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WY Real Estate practice questions

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Question 1Wyoming Real Estate License Law, Statutes, and Commission Rules

Which state body is charged with administering and enforcing the Wyoming Real Estate License Act?

  1. Wyoming Real Estate Commission Correct answer.
  2. Wyoming Department of Insurance
  3. Wyoming Attorney General's Consumer Protection Division
  4. Wyoming Secretary of State

Explanation

The Wyoming Real Estate License Act creates the Wyoming Real Estate Commission and gives it authority to license, regulate, and discipline real estate brokers and salespersons in the state. The Commission adopts rules and hears disciplinary matters under the Act.

Question 2Wyoming Real Estate License Law, Statutes, and Commission Rules

For which activity does Wyoming law require a real estate license?

  1. Renting a room in one's own residence
  2. Negotiating a sale for another for compensation Correct answer.
  3. Selling one's own home without the help of a licensed broker
  4. Preparing a deed for a family member without charge or compensation

Explanation

A license is required when a person acts for another in a real estate transaction for compensation. Owners disposing of their own property and uncompensated family assistance fall outside the licensing requirement.

Question 3Wyoming Real Estate License Law, Statutes, and Commission Rules

A Wyoming real estate salesperson who closes a transaction is compensated in which manner?

  1. By the title company at the salesperson's direction
  2. Through the salesperson's personal corporation
  3. Directly by the client at closing
  4. Through the supervising broker Correct answer.

Explanation

Wyoming law requires a salesperson to be affiliated with a broker and to receive compensation through that broker. The broker is the party to the listing or buyer agency agreement, so commissions flow through the brokerage.

Question 4Wyoming Real Estate License Law, Statutes, and Commission Rules

Client funds such as earnest money received by a Wyoming broker must be kept in which location?

  1. A separate trust account Correct answer.
  2. The broker's general business operating account
  3. The broker's personal savings account
  4. The listing agent's personal account

Explanation

A broker who holds money belonging to others must deposit it in a trust account separate from the broker's own funds. Commingling client money with business or personal money is grounds for discipline.

Question 5Wyoming Real Estate License Law, Statutes, and Commission Rules

The Wyoming Real Estate Commission may take which action against a licensee who violates the license law?

  1. Direct the county sheriff to close the brokerage
  2. Impose a criminal jail sentence on the licensee
  3. Order forfeiture of all the licensee's personal assets
  4. Suspend or revoke the license after a hearing Correct answer.

Explanation

The Commission's authority is administrative. After a complaint, notice, and hearing, it may deny, suspend, revoke, or condition a license and impose other authorized discipline.

Question 6Wyoming Real Estate License Law, Statutes, and Commission Rules

Which task may an unlicensed assistant perform for a Wyoming brokerage?

  1. Explain the terms of a listing agreement to a client
  2. Negotiate the price and terms of a sale
  3. Answer the office telephone and schedule appointments Correct answer.
  4. Advise a client about whether to accept a counteroffer

Explanation

Unlicensed staff may handle clerical and administrative duties but may not perform activities that require a license. Negotiating, explaining contract terms, and advising on offers are licensed activities.

Question 7Wyoming Real Estate License Law, Statutes, and Commission Rules

A Wyoming licensee who changes their business address must take which action?

  1. Notify the Commission of the change Correct answer.
  2. Post the change in the local newspaper
  3. Wait until the next license renewal to report it
  4. Obtain approval from the local board of REALTORS

Explanation

Commission rules require licensees to keep the Commission informed of their current business address so official notices and service can reach them. The change is reported to the Commission, not to a newspaper or association.

Question 8Wyoming Real Estate License Law, Statutes, and Commission Rules

To renew a Wyoming real estate license, a licensee generally must do which of the following?

  1. Pass the state licensing exam again
  2. Submit a new fingerprint card each year
  3. Obtain a new sponsor's signature each year
  4. Complete the required continuing education Correct answer.

Explanation

Wyoming renewal requires completion of the continuing education required by the Commission. The licensing exam is for initial licensure, not for routine renewal.

Question 9Wyoming Real Estate License Law, Statutes, and Commission Rules

Under Wyoming law, a broker's responsibility for affiliated licensees includes which duty?

  1. Supervise affiliates and enforce license-law compliance Correct answer.
  2. Review each affiliate's personal credit report every month
  3. Guarantee each client's mortgage financing will be approved
  4. Pay the personal income taxes owed by affiliated licensees

Explanation

The broker is the supervising licensee and is responsible for the brokerage's activities. The broker must establish supervision and ensure that affiliated licensees follow the Act and Commission rules.

Question 10Wyoming Real Estate License Law, Statutes, and Commission Rules

Which statement about advertising by a Wyoming real estate brokerage is correct?

  1. Only the salesperson's name must appear in the advertisement
  2. Advertising may omit the brokerage name if the salesperson is well known
  3. Advertising must identify the brokerage or supervising broker Correct answer.
  4. A salesperson may advertise under a fictitious name unrelated to the brokerage

Explanation

Advertising must identify the brokerage or supervising broker so the public knows which licensed entity is responsible. A salesperson advertises under the broker's supervision and may not use an unaffiliated fictitious name.

Question 11Wyoming Real Estate License Law, Statutes, and Commission Rules

A Wyoming broker wants to pay part of a commission to an unlicensed friend who referred a buyer. This payment is best described as which of the following?

  1. Permitted if the friend is a close relative of the broker
  2. Permitted if the fee is less than the broker's own share
  3. Permitted if the referral is disclosed to the client in writing
  4. Prohibited as paying an unlicensed person for brokerage Correct answer.

Explanation

The license law prohibits paying a commission or referral fee to an unlicensed person for brokerage activity. Disclosure to the client or limiting the amount does not cure the violation.

Question 12Wyoming Real Estate License Law, Statutes, and Commission Rules

A Wyoming listing agreement for the sale of residential property must meet which requirement?

  1. Be signed only by the broker and not the seller
  2. Be written with a definite termination date Correct answer.
  3. Be oral if the term is less than six months
  4. Be automatically renewable without any expiration

Explanation

Listing agreements must be in writing and must include a definite expiration date. Oral listings and listings with no fixed termination are inconsistent with the license law and Commission rules.

Question 13Wyoming Real Estate License Law, Statutes, and Commission Rules

Before a Wyoming licensee begins representing a buyer in a transaction, the licensee must take which action?

  1. Provide a home warranty policy paid by the broker
  2. Promise to rebate a portion of the commission to the buyer
  3. Obtain the seller's written permission before showing
  4. Disclose in writing which party the licensee represents Correct answer.

Explanation

Agency disclosure must be made so the client understands whom the licensee represents. Wyoming rules require the disclosure to be in writing.

Question 14Wyoming Real Estate License Law, Statutes, and Commission Rules

In a Wyoming transaction where the same brokerage represents both buyer and seller, the brokerage must do which of the following?

  1. Represent only the buyer in the transaction
  2. Represent only the seller in the transaction
  3. Withdraw from the transaction immediately
  4. Obtain the informed written consent of both parties Correct answer.

Explanation

Dual agency is permitted only with the informed written consent of both parties. Without that consent, the brokerage may not act as a dual agent.

Question 15Wyoming Real Estate License Law, Statutes, and Commission Rules

A Wyoming seller's agent learns that the basement has recurring water intrusion. The agent must take which action?

  1. Keep the information confidential because the seller is the client
  2. Wait until the buyer's inspection discovers it
  3. Tell only the lender about the water problem
  4. Disclose the known material adverse fact to the buyer Correct answer.

Explanation

Licensees have a duty to disclose known material adverse facts about the property. Confidentiality owed to the seller does not permit concealing material defects from a buyer.

Question 16Wyoming Real Estate License Law, Statutes, and Commission Rules

A Wyoming broker may use funds in the brokerage trust account for which purpose?

  1. To disburse earnest money as authorized by the parties Correct answer.
  2. To pay the broker's office rent
  3. To make a short-term personal loan to the broker
  4. To buy office equipment for the brokerage

Explanation

Trust funds may be disbursed only for the purpose for which they are held, such as a properly authorized closing or refund. Using them for business expenses is commingling and conversion.

Question 17Wyoming Real Estate License Law, Statutes, and Commission Rules

When buyer and seller dispute who is entitled to earnest money held by a Wyoming broker, the broker should take which action?

  1. Give the money to the seller immediately
  2. Apply the money to the broker's commission
  3. Hold the funds until written agreement or court order Correct answer.
  4. Give the money to the buyer immediately

Explanation

A broker holding disputed funds must not unilaterally decide who wins. The funds should be held until the parties agree in writing or a court orders disbursement.

Question 18Wyoming Real Estate License Law, Statutes, and Commission Rules

A Wyoming licensee who buys property for their own account must do which of the following?

  1. Avoid making any written offer to the seller
  2. Disclose in writing that the licensee is a licensed agent Correct answer.
  3. Pay the commission to the other broker only
  4. Use a different brokerage name on the contract

Explanation

When a licensee acts as a principal, the licensee must disclose their licensed status in writing so the other party knows they are dealing with a real estate professional. This prevents unfair advantage in the negotiation.

Question 19Wyoming Real Estate License Law, Statutes, and Commission Rules

After a Wyoming agency relationship ends, the licensee's duty of confidentiality does what?

  1. Ends immediately on the date of termination
  2. Transfers to the buyer automatically at closing
  3. Applies only to information in the public record
  4. Continues as to information obtained during the agency Correct answer.

Explanation

Fiduciary duties, including confidentiality of information gained in the relationship, continue after termination unless the information becomes public or the client consents to disclosure.

Question 20Wyoming Real Estate License Law, Statutes, and Commission Rules

Records of a Wyoming real estate transaction kept by the broker must be handled in which way?

  1. Belong exclusively to the salesperson who wrote them
  2. Must be kept in the salesperson's home office
  3. Must be kept and available to the Commission Correct answer.
  4. May be destroyed once the closing statement is signed

Explanation

The broker must maintain transaction records for the period required by rule and make them available to the Commission on request. These records support audits and complaint investigations.

Question 21Wyoming Real Estate License Law, Statutes, and Commission Rules

The Wyoming Real Estate Commission may deny a license application for which reason?

  1. The applicant lives out of state
  2. The applicant works a second job
  3. The applicant has never owned real estate
  4. A demonstrated lack of honesty, truthfulness, or integrity Correct answer.

Explanation

The Commission evaluates an applicant's character and fitness, and dishonesty or fraud is grounds for denial. Property ownership, outside employment, and out-of-state residence are not licensing disqualifiers.

Question 22Wyoming Real Estate License Law, Statutes, and Commission Rules

A Wyoming salesperson whose license has lapsed may take which action?

  1. Continue closing existing transactions for 90 days
  2. Collect commissions directly from clients
  3. Not perform brokerage activity until the license is reinstated Correct answer.
  4. Work under another broker temporarily for 30 days

Explanation

A license must be active for the licensee to perform brokerage. A lapsed license means no brokerage activity until the license is reinstated; continuing to act is unlicensed practice.

Question 23Wyoming Real Estate License Law, Statutes, and Commission Rules

A Wyoming property manager who collects security deposits for an owner must handle them in which way?

  1. Deposit them in the broker's operating account
  2. Use them for maintenance on other properties
  3. Hold them in a trust account as required for client funds Correct answer.
  4. Give them to the tenant's bank for safekeeping

Explanation

Security deposits held on behalf of others are trust funds and must be kept in the brokerage trust account, separate from the broker's own money. Using them for other properties is conversion.

Question 24Wyoming Real Estate License Law, Statutes, and Commission Rules

Which condition is required for a Wyoming salesperson license to be active?

  1. Affiliation with a licensed Wyoming broker Correct answer.
  2. A college degree in business
  3. Ownership of at least one rental property
  4. Membership in the local association of REALTORS

Explanation

A salesperson must be affiliated with and supervised by a licensed broker to engage in brokerage. Association membership, property ownership, and a business degree are not licensing conditions.

Question 25Wyoming Real Estate License Law, Statutes, and Commission Rules

Which activity by a Wyoming licensee would most likely constitute unprofessional conduct subject to discipline?

  1. Keeping client funds in a trust account
  2. Recommending that a buyer obtain a professional inspection
  3. Telling a client that the licensee represents the seller
  4. Falsifying a transaction record to hide a missed deadline Correct answer.

Explanation

Falsifying records is dishonest and constitutes unprofessional conduct subject to discipline. Keeping trust funds properly, disclosing representation, and recommending inspections are proper or required acts.

Question 26Wyoming Real Estate License Law, Statutes, and Commission Rules

Which person must hold a Wyoming real estate license to perform the activity described?

  1. An attorney drafting a deed for a client's closing
  2. An owner selling the home they have lived in for ten years
  3. A court-appointed receiver selling property under court order
  4. A person who lists another person's house for a fee Correct answer.

Explanation

Wyoming's license act requires a license for anyone who, for compensation, lists, sells, exchanges, leases, or negotiates the sale of real property belonging to another. A property owner disposing of their own real estate, a court-appointed receiver acting under court authority, and an attorney performing legal work are all outside that licensing requirement.

Question 27Wyoming Real Estate License Law, Statutes, and Commission Rules

Which body administers the Wyoming Real Estate License Act and adopts the rules that govern licensees?

  1. The Department of Workforce Services
  2. The Secretary of State's business division
  3. The Attorney General's consumer protection office
  4. The Wyoming Real Estate Commission Correct answer.

Explanation

The license act is administered by the Wyoming Real Estate Commission, which adopts rules and decides licensing and disciplinary matters. Its members are appointed by the Governor and serve as the state's regulatory authority for brokerage practice.

Question 28Wyoming Real Estate License Law, Statutes, and Commission Rules

To obtain an initial Wyoming salesperson license, an applicant must generally do which of the following?

  1. Hold a Wyoming associate broker license first
  2. Pass the licensing examination and complete required prelicense education Correct answer.
  3. Post a surety bond with the Commission
  4. Have two years of full-time experience in a related field

Explanation

Wyoming requires salesperson applicants to complete the prelicense coursework set by Commission rule and to pass the licensing examination before a license is issued. Prior business experience, a bond, and a previously held broker or associate broker license are not requirements for a salesperson license.

Question 29Wyoming Real Estate License Law, Statutes, and Commission Rules

A Wyoming seller's agent receives a written offer that is far below the listing price. What must the agent do?

  1. Reject the offer and continue marketing the property
  2. Promptly present the offer to the seller for a decision Correct answer.
  3. Hold the offer until a higher one arrives
  4. Instruct the buyer's agent to submit a higher price first

Explanation

A seller's agent must promptly transmit every written offer to the seller; deciding to accept, reject, or counter belongs to the seller. Withholding or rejecting an offer without the seller's direction breaches the agent's duties of loyalty and obedience to lawful instructions.

Question 30Wyoming Real Estate License Law, Statutes, and Commission Rules

A Wyoming salesperson affiliated with Broker A wants to also place her license with Broker B and split her time between the two offices. Under Wyoming law, what may she do?

  1. Affiliate with only one broker at a time Correct answer.
  2. Affiliate with two brokers after paying a second licensing fee
  3. Affiliate with two brokers if both agree in writing
  4. Affiliate with two brokers if the Commission approves the arrangement

Explanation

A Wyoming salesperson license is held under a single employing broker, and the salesperson may not be affiliated with more than one brokerage at the same time. To move to another brokerage, the salesperson must end the current affiliation and have the license transferred to the new broker.

Question 31Wyoming Real Estate License Law, Statutes, and Commission Rules

After notice and hearing, the Wyoming Real Estate Commission may do which of the following to a licensee who violates the license act?

  1. Award the complaining consumer compensatory damages
  2. Quiet title to the property involved in the complaint
  3. Sentence the licensee to a jail term
  4. Suspend or revoke the license and impose a fine Correct answer.

Explanation

The Commission's disciplinary authority includes suspending or revoking a license, imposing fines, and ordering additional education after proper notice and hearing. It cannot award money damages to consumers, impose criminal punishments, or decide who owns real property, which are matters for the courts.

Question 32Wyoming Real Estate License Law, Statutes, and Commission Rules

A Wyoming broker agrees to manage an owner's rental property. Before collecting rents and handling the owner's funds, what should the broker do?

  1. Record the arrangement in the broker's listing file only
  2. File a notice of the arrangement with the county clerk
  3. Obtain a written property management agreement signed by the owner Correct answer.
  4. Obtain verbal authorization and confirm it by email

Explanation

Property management is a brokerage activity, and a broker's authority to manage property, collect rents, and disburse owner funds must be established in a written management agreement signed by the owner. The written agreement fixes the broker's duties and fee and supports the required trust account records.

Question 33Wyoming Real Estate License Law, Statutes, and Commission Rules

A consumer obtains a final court judgment against a Wyoming licensee for fraud in a real estate transaction, and the licensee does not pay it. The consumer may seek reimbursement from which source?

  1. The state guarantee fund for title insurers
  2. The Commission's general operating fund
  3. The Wyoming real estate recovery account Correct answer.
  4. The brokerage's errors and omissions policy, which is mandatory

Explanation

Wyoming maintains a real estate recovery account that can reimburse a person who holds an unpaid court judgment against a licensee for a fraudulent or dishonest act in a real estate transaction, subject to statutory limits. The claim must first be reduced to a final judgment and collection pursued against the licensee before the account pays.

Question 34Wyoming Real Estate License Law, Statutes, and Commission Rules

The Wyoming Real Estate Commission notifies an applicant that it intends to deny her license based on her application history. Before the denial becomes final, what is the applicant entitled to?

  1. An immediate appeal to the Wyoming Supreme Court
  2. An automatic stay of the denial while she practices under a provisional license
  3. A binding arbitration before a panel of local brokers
  4. Notice and an opportunity for a hearing before the Commission Correct answer.

Explanation

Because licensing decisions are governed by the Wyoming Administrative Procedure Act, an applicant facing denial must be given notice of the reasons and an opportunity to be heard before the Commission acts. Judicial review is available only after the agency issues a final decision, and no provisional practice rights are created while the matter is pending.

Question 35Agency Relationships, Fiduciary Duties, and Disclosures

Which of these actions most likely creates an agency relationship between a broker and a buyer in Wyoming?

  1. The broker shows the buyer a home that is listed by another brokerage firm.
  2. The broker enrolls the buyer in automated listing alerts for new homes.
  3. The buyer and the broker sign a written agreement in which the broker agrees to represent the buyer. Correct answer.
  4. The buyer attends an open house that the broker is holding.

Explanation

Agency is created when one person consents to act on behalf of another and that other person authorizes the representation. A signed representation agreement is the clearest evidence of that consent, and it also defines the scope of the broker's authority. Casual contacts such as showings or open houses do not by themselves make the broker the buyer's agent.

Question 36Agency Relationships, Fiduciary Duties, and Disclosures

A broker representing a seller is asked by a buyer's agent whether the seller would take less than the list price. The seller has told the broker not to reveal that information. What should the broker do?

  1. Keep the seller's minimum price confidential and encourage the buyer to make an offer. Correct answer.
  2. Disclose the seller's minimum acceptable price so the buyer can meet it and the transaction will close.
  3. Tell the buyer that the seller is eager to sell and will probably accept less.
  4. Suggest the buyer submit a very low offer in order to test the seller's reaction.

Explanation

Loyalty requires the broker to protect the client's bargaining position and follow lawful instructions about confidential information. Revealing the seller's floor would harm the seller's negotiating position. The broker can still encourage the buyer to submit an offer without disclosing the seller's private pricing.

Question 37Agency Relationships, Fiduciary Duties, and Disclosures

A licensee who holds an active real estate license wants to purchase a property that the licensee has listed. What is required?

  1. Nothing needs to be disclosed as long as the licensee pays the full asking price.
  2. The licensee must disclose both the license status and the personal interest in writing before the seller accepts an offer. Correct answer.
  3. An oral statement at the closing table is sufficient disclosure.
  4. Disclosure is required only if the seller specifically asks whether the buyer is a licensee.

Explanation

A licensee who buys property in a transaction in which the licensee is involved has a conflict of interest and must disclose it so the seller can make an informed decision. Written disclosure of both the license and the personal interest, made before the seller commits, satisfies that obligation. Full price does not remove the conflict.

Question 38Agency Relationships, Fiduciary Duties, and Disclosures

A broker receives a $5,000 earnest money check on a sale. How should the broker handle the funds?

  1. Apply the money to the broker's commission if the sale closes early.
  2. Hold the uncashed check in the transaction file until the closing date.
  3. Deposit the funds promptly into the trust account designated for client funds and account for them. Correct answer.
  4. Deposit the check in the broker's general operating account and transfer the money at closing.

Explanation

Money held for others must be kept separate from the broker's own funds and must be safeguarded and accounted for. Prompt deposit into a trust account prevents commingling and misapplication of client money. The broker may not use earnest money as a commission before closing.

Question 39Agency Relationships, Fiduciary Duties, and Disclosures

A seller instructs the listing broker not to schedule showings on Sundays. The broker should follow the instruction unless:

  1. the instruction is unlawful, such as refusing to sell to buyers of a particular race. Correct answer.
  2. the broker-in-charge of the firm prefers a different showing policy.
  3. a buyer offers the full asking price and wants an immediate Sunday showing.
  4. the broker believes that a different showing schedule would sell the home faster.

Explanation

The duty of obedience requires the broker to follow the client's lawful instructions about marketing the property. Instructions that would result in unlawful discrimination cannot be followed, and the broker must explain why. Personal preference about scheduling does not override the client's direction.

Question 40Agency Relationships, Fiduciary Duties, and Disclosures

A licensee is working with a buyer who is a customer rather than a client. What does the licensee owe this buyer?

  1. Honest dealing and disclosure of known material facts, but not full fiduciary advocacy. Correct answer.
  2. Only a duty to keep the buyer's financial information confidential.
  3. No duties at all, because no agency relationship has been formed.
  4. The same full fiduciary duties of loyalty, obedience, and confidentiality owed to a client.

Explanation

A customer is a person the licensee assists without representing that person. The licensee still owes honesty, fairness, and disclosure of known material facts affecting the property, but does not owe the advocacy and fiduciary duties owed to a client.

Question 41Agency Relationships, Fiduciary Duties, and Disclosures

A buyer tells a licensee that the buyer wants to see homes only in neighborhoods where the residents are "people like us." How should the licensee respond?

  1. Comply with the request, because the buyer is the client and the client's preferences control the search.
  2. Report the buyer to the Real Estate Commission and decline to provide any further service to the buyer.
  3. Explain that steering buyers by race or national origin is illegal and show homes selected on objective criteria. Correct answer.
  4. Show the requested homes but keep a separate list documenting the buyer's stated preference.

Explanation

Fair housing law prohibits licensees from steering buyers or limiting housing choices on the basis of protected characteristics such as race or national origin. The licensee should explain the legal limit and continue to serve the buyer using objective criteria such as price, size, and location features. A single improper request does not automatically end the professional relationship.

Question 42Agency Relationships, Fiduciary Duties, and Disclosures

The duty of reasonable care generally requires a licensee to:

  1. guarantee that the roof and structural systems are sound at the time of sale.
  2. recommend professional inspections and disclose known defects to the parties. Correct answer.
  3. personally verify the square footage by measuring every room in each home shown.
  4. inspect the electrical system and disclose any code violations found.

Explanation

Reasonable care means exercising the skill and diligence a competent licensee would use, which includes recommending that clients obtain professional inspections and passing along known adverse facts. It does not make the licensee a building inspector or a guarantor of the property's condition.

Question 43Agency Relationships, Fiduciary Duties, and Disclosures

A seller's agent learns that the seller is being transferred out of state and must sell quickly. How long does the duty to keep this information confidential last?

  1. Until the licensee's license expires or the licensee changes brokerage affiliation.
  2. Only until the closing is completed and the deed is recorded.
  3. Only while the listing agreement is in effect and the property is on the market.
  4. After the agency ends, unless the information becomes public or law requires disclosure. Correct answer.

Explanation

Confidentiality survives the end of the agency relationship. The obligation ends only if the information becomes publicly available or if disclosure is required by law or a court order. Tying the duty to the listing period or to the licensee's employment would leave the former client unprotected.

Question 44Agency Relationships, Fiduciary Duties, and Disclosures

One licensee in a firm represents the seller while another licensee in the same firm represents the buyer in the same transaction. Under Wyoming practice, this situation generally requires:

  1. automatic termination of both agency agreements when the buyer signs an offer.
  2. the seller to pay both brokerage commissions at closing as a matter of law.
  3. no disclosure, because two different licensees in the firm are involved in the transaction.
  4. written disclosure to both parties and their informed consent to the firm's dual role. Correct answer.

Explanation

When a firm represents both sides of a transaction, the parties must be told in writing and must consent before the firm may continue. The firm then functions in an intermediary capacity with limits on advocacy and confidentiality. Undisclosed dual representation is a conflict of interest.

Question 45Agency Relationships, Fiduciary Duties, and Disclosures

A listing agent learns from the seller that the basement takes on water during heavy rain, and the seller does not mention it on any disclosure. What should the agent do?

  1. Say nothing, because the seller, not the agent, decides what property conditions to disclose to buyers.
  2. Quietly recommend a lower list price and let buyers discover the issue during inspections.
  3. Mention the water problem only if a buyer's agent asks a direct question about the basement.
  4. Disclose the known material defect to prospective buyers and encourage the seller to amend the disclosure. Correct answer.

Explanation

A licensee may not conceal a known material adverse fact about the property. The agent should disclose it and urge the seller to correct any inaccurate disclosure, because a defect that affects value or a buyer's decision is material. Silence can expose both the seller and the licensee to liability for misrepresentation.

Question 46Agency Relationships, Fiduciary Duties, and Disclosures

During a showing, the seller tells the buyer's agent that the roof was replaced last year. The agent later learns the roof is original. What should the agent do?

  1. Stay silent, because correcting the seller might harm the sale and the agent's commission.
  2. Wait until after closing and then tell the buyer what the agent learned.
  3. Correct the misinformation promptly and disclose what the agent knows about the roof. Correct answer.
  4. Advise the buyer to ask the seller to repeat the statement in writing.

Explanation

A licensee may not pass along or reinforce a statement the licensee knows to be false. Correcting the misinformation promptly protects the buyer and keeps the licensee from being part of a misrepresentation. Waiting until after closing leaves the buyer harmed and the licensee exposed.

Question 47Agency Relationships, Fiduciary Duties, and Disclosures

A buyer's agent will be paid a share of the commission through a cooperative arrangement with the listing broker. What must the agent do?

  1. Adjust the amount quietly so the buyer is not confused by the paperwork.
  2. Disclose the compensation arrangement to the buyer as required by law and agency rules. Correct answer.
  3. Refuse the payment, because a buyer's agent may never be compensated by the seller's side.
  4. Keep the arrangement confidential because it is a private business matter between the brokers.

Explanation

A buyer's agent must disclose how the agent will be paid so the buyer understands the incentives in the transaction. Cooperative compensation paid through the listing broker is common, but it must not be hidden from the client. Concealment of compensation is a breach of the duty of disclosure.

Question 48Agency Relationships, Fiduciary Duties, and Disclosures

A listing broker offers compensation to a cooperating broker who is acting as a subagent rather than as the buyer's agent. What is true of this arrangement?

  1. The subagent owes fiduciary duties to the buyer because the buyer benefits from the service.
  2. The subagent automatically becomes the buyer's agent once an offer is written.
  3. The subagent owes fiduciary duties to the seller, and the buyer must be told the broker does not represent the buyer. Correct answer.
  4. No disclosure is needed because both brokers are working on the same side of the transaction.

Explanation

A subagent acts on behalf of the seller through the listing broker and therefore owes fiduciary duties to the seller. Because a buyer may mistakenly assume the cooperating licensee is working for the buyer, the buyer must be told clearly that the licensee represents the seller, not the buyer.

Question 49Agency Relationships, Fiduciary Duties, and Disclosures

A buyer client has told their agent the maximum amount the buyer can pay. The agent's firm is acting as an intermediary for both parties. What should the agent do with this information?

  1. Place the figure in the transaction file so all parties can review it at closing.
  2. Keep the buyer's financial position confidential and act only within the consent to limited representation. Correct answer.
  3. Share it with the other licensee in the firm so both sides can negotiate efficiently.
  4. Share the figure with the seller so the seller can hold firm on price and obtain the best terms.

Explanation

Even in an intermediary arrangement, a licensee may not use one party's confidential financial information to the disadvantage of that party. The buyer's price ceiling stays confidential, and the agent's role is limited to what both parties consented to in writing.

Question 50Agency Relationships, Fiduciary Duties, and Disclosures

A listing agreement expires without a sale. What happens to the broker's duties?

  1. They automatically convert into a buyer's agency agreement for any buyer the broker produced.
  2. They end entirely, including the duty to account for any funds or documents the broker holds.
  3. Confidentiality and accounting duties survive, but the broker's authority to market the home ends. Correct answer.
  4. They continue in full, so the broker may keep showing the home until it sells.

Explanation

Expiration ends the broker's authority to act for the client, including the authority to market the property. Some duties, notably confidentiality and the obligation to account for money and documents, survive termination. Any continued marketing would require a new agreement.