Difficulty: Easy

Average Score: 84%

Which of the following listing agreements is prohibited by the Real Estate Board?

Rationale

The broker receives as commission any money above a specified amount.

This type of listing agreement is prohibited by the Real Estate Board as it can create conflicts of interest and undermine fair market practices. Such arrangements can incentivize brokers to act in ways that are not in the best interest of the property owner.

A (The broker receives as commission any money above a specified amount) CORRECT

This choice is illegal under the Real Estate Board's regulations because it allows brokers to potentially manipulate sale prices to receive higher commissions, resulting in unethical practices. The prohibition ensures that brokers provide genuine representation and avoid conflicts that could arise from financial incentives tied to inflated sale prices.

B (The broker receives a lower rate of commission if the owner sells the property) YOUR ANSWER

This listing agreement is permissible as it provides flexibility for the owner to incentivize a sale. It allows owners to negotiate lower fees if they successfully sell the property themselves, which does not conflict with ethical standards set by the Real Estate Board.

C (The broker receives a lower rate of commission if the property is not sold within a specified time period) YOUR ANSWER

This type of agreement can be acceptable as it offers a form of accountability for the broker. It encourages brokers to actively market the property while providing a financial incentive to improve their performance, making it compliant with the Real Estate Board's guidelines.

D (The broker receives a bonus if the property is sold within a specified time period) YOUR ANSWER

Offering a bonus for selling a property within a designated timeframe is allowed, as it serves as an incentive for brokers to close deals quickly. This arrangement aligns with the Real Estate Board's principles since it promotes efficiency without compromising ethical practices.

Conclusion

In real estate, it is crucial that listing agreements maintain ethical standards to protect consumers. Among the options listed, only the first choice violates these standards by allowing commissions based on inflated sale prices. The remaining options comply with regulations, providing incentives without compromising the integrity of the sales process.

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