Chapter 12

An owner wants to receive a net amount from sale of a property of $200,000. the broker commission is 6 percent of the gross sale price. The gross price necessary (to the nearest hundred dollars) to achieve this will be ____.

$212,800 (212800, or 212766)

Most states have two levels of real estate licensing; the senior one is broker while the lower level one is salesperson. Which license enables the licensee to operate his or her own brokerage firm?

Broker only

Characteristics of real estate brokerage as a vocation include:

High required knowledge, skill, and effort. Low capital requirements. High visibility. High potential personal and monetary rewards.

Innovation in real estate brokerage since about 2000 has included:

Internet based services designed for owner-sellers. administrative and document services for owner-sellers for a fixed fee. discount brokerage.

Characteristics of a real estate listing contract include:

It normally specifies a time interval and a required price. It can be oral or written. It traditionally has created a special agent relationship.

Numerous industry designations are maintained by affiliates of the ____ ____ of ____.

National. Association. Realtors.

Which of these are correct statements about a state real estate commission?

Oversees implementation of real estate licensing education and licensing exams. Responsible for the rules and regulations to implement state license law. Usually includes prominent real estate brokers.

The term "commercial" is used to include which of these types of properties?

Rental apartments. Warehouses. Offices.

Survey data from about a decade ago indicates that most potential home buyers working with a real estate agent still believe that the agent represents them, despite years of efforts to inform persons otherwise. If the real estate sales person is, in fact, an agent, he probably has violate fiduciary duties to whom?

The seller, violating duty of loyalty. The buyer, violating duty of disclosure.

Most U.S. real estate brokers working with international real estate work through:

a cooperating broker from the country involved

The implementing of state laws concerning real estate licenses is a matter of writing specific rules and regulations and overseeing their implementation. This task generally is the responsibility of:

a state real estate commission

A real estate salesperson can perform virtually all of the business functions of brokerage, but must do so in the name of their ____.

broker

In a ____ agency agreement, the broker agrees to use his or her best efforts to find properties meeting the requirements of a person seeking a property. Commonly this broker, if successful, will share a commission with the ____ broker.

buyer. listing (seller's, or selling).

In a traditional listing placed in MLS the buyer is not a ____ but a ____ of the selling broker.

client (or principal). customer.

The websites ccim.net, costar.com, and loopnet.com all offer vast amounts of information about ____ properties across the nation.

commercial (income, or investment)

When buyers and sellers are "at odds," commercial brokers must be prepared to negotiate ____.

compromises

In international real estate brokerage, most U.S. brokers work through ____ arrangements with a local broker when working in a non-English speaking country.

cooperative (or joint)

Commercial property buyers tend to be knowledgeable and sophisticated and want considerable information about a property, including:

current lease details. information about the market context. Cash flow pro formas. certifications of compliance with relevant regulations. financial history of the property.

About half of states have adopted a weakened form of broker relationship known as transaction broker. Other names for the concept are:

intermediary broker facilitating broker

Several events have spawned an active recent period of innovation in real estate brokerage, including:

legislation revising the traditional law of agency compelled new procedures and brokerage arrangements. the internet explosion opened dramatic new possibilities for marketing. rapid rise in home values created extraordinarily high brokerage commissions.

Dual agency is controversial due mainly to divided ____.

loyalty

If a broker recommended a price for a listing that the broker believed was below market in order to get a quick sale, and was not candid about it, this would violate the fiduciary duty of:

loyalty

Obligations of a principal to a fiduciary is to be ____, ____, and ____ to the fiduciary.

open. honest. fair.

Real estate brokers are market facilitators, bringing buyers and sellers together both ____ and ____.

physically. emotionally.

A well-prepared broker has knowledge in numerous valuable areas, including:

prospective buyers and their needs. price and terms of recent market transactions. most effective marketing procedures. properties available and their features and terms. legal obligations of buyer and seller.

A listing broker normally is presumed to earn a commission upon finding a buyer who is "____, ____, ____," or upon closing of the transaction.

ready. willing. able.

For protection against financial harm to clients or customers some states require errors and omissions insurance for licensees, while other states have established a ____ ____ taken from license fees and used to compensate victims of licensee mistakes and misdeeds.

recovery. fund.

Potential buyers tend to select a brokerage firm, or broker/salesperson, on the basis of several factors, including:

sometimes, reputation of a franchise. recommendations of friends. local reputation of the firm. personal familiarity with the broker.

An agent who is empowered to act on behalf of a person or firm for one specific event or transaction is a ____ agent.

special

The typical state real estate commission has these responsibilities:

specifying education and other requirements for licensing. Enforce the license law through hearings for violations and administering penalties. creating and administering exams for licensing. overseeing administration of the state licensing law and regulations.

In a listing agreement, issues that the owner-principal needs to require include:

that the agreement is limited to a reasonable time. that the broker will provide regular progress reports. that the property will be placed in the local MLS. that the brokerage firm will use diligent efforts to market the property.

The most widely used arrangement to avoid dual agency is to change the listing relationship from the traditional fiduciary relationship to what is most commonly called a ____ broker.

transaction

An agent who is empowered to act in all matters for a person, personal and financial, is called a ____ agent.

universal

In most states a person can obtain a broker's license only after obtaining a salesperson's license, plus the person must:

have an active salesperson's license for, generally, 1-3 years. take additional prescribed license education.

An old saying in the residential brokerage community is: "If you don't list, you don't last." The flaw in this view is that it ignores how a broker gets listings, and another view is that the primary factor in obtaining listings is a reputation for good ____.

service

It is critical that a broker or a salesperson understands thoroughly that what they really are offering to clients is ____.

service

Dual agency is viewed as troublesome by many observers. It has been questioned whether a single broker can "stand in the ____" of both buyer and seller.

shoes

When a real estate broker builds a business focusing on a particular type of property - selected office, industrial, retail, residential - or a zone of a city, or a highly specialized type of property such as resorts, the broker is recognizing market ____.

segmentation

In dual agency, the broker is an agent to both the ____ and the ____.

seller. buyer.

Persons who deal with real estate for others but are exempt from licensure include:

attorneys. trustees and executors. on-site residential managers. government employees dealing with real estate as part of their work. those with power of attorney.

In all states a real estate license is required to perform for anyone other than yourself all real estate activities, including:

auctioning. purchasing. managing. renting or leasing. selling.

The problem of dual agency can arise within a single brokerage firm if a transaction involves both a listing and a buyer's agency within that firm. One solution that has been attempted is to appoint a separate ____ agent for each party who are to work at "arms length."

designated

Traditional duties of a fiduciary include:

disclosure. loyalty. skill and care. confidentiality. accounting. obedience.

Driven by concern about dual agency, states have imposed strict requirements of explicit ____ and written ____ concerning whom a broker or salesperson represents.

disclosures. consent.

If a property owner is willing to give a broker exclusive right to serve as a broker for the property, but wants to retain the right to sell it by him/herself, the owner will want a(n) ____ ____ listing contract.

exclusive. agency.

An agent who is empowered to make commitments or contracts obligating a person of firm within a specific sphere of activity is a ____ agent.

general

Real estate brokers, recognizing market segmentation, frequently specialize in submarkets. These submarkets commonly are distinguished by some combination of:

geography. property type or size.

Reasons why the exclusive right of sale listing contract is the most widely used listing contract include:

in a MLS context, for an owner to be able sell an MLS property and preempt the commission could undermine the MLS system. a broker who is sure of capturing the benefits of a marketing program is likely to work harder at it. the broker needs to avoid the risk of being "scooped" after making substantial effort and investment in marketing a property.

A dual agent owes equal ____ to both parties of a transaction. In this situation the broker cannot reveal to the seller that the buyer will pay ____ than the listing price, nor to the buyer that the seller will accept ____ different than are listed or a ____ price than is listed.

loyalty. more (higher, or greater). terms. lower (less, or smaller).

Typical required qualifications for a real estate license include:

minimum age (18 - 21). pass a state licensing exam. good reputation, sometimes references. prelicensing classroom education, typically 70 hours. high school diploma or GED.

Among the misdeeds for which license law prescribes punishment or penalties are:

mishandling trust money. paying commissions to unlicensed persons. improper business practices, such as failing to present all offers to a seller. failure to provide required information in a timely manner, such as closing costs.

In a conventional ____ ____ ____ (MLS), member brokers are empowered to show a buyer properties listed by ____ of the member brokerages. If a broker obtains a sale of another broker's listing, the two brokers will share the listing commission.

multiple. listing. service. all (or any).

The transaction broker, in contrast to the traditional fiduciary duties, removes or lessens these three duties:

obedience. confidentiality. loyalty.

Specific actions that generally violate state real estate broker and sales person license law include:

offering property on terms other than those specified by the client. paying a commission to an unlicensed person. failure to provide contracts to all parties of a sales agreement. Commingling deposits with personal funds.

The Fair Housing Act prohibits discrimination on any of the characteristics named in the law. For brokers this means that there is risk of violation in:

offering terms and conditions that differ among persons. refusing to sell, rent, or deal with any person. "blockbusting". denying that housing is available for sale or rental when it actually is. advertising housing as available only to certain buyers.

What do zillow.com, Redfin.com and trulia.com have on common? They all are:

on-line residential brokers. national in scope.

The Fair Housing Act provides an exemption to its prohibitions for 1-4 unit housing where the owner is a resident. However the US supreme Court has overridden this exemption in the case of Jones v Mayer Co. for discrimination by ____.

race

The Fair Housing Act (Title VIII of the Civil Rights Act of 1968) prohibits discrimination in housing on the basis of:

race and color. handicap. religion. national origin. sex. familial status.

Internet marketing of housing is now central to real estate brokerage. For example, the National Association of Realtors offers lisitngs of ____ all across the country on www.realtor.com.

residences (houses, or properties)

Three ways that a listing agreement will terminate include:

sale of the property. abrogation of the agreement. expiration of the agreement term.

Industry designations can serve as a ____ of professionalism and expertise.

signal

Virtually every active real estate licensee will affiliate with a local Association of Realtors as a ____ of professionalism and as a business resource.

signal

The traditional agency relationship in real estate brokerage has come to be called a ____ agency relationship (whether with buyer or seller) to distinguish it from more recent forms of broker agreements.

single

Among MLS members, a broker selling a listing of another broker traditionally became a ____ of the listing broker which implies ____ duties to the seller of the property.

subagent fiduciary (or agency).

Among MLS members, a ____ broker selling a listing of another broker traditionally became a of the listing broker which implies ____ duties to the seller of the property.

subagent. fiduciary (or agency).