Iowa Real Estate Practice Exam

Which of the following actions is legal for an owner-broker?

1. Paying commissions to unlicensed individuals

2. Soliciting agents from other real estate agencies

3. Accepting referral fees without disclosure

4. Representing multiple buyers without consent

The correct answer is: Soliciting agents from other real estate agencies

An owner-broker is permitted to solicit agents from other real estate agencies. This is part of their role when managing their own business and can contribute to building a robust team. As an owner-broker, they have the legal authority to recruit licensed agents who can help expand their operations and reach new clients. This action is consistent with the rights and privileges granted to licensed brokers under real estate law. On the other hand, paying commissions to unlicensed individuals violates the regulatory framework surrounding real estate transactions. Commissions should only be disbursed to individuals who hold appropriate licenses that authorize them to engage in real estate activities. Accepting referral fees without disclosure is also prohibited, as transparency and ethical standards require brokers to disclose any referral relationships, ensuring that all parties are aware of potential conflicts of interest. Lastly, representing multiple buyers without consent can lead to conflicts of interest and ethical issues, as it is essential for brokers to ensure that their clients are aware of such dual agency situations where their loyalties might be divided.