Iowa Real Estate Broker Exam

A seller receives an offer and returns it with the price raised by $10,000 and everything else unchanged. In contract terms, the seller has made:

1. AAn acceptance that binds the buyer, because only the price was changed and nothing else
2. BAn option contract
3. CA counteroffer that rejects the original offerCorrect
4. DA unilateral contract, because only the seller has promised anything at the new price

Why: Changing any material term, such as the price, is a counteroffer. A counteroffer rejects the original offer and becomes a new offer that the original offeror (the buyer) may accept or reject. There is no binding contract until one party accepts the other's terms exactly and communicates that acceptance. This is why a broker must train agents to track which offer is currently open, since multiple counteroffers can create confusion about the actual terms on the table.

An affiliated licensee, acting within the scope of authority, misrepresents a material fact to a buyer. Under agency law, who may also be held responsible?

1. AOnly the individual licensee
2. BThe supervising broker, under vicarious liabilityCorrect
3. CThe buyer, for failing to investigate before relying on the statement
4. DNo one, provided the misstatement was unintentional and corrected before closing

Why: A broker acts as a general agent of the brokerage and is responsible for supervising affiliated licensees. Under respondeat superior and agency principles, a broker can bear vicarious liability for acts a licensee commits within the scope of authority, including misrepresentation. That is why supervision, training, written policies, and file review are core broker duties. The buyer's own investigation does not erase the firm's responsibility for a licensee's material misrepresentation.