A real estate agent is obligated to communicate any offer to the principal:
Correct Answer
A) unless the offer is patently frivolous or the agent is acting on written instructions of their seller.
Agents must present all offers to the principal promptly, regardless of amount or terms.
Why This Is the Correct Answer
Option A is correct because it accurately states the two exceptions to the duty to present offers: when the offer is clearly frivolous or when the agent has specific written instructions from the seller not to present certain offers. All other offers must be presented promptly regardless of form or terms.
Why the Other Options Are Wrong
Option B: only if it is in writing.
Option B is incorrect because there is no requirement that offers must be in writing to be presented to the principal. Verbal offers must also be communicated promptly, though they should be followed by written documentation.
Option C: whether the offer is verbal or written until the agency is terminate
Option C is incorrect because the duty to present offers applies regardless of agency status. The obligation exists until the agency relationship is properly terminated, not until the agency is terminated as this option incorrectly suggests.
Option D: d. unless the offer is terminated.
Option D is incorrect because the duty to present offers is not dependent on whether an offer is terminated. Offers must be presented unless they meet the specific exceptions in option A.
Deep Analysis of This Agency Question
This question addresses a fundamental fiduciary duty of real estate agents - the duty to present all offers to their principal. In California real estate practice, this duty is critical as it directly impacts the seller's ability to secure the best possible price and terms for their property. The core concept here is that agents must promptly communicate all offers unless specific exceptions apply. Option A correctly identifies these exceptions: offers that are clearly frivolous (lacking good faith) or when the agent has explicit written instructions from the seller not to present certain offers. The other options either impose unnecessary restrictions (B requires written offers) or contain factual errors (C mentions agency termination which isn't relevant, D incorrectly references offer termination). This question tests understanding of when agents can exercise judgment in presenting offers versus when they must present every offer received.
Background Knowledge for Agency
The duty to present all offers is a fundamental aspect of the fiduciary relationship between a real estate agent and their principal. This duty exists under California's real estate laws and regulations to ensure sellers have the opportunity to consider all potential transactions. The rule recognizes that sellers have the right to accept, reject, or counter any offer, regardless of how unattractive it may initially appear. The exceptions for frivolous offers and written instructions provide practical flexibility for agents while maintaining the core obligation to keep their principal informed of all potential opportunities.
Memory Technique
acronymFIVE: Frivolous offers, Instructions from principal, Verbal offers must be presented, Every offer must be communicated
Remember FIVE to recall when you must present offers (all except frivolous or when instructed not to)
Exam Tip for Agency
Look for keywords like 'offer,' 'present,' and 'principal.' Remember that agents must present ALL offers unless they're clearly frivolous or you have specific written instructions not to.
Real World Application in Agency
Imagine you're listing a home priced at $500,000. A buyer submits an offer for $350,000 with unusual contingencies. While this offer seems far below market value, you must present it to your seller unless you have written instructions not to present offers below a certain price. Similarly, if you receive a verbal offer over the phone, you must document it and present it to your seller promptly. Only offers that are clearly insincere (like offering $1 for a multimillion dollar property) could be considered frivolous and potentially not presented.
Common Mistakes to Avoid on Agency Questions
- •Assuming offers must be in writing to be presented to the principal
- •Confusing the duty to present offers with the requirement for written contracts
- •Believing that agents can exercise discretion in presenting offers based on their own judgment about the offer's quality
Related Topics & Key Terms
Related Topics:
Key Terms:
More Agency Questions
A fiduciary relationship exists between:
Which duty requires an agent to keep the principal informed of all material facts?
Dual agency occurs when:
An agent who exceeds the authority granted by the principal:
A broker who represents both the buyer and seller in the same transaction without the knowledge and consent of both parties is practicing:
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A prospective buyer gave their broker a personal check for $1,000 payable to the seller along with an offer to buy the property. The buyer told the broker the check was not to be cashed until the end of the month. Which of the following is correct?
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