Iowa Real Estate Practice Exam 2026 – Full Prep Resource

In the scenario presented, the illegal action taken by the broker is the act of keeping $50,000 from the sale. When a broker represents a seller, they have a fiduciary duty to act in the best interest of their client, which includes handling funds appropriately. If the seller has not agreed to the broker retaining a portion of the sale proceeds, doing so without consent constitutes misappropriation of funds. This is a serious violation of real estate law and ethics.

Each of the other actions does not necessarily indicate illegal behavior. Refusing to list the property or not advising the seller on pricing might not align with ethical practices, but they don’t directly involve an unlawful act of handling funds. Selling under market value could be a strategic decision made by the seller based on their circumstances, even if it might not be advisable from a financial standpoint. Thus, option B stands out as the clear violation involving improper management of the sale proceeds.