptor still governs all residential sales
  2. The licensee may remain silent because the seller, not the licensee, owns the duty
  3. The licensee may face discipline for failing to disclose a known material defect to buyers Correct answer.
  4. The licensee must disclose only if the buyer specifically asks about water

Explanation

Pennsylvania's seller disclosure law and licensing regulations impose disclosure obligations for known material defects in residential property. A licensee who knows of a defect and conceals it risks disciplinary action and civil liability.

Question 12Real Estate Law, Rules and Regulations

Which statement about the Pennsylvania Real Estate Recovery Fund is accurate?

  1. It pays the Commission's operating expenses from license fees
  2. It may reimburse persons who obtain judgments against licensees for certain wrongful acts and cannot collect Correct answer.
  3. It reimburses licensees for unpaid commissions owed by clients
  4. It insures brokers against errors and omissions claims by clients

Explanation

The Recovery Fund provides a limited remedy for consumers who win judgments against licensees for specified violations and are unable to collect. It is not a commission collection mechanism or general insurance program.

Question 13Real Estate Law, Rules and Regulations

A broker acting as a dual agent in a transaction must, under Pennsylvania law, do which of the following?

  1. Keep the dual agency secret to protect confidentiality
  2. Obtain the written consent of both parties and treat them fairly without advocating one over the other Correct answer.
  3. Delegate the dual agency to two salespersons in the same office
  4. Represent the seller's interests fully while informing the buyer of that role

Explanation

Dual agency requires informed written consent from both parties and imposes duties of fairness, disclosure, and confidentiality rather than undivided loyalty to one side. Failing to obtain consent or concealing the relationship violates the statute.

Question 14Real Estate Law, Rules and Regulations

Under Pennsylvania's Real Estate Seller Disclosure Law, when must the seller deliver the property disclosure statement to a buyer?

  1. Only at the closing table
  2. Before the buyer is bound by a contract, generally before signing the agreement of sale Correct answer.
  3. Only if the buyer's lender requests it
  4. Within 30 days after closing

Explanation

The disclosure statement must be provided before the purchaser enters into a binding agreement of sale. Delivering it at closing or after closing defeats the statute's purpose of informing the buyer before commitment.

Question 15Real Estate Law, Rules and Regulations

A Pennsylvania licensee wants to use a written agency agreement with a seller. Which statement is correct?

  1. The agreement need not state the duration of the listing
  2. An oral exclusive listing is enforceable for up to one year
  3. The broker may alter the commission after signing without the seller's consent
  4. The agreement must be in writing and include the term and the broker's duties and compensation terms Correct answer.

Explanation

Pennsylvania law requires listing and buyer agency agreements to be in writing and to contain specified terms, including duration and the parties' obligations. Oral exclusive listings and unilateral changes to compensation are not enforceable.

Question 16Real Estate Law, Rules and Regulations

A buyer's agent learns that the seller will accept $20,000 less than the asking price. May the agent withhold this from the buyer?

  1. Yes, because the agent's duty is to close the transaction quickly
  2. No, because the agent owes the buyer loyalty, disclosure, and reasonable care Correct answer.
  3. No, but only if the buyer submits a written request for the information
  4. Yes, because price negotiation strategy is confidential seller information

Explanation

A buyer's agent owes fiduciary duties to the buyer, including loyalty and full disclosure of material information the agent learns that affects the buyer's interests. Concealing favorable facts to speed a closing breaches those duties.

Question 17Real Estate Law, Rules and Regulations

Pennsylvania law requires certain written disclosures and a consumer notice at the beginning of a relationship. When should the consumer notice be given to a prospective buyer or seller?

  1. Only when the consumer asks for it in writing
  2. At the settlement table with the closing documents
  3. Only after a written agreement of sale is signed
  4. At the initial interview or first substantive contact, before services are provided Correct answer.

Explanation

The consumer notice must be provided at the initial interview or first substantive contact so the consumer understands the types of agency relationships and business relationships before committing. Delaying it until contract or closing defeats its purpose.

Question 18Real Estate Law, Rules and Regulations

A salesperson licensed in Pennsylvania moves to another brokerage. What is required?

  1. The salesperson must retake the licensing examination
  2. The license must be transferred to and sponsored by the new broker, with notice to the Commission Correct answer.
  3. The salesperson must surrender the license and apply as a new applicant
  4. The salesperson may practice for 90 days without any sponsorship

Explanation

When a salesperson changes employing brokers, the license must be reissued in connection with the new sponsoring broker through the required filing with the Commission. Retaking the exam or practicing unsponsored is not required or permitted.

Question 19Real Estate Law, Rules and Regulations

Which practice by a licensee would violate Pennsylvania's fair housing and licensing rules?

  1. Steering a buyer away from a neighborhood based on the buyer's race Correct answer.
  2. Providing the same written criteria to all prospective tenants
  3. Requiring a credit check of every applicant under the same standard
  4. Advertising a property in publications serving diverse communities

Explanation

Steering buyers based on protected characteristics such as race violates fair housing laws and constitutes misconduct subject to license discipline. Applying uniform, objective screening criteria to all applicants is lawful.

Question 20Real Estate Law, Rules and Regulations

A broker's escrow records must be kept for how long under Pennsylvania Commission regulations?

  1. For the period specified by Commission regulation, generally at least three years Correct answer.
  2. Only until the transaction's closing statement is filed
  3. For six months after closing
  4. Until the broker retires

Explanation

Commission regulations require brokers to retain escrow and transaction records for a defined retention period, commonly at least three years, so they remain available for inspection. Destroying records too soon can itself be a violation.

Question 21Real Estate Law, Rules and Regulations

A broker learns that a salesperson in the office has been converting escrow funds for personal use. What is the broker's responsibility?

  1. The broker should quietly terminate the salesperson and take no further action
  2. The broker has no responsibility because the salesperson acted alone
  3. The broker may be subject to discipline for failing to supervise and must address the misconduct Correct answer.
  4. The broker must personally repay the funds and is immune from discipline

Explanation

Brokers are responsible for supervising licensees associated with the brokerage and for safeguarding escrow funds. Failure to supervise or to report misconduct can result in discipline against the broker as well as the salesperson.

Question 22Real Estate Law, Rules and Regulations

A licensee prepares a comparative market analysis for a seller and charges a fee for the opinion of value. Which statement is correct?

  1. The licensee may prepare a CMA for listing purposes but a fee appraisal requires an appraiser certification Correct answer.
  2. The licensee may appraise any property as an incidental brokerage service
  3. The licensee may perform appraisals if the broker approves in writing
  4. The licensee may charge for any appraisal if the amount is under $250,000

Explanation

Pennsylvania regulates appraisals separately; a real estate licensee may prepare a comparative market analysis in the course of brokerage activity but may not perform a fee appraisal without the required appraiser certification. Broker approval does not create appraisal authority.

Question 23Real Estate Law, Rules and Regulations

A buyer client tells a licensee, "I will pay up to $400,000, but offer $350,000." The seller's agent asks the licensee what the buyer's maximum is. What is the appropriate response?

  1. Disclose the $400,000 maximum to help close the deal
  2. Disclose it because agents must answer all questions truthfully
  3. Disclose it only if the seller agrees to pay a higher commission
  4. Decline to reveal the buyer's confidential negotiating position Correct answer.

Explanation

A buyer's agent owes confidentiality regarding the client's negotiating position and may not reveal it to the opposing side. Truthfulness duties do not require disclosing a client's confidential information; the agent can decline to answer.

Question 24Real Estate Law, Rules and Regulations

Which statement about a Pennsylvania real estate broker's handling of a tenant's security deposit for property the broker manages is correct?

  1. The broker need not keep records if the deposit is under $500
  2. The broker must hold and account for it as trust funds and comply with the security deposit statute Correct answer.
  3. The broker may use it for office expenses if repaid within 30 days
  4. The broker may apply it to the owner's repair costs at any time

Explanation

Security deposits held in the course of managing property are funds belonging to others and must be maintained as trust funds with proper accounting, consistent with the security deposit statute. They cannot be used for the owner's or broker's expenses.

Question 25Agency, Brokerage Relationships and Disclosure

A Pennsylvania broker's office handles a listing for a seller. A buyer with no agent calls the broker directly. Under Pennsylvania law, what is the default relationship between that buyer and the broker unless a written agreement says otherwise?

  1. The buyer automatically becomes a dual client once the broker shows the property
  2. The buyer becomes the broker's client, because the broker is providing services to the buyer
  3. The buyer is a subagent of the listing broker's seller-client by operation of law
  4. The buyer is a customer, not a client, and the broker owes the buyer honesty and fairness but not loyalty Correct answer.

Explanation

In Pennsylvania, a consumer who is not a party to a written agency agreement with the broker is a customer rather than a client. The broker must treat that customer honestly and fairly and disclose known material defects, but the duties of loyalty and full fiduciary care run to the seller-client. Agency status arises from a written agreement, not from the act of showing property or making a phone call.

Question 26Agency, Brokerage Relationships and Disclosure

Which written disclosure must a Pennsylvania broker provide to a consumer at the time a substantive discussion about a specific property first occurs?

  1. The consumer notice describing agency relationships and the broker's duties Correct answer.
  2. The Real Estate Recovery Fund notice
  3. The Fair Housing Act acknowledgment form
  4. The seller's property disclosure statement

Explanation

Pennsylvania requires the consumer notice, which explains agency relationships and the duties owed, to be given at the earliest practical time, generally before or at the initial substantive contact about a specific property. The property disclosure statement comes from the seller, and the recovery fund notice is a separate required disclosure. Getting the consumer notice out early is what allows the consumer to make an informed choice about representation.

Question 27Agency, Brokerage Relationships and Disclosure

A seller signs a listing agreement giving the broker the exclusive right to sell. During the term, the seller personally finds a buyer and closes without the broker's involvement. What is the seller's obligation?

  1. Nothing is owed, because the broker did not procure the buyer
  2. The seller owes the commission only if the broker can prove it introduced the buyer to the property
  3. The seller owes only a reduced flat fee for administrative costs
  4. The seller owes the broker the agreed commission, because the exclusive right to sell covers any sale during the term Correct answer.

Explanation

Under an exclusive right to sell, the broker earns the agreed compensation if the property sells during the listing term regardless of who produced the buyer, including the seller. This is what distinguishes it from an exclusive agency listing, in which the seller who procures the buyer may avoid paying. The seller's self-procured sale therefore still triggers the commission.

Question 28Agency, Brokerage Relationships and Disclosure

A broker represents a buyer under a written buyer agency agreement. The buyer wants to see a home listed by another brokerage. Which statement best describes the listing broker's duty to that buyer at the showing?

  1. The listing broker owes the buyer confidentiality regarding the buyer's motivation to purchase
  2. The listing broker owes the buyer full fiduciary loyalty because both brokers are licensees
  3. The listing broker treats the buyer as a customer and must deal honestly and disclose known material defects Correct answer.
  4. The listing broker becomes a dual agent the moment the buyer enters the property

Explanation

The listing broker's client is the seller, so the buyer remains a customer of that broker even though the buyer has their own agent. The listing broker must be honest, cannot misrepresent material facts, and must disclose known material defects. Confidentiality and loyalty toward the buyer belong to the buyer's own broker.

Question 29Agency, Brokerage Relationships and Disclosure

A broker acts as a dual agent with the written informed consent of both the seller and the buyer. Which duty is necessarily limited by that role?

  1. The duty to account for funds
  2. The duty to keep transaction records
  3. The duty of undivided loyalty to either party Correct answer.
  4. The duty to disclose known material defects

Explanation

Dual agency cannot provide undivided loyalty to either side, because the broker owes duties to both. Pennsylvania permits it only with written informed consent after full disclosure, and the broker must remain neutral. Accounting, recordkeeping, and honesty about material defects are not relaxed.

Question 30Agency, Brokerage Relationships and Disclosure

A buyer's agent learns that the buyer is going through a divorce and is desperate to close quickly. The listing agent asks directly why the buyer is motivated to move fast. How should the buyer's agent respond?

  1. Refuse to disclose the confidential information without the buyer's authorization Correct answer.
  2. Disclose the reason, because the listing agent is entitled to all facts that affect price
  3. Disclose only that the buyer is motivated, keeping the underlying reason confidential
  4. Refer the listing agent to the buyer so the buyer can answer personally

Explanation

Confidential information learned within the agency relationship may not be disclosed without the client's authorization, even when it would help the other side. The buyer's agent should decline and can share only what the buyer permits. Pointing the listing agent to the buyer to extract the information defeats the duty of confidentiality.

Question 31Agency, Brokerage Relationships and Disclosure

A licensee prepares a comparative market analysis for a homeowner who is thinking about selling. A neighbor asks the licensee to share the analysis. What is the appropriate response?

  1. Share it, because a CMA is a public record once it is prepared
  2. Share it only after removing the homeowner's name
  3. Share it if the neighbor agrees to list with the licensee
  4. Decline, because the analysis was prepared for the client and is confidential Correct answer.

Explanation

A comparative market analysis prepared for a client is confidential information belonging to that client relationship. Sharing it with a neighbor, even redacted, would reveal the client's plans and pricing strategy. The licensee should decline unless the client authorizes release.

Question 32Agency, Brokerage Relationships and Disclosure

A property manager collects rent on behalf of an owner and holds the funds in the broker's account. Which statement about the handling of those funds is correct?

  1. The funds may be deposited in the broker's general business account until the monthly reconciliation
  2. The funds must be maintained in a separate escrow or trust account and accounted for to the owner Correct answer.
  3. The funds may be commingled with the broker's operating funds as long as records are kept
  4. The funds belong to the broker until the management agreement term ends

Explanation

Money held for others must be kept separate from the broker's own funds and accounted for to the principal. Commingling trust funds with operating money is prohibited. The owner retains entitlement to the rents, and the broker acts only as custodian.

Question 33Agency, Brokerage Relationships and Disclosure

A seller tells the listing agent, in confidence, that the basement floods every spring but asks the agent not to mention it. The agent knows a buyer is about to make an offer. What must the agent do?

  1. Suggest the buyer hire an inspector and say nothing else
  2. Resign the listing immediately without further discussion
  3. Disclose the known material defect to the buyer despite the seller's instruction Correct answer.
  4. Honor the seller's confidence, because the agent's loyalty runs to the seller

Explanation

The duty of confidentiality does not authorize concealment of known material defects. Pennsylvania licensees must disclose known material defects to prospective buyers, and the seller's instruction cannot override that obligation. The agent should tell the seller that the defect must be disclosed and proceed accordingly.

Question 34Agency, Brokerage Relationships and Disclosure

A licensee's written buyer agency agreement states that the buyer will pay the broker a stated fee, with any cooperating compensation from the seller credited against it. The seller offers no cooperating compensation. What is the result?

  1. The agreement is unenforceable because the seller did not contribute
  2. The buyer owes nothing, because the seller refused to cooperate
  3. The buyer owes the difference between the agreed fee and the compensation received, which here is the full agreed fee Correct answer.
  4. The listing broker must pay the buyer's broker out of the listing commission

Explanation

A buyer agency agreement can set the buyer's obligation while crediting any compensation the broker actually receives from the seller or listing broker. If no cooperating compensation is offered, the buyer is responsible for the full agreed fee. The listing broker has no obligation to fund the buyer's broker absent an agreement to do so.

Question 35Agency, Brokerage Relationships and Disclosure

An unrepresented buyer asks a listing agent whether the neighborhood is safe and whether the school district is good. How should the listing agent handle these questions?

  1. Answer only if the seller authorizes the statements in writing
  2. Advise the buyer to investigate independently and avoid offering opinions on safety or schools Correct answer.
  3. Answer fully, because the agent's local knowledge makes the answers reliable
  4. Refuse to speak with the buyer until the buyer signs a buyer agency agreement

Explanation

Statements about safety, crime, and school quality can expose a licensee to fair housing and misrepresentation claims, so buyers should be directed to independent sources such as police departments and school officials. The agent should not volunteer subjective opinions on these topics. A buyer agency agreement is not a precondition to answering a customer's questions.

Question 36Agency, Brokerage Relationships and Disclosure

A broker terminates a listing agreement because the seller refuses to disclose a known structural problem. What happens to the broker's right to compensation for a buyer the broker procured before termination?

  1. The broker must return all marketing expenses but keeps no commission
  2. Compensation depends solely on whether the seller relists with another broker
  3. The broker may still be entitled to compensation for a ready, willing, and able buyer procured before termination Correct answer.
  4. All compensation is forfeited because the broker ended the agreement

Explanation

When a broker procures a ready, willing, and able buyer before the agreement ends, the broker has generally earned compensation even if the seller later terminates. A termination caused by the seller's refusal to comply with disclosure duties does not automatically wipe out that entitlement. Whether a particular agreement preserves the claim depends on its terms, but forfeiture is not automatic.

Question 37Agency, Brokerage Relationships and Disclosure

A salesperson licensed under Broker A wants to assist a friend with a rental transaction on weekends, outside Broker A's business. What is required?

  1. The salesperson may act independently as long as no commission is charged
  2. The salesperson must notify the friend in writing that no agency exists
  3. Nothing, because rental referrals are outside the licensing law
  4. The salesperson must affiliate with a broker who supervises that activity Correct answer.

Explanation

A Pennsylvania salesperson may not perform licensed real estate activity independently of a supervising broker. Any brokerage activity, including rental transactions for compensation, must be performed under a broker who supervises it. Acting on one's own would be unlicensed activity even if the salesperson holds a license.

Question 38Agency, Brokerage Relationships and Disclosure

A buyer's agent receives a copy of the seller's property disclosure statement showing a prior roof leak that was repaired. The buyer asks whether the disclosure is a warranty. What is the most accurate guidance?

  1. The disclosure is prepared by the broker and binds the seller to repair all listed items
  2. The disclosure relieves the buyer's agent of any duty to advise about inspections
  3. The disclosure is a warranty that the roof is defect-free
  4. The disclosure is the seller's representation of known conditions and does not replace the buyer's own inspections Correct answer.

Explanation

The seller's property disclosure is a statement of known conditions, not a guarantee of condition. Buyers should still obtain inspections and other evaluations, and the buyer's agent should recommend them. The disclosure is completed by the seller, not the broker, and does not obligate repairs.

Question 39Agency, Brokerage Relationships and Disclosure

A licensee is showing a home and the buyer says, "I'll pay full price if the seller throws in the washer and dryer." The licensee represents the seller. What is the licensee's best course of action?

  1. Negotiate the inclusion directly with the buyer on the seller's behalf without consulting the seller
  2. Suggest the buyer submit the request without mentioning the appliances
  3. Advise the buyer that the licensee cannot advise the buyer on price strategy and relay the offer terms to the seller Correct answer.
  4. Tell the buyer the seller will accept, to keep the deal moving

Explanation

Because the licensee represents the seller, the buyer is a customer who should not receive advice on negotiating strategy. The licensee should avoid giving counsel to the buyer and should present the buyer's terms to the seller for a decision. Committing the seller to terms without authority exceeds the agent's role.

Question 40Agency, Brokerage Relationships and Disclosure

A broker's agency agreement with a seller contains no stated termination date. How does Pennsylvania law treat this agreement?

  1. It must contain a definite termination date and may be unenforceable without one Correct answer.
  2. It is enforceable only if the seller initials the blank term
  3. It automatically converts to a transaction license after ninety days
  4. It is valid indefinitely until either party gives notice

Explanation

Pennsylvania requires written agency agreements to include a definite termination date, and an agreement without one is subject to challenge. A definite term protects consumers from open-ended obligations. Initialing a blank space does not supply the missing term.

Question 41Agency, Brokerage Relationships and Disclosure

A broker lists a home and, during the listing, the seller asks the broker to also represent the buyer in the same transaction. Which step must occur before the broker may act as a dual agent?

  1. The broker must obtain written informed consent from both the seller and the buyer after full disclosure Correct answer.
  2. The broker must notify the local association of REALTORS of the dual role
  3. The broker must reduce the commission rate by half
  4. The broker must obtain the lender's written approval of the dual agency

Explanation

Dual agency in Pennsylvania requires full disclosure and the written informed consent of all parties before the broker may act for both. The consent must be informed, meaning the parties understand the limits on loyalty and confidentiality. Notification to an association or lender is not the operative requirement.

Question 42Agency, Brokerage Relationships and Disclosure

A buyer's broker learns from the buyer that the buyer will pay up to $50,000 more than the list price. In a conversation with the listing broker, how should the buyer's broker handle that information?

  1. Disclose it only if the listing broker promises not to tell the seller
  2. Disclose it after the offer is accepted to show good faith
  3. Keep it confidential unless the buyer authorizes disclosure Correct answer.
  4. Disclose it, because brokers must share all information relevant to price

Explanation

A buyer's maximum willingness to pay is confidential client information that the buyer's broker may not reveal without authorization. Disclosing it would harm the buyer's negotiating position and breach the duty of loyalty. The listing broker has no entitlement to the client's internal limits.

Question 43Agency, Brokerage Relationships and Disclosure

A licensee working under a broker advertises a listing on social media without the broker's name in the ad. Which statement is correct?

  1. The ad is acceptable if the seller approved the content
  2. The ad is acceptable because the salesperson's license number appears
  3. The ad is acceptable because social media posts are not advertising
  4. The ad must identify the brokerage name as required for advertising by a licensee Correct answer.

Explanation

Advertising by a licensee must identify the affiliated brokerage, because the salesperson acts under the broker's supervision. The broker's name in the ad informs the public who is responsible for the brokerage relationship. Seller approval of content does not satisfy the identification requirement.

Question 44Agency, Brokerage Relationships and Disclosure

A seller-client instructs the listing agent to tell buyers that the property has "no problems" even though the agent knows of an unresolved water intrusion issue. What is the agent's proper response?

  1. Make the statement but add a verbal disclaimer at the showing
  2. Resign from the brokerage and refer the seller elsewhere without explanation
  3. Decline to make the statement and explain that known material defects must be disclosed Correct answer.
  4. Follow the instruction, because the agent must obey the client's lawful directions

Explanation

A client's direction does not override the licensee's duty to avoid misrepresentation and to disclose known material defects. The agent should refuse to make the false statement and explain the obligation to the seller. A verbal disclaimer does not cure an affirmative misrepresentation.

Question 45Listing and Buyer Agency Agreements

Under Pennsylvania's Real Estate Licensing and Registration Act, which element must a valid written buyer agency agreement contain to be enforceable against the buyer?

  1. A list of every property the buyer intends to view
  2. A statement of the broker's commission split with the cooperating broker
  3. A notarized signature of the buyer and the broker
  4. A fixed termination date or a defined period of duration Correct answer.

Explanation

Pennsylvania requires buyer agency agreements to be in writing and to state a definite duration or expiration date, along with the parties, the services, and the compensation terms. A definite term protects the consumer from an open-ended obligation and is a standard compliance checkpoint for the broker.

Question 46Listing and Buyer Agency Agreements

A seller signs a listing agreement granting the broker the exclusive right to sell. During the listing term, the seller personally finds a buyer and sells the home without the broker's involvement. What is the broker entitled to under the exclusive right to sell?

  1. A commission reduced by half as a penalty on the seller
  2. Nothing, because the broker procured no buyer
  3. Only reimbursement of marketing expenses actually incurred
  4. A full commission, because the broker is entitled to be paid no matter who procures the buyer during the term Correct answer.

Explanation

In an exclusive right to sell, the broker earns compensation regardless of who procures the buyer during the listing period, including a sale the owner makes personally. This is the defining feature that distinguishes it from an exclusive agency listing, where the owner retains a personal-procurement exception.

Question 47Listing and Buyer Agency Agreements

Which statement correctly contrasts an exclusive agency listing with an exclusive right to sell listing?

  1. Exclusive right to sell limits the listing to a single named prospective purchaser
  2. Under exclusive agency the owner keeps the right to sell personally without owing the broker, while under exclusive right to sell the broker is paid even for the owner's own sale Correct answer.
  3. Exclusive agency pays the broker only if the broker personally shows the property to the buyer
  4. Exclusive agency listings are unlawful in Pennsylvania unless the term is under 30 days

Explanation

The key difference is the owner's personal-procurement exception. An exclusive agency listing reserves to the owner the right to sell without a cooperating broker and owe nothing, whereas an exclusive right to sell obligates the commission even for a sale the owner arranges alone.

Question 48Listing and Buyer Agency Agreements

A Pennsylvania broker wants to collect compensation from a buyer under a buyer agency agreement. Which arrangement satisfies the statute's requirement?

  1. An unsigned draft emailed to the buyer for review
  2. A written agreement signed by the buyer that states the broker's compensation or how it will be calculated Correct answer.
  3. An oral agreement confirmed by a handshake and later text messages
  4. A verbal understanding that the buyer will pay whatever the seller's side offers

Explanation

The statute requires buyer agency agreements to be written and signed by the buyer and to specify compensation or the manner in which it is computed. An oral or unsigned arrangement does not create an enforceable right to compensation from the buyer.

Question 49Listing and Buyer Agency Agreements

A listing broker and seller agree to a net listing in which the broker keeps everything above a stated seller price. Which statement best describes the legal problem with this arrangement?

  1. It is acceptable if disclosed in writing and signed by both parties
  2. It is valid but the broker must rebate any amount above ten percent of the seller's price
  3. It is permitted only for commercial property over one million dollars
  4. It is prohibited because the broker's compensation would depend on a price the broker may influence, creating a conflict of interest Correct answer.

Explanation

Pennsylvania prohibits net listings because the broker's compensation is not a fixed or computable amount and the broker has an incentive to obtain the highest possible price at the seller's expense. The concern is the inherent conflict of interest and the uncertain compensation, not the property type or price.

Question 50Listing and Buyer Agency Agreements

A seller signs a listing agreement that automatically renews for successive one-year terms unless the seller cancels in writing 90 days before expiration. How does Pennsylvania law treat this provision?

  1. It converts the listing into an exclusive right to sell
  2. It is enforceable if the renewal language is in bold type
  3. It is unenforceable because a listing agreement may not contain an automatic renewal clause Correct answer.
  4. It is enforceable only if the broker reminds the seller 30 days before the renewal date

Explanation

Pennsylvania prohibits automatic renewal clauses in listing agreements, so a provision extending the listing unless the seller acts affirmatively is void. The policy protects sellers from being locked into continuing obligations they did not freshly agree to.