Maryland Home Improvement PSI Practice Exam

What standard represents a service contract in real estate?

1. A purchase agreement

2. A lease agreement

3. A listing agreement

4. A rental agreement

The correct answer is: A listing agreement

A listing agreement is recognized as a service contract in real estate because it establishes a formal relationship between a property owner (the seller) and a real estate broker. This agreement outlines the terms under which the broker will provide services to market and sell the property. It specifies details such as the duration of the agreement, the listing price, and the commission that the broker will receive upon successful sale of the property. Because it involves the provision of services (marketing, negotiation, etc.) in exchange for compensation, it fits the definition of a service contract. In contrast, a purchase agreement pertains to the sale transaction itself; a lease agreement refers to the rental of property over a specified term; and a rental agreement is a more common term used for short-term leases as opposed to more comprehensive service contracts for real estate transactions. These options don't primarily represent a service engagement in the same manner as a listing agreement does.