### Under which circumstance is a contingent fee typically paid? - [x] When a certain event, such as the sale of a property, happens - [ ] Upon signing a contract, regardless of outcome - [ ] At the initial listing of a property - [ ] During appraisal of the property > **Explanation:** A contingent fee is paid when a specific event, like the sale of a property, occurs. This structure aligns the interests of the agent with those of the buyer and seller since the agent earns their fee only upon successful completion of the sale. ### Which profession is commonly associated with earning contingent fees? - [ ] Electricians - [x] Real estate agents - [ ] Insurance brokers - [ ] Financial advisors > **Explanation:** Real estate agents typically earn contingent fees when they successfully close a real estate sale. This payment structure ensures that agents are motivated to complete sales transactions. ### In a real estate transaction, when is a contingent fee generally dispersed to the agent? - [ ] When the property is listed - [x] As part of the closing process - [ ] When an offer is made - [ ] When the property is appraised > **Explanation:** The contingent fee for a real estate agent is usually dispersed during the closing process by the title company, following a successful property sale. ### What is the primary risk for a real estate agent working on a contingent fee basis? - [ ] Losing a property listing - [ ] Having delayed appraisals - [x] Not earning a fee if the sale does not close - [ ] Paying for property repairs > **Explanation:** Real estate agents working on a contingent fee basis face the risk of not earning their fee if the property sale does not successfully close. This risk provides motivation for agents to thoroughly complete transactions. ### Why do real estate agents agree to work on a contingent fee basis? - [ ] To immediately secure their payment - [x] To align their interests with the successful sale of the property - [ ] To avoid upfront costs - [ ] To impress potential clients with their confidence > **Explanation:** Real estate agents agree to work on a contingent fee basis to align their interests with the successful sale of the property, ensuring they only get paid if the sale goes through. This provides them with strong motivation to successfully close the deal. ### Which document typically outlines the terms of a contingent fee for a real estate agent? - [ ] The property deed - [x] The seller's listing contract - [ ] The property appraisal report - [ ] The homeowner's insurance policy > **Explanation:** The terms of a contingent fee for a real estate agent are usually outlined in the seller's listing contract, which sets the conditions under which the agent will earn their fee from a successful sale. ### How does a contingent fee affect a real estate agent's approach to completing a sale? - [ ] It makes them focus less on closing the deal - [x] It gives them a strong incentive to complete the sale - [ ] It encourages them to look for alternative payment - [ ] It removes financial risk from the transaction > **Explanation:** A contingent fee provides a strong incentive for a real estate agent to complete the sale because their payment is dependent on this outcome. This motivates the agent to work diligently to close the transaction. ### Who is responsible for disbursing a real estate agent's contingent fee as part of the closing process? - [ ] The buyer - [x] The title company - [ ] The seller - [ ] The mortgage lender > **Explanation:** During the closing process, the title company is typically responsible for disbursing the real estate agent's contingent fee, ensuring that agents receive their payment upon the successful completion of the sale. ### What might a real estate agent working for a contingent fee do if a sale falls through? - [ ] Charge an upfront fee to the seller - [ ] Request immediate partial payment from the buyer - [x] Continue working to secure another buyer - [ ] Stop representing the seller > **Explanation:** If a real estate transaction falls through, a real estate agent earning a contingent fee will likely continue working to secure another buyer. Since their fee is contingent on a successful sale, they are incented to keep efforts ongoing. ### What is a key characteristic of a contingent fee? - [ ] It is a non-refundable deposit - [ ] It is paid regardless of the outcome - [x] It is dependent on the occurrence of a specific event - [ ] It is invoiced monthly > **Explanation:** A contingent fee is characterized by its dependency on the occurrence of a specific event, such as the closing of a real estate transaction. If the event doesn't occur, the fee is not paid.