Real estate exam terms
9 terms, each with a plain definition, the term it is most often confused with, and how the license exam actually asks about it.
The employment contract between a buyer and a brokerage
It makes the buyer a client rather than a customer, and it sets out the term, the scope of the search and how the brokerage is compensated — which may be by the seller, by the buyer, or by a combination, disclosed in writing.
Compensation and agency are separate questions. Who pays a brokerage does not by itself determine whom that brokerage represents.
One brokerage is appointed, but the seller may sell it themselves and owe nothing
The brokerage is the only one authorized to market the property, so no other firm can claim a commission — but the seller keeps a carve-out for a sale they procure alone.
The carve-out is what produces disputes about procuring cause, which is why the two subjects tend to appear together.
The listing broker is paid on any sale during the term, whoever finds the buyer
The strongest listing from the brokerage’s side and by far the most common, because the certainty of payment is what justifies spending money on marketing. Even a buyer the seller found personally triggers the commission.
The single difference from an exclusive agency listing is what happens when the seller sells it themselves: here, the commission is still owed.
The employment contract between a seller and a brokerage
It creates the agency relationship, sets the term, states the compensation and defines what the brokerage will do. Compensation is always negotiable between the firm and its client — never set by agreement among competing firms.
Know all four types by what they do to the commission: exclusive right-to-sell, exclusive agency, open, and net.
A cooperative arrangement among brokers to share listings and offers of cooperation
A private cooperative of member brokerages, not a public record and not a government registry. Its rules are its own, which is why practice and terminology can differ noticeably between markets in ways state law does not explain.
It is not a type of listing agreement and it is not an agency relationship — two distractors the exam uses regularly.
The broker keeps everything above a price the seller sets
The seller names a figure they must receive and the brokerage’s compensation is whatever the sale exceeds it by. The arrangement sets the broker’s interest directly against the client’s: the broker profits by keeping the seller uninformed about what the property is worth.
Name the conflict of interest rather than the arithmetic. Several states prohibit net listings outright and the rest restrict them.
A non-exclusive listing; only the broker who procures the buyer is paid
Any number of brokerages may work the property and the seller may also sell it themselves. Because effort may go entirely unrewarded, brokerages invest little in these, and sellers usually get correspondingly little marketing.
A unilateral contract: the seller promises to pay if a broker produces a buyer, and no broker promises to try.
The broker whose efforts started the unbroken chain of events leading to the sale
The standard used to settle commission disputes between cooperating brokerages, most often where a buyer first saw a property with one agent and wrote the offer with another. It looks at the chain of events, not at who filed which document.
Neither showing the property first nor writing the contract is automatically decisive. The exam wants "unbroken chain of events".
The contract appointing a manager as the owner’s general agent for a property
It sets the manager’s authority, compensation and reporting, and it creates a general agency — an ongoing relationship covering leasing, rent collection, maintenance and accounting, rather than a single transaction.
Money handled for owners and security deposits held for tenants both go into trust accounts, which is why property management questions so often turn into trust fund questions.
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