Colorado Practice Test for PSI,100 Questions with accurate answers, Rated A, 2022/2023.

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Colorado Practice Test for PSI,100 Questions with accurate answers, Rated A, 2022/2023. The brokerage firm owns the listing contract and has designated a broker to represent the seller. In this ... case, the designated broker: A. performs the services and represents the seller. B. is an employing broker, both represent the seller. C. is not supervised by the employing broker. D. will be an agent of the buyer. - ✔✔performs the services and represents the seller. Only a designated broker has an agency relationship with the seller- the designated agency relationship does not extend to the employing broker unless the employing broker is also designated. Designated agents can only represent a client as a single agent or transaction agent. The employing broker is still obligated to supervise the designated broker, but the designated broker isn't allowed to share any knowledge with an employing broker who isn't also designated to that client. If a broker wishes to be the only broker involved in a transaction, thereby "double ending" this sale, she may A. represent both parties as a transaction broker. B. treat both parties as customers. C. represent one party as an agent and the other as a transaction broker. D. act as an agent to each party. - ✔✔represent both parties as a transaction broker. Dual Agency in Colorado is not allowed. Dual agency occurs when real estate agents from the same firm claim to represent both the buyer and the seller in the same transaction. An inactive broker has been asked by a friend to list her house in six months. In this case, the broker A. must pay her errors and omissions insurance, which will activate the license. B. may activate her license prior to listing the home. C. should list the house as a FSBO so the broker won't have to activate her license. D. must refer the potential seller (friend) to an active licensee and receive a referral fee. - ✔✔B. may activate her license prior to listing the home. The answer is may activate her license prior to listing the home. In order to take the listing, the broker must activate her license by meeting all requirements, including obtaining E&O insurance. Inactive brokers may not receive a referral fee. Listing the home as a FSBO and acting as a broker is illegal. A buyer is assuming a loan at a closing on October 25. The loan balance after the October 1 payment is $125,000 and the interest rate is 10%. How will the interest proration appear on the buyer's closing statement? A. $235.22 credit B. $806.45 credit C. $236.82 debit D. $1041.67 debit - ✔✔B. $806.45 credit The answer is $806.45 credit. To solve this problem, take the total amount times the interest rate, then divide by 12 to find monthly interest: $125,000 x .1 = $12,500 ÷ 12 = $1,041.67 monthly interest Now, divide that answer by the number of days in October and multiply that by the number of days the buyer must pay for: $1,041.67 ÷ 31 X 24 = $806.45 prorated amount Interest on assumed loans is always a buyer credit and seller debit because interest is paid in arrears, and the buyer did not own the property at that time. All of the following are true of the six-column worksheet EXCEPT A. it is a tool for tracking who pays what. B. it replaces the buyer and seller closing statements. C. it is not given to parties. D. the information on it is transferred to the buyer and seller closing statements. - ✔✔B. it replaces the buyer and seller closing statements. The six-column worksheet does not replace the buyer and seller closing statements. All of the following are true of the brokerage firm's office policy requirements EXCEPT A. it must include the license numbers and name of each broker associate. B. if the Commission audits the firm, the employing broker must be able to produce the policy. C. the only required element is a statement on designated brokerage. D. each broker associate must read and sign a copy of the policy. - ✔✔A. it must include the license numbers and name of each broker associate. The answer is it must include the license numbers and name of each broker associate. A list of the brokerage firm's associate brokers would not be included in the office policy. A transaction broker is most likely a(n) A. coach B. agent C. facilitator D. advocate - ✔✔C. facilitator A transaction broker facilitates or coordinates the transaction, in a neutral way, to completion. An agent has fiduciary obligations, as illustrated by a coach or advocate. 8. Colorado law requires buyers to be notified of the source of water for residential properties, how does the buyer receive this notice? A. The buyer's listing contract B. The water department sends a notice after closing C. Contract to Buy and Sell or listing contract D. Seller's Property Disclosure or Water Addendum - ✔✔D. Seller's Property Disclosure or Water Addendum The Contract to Buy and Sell gives the buyer notice to review the seller's property disclosure or source of potable water addendum to verify the water supply is adequate prior to closing. 9. A general agent acting for a principal A. has no authority to bind her principal B. has limited authority to bind her principal. C. has unlimited authority to bind her principal. D. must have a power of attorney. - ✔✔B. has limited authority to bind her principal. General agents are allowed to bind their principal based upon a signed agreement. Special agents have no power to bind, and a universal agent has unlimited power to bind the principal. 10. The brokerage relationship between a seller and listing broker is created by the A. disclosure to buyer or seller. B. A listing contract C. common law. D. Contract to Buy and Sell. - ✔✔B. A listing contract Brokerage relationships, agency or transaction-broker, are defined in the listing contract. 11. The purpose of Rule 6.15 regarding sign crossing is to protect whom? A. Sellers and buyers B. Brokers with expired listings C. Brokers with active listings D. Sellers - ✔✔C. Brokers with active listings The purpose of Chapter 4 of the Code of Colorado Regulations, Section 725-1-6.15 regarding sign crossing is to protect brokers with active listings from other brokerage firms trying to list the property. Part A of the rule reads "Brokers will not negotiate a Listing Contract directly with a Consumer for compensation from said Consumer if such Broker knows the Consumer has an unexpired Listing Contract with another Brokerage Firm granting said Brokerage Firm an exclusive contract." 12. A property sold for $450,000. The out-of-state seller will only net $6,000 at closing. How much will the closing entity withhold for income taxes? A. $6,000 B. $12,000 C. $9,000 D. $6,700 - ✔✔A. $6,000 Withholding is the lesser of the seller's net proceeds or 2% of the sales price, which means the full amount of the seller's proceeds will be held 13. The employing broker who has a number of independently contracted broker associates is responsible for A. paying for health care, vacation, and other employee benefits. B. setting the amount of commissions each broker associate must earn each month. C. paying for all office expenses and managing the office equipment D. reviewing all contracts brought into the firm by all broker associates. - ✔✔D. reviewing all contracts brought into the firm by all broker associates. The answer is reviewing all contracts brought into the firm by all broker associates. Employing brokers must review all contracts and supervise all employed broker associates. Broker associates with less than two years of experience require a high level of supervision 14. Which of the following is TRUE regarding specific performance in the Colorado approved Contract to Buy and Sell? A. It is no longer allowed in any approved form B. It is only in the residential form and only for the seller C. Only the commercial and vacant land allows specific performance D. All forms allow for the use of specific performance by checking a box in the form - ✔✔D. All forms allow for the use of specific performance by checking a box in the form The answer is all forms allow for the use of specific performance by checking a box in the form 15. The closing company's job is to A. close the transaction according to the terms of the contract. B. represent the buyer and seller in the event of a dispute. C. assist the listing broker while presenting all the documents. D. have overall supervision of the closing. - ✔✔A. close the transaction according to the terms of the contract. The answer is close the transaction according to the terms of the contract. The designated brokers represent the buyer and seller, not the closing company. The listing broker has overall supervision of the closing. 16. A new broker attending her first closing found an error in the amount her buyer was owed. The broker should A. stop the closing and call her employing broker to find out what to do. B. pay the buyer the difference once she gets her commission check. C. say nothing since she is most likely wrong, being new to the business. D. bring the error to the attention of the closer to determine the next step. - ✔✔D. bring the error to the attention of the closer to determine the next step. The answer is bring the error to the attention of the closer to determine the next step. Any error should be brought to the attention of all parties at the closing. 17. A brokerage firm is primarily involved in listings and sales, but does manage 15 rentals. How many trust accounts must the brokerage maintain? A. 5 B. 4 C. 2 D. 3 - ✔✔D. 3 Once the brokerage manages more than seven rentals, they will need to have at least three accounts- one for earnest money (sometimes called "sales escrow"), one for rental management, and one for security deposits. A broker who manages seven rentals or less may deposit rental receipts and security deposits in the "sales escrow" account. 18. Which of the following is TRUE about the rules for a broker's referral fees to non-licensed individuals? A. Brokers may never pay a referral fee to a non-licensed individual. B. Unlicensed assistants may be independent contractors, who receive a portion of the brokers' commissions. C. Brokers may pay up to a half percent of their commission to a non-licensed individual. D. A finder's fee is acceptable as long as it is less than 1% of the commission. - ✔✔A. Brokers may never pay a referral fee to a non-licensed individual. The answer is brokers may never pay a referral fee to a non-licensed individual. Brokers are not allowed to compensate non-licensed persons, including assistants, with referral fees or part of the commission. 19. Brokerage firms, when paying commissions to broker associates, A. must have a minimum of a 50/50 split. B. must set commission rates and splits within the office, not with other firms. C. are not allowed to take more than 20% of the full commission. D. must withhold taxes and insurance. - ✔✔B. must set commission rates and splits within the office, not with other firms. The answer is must set commission rates and splits within the office, not with other firms. Antitrust law allows employing brokers to set the amount of commission the firm will charge and the firm's commission splits with broker associates. Setting these rates with outside firms would violate the law. 20. Good funds would include all the following EXCEPT A. a cashier's check. B. a wire transfer. C. a teller's check. D. a title insurance company check. - ✔✔D. a title insurance company check. The answer is title insurance company's check. Personal checks are not allowed, which would also include company checks, business checks, or money market checks. 21. Bills of sale convey title to A. fixtures B. real or personal property. C. personal property. D. real property - ✔✔C. personal property. Fixtures are considered real property and, like real property, are conveyed by a deed. 22. Fair Housing complaints in Colorado are handled by the A. office of the Secretary of State B. Colorado Civil Rights Commission. C. Real Estate Commission. D. office of the Attorney General. - ✔✔B. Colorado Civil Rights Commission. The answer is Colorado Civil Rights Commission. There is one year to file a complaint with them, and up to two years to go to court. 23. If there is a dispute on which fair housing act might apply at a state, federal, or local level the A. jurisdiction will have to be decided and the local prosecutor will prevail. B. oldest will prevail. C. strictest will apply. D. a court will have to decide. - ✔✔C. strictest will apply. The answer is strictest will apply. The strictest will apply in order to give the consumer the most protection. 24. The buyer's broker has completed the offer for her first time buyers and printed it. The broker hands the offer to the buyers and tells them to read and review the document and let the broker know if they have any questions. In this case, the broker's actions are considered to be A. acceptable if the buyers are knowledgeable and have a college education. B. standard practice, since brokers cannot practice law and explain legal documents C. in violation of Rule F and good business practices. D. unacceptable as the broker must have an attorney review the offer. - ✔✔C. in violation of Rule F and good business practices. The answer is in violation of Rule F and good business practices. Brokers should review the contract section by section, explaining to the party they represent what each section means and its implications. This is particularly true of dates, deadlines, and contingencies. Brokers must also recommend the party speak to an attorney or other counsel. 25. Who has the responsibility for presenting an earnest money promissory note to be collected? A. Lender B. Buyer broker C. Employing broker D. Listing broker - ✔✔D. Listing broker The answer is listing broker. The promissory note is held by the listing broker and the note must be redeemed and converted into good funds prior to the closing. 26. On Friday, a broker receives an earnest money check with an offer on his listing. The seller cannot be reached until Monday. The broker should A. keep the check in a safe place until the offer is accepted or rejected. B. deposit the check in his personal trust account. C. negotiate to see if he can get a better offer. D. stop all showings until after the offer is presented. - ✔✔A. keep the check in a safe place until the offer is accepted or rejected. The answer is keep the check in a safe place until the offer is accepted or rejected. The broker should continue to show the property and solicit offers until the seller tells them to stop or the property closes. 27. The overall responsibility for the closing belongs to the A. title company. B. employing brokers. C. listing broker and brokerage firm. D. designated broker for the buyer. - ✔✔C. listing broker and brokerage firm. The answer is the listing broker and brokerage firm. The overall responsibility for the closing belongs to the listing broker and brokerage firm. 28. A broker using an exclusive Right to Sell or Buy contract in Colorado must have A. the full price of the listed property or price of the property the buyer is seeking. B. the commission amount to be paid. C. a definite termination date. D. a complete description of the personal property on the property. - ✔✔C. a definite termination date. The answer is a definite termination date. The broker should have all the other items completed but all listings per Rule E-11 must have a defined termination date. 29. Once a Notice for Election and Demand has been received, the next step is for the A. lender to confiscate the property. B. private trustee to set a court date for a foreclosure hearing. C. public trustee to advertise the sale. D. homeowner to pay off the entire loan amount to keep the property - ✔✔C. public trustee to advertise the sale. The answer is public trustee to advertise the sale. The lender does not have title to property. The homeowner can bring the loan current, but does not need to pay off entire loan. A private trustee would be involved in the foreclosure of a mortgage and could not issue an Election and Demand, which is used by the public trustee under the non-judicial foreclosure rights. 30. All the following are advantages of seller financing EXCEPT A. no points or origination fees. B. shorter term. C. lower interest rate. D. less strict qualifying standards. - ✔✔B. shorter term. The answer is shorter term. Seller financing offers a number of advantages such as lower interest rates, easy qualification, and no closing fees. A disadvantage is the shorter term often offered. 31. All of the following are true of the square footage disclosure EXCEPT A. it is used to tell how the square footage of a residential property was determined. B. the listing broker, seller, and buyer sign the form to show it was delivered and received. C. the listing broker must deliver it to the buyer in a timely manner. D. it is the responsibility of both the listing and buyer brokers to measure the property for the disclosure. - ✔✔D. it is the responsibility of both the listing and buyer brokers to measure the property for the disclosure. The answer is it is the responsibility of both the listing and buyer brokers to measure the property for the disclosure. The disclosure is the responsibility of the listing broker only. 32. All of the following define Commission rules on advertising EXCEPT: A. all brokers may advertise anywhere as long as they use their and the brokerage firm's name in the ad. B. the broker is responsible for making sure that all information is correct and accurate. C. ads should clearly allow the reader to understand the advertisement is from a brokerage firm and broker or team. D. it is acceptable for the broker to use a name different than his licensed name, if everyone knows his nickname. - ✔✔D. it is acceptable for the broker to use a name different than his licensed name, if everyone knows his nickname. The answer is it is acceptable for the broker to use a name different than his licensed name, if everyone knows his nickname. All advertising must be done in the licensed name of the broker and include the brokerage firm's name. NOTE - This question says "All of the following define Commission rules on advertising EXCEPT" which means it's looking for a false answer, and it's false that it is acceptable for the broker to use a different name than his licensed name. 33. A transaction broker would owe the party they represent all the following EXCEPT A. disclosure of benefits and risks. B. an accounting. C. confidentiality. D. disclosure of adverse material facts. - ✔✔A. disclosure of benefits and risks. The answer is disclosure of benefits and risks. Agents are required to disclose both benefits and risks while transaction brokers must just disclose known risks. 34. A broker associate has just listed a property where a suicide recently took place. In this case, the broker A. may disclose the suicide with written permission from seller. B. will need permission from the employing broker to disclose. C. must disclose this to the public prior to receiving confidential information. D. may disclose the suicide with verbal permission. - ✔✔A. may disclose the suicide with written permission from seller. The answer is may disclose the suicide with written permission from the seller. The stigmatized property law states that listing brokers may not disclose items that are not considered to be material to the transaction, such as a suicide, without written permission from the seller. 35. The closing statements for the buyer and seller contain A. only the debits and credits of each party. B. the closing instructions given by the title company. C. all information pertinent to the closing documents. D. detailed loan information for the parties. - ✔✔A. only the debits and credits of each party. The answer is only the debits and credits of each party. The closing statements for the buyer and seller contain only the debits and credits of each party. 36. The seller on a listing has told the broker she wants to offer seller financing, the next step for the broker is to A. review the options for approved deeds of trust. B. tell her that the Dodd-Frank law does not allow seller financing. C. discuss the term and rates and then list them in the listing contract. D. suggest she speak to a mortgage loan originator or attorney. - ✔✔D. suggest she speak to a mortgage loan originator or attorney. The answer is suggest she speak to a mortgage loan originator or attorney. Real estate brokers are not allowed to act as mortgage loan originators and suggest terms or review loan documents with sellers. Sellers are allowed to offer financing; brokers are not allowed to help them decide what terms, conditions, and forms to use. 37. A broker is working with a buyer as a buyer's agent, who has expressed an interest in buying one of the broker's rentals. In this instance the broker's first step should be to A. tell the buyer to have an inspection so there is no conflict of interest. B. disclose that the broker would not be allowed to be the buyer's agent in the transaction. C. give the buyer a Brokerage Disclosure to Buyer form and have her sign it. D. make sure the buyer can qualify for the purchase. - ✔✔B. disclose that the broker would not be allowed to be the buyer's agent in the transaction. The answer is disclose that the broker would not be allowed to be the buyer's agent in the transaction. The broker will be an agent representing herself in the transaction so the buyer would be required to be a customer or find another broker to represent him. A brokerage disclosure to buyer form should have been given when the buyer and broker started to work together prior to signing an agency agreement. 38. Whose responsibility is it to make sure computer generated forms are correct and match those on the Commission website? A. The employing broker B. Only the software firm C. The broker who bought the software D. The Commission who approves the software companies - ✔✔C. The broker who bought the software The answer is the broker who bought the software. The software company has limited liability and brokers must make sure all forms are reproduced exactly as approved. 39. The purpose of the Seller's Property Disclosure is to A. relieve the brokers from having to make any disclosures. B. create a written disclosure of material facts about the property. C. give the buyer enough information to eliminate an inspection. D. remove all liability from the seller for any issues on the property. - ✔✔B. create a written disclosure of material facts about the property. The answer is create a written disclosure of material facts about the property. No disclosure removes all liability, and the brokers will still have to disclose any material facts they know. This disclosure does not replace the need for an inspection. 40. The closing instructions are a three party agreement between the buyer, seller, and A. title company B. listing broker. C. buyer's broker. D. lender. - ✔✔A. title company The answer is title company. This form is used by the seller and buyer to hire the title company to complete the closing. 41. A broker has given the seller and buyer a Change of Status form to become a transaction broker and double end the sale. The broker's ability to make this change was agreed to in what document(s)? A. The Change of Status form B. The exclusive-right-to-sell only C. The exclusive-right-to-buy only D. Both listing contracts - ✔✔D. Both listing contracts The answer is both listing contracts. The seller and buyer agree in the listing to allow the broker to become a transaction broker and double end the transaction, the notice of this change is the purpose of the Change of Status form. The broker can also give this notice in the Contract to Buy and Sell. 42. The Real Property Transfer Declaration is completed at closing and sent to the A. County Assessor's office. B. state engineer. C. Real Estate Commission. D. Department of Revenue - ✔✔A. County Assessor's office. The answer is the County Assessor's office. This is used by the assessor to ensure fair and uniform property tax assessments. 43. The seller has given a buyer a counteroffer with three days to respond. The buyer has found a new property they like better and want to put an offer in on it. The buyer tells her agent to see if they can get a response from the seller on the new property before the three days are up to hold the counteroffer as a backup in case the new offer fails. In this case, how is the buyer's agent obligated to proceed? A. The broker should let the listing broker know the buyer is looking at another property as a professional courtesy B. The broker should follow the buyer's instructions and say nothing to either listing broker C. The broker should inform the listing broker of the new property the buyer has a counter offer on another property to motivate the new seller to accept the offer D. The broker should inform the buyer he must respond to the counter before writing another contract or may be obligated to buy both properties - ✔✔B. The broker should follow the buyer's instructions and say nothing to either listing broker The broker's fiduciary duty is to her client, so she should follow the buyer's instructions and say nothing to either listing broker. It is in the buyer's best interest to keep the first seller waiting while the buyer finds out if the new seller will accept her offer. The buyer is not obligated to respond to the counteroffer at all and can buy a new property without any obligation to the first seller. 44. A broker has been approached by her neighbor to sell a business opportunity the neighbor owns. When would a real estate license be required to sell this business opportunity? A. If any real property or interest in real property is included B. If there is any personal property included C. Only when the business opportunity has inventory over $100,000 D. If the sale amount is more than 1 million dollars - ✔✔A. If any real property or interest in real property is included The answer is if any real property or interest in real property is included. If there is no real property or lease with the business, there is no need for a real estate license. The amount of the sale or the inventory has no bearing on the requirement. 45. The listing contract on Ash Street expired. Prior to the expiration date, the broker gave the seller a list of potential buyers who had seen the property in compliance with the 60 days holdover in the listing. Three months later the seller sold the property to one of the buyers listed. In this case, the broker A. is entitled to a 1% finder's fee. [Show More]

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