California Real Estate Salesperson Exam Practice - Quesiton 45

Question

When a broker advertises a listed property for sale, the broker may not legally use an ad: 

Selections

A. Which does not give the price of the property

B. Without stating the kind of financing that is available

C. Which fails to state the street address of the property

D. That gives the impression that the broker is the owner of the property

---

Answer: D

---

5 Keys Summary

• A broker may not legally use an ad that gives the impression that the broker is the owner of the property.

• This practice is known as a blind ad and is illegal because the broker fails to clearly identify themselves as a licensed agent or broker.

• Licensed real estate agents must clearly identify themselves (including the broker's name and license number) in all advertisements for listed homes to prevent consumers from mistakenly believing they are contacting the owners directly.

• Misrepresentation through giving the impression of ownership can lead to license suspension or revocation and fines for the licensee.

• An ad is generally permissible even if it does not contain the price of the property or the street address.

Explanations

A real estate broker, when advertising a listed property for sale, is legally prohibited from using an ad that gives the impression they are the owner of the property. This type of advertisement is known as a blind ad.

Here's why:

Street Address (C): While providing the street address is standard practice, not including it in an initial ad is not inherently illegal, especially if the ad aims to generate inquiries. However, for classified ads for rental properties, the phone number and address for the rental property should be clearly listed.

Blind Ad (D): California law requires real estate licensees to clearly identify themselves as licensed agents in all advertisements for listed homes. This includes stating the broker's name and license number. The purpose is to prevent consumers from mistakenly believing they are contacting the property owners directly. Failure to do so can lead to license suspension or revocation and fines.

Price (A): While including the price is common practice and usually beneficial, there is no general legal prohibition against an ad that does not give the price of the property.

Financing (B): Stating the kind of financing available is not a universal legal requirement for all property advertisements, although specific loan advertisements have disclosure rules (e.g., Truth-in-Lending Act requires disclosure of APR and total borrower costs for certain loans).

Concepts Definitions

Blind Ad: An advertisement placed by a real estate licensee that does not clearly identify the individual or brokerage firm as a licensed real estate professional, leading consumers to believe they are dealing directly with the property owner.

Misrepresentation: An untrue or misleading statement, whether unintentional or intentional, which can cause harm to another party. In advertising, giving the impression of ownership when acting as an agent is a form of misrepresentation.

Real Estate Licensee: A person holding a real estate license, who is legally obligated to adhere to specific advertising rules, including identifying their professional status in property advertisements.