PSI Virginia Real Estate Practice Exam

What characterizes a nonexclusive not-for-compensation contract?

1. No compensation is paid to the broker

2. Only one brokerage can be retained

3. The buyer must always pay a commission

4. Only the broker can revoke the contract

The correct answer is: No compensation is paid to the broker

A nonexclusive not-for-compensation contract is defined by the fact that no compensation is paid to the broker involved in the agreement. This type of contract allows the seller or property owner to work with multiple brokers or agents without the obligation to pay any commission or fee to any of them unless they choose to do so. Understanding this definition helps clarify why this option is correct. In nonexclusive arrangements, the lack of compensation ties directly into the nature of the contract itself, meaning that the relationship is primarily based on the willingness to work together without financial expectations. In this context, the other statements do not accurately describe the characteristics of a nonexclusive not-for-compensation contract. The second statement about only one brokerage being retained contradicts the nonexclusive nature, as this type of contract allows for multiple brokers to be engaged simultaneously. The third statement regarding the buyer always paying a commission misrepresents the fundamental principle of a not-for-compensation contract, where no fees are necessitated. Finally, the assertion that only the broker can revoke the contract undermines the essence of its nonexclusive nature, where both parties typically have the ability to terminate the agreement without restrictions.