Illinois Real Estate Practice Exam

A brokerage company offers to pay for moving costs of clients who are moving out of town:

1. This is an acceptable business practice in that a principal to a transaction can receive compensation from a brokerage

2. This is a violation of ethics and against real estate regulations

3. It is mandatory for brokerages to cover moving costs for clients

4. Commission rates need to be increased to cover moving costs

The correct answer is: This is an acceptable business practice in that a principal to a transaction can receive compensation from a brokerage

The choice that states the practice is acceptable is correct because brokerage companies are allowed to offer incentives like covering moving costs as part of their business strategies. This practice can serve as a marketing tool to attract clients and make the moving process easier for them, showing goodwill and a commitment to customer service. In this context, it's important to differentiate this option from the other alternatives. The second option about violation of ethics and regulations is misleading since providing moving cost assistance is not inherently unethical or against regulations if disclosed appropriately. The third option regarding the mandatory nature of covering moving costs is incorrect as it is ultimately at the discretion of the brokerage and not a requirement. Lastly, the fourth choice about needing to increase commission rates to cover moving costs is also inaccurate; a brokerage can choose to provide incentives without adjusting their commission structure. Overall, the practice of covering moving costs can be a valuable proposition for real estate clients when conducted transparently and within legal boundaries.