Ch. 8 - Agency Contracts (Sales) and Related Practices - Part 2
True or False: Sellers are required to disclose if previous owners have severed MOG rights.
True
If a licensee is hired as an employee for a firm, they receive what form at the end of the year?
W-2
Those who violate the FTC's regulations for the DNC Registry can face violations: -Fines that can exceed up to __________ per call on the federal level. -On the state level, fines are __________ for the first violation, __________ for the second, and __________ for the third and subsequent violations. What would allow a brokerage to be exempt from a fine?
1) $40,000 2) $500 3) $1,000 4) $5,000 5) The brokerage will not be subject to a fine if they were able to establish (by meeting certain requirements) that the call was part of a routine business practice.
At the end of the year, an independent contractor receives a __________ form detailing any commission-based income, vs. a W-2. They are responsible for sending __________ payments to the IRS to meet their tax obligations.
1) 1099 2) Quarterly
What are two reasons obtaining a consumer's signature (express written consent) is necessary to make solicited calls?
1) A name and a number only would be considered an inquiry, and allows only three (3) months to call 2) Obtaining a signature, name, and number provides written consent that does not expire until it is rescinded.
__________-__________ living areas have no earth adjacent to any exterior walls, while __________-__________ living areas are accessible by interior stairs and have earth adjacent to any exterior wall.
1) Above-Grade 2) Below-Grade
Net Profit/Loss Equation: -Current Selling Price - Estimated Closing Expenses = __________ __________ __________. -Original Purchase Price + Original Closing Expenses = __________ __________ __________ Adjusted Sales Price - Adjusted Purchase Price = Net Profit/Loss.
1) Adjusted Sales Price 2) Adjusted Purchase Price
The federal __________ __________ __________ was enacted to curb the annoying and costly problem unsolicited commercial email, or spam, to both computers and wireless devices without permission. Makes no exception for business-to-business email; violators can receive fines that can exceed __________ per violation.
1) CAN-SPAM Act (Controlling the Assault of Non-Solicited Pornography and Marketing) 2) $40,000
A __________ __________ __________ is a contract between a buyer and a real estate broker that grants the broker the right to represent the buyer in the purchase of the property, and that stipulates the conditions under which the broker will be compensated.
Buyer Agency Contract Also called a Buyer Agency Agreement, Buyer Representation Agreement, Buyer Brokerage Agreement, or Buyer Listing
What are four items a broker should advise the seller to gather before a prelisiting meeting?
1) Copy of the seller's deed (to clearly confirm who holds title, and if it is fee simple) 2) Copy of a survey (may be used to check boundaries and acreage) 3) Copy of protective covenants and homeowners' association information (including dues and assessments) 4) Balance due and status of the seller's mortgages(s), which may be used to determine whether a potential short sale exists or whether foreclosure is imminent.
An __________ __________ __________ (EBR) exists when someone has made an inquiry, application, purchase, or transaction. It is only in effect for: -__________ months after the consumer's last business transaction, delivery, or payment, or -__________ months after the consumer's last inquiry or application.
1) Established Business Relationship (EBR) 2) Eighteen (18) 3) Three (3)
A buyer agency agreement may be __________ (only one broker has the right to represent the buyer) or __________ (the buyer can work with other agents).
1) Exclusive 2) Nonexclusive
An __________ __________ __________ __________ limits the buyer to representation by a single brokerage firm. The buyer cannot employ another buyer's agent and cannot purchase property directly through a listing agent or a seller's subagent. If property is purchased through another brokerage, the one with the exclusive agreement is entitled to the negotiated fee. Depending on language of the contract, the broker may also receive compensation if the buyer finds the property and purchases directly from the owner (similar to the __________ __________ __________ __________ __________)
1) Exclusive Buyer Agency Agreement 2) Exclusive Right to Sell Listing
Living area (and other area) calculations are based on __________ measurements, except for condominiums, in which case __________ measurements should be used.
1) Exterior 2) Interior
__________ __________ refers to the portion of the lot that faces a feature such as a street, water, or rail line. In an area measurement, frontage is always the __________ number indicated. So, a 65' x 105' lot has 65 __________ feet, and 105 feet on the side (length).
1) Front Feet (also called Frontage) 2) First 3) Front
What are the five ways a buyer agency contract may be terminated?
1) Full Performance 2) Expiration 3) Agreement of the Parties 4) Impossibility of Performance 5) Operation of Law (i.e. buyer declares bankruptcy; brokerage firm loses license, etc.) Same as a Listing Agreement
To be classified as a living area, a space must have what three components?
1) Heated 2) Finished (with a height of seven (7) feet) 3) Directly accessible from another heated living space (though a door, heated hallway, or heated stairway).
What are three situations where it's more common to find a licensee as an employee vs. a contractor?
1) In commercial real estate, where it might take several years from the time a licensee starts a large commercial transaction until it finally closes. 2) A licensee who manages property for a property management firm or property owner. 3) A licensee who works for a developer/builder.
According to the IRS: -An individual is an __________ __________ if the person for whom the services are perfumed has the right to control or direct only the result of the work and not the means and methods of accomplishing the result. -An individual is an __________ if the person for who the services are performed has the right to control what will be done and how it will be done.
1) Independent Contractor 2) Employee
What are the three things that the Do Not Call Law means for brokers?
1) It is illegal to call a residential number for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services if the number is on the DNC registry. 2) A licensee may call a "for sale by owner" (FSBO) if she has a legitimate buyer, but may not call a FSBO's telephone number that is on the DNC list if she is only trying to market real estate services, even if the FSBO's number is in an ad or on a yard sign. 3) A licensee may call expired listings if they have a legitimate buyer, but may not call to merely solicit the listing if the residential number of the owner is on the DNC list.
What are attractive alternatives to long-term exclusive buyer agreements?
1) Limiting the Duration of an Exclusive Agreement (rather than setting for several months, the parties can agree to a shorter term, such as a day, week, month, etc.) 2) Limiting an Exclusive Agreement to Specific Properties (the broker is the exclusive agent for properties identified in the agreement)
Living areas typically include which five types of rooms? What eight additional "rooms" could be considered if they meet the main three criteria? (i.e. heated, finished, and directly accessible from another living area) Stairways are included from the area they descend, not to exceed the area of the opening in the floor. Space beneath is included as part of the lower level area, regardless of its ceiling height.
1) Living Room 2) Dining Room 3) Kitchen 4) Den 5) Bedrooms 6) Attics 7) Basements 8) Bonus rooms 9) Offices 10) Hallways 11) Stairways (if connected to living areas) 12) Closets 13) Laundry Rooms
To keep from violating DNC regulations, a company must maintain __________ and __________ lists of customers and prospects who do not want to be called and keep the lists updated regularly. Companies must synchronize their lists with an updated version of the registry at least every __________ days.
1) National 2) Internal 3) 31
Like an open listing agreement (for a seller), a __________ __________ __________ __________ __________ allows a buyer to enter into a nonexclusive agreement with more than one brokerage firm. It also allows the buyer to purchase a property directly from the owner or through a broker acting as a listing agent or seller's subagent. Broker under this agreement earns a commission only if the buyer enter into an agreement to purchase a property that was introduced to the buyer by the firm (i.e. the broker is the __________ __________ of the purchase).
1) Non-Exclusive Buyer Agency Agreement (Also called an Open Buyer Agency Agreement) 2) Procuring Cause
What are the two types of buyer agency contracts?
1) Nonexclusive 2) Exclusive
A buyer agency agreement may be __________ or __________. Under NCREC rules, the verbal agency agreement can occur, AS LONG AS the relationship is __________ and the agreement doesn't bind the buyer for a fixed period of time (buyer may __________ at any time). This verbal agreement, however, must be put in __________ and signed no later than the time one of the parties makes an offer to another party.
1) Oral 2) Written 3) Nonexclusive 4) Terminate 5) Writing
When assisting a seller with establishing a price, what four factors should a listing broker consider with the seller?
1) Seller's Desired Net or Profit 2) Seller's Motivation for Selling 3) Competing Properties 4) Current Market Conditions
In a __________ __________, where there are more buyers than sellers, prices tend to be higher. Conversely, in a __________ __________, where there are more sellers than buyers, prices tend to be lower.
1) Seller's Market 2) Buyer's Market
Exceptions to the seven-foot ceiling height requirement: -Under beams, ducts, etc. the height must be at least __________. -In rooms with slope ceilings, the height must be at least __________ feet, and -At least __________-__________ of the finished area of the room must have a ceiling height of seven feet.
1) Six Feet Four Inches (6'4") 2) Five (5'0") 3) One-Half
Similar to listing agreements, what three components must every written buyer agency agreement include?
1) Specific Termination Date 2) Broker's License Number 3) Antidiscrimination Clause
A provision of the federal __________ __________ __________ established the __________ __________ __________ rules and the National __________ __________ __________ (DNC) __________. Consumers can request not to be called by commercial telemarketers by adding their names and telephone numbers (home and/or mobile) to the registry. This is managed and enforced by the FTC, the Federal Communications Commission (FCC), and state law enforcement officials.
1) Telemarketing Sales Rule 2) Do Not Call 3) National Do Not Call (DNC) Registry
Any opt-out mechanism provided by a business (in accordance with the CAN-SPAM Act) must be able to process requests for at least __________ days after sending your message. Additionally, a recipient's opt-out request must be honored within __________ business days.
1) Thirty (30) 2) Ten (10)
To find area, you multiply __________ by __________. To find the area of a triangle, multiply __________ of the base measurement by the height. For a trapezoid, __________ the two uneven sides, divide by __________, then multiply length by the width. To calculate volume, multiply __________ by __________ by __________. There are __________ feet in a cubic yard. To find the perimeter (the length around something), add each __________ of the lot.
1) Width 2) Length 3) Half 4) Average 5) Two (2) 6) Length 7) Width 8) Height 9) 27 10) Side
The Do Not Call (DNC) Registry does not cover: -Calls for which the person has given prior __________ permission. -Calls from companies with whom the person has an __________ __________ __________ (EBR). -Calls that are not commercial or do not include unsolicited advertisements. -Calls by or on behalf of tax-exempt __________-__________ __________. -Calls to a person with whom the caller has a personal relationship.
1) Written 2) Established Business Relationship (EBR) 3) Non-Profit Organizations
There are __________ square feet in an acre.
43,560
SKIP How do you determine a seller's net share?
Begin with the sales price and subtract all known costs for which the seller is normally responsible: -Broker's commission -Payoff of existing mortgages -Prorated mortgage interest for month of the sale -Prorated property taxes or special assessments -Title insurance -State, county, and/or municipal transfer taxes -Any other prorated association fees or special assessments -Attorney fees
The frontage of land is often more valuable than its area or acreage for __________ and waterfront properties, where adding more frontage makes land more valuable than adding more depth.
Commercial
A __________ __________ __________ is a method of estimating the approximate market value of a home by comparing the subject property to other homes in the same neighborhood or vicinity that: -Have sold recently -Are presently or sale -Did not sell before the listing expired.
Comparative Market Analysis Also called a Competitive Market Analysis or a Residential Market Analysis
A buyer's agent should also perform a __________ __________ __________ before the buyer makes an offer.
Comparative Market Analysis (CMA)
__________ states that a particular item or feature of a home is worth only what it actually contributes in value to that piece of property, not what it actually cost the owner to install or construct it.
Contribution
An __________ is a person whose results are mandated by the employer, and the employer controls how the result are accomplished. The employer is responsible for withholding income tax as well as Social Security and Medicare taxes.
Employee
An __________ __________ is one in which the client agrees to appoint only one broker as her representative in a specific type of transaction for a specified period of time.
Exclusive Agreement
True or False: North Carolina maintains its own specific Do Not Call list.
False; North Carolina uses the national list and does not maintain its own state specific list.
True or False: A listing price can be determined after a seller has signed a listing contract.
False; a listing price MUST be determined BEFORE the seller signs a listing contract.
True or False: Business-to-business calls are subject to DNC restrictions if they have requested to be placed on the list.
False; business-to-business calls are NOT subject to DNC restrictions.
True or False: Square footage is a material fact in North Carolina.
False; square footage is NOT a material fact in North Carolina.
True or False: Steering is acceptable if requested by the client.
False; steering is prohibited even at a client's behest.
True or False: The DNC Registry can limit calls by political organizations, charities, or telephone surveyors.
False; the DNC Registry does not limit calls by political organizations, charities, or telephone surveyors.
An __________ __________ typically controls the means and methods of accomplish an assigned task; the paying entity has the right to demand only the end result. They are responsible for their actions to the person or organization who contracted with them, and for their own tax liability to the IRS as well as other taxing agencies.
Independent Contractor
A __________ __________ __________ is a tool for gathering information about the property before submitting the listing to the multiple listing service (MLS).
Listing Data Sheet Also called Property Data Sheet.
__________ __________ are the spaces intended for human occupancy in a home.
Living Areas
How many times are consumers required to register with the DNC Registry to permanently be removed from the list?
Only once
SKIP A __________ __________ is one that is out of the scope of business, such as a family member or a close personal friend or neighbor.
Personal Relationship
__________ is estimating the maximum loan amount a buyer is likely to be eligible to obtain, and, given the buyer's assets, the approximate purchase price the buyer can afford. The benefit of this is to ensure that the buyer is shown only those properties they can afford i.e. to avoid wasting the time of the buyer, broker, listing agents, and sellers.
Prequalification
When putting a property up for sale, it is ultimately the __________ responsibility to determine the listing, or asking, price.
Seller's
SKIP A __________ __________ is an estimate of the money a seller should receive from a real estate transaction based on a certain selling price after all costs and expenses have been paid.
Seller's Share Also called Net to Seller and Seller's Net Equity
SKIP North Carolina enacted a __________ Do Not Call law that parallels the federal Do Not Call legislation.
State
Brokers often fall under the IRS category of __________ __________, and are treated as independent contractor for tax purposes.
Statutory Nonemployees
__________ is directing prospective buyers to or away from specific neighborhoods based on their race, religion, national origin, or other protected class to maintain or change the character of a neighborhood.
Steering
__________ __________ is the causing of harm by disrupting another's relationship; it essentially means you cannot interfere with an existing contract. It may be the basis for a civil lawsuit.
Tortious Interference
A buyer agent agreement promises to procure compensation from where first?
The listing firm or seller before looking to the buyer client
Brokers must retain for at least __________ years any sketches, calculations, photos, and other documentation used and/or relied on to determine square footage.
Three (3)
True or False: Even if there is an EBR, a consumer may not be called if they've been requested to be placed on the company's internal do not call list.
True
True or False: A broker is prohibited from interfering (i.e. actively soliciting towards) with the relationships other brokers have with their clients.
True
True or False: A telemarketer or seller may call a consumer with whom they have an established business relationship, even if they are on the Do Not Call Registry.
True
True or False: An agent has a right to not take a listing if the sellers are unrealistic about what it's going to sell for.
True
How long does a broker have to deliver a copy of a written agency agreement, contract, offer, lease, rental agreement, etc. to their client?
Within three days of the broker's receipt of the executed (signed) document.