Real Estate Lesson One Test

Questions and Answers

Because the real estate housing market is varied in nature and deals with many different types of desires and needs, it is said to be ________?

stratified

What is the desk cost for a broker?

The total current cost including salaries paid to the office manager and receptionist decided by the number of agents in the office.

Commingling is most nearly the opposite of ______?

segregate

What does commingling refer to?

The act of mixing or blending together. Signup and view all the answers

What act best describes conversion in real estate?

The salesperson receives $500 cash from the buyer and spends it before the offer is accepted. Signup and view all the answers

What is conversion in a real estate context?

The misappropriation and use of moneys or property of another. Signup and view all the answers

In the case where a broker loses a deposit check made payable to the seller, who bears the risk?

The seller. Signup and view all the answers

Which of the following could be used by a buyer as an earnest money deposit in purchasing real property? (Select all that apply)

All of the above Signup and view all the answers

When using a note as a deposit from a buyer in making an offer, what should the agent inform the seller?

The deposit is in the form of a note before the seller accepts the offer. Signup and view all the answers

What should an agent do if a buyer instructs to hold a check until a future date?

Hold the check uncashed and inform the seller accordingly. Signup and view all the answers

If a buyer's offer states that their check is to be held uncashed until closing, what should the broker do?

Take the offer and inform the seller of the conditions on the deposit before acceptance. Signup and view all the answers

What should Broker Brown do when accepting a deposit from Charles Cable for Blackacre?

Can accept the deposit as the agent for Buyer Cable and place the money in a buyer's trust fund. Signup and view all the answers

Can a real estate agent use trust account funds for repairs on a managed house?

Yes, to pay for repairs on the house managed by the broker. Signup and view all the answers

Who must sign for withdrawals from a real estate broker's trust account?

The broker or at least one authorized person. Signup and view all the answers

Study Notes

Real Estate Concepts and Terminology

Stratified Housing Market: Refers to the varied nature of the real estate housing market, addressing different types of desires and needs, including residential, business, investment, agriculture, and industrial purposes.
Desk Cost for Brokers: Comprises total current costs, including salaries for office management, calculated based on the number of agents in the office.
Commingling vs. Segregate: Commingling involves mixing funds, which is the opposite of segregating, or keeping funds separate.
Definition of Commingling: The blending or mixing of funds, often seen as a violation of ethical standards in real estate.

Conversion in Real Estate

Definition of Conversion: Refers to the misappropriation and personal use of another's funds, a more severe offense than commingling.
Example of Conversion: If a salesperson spends a buyer's deposit on personal expenses before the offer is accepted, it constitutes conversion.

Handling Deposits in Real Estate Transactions

Broker's Risk with Lost Deposits: A broker authorized to accept deposits assumes the risk of loss of the deposit if it was lost due to negligence, impacting the seller.
Acceptable Earnest Money Deposits: Buyers in real estate can use various forms such as postdated checks, unsecured promissory notes, or promissory notes secured by deeds of trust as earnest money deposits.
Note as Deposit: Agents must inform sellers when deposits are in the form of notes before the seller accepts the offer.

Trust Accounts and Their Management

Trust Account Benefits: Trust accounts benefit both the beneficiary and the trustor, do not require a minimum balance, and may not earn interest under current law. They protect the interests of all parties in a transaction.
Holding Checks as Agent: If an agent holds a buyer's check to be cashed later, they must inform the seller and obtain consent before acceptance.

Broker Responsibilities

Accepting Deposits Without Authorization: A broker can accept a buyer’s deposit as their agent and place it in a buyer's trust fund if not explicitly prohibited by the seller.
Use of Trust Account Funds: Trust account funds may be used for necessary repairs on properties managed by the broker, ensuring benefits go to involved parties only.
Withdrawal Restrictions: Withdrawals from a broker's trust account require the broker's signature or those of authorized personnel, ensuring accountability.

Description

Test your knowledge on key real estate concepts with this flashcard quiz based on Lesson One. From understanding the stratification of the housing market to knowing brokers' desk costs, this quiz is perfect for anyone looking to sharpen their real estate vocabulary. Get ready to enhance your expertise in the field!