Real Estate: The Sales Process! Quiz

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| By Sseveland

Sseveland

Community Contributor

Quizzes Created: 21 | Total Attempts: 28,503

Questions: 12 | Attempts: 71 | Updated: Mar 21, 2023

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Questions and Answers

1.

The most important contract in the sale of real property is called the "agreement of sale".
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
The most important contract in the sale of real property is called the "agreement of sale" because it outlines the terms and conditions of the sale, including the purchase price, payment terms, and any contingencies. This contract is legally binding and serves as a crucial document for both the buyer and the seller to ensure a smooth and fair transaction.

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2.

The agreement of sale is NOT a legally binding contract.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
The agreement of sale is the most important contract for the sale of real estate and represents a legally binding contract and both parties are legally bound to honor the terms and conditions of the contract.

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3.

Before buyer signs, this agreement of sale, the Rules, and Regulations of the Pennsylvania Real Estate Commission require that all licensed real estate agents prepare and give to any buyer a reasonable, accurate written estimate of closing costs.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
The statement is true because according to the Rules and Regulations of the Pennsylvania Real Estate Commission, licensed real estate agents are required to provide buyers with a reasonable and accurate written estimate of closing costs before they sign the agreement of sale. This requirement ensures that buyers are fully informed about the potential costs involved in the real estate transaction.

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4.

The "statute of frauds" requirement is that the seller is guaranteeing the buyer a clear title to the property being sold.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
The "Statute of Fraud" is a requirement that the Agreement of Sale must be in writing. All contracts must be in writing and signed.

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5.

As the person giving the offer, a prospective buyer is officially known as the "offeror". The prospective seller as the receiver of the offer is officially known as the "offeree".
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
The explanation for the given correct answer is that in a legal context, the person making an offer is referred to as the "offeror" and the person receiving the offer is called the "offeree". This terminology is commonly used in contract law to distinguish between the parties involved in the negotiation process. Therefore, it is true that the prospective buyer is officially known as the "offeror" and the prospective seller is officially known as the "offeree".

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6.

An advance offer of money put up in earnest by the buyer with the agreement of sale to make a good faith offer to the seller of the property is known as a "contract binding offer".
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
It is known as an Earnest Money Deposit.

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7.

If the offer made through the agreement of sale is accepted by the seller, the earnest money deposit is at risk and may be forfeited as liquid damages in the event of default by the buyer.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
If the offer made through the agreement of sale is accepted by the seller, it means that both parties have agreed to the terms and conditions of the sale. In this case, the earnest money deposit, which is a sum of money paid by the buyer to show their commitment to the purchase, is at risk. If the buyer defaults on the agreement, meaning they fail to fulfill their obligations, the seller has the right to keep the earnest money deposit as liquid damages. This serves as compensation for any losses or damages incurred by the seller due to the buyer's default. Therefore, the statement is true.

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8.

Brokers are required by law to deposit money belonging to another into an escrow account within seven (7) days following its receipt in the real estate office where the escrow records are maintained.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
Must be deposited by the end of the next business day following its receipt. An exception to the law: If money of another has been tendered to the broker in the form of a check....with the written permission of both the buyer and the seller or the lessee and lessor, refrain from depositing money into an escrow account by the deadline pending the seller's or lessor's acceptance of the offer. The broker is then required to deposit the money into the escrow account within 1 business day of the acceptance of the offer.

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9.

When an offer is made by the offeror, the offeree has 3 choices: 1) Accept the offer, 2) Reject the offer, 3) File a complaint with the Pennsylvania Real Estate Commission.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
3 choices: 1) Accept offer, 2) Reject Offer, 3) Make counteroffer.

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10.

A counteroffer by law represents a total rejection of the original offer.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
A counteroffer is a response to an original offer in a negotiation process. By law, a counteroffer is considered as a rejection of the original offer because it introduces new terms or conditions. This means that the party making the counteroffer is not accepting the original terms and is proposing alternative terms instead. Therefore, it can be said that a counteroffer represents a total rejection of the original offer.

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11.

A temporary loan that can be used to complete the down payment needed for the settlement of the new home as the result of the cash that has not been released from the sale of the old home is known in the real estate business as an unsecured loan.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
A swing loan represents a risk to the borrower/buyer as they may be burdened with payments on 3 property loans: 1) mortgage on an old home that remains unsold, 2) mortgage loan needed to purchase a new home, 3) swing loan needed to carry over the cash from the old unsold home to make a down payment on the purchase of a new home.

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12.

There are numerous risks to a borrower-buyer who enters into an agreement of sale to purchase a new home without having sold an old home and then is unable to sell the old home in time to go to settlement on the new home. In this case, a borrower-buyer may possibly be burdened with payments on 3 property loans: 1) mortgage on an old home that remains unsold, 2) mortgage loan needed to purchase a new home, 3) swing loan needed to carry over the cash from the old unsold home to make a down payment on the purchase of a new home.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
Entering into an agreement of sale to purchase a new home without having sold an old home can pose significant risks to the borrower-buyer. If the old home is not sold in time to go to settlement on the new home, the borrower-buyer may be burdened with payments on three property loans. These include the mortgage on the old unsold home, the mortgage loan needed to purchase the new home, and the swing loan needed to carry over the cash from the old unsold home to make a down payment on the new home. Therefore, it is true that there are numerous risks to a borrower-buyer in this situation.

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Current Version
Mar 21, 2023

Quiz Edited by
ProProfs Editorial Team
Aug 30, 2011

Quiz Created by
Sseveland

Real Estate: The Sales Process! Quiz

The most important contract in the sale of real property is called the "agreement of sale".

The agreement of sale is NOT a legally binding contract.

Before buyer signs, this agreement of sale, the Rules, and Regulations of the Pennsylvania Real Estate Commission require that all licensed real estate agents prepare and give to any buyer a reasonable, accurate written estimate of closing costs.

The "statute of frauds" requirement is that the seller is guaranteeing the buyer a clear title to the property being sold.

As the person giving the offer, a prospective buyer is officially known as the "offeror". The prospective seller as the receiver of the offer is officially known as the "offeree".

An advance offer of money put up in earnest by the buyer with the agreement of sale to make a good faith offer to the seller of the property is known as a "contract binding offer".

If the offer made through the agreement of sale is accepted by the seller, the earnest money deposit is at risk and may be forfeited as liquid damages in the event of default by the buyer.

Brokers are required by law to deposit money belonging to another into an escrow account within seven (7) days following its receipt in the real estate office where the escrow records are maintained.

When an offer is made by the offeror, the offeree has 3 choices: 1) Accept the offer, 2) Reject the offer, 3) File a complaint with the Pennsylvania Real Estate Commission.

A counteroffer by law represents a total rejection of the original offer.

A temporary loan that can be used to complete the down payment needed for the settlement of the new home as the result of the cash that has not been released from the sale of the old home is known in the real estate business as an unsecured loan.