Unit 4

An unlicensed assistant may

A. handle correspondence for a licensed agent. PG 68 b. interview prospects for a licensed agent. c. show property for a licensed agent d. respond to inquiries about a property, sharing information that has not been advertised.

It is customary to make the commission payable

a. when the seller delivers the deed.

A broker may act as an intermediary

a. with the written consent of each party to the transaction.

In a real estate brokerage company, who needs to understand the Texas law of agency?

b. Everyone in the office who has a real estate license

A property manager would be what kind of agent?

b. General

Can a buyer broker accept both a portion of a commission split from the listing broker and a fee from the buyer client?

b. Yes, if the buyer agent agreement calls for a fee to be paid, and the listing agreement also calls for a commission split, the buyer broker may collect from both sides of the transaction.

If a sales agent hopes to buy a property listed by another brokerage, is that agent obligated to inform the seller that he is also a license holder?

b. Yes, in Texas, real estate license holders must always disclose their backgrounds when buying property on their own behalf. PG 53

While showing properties to a potential buyer who has not signed a buyer representation agreement, the real estate agent refers to the buyers as her "clients" and recommends that they offer purchase prices that are less than listing prices. When presenting an offer to the seller's agent, she does not share that the buyers have stated to her that they would pay more for the house than they have offered. The agency relationship created in this instance is

b. an implied agency.

When the Texas IABS is delivered, the sales agent or the broker should

b. ask for a verbal or confirming email that the consumer has received it.

A real estate agent tells a seller during a listing presentation that the firm's commission is in line with those of other real estate firms in the area. The broker may

b. be guilty of price-fixing.

The four statutory positions a broker might take when doing business include the intermediary position, seller representation, subagency, and

b. buyer representation.

An attorney who is NOT licensed by the Texas Real Estate Commission (TREC) but performs brokerage services in a transaction may

b. not receive part of a broker's commission on the sale of a property.

If a broker says that a house is the most beautiful house in the neighborhood, the broker's statement is an example of

b. puffing.

All of the following are true about a licensed associate who is an independent contractor EXCEPT

b. the broker has control over how the associate performs a task.

When a property is listed for sale, an agency relationship is created between

b. the listing sales agent's broker and the seller.

May a broker subtract desk expenses from an independent contractor's commission check?

c. Brokers and sales agents should operate under a negotiated work agreement, which may or may not allow the broker deductions.

Can a sponsoring broker monitor a licensed employee's progress in continuing education and instruct that employee when to take classes and what classes to take?

a. A sponsoring broker has the authority to instruct an employee when to take classes and which classes to take.

the broker?

a. Written agreement

Misleading or deceptive practices according to the Deceptive Trade Practices Act (DTPA) include all of the following EXCEPT

a. advertising a property with no intention of selling the property as advertised. b. misrepresenting the authority of an agent to negotiate the final terms of a sales contract. c. stating that a property is being sold "as is." PG 70 d. making false statements of fact concerning the reasons for a price reduction.

A broker who acts as a subagent represents

b. the seller.

To protect themselves from financial loss due to liability for mistakes and negligence, many brokers and agents purchase which kind of insurance?

c. Errors and omissions

Are the principals allowed to know how license holders divide the various commissions, splits, and fees between themselves?

d. All of these are correct.

Are violations of antitrust laws considered civil violations or criminal violations?

d. Both

If a large vicious dog is in residence next to a property listed for sale and an agent acting as a subagent for the seller advises a buyer-customer about the presence of the dog, causing the deal to collapse, is the subagent liable to the seller?

d. No, the subagent has a duty of honesty to the buyer

When sales agents work as independent contractors, what is the commission split required by TREC regulations?

d. The Texas Real Estate Commission does not regulate commissions.

When advertising that a roof is "new," how "new" does it have to be?

d. There is no specific definition.

An intermediary broker (or appointed license holder) must

treat all parties honestly.

Is the sponsoring broker liable for the unauthorized misdeeds of a licensed employee?

A. Yes, the chain of liability goes all the way up from the employee to the broker, to the owner of the company. b. No, in most cases employees are responsible for their own malfeasance. c. No, the sponsoring broker may not be liable for the actions of employees. d. No, the sponsoring broker is not responsible for the actions of employees, even if the supervisor was aware of the misdeed at the time it occurred.

If a Deceptive Trade Practices Act (DTPA) lawsuit is filed against a real estate agent, broker defenses do NOT include

a. a reasonable offer of settlement within specified time limits. b. written notice to the consumer before consummation of the sale that the broker is relying on written information prepared by others. c. the impossibility of the broker's knowing that the information was false or inaccurate. D. notice to the consumer before consummation of the sale that the broker is relying on verbal representations given by the seller, the appraisal district, or other providers of information. PG 71

The practice of unfairly excluding brokers from real estate professional associations or withholding patronage from other businesses is known as

a. boycotting the competition.

That people buy at their own risk and should examine the property before they buy is expressed by the concept of

a. caveat emptor.

Broker X represents a prospective buyer. When he calls to schedule an appointment to show a property listed by another broker, X must

a. disclose that representation at the time he schedules the appointment to show the property.

Recovery under the DTPA for an act committed knowingly is limited to

a. economic damages only. b. economic plus mental anguish damages. PG 71 c. mental anguish damages only. d. triple economic and mental anguish damages.

A broker who represents a seller knows that the house has structural defects that will need expensive repairs but does NOT tell prospective buyers. This is an example of

a. fraud.

A broker can control what licensed associates do but NOT how they will do it if the associates have the status of

a. independent contractors.

The Deceptive Trade Practices Act (DTPA) does NOT apply to the actions of real estate agents when an agent

a. makes an exaggerated or unsubstantiated statement of value given as advice, judgment, or opinion when selling real estate.

The brokers in a certain area meet and agree that some brokers will handle residential property under $100,000, others will handle residential property over $100,000, others will handle commercial property, and others will sell condominiums. This is an example of

a. market allocation.

An unlicensed assistant may NOT

a. solicit prospects or listings for a licensed agent.

A seller hires a broker, who has several licensed associates, to sell his house. In this transaction the broker is

a. the agent.

The Andersons have contracted with a minimum-services real estate broker to assist them in marketing their home. By law their broker has all of these duties EXCEPT

a. to instruct another broker to negotiate an offer with the sellers on his behalf.

Which duty requires the broker to keep the principal fully informed at all times of all information the broker obtains that could affect the principal's decisions?

b. Disclosure

If a real estate agent whose license has lapsed refers a client to a license holder, can the lapsed agent collect a referral fee?

b. No compensation may be paid to anyone who is not a current license holder.

Is the sponsoring broker liable for the unauthorized misdeeds of an independent contractor?

b. No, in most cases independent contractors are responsible for their own malfeasance.

If an independent-contractor sales agent working with a buyer - but not under contract as a buyer agent - becomes a subagent to the listing broker, does that make the associate with the buyer an employee of the listing broker?

b. No, the associate with the buyer does not become an employee of the listing broker.

When a seller, on the advice of the listing agent, reduces the price of the home, are potential buyers entitled to know why?

b. No, the listing agent is not obligated to volunteer why there has been a price reduction.

May sales agents who work for competing companies, but in the same tier of property values, share information with each other about properties that are either new on the market or about to be brought to market?

b. Sales agents may form loose networks with each other as long as price-fixing does not take place, fair housing laws are not violated, and sales agents from outside the confederation also are allowed to present buyers.

If a listing agent advertises a property as "valued at more $25,000 above similar homes on the same block," does that claim have to be backed up?

b. The claim does not have to be proven, but the agent should be prepared to offer some measurement on which the claim is based.

The license holder is required to furnish a written statement providing general information concerning agency positions under which of the following cases?

b. The license holder has a substantive dialogue with a buyer.

In an educational setting where competitors are in the same class, is it permissible to discuss how brokers may derive commission levels?

b. Yes, instructors are permitted to teach "the business of brokerage."

Under the Fraud in Real Estate and Stock Transactions statute,

b. any person who stands to gain financially from a transaction is assumed to have knowledge of all aspects of the transaction.

The broker must NOT act in self-interest because of the duty of

b. loyalty.

A sales agent working for a buyer collects a commission from

b. the selling broker under whom the sales agent is licensed.

how much in fines?

c. $1,000,000

Why is understanding and being able to explain "agency" an important element in a license holder's professional life?

c. Because unhappy real estate clients and customers often contend they did not understand the legal relationship between themselves and "their agent"

Whose responsibility is it to disclose how long a property has been listed?

c. Buyer's agent PG 53

Does the obligation to be honest with all parties extend to a sales agent, representing a seller, who is confronted by a potential buyer wanting to know why the seller is selling?

c. No, the sales representative should not lie but should not provide any personal or financial information about a property that the seller does not want released.

Are real estate fees and commissions negotiable?

c. Yes, and no.

If all the franchise offices in a community—each one independently owned but all under the same franchise flag—agree on how they will compensate each other, is that considered pricefixing?

c. Yes, anytime independent brokerages agree to set fees between themselves, it is considered price-fixing.

A broker is clearly entitled to conduct performance reviews with employed sales agents. May a broker conduct performance reviews with independent contractors?

c. Yes, brokers may review all aspects of the work of independent contractors, including meeting sales goals, office conduct, clerical duties and legal compliance.

If a broker obtains a listing agreement and counsels the seller on matters such as the right price and home preparation, can that broker then claim neutrality if a buyer approaches the broker later with an interest in the property?

c. Yes, if the brokerage is large enough, the broker may appoint two associates, one to represent the buyer and one to represent the seller, who may then counsel those principals.

A broker who lists the property for sale or lease represents the owner as

c. a seller's agent.

A seller employs a broker to list his home for sale. The broker is classified as

c. a special agent.

If a homeowner who has NOT hired a broker agrees to accept an offer brought to him by a broker, he may create

c. an agency by ratification.

A listing agreement between the seller and the broker creates

c. an express agency.

A broker who represents a party in a real estate transaction may NOT

c. instruct another broker to negotiate directly with the client.

The purpose of antitrust laws is

c. to prevent a company or companies from joining together block competitors from entering the market while simultaneously agreeing how much to charge consumers.

If a sales agent is working with sellers and makes a mistake in a transaction, in theory the party responsible for the mistake is

c. usually the sales agent's sponsoring broker.

In addition to proportionate responsibility for damages under the DTPA, a defendant may be held jointly and separately responsible for all damages recoverable if the defendant's percentage of responsibility is found to be more than what percentage?

d. 50

backdating a property disclosure form - who is liable?

d. Both the sponsoring broker and the independent contractor would be held liable for the infraction.

Brokers will often provide time for license holders to work "desk duty," a period in which the desk person fields incoming calls to the brokerage and may work with callers who are not otherwise affiliated with other sales agents. May brokers assign (order) sales agents to work specific hours of desk duty?

d. Brokers may assign desk duty hours to employees, but may negotiate contracts with independent contractors that include desk duty expectations.

An agency can be terminated by which without liability for breach of contract?

d. Mutual agreement

Inside a brokerage office, if all the independent contractor sales agents are on the same commission split, is that price-fixing?

d. No, each real estate brokerage has its own policies regarding sales agent compensation and has the right to fix those amounts.

Is a real estate consumer, a seller, for instance, allowed to withhold the payment of a commission if the home "sells too quickly," suggesting "the agent priced it too low"?

d. No, listing agents do not "set the price" on a home, but only consult with sellers who make the final decision.

If an independent contractor announces her "farm" will henceforth be the country club crowd, can the sponsoring broker redirect her if someone else in the office already is working the country club scene?

d. No, the broker may discuss the difficulties of breaking into the other agent's farm but could not otherwise order the agent to work elsewhere.

Suicide on the property requires disclosure by a seller under which scenario?

d. None of these

The subject of real estate comes up at a community social event and an individual begins asking a license holder specific questions (price, condition, square footage) about a neighborhood home for sale. Would that conversation trigger a disclosure?

d. Probably not, but if the conversation led to a follow-up phone call, email or personal conversation, a disclosure would be appropriate.

If a sales agent leaves one company and becomes a sales agent for another firm, and that sales firm soon adopts the pricing, commission structure, and business practices of the first company, is that a violation of antitrust laws?

d. Probably not.

If a broker is forced into an intermediary position because a buyer expresses interest in a company listing, and therefore appoints two other associated license holders to represent seller and buyer, respectively, do the respective appointees need to be of roughly equal skill and experience?

d. Texas law is silent on the issue.

Can a broker arbitrarily penalize an independent contractor based on varying factors, such as the sales agent's difficulty in closing a deal or failure to produce paperwork in a timely fashion?

d. Texas real estate regulations are silent on in-office compensation disputes.

What form of agency is illegal in Texas?

d. Undisclosed dual agency

Clients who have signed listing agreements may "fire" their broker. Is a broker permitted to fire a client?

d. Yes, a broker may fire a client.

Can a broker monitor an independent contractor's compliance with continuing education requirements and instruct the independent contractor to attend classes?

d. Yes, the broker may monitor an independent contractor's compliance with continuing education requirements and instruct the independent contractor to attend classes.

Broker Y is cooperating with a listing broker by showing that broker's listing to a prospective purchaser/ customer. She is, therefore, working as

d. a subagent.

If the owner tells the buyer's agent something the owner would NOT want the buyer to know, the buyer's agent must

d. disclose the information to the buyer.

To earn a commission, a broker must do all of the following EXCEPT

d. ensure that the transaction closes.

Real estate fees and commission are set by

d. individual companies.

Sales agents who have mastered an understanding of agency relationships

d. realize their limitations in working with clients and customers.

Which statement does NOT accurately reflect the broker-sales agent relationship?

A. If a broker permits a sponsored sales agent to conduct activities beyond the authorized scope, the broker is not responsible for those unauthorized activities. PG 63-64 b. Each broker is required to maintain written policies and procedures regarding a sales agent's authorized activities. c. Each broker is required to advise a sponsored sales agent regarding the scope of the sales agent's authorized activities. d. Unless the scope of authorized activities is limited or revoked in writing, the broker is responsible for authorized acts of a sponsored sales agent.

With the exception of which kind of property, the DTPA does NOT apply to transactions that exceed $100,000 where there is a written contract and the consumer is represented by legal counsel?

A. Residential PG 70 b. Industrial c. Agricultural d. Commercial

A listing broker or a subagent who assists the buyer in any way automatically becomes

A)none of these. b)the buyer's agent. c)an intermediary. d)a dual agent

Advertising, telephone charges, and other expenses in a broker's office may be paid by which of the following?

a. The broker b. The licensed associate(s) or sales agents c. Both of these GUESSED

If a listing agent advertises a property as "the cutest house on the street" or "the most attractive house on the street," do those claims have to be backed up?

a. The claims are examples of puffery and are generally acceptable in advertising real estate and most other industries.

responsible for setting aside funds for income tax purposes?

a. The independent contractor sales agent

The License Act requires that, in order to earn a commission, a broker must (1) be licensed, (2) have a written memorandum for a commission, and (3) advise the buyer to obtain which kind of insurance or have an abstract examined by an attorney of the buyer's choice?

a. Title

Brokerages that work together to exclude a competitor may be guilty of boycotting, but if brokers decide to only pay a fixed amount to a competitor (such as only paying a buyer broker a $500 finder's fee rather than a commission split), would that be considered boycotting?

a. Yes, any time two or more brokers join to take action against a single competitor, it would be considered boycotting.

If the largest brokerage in a community decides to offer different competitors varying levels of commission splits or fees, is that considered boycotting or price-fixing?

a. No, brokers are entitled and encouraged to make business decisions regarding how they will compensate various competitors.

May sales agents working as independent contractors play golf every day and report to the office only periodically?

a. Yes, independent contractors set their own hours.

If a large vicious dog is in residence next to a property listed for sale, should the sellers list the presence of the dog as a property defect?

a. No, the dog does not relate to the condition of the property.

An agent's legal requirement to act in the client's best interest and with the utmost good faith is called

a. a fiduciary relationship.

Is a license holder entitled to stop a transaction (refuse to close) if he or she believes either the seller or buyer will be unable to fulfill the compensation clause in the contract?

a. No, the license holders must permit the transaction to close and litigate compensation after the fact.

Which covers innocent misrepresentations as well as unfulfilled promises?

a. Statutory fraud

Under Texas law, a sales agent who has secured a listing (for the broker) must make that relationship clear to the seller and who else?

a. Any buyers who inquire about the property

Who is the principal in a typical real estate transaction?

a. Either the buyer or the seller of the property

A seller has accepted an offer from a ready, willing, and able buyer, and the real estate agent is anticipating the closing of the transaction and receiving a commission. However, if the transaction does not close, the broker still would receive a commission under which circumstances?

a. Failure of the owner's spouse to sign the deed

Which duty owed to the agent by the principal consists of furnishing accurate information when requested by the broker?

a. Information