Hawaii Real Estate State Practice Exam

Under an Exclusive Right To Sell Listing Agreement, when is the commission paid to the broker?

1. The seller accepts an offer that meets most of the conditions of the listing agreement.

2. A financially unqualified buyer makes a full price offer.

3. The seller counters a buyer's offer at less than full price.

4. The seller does not respond to a full price offer contingent upon the sale of his existing home.

The correct answer is: The seller accepts an offer that meets most of the conditions of the listing agreement.

Under an Exclusive Right to Sell Listing Agreement, the commission is typically earned and due to the broker when the seller accepts an offer that meets the terms specified in the listing agreement. This is because the broker has the exclusive right to sell the property and is compensated for their efforts in securing a buyer who is willing to meet the conditions outlined in the agreement. In this context, when the seller accepts an offer, it signifies that the transaction process is moving forward, which validates the broker's role and entitles them to commission. It is important to note that this is conditioned on the accepted offer being in alignment with the terms and conditions established in the listing agreement. The other scenarios present situations that do not fulfill the conditions necessary for triggering the broker's commission under the agreement. For example, an offer from a financially unqualified buyer does not guarantee a completed transaction; similarly, the seller's counter-offer or failure to respond to a full price offer does not constitute acceptance of an agreement. Thus, the correct answer reflects the established practice regarding when a commission is earned in the context of an Exclusive Right to Sell Listing Agreement.