Maryland Home Improvement PSI Practice Exam

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Prepare for the Maryland Home Improvement Test. Study using flashcards and multiple-choice questions, each with hints and explanations. Get ready to excel on your exam!

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Under what conditions would a broker earn a commission in a real estate transaction?

Upon closing the sale only.
When the buyer signs a contract.
Based solely on the listing agreement.
As negotiated in the buyer's representation agreement.

The correct answer is: Upon closing the sale only.

A broker typically earns a commission upon the closing of a sale because this is the point at which the transaction is legally completed, and ownership of the property is transferred from the seller to the buyer. This ensures that the broker has fulfilled their obligation of bringing about a successful sale. The commission is usually a percentage of the sale price, and it is only fair for the broker to receive payment after the completion of all necessary actions to finalize the deal. The other options specify conditions that do not universally guarantee a commission. For instance, a buyer signing a contract (the second option) does not necessarily secure a commission for the broker, as the sale may not be finalized. Similarly, the listing agreement (the third option) outlines the terms under which the broker represents the seller and is relevant but does not itself dictate when the commission is to be paid. Lastly, while a buyer's representation agreement (the fourth option) can establish commission terms, the commission will still generally be contingent on the closing of the sale, aligning with the accepted industry practice.