A prospect calls a broker and asks about a farm property that he wishes to buy. The broker says he does not have a listing on that property, but that he will check into it. He calls the owner of the farm and says that he has an interested buyer. However, the owner of the farm says the property is not for sale. One week later, the broker learns that the owner of the farm sold the property to the prospect. The broker:
A. is entitled to a reasonable commission from the buyer
B. may sue the seller for a reasonable commission
C. is entitled to a reasonable commission from the seller
D. is not entitled to a commission
Answer: D. is not entitled to a commission
Explanation: The broker is not entitled to a commission, since he did not have a written listing agreement for the property and did not arrange the sale of the property to the buyer.
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As a condition for making a home loan, a bank charged the seller 4 points on the loan amount. The bank immediately sold the loan to an insurance company at a discount of 3 1/2 points and received $34,790. The original amount of the loan was most nearly:
A: $35,850; B: $35,975; C: $36,050; D: $36,200.
Why is there unequal knowledge and bargaining power in the insurance transaction?
A) The complexity of the insurance contract and the intangible nature of the product B) The insurance companies want to confuse consumers so it is difficult to make choices. C) Consumers do not receive the policy until months after the contract goes into effect. D) There is no competition in the industry, therefore the consumer is stuck with inferior products.