A broker using lotteries or trading schemes that involve selling certificates or chances to induce any person to buy real estate is guilty of which of the following?

• A. Fraud
• B. Ethical violation
• C. Examples of real estate fraud
• D. Unethical advertising

Answer: (C)

This item tests recognizing deceptive practices in real estate that amount to fraud. When a broker runs lotteries or trading schemes that sell certificates or chances to induce someone to buy property, the tactic relies on misrepresentation and manipulation to get a buyer to act under false pretenses. That deception is specifically tied to real estate transactions, making it a concrete example of real estate fraud rather than a generic fraud or a simple ethical violation.

Labeling it as an ethical violation or as unethical advertising is less precise because the heart of the issue is the deceptive deception used to induce a real estate purchase. It’s not just that the advertising is questionable or that the broker acted unethically in a general sense; the act itself is a fraudulent scheme aimed at securing a real estate transaction, which is why it’s categorized as an instance of real estate fraud.