California Real Estate Practice Exam

An option listing agreement where the broker purchases the property from the seller, and then resells the property making a profit on the resale requires?

1. Direct payment to the seller without disclosing the profit

2. Inform the principal of the resale of the property, any profits to be realized and securing the permission of the seller to proceed

3. No obligations as the broker assumes all risks

4. Private disclosure to regulatory authorities only

The correct answer is: Inform the principal of the resale of the property, any profits to be realized and securing the permission of the seller to proceed

This is the correct answer because option B follows the ethical principle of full disclosure to the principal and obtaining their permission before proceeding with the resale. Option A would be unethical as it does not disclose the profit to the seller. Option C is incorrect because brokers still have obligations and responsibilities even if they assume risks. Option D is incorrect because private disclosure to regulatory authorities is not enough to fulfill the ethical obligation of informing the principal.