Ch. 8 Clarifying Agency Relationships

Who should make sure that the agency disclosure is written and acknowledged by the parties involved?

Broker Brokers should make sure the agency disclosure is written and acknowledged by the parties involved.

Many communication problems could be eliminated if the licensee follows these best practices.

Decide in each transaction whether to represent the buyer or the seller. Decide whether intermediary brokerage might be possible. Disclose to the buyer or seller whom they represent after the agreement has been signed. Document the disclosure with an adequate written confirmation. Act consistently with the disclosed decision.

The best written broker policy manuals

have the most detail.

The Handling Common Situations section of a company's agency policy would likely NOT include

how to properly complete each form.

The majority of agency problems that licensees face are the result of

inadequate communication.

Agency

is a consensual relationship that requires a delegation of authority by the principal and consent by the agent, in this case the broker or licensee.

The Texas Real Estate License Act specifies the

licensee's duties to disclose their agency relationships.

Brokers must supervise their

licensees. Throughout a transaction, the broker and licensee must take care to document all aspects of the transaction.

Anytime that anyone refuses to sign a required disclosure form you should

make a note to that effect and retain copies.

One of the most complex agency situations occurs when an agent

meets a potential buyer at an open house.

While an agent may decide whom to represent, he or she must

obtain written consent from all parties.

The written information statement and the agency disclosure may be made

orally or in writing. Licensees must comply with both disclosure provisions.

Policies and procedures are written to

protect the brokerage and licensees, but they should also be written to serve the customer and client while maintaining the highest ethical standards.

Written agency information statements and agency disclosures

provide different information and are both required by Texas law.

Although an agent may not know the future role he or she will play with a buyer, it is imperative the agent

provide proper disclosure.

Each licensee must understand the

signed agency agreement and relay the requirements of licensee and client so that good communication exists. Licensees must take steps to eliminate any confusion the customer or client may have.

Throughout any transaction, brokers must

supervise their licensees.

When deciding the agency role a licensee wants to play, he or she must consider

the implications and obligations of each situation that may develop.

When a prospect comes into our open house, our duty is to

the seller and we must use our best efforts to sell the home to the prospect.

Brokers should develop a company disclosure policy so that

they take control over agency relationships and avoid unintended and illegal agencies. Timely, proper disclosure is the key to a successful and effective agency program.

Many potential agency problems could be solved by

thorough communication between all parties.

The most effective way to develop a company policy on agency relationships is

to follow an organized approach.

A licensee prepares for representation in each transaction,

which party they will represent, and what their relationship will be to other participants.

In addition to specific requirements for agency disclosure, TREC requires that the licensee deliver to prospective parties a

written information statement regarding the roles the broker might take in the transaction. This statement must be given at the first meeting where substantial information is discussed regarding real property.

Before entering into an intermediary relationship, written consent must be obtained from

both parties. Once consent is obtained, no further notification is required unless associates are appointed by the broker. If the broker makes appointments, the parties must be informed in writing. The appointment must give the appointees names and identify the parties involved.

Texas agency disclosure laws apply to

commercial and residential licensees, leases, and sales.

Before deciding on the status of the working relationship, the licensee should

define what role to play in each situation.

Licensees sometimes mistakenly think the information statement is a

disclosure of their agency status. The statute requires both the written information statement and a disclosure of any agency relationships.

Disclosure of agency relationships and whom the licensee currently represents in the transaction must take place

early in the first substantive meeting about real property.

Real estate licensees offer the highest ethical standards of

fairness and honesty to clients and customers.

In regards to agency discussions, licensees should

feel comfortable discussing agency and make it part of professional meetings.

The rule states that:

A broker who represents a party in a real estate transaction or who lists real estate for sale under an exclusive agreement for a party is that party's agent. A license holder who represents a party in a proposed real estate transaction shall disclose such representation, orally or in writing, at the time of the license holder's first contact with: another party to the transaction, or with another license holder who represents another party to the transaction.

Why should brokers develop a company disclosure policy?

A company policy helps avoid unintentional and illegal agencies in their offices.

Agency.

A consensual relationship that requires a delegation of authority by the principal and consent by the agent

What is NEVER covered by the brokerage Policies and Procedures manual?

A designated area of town to show/sell members of a protected class

Which of the following is NOT a way a broker can help avoid agency problems due to miscommunication, confusion, or misunderstanding?

Allow all licensees to develop their own personalized disclosure brochures in the language and tone they prefer.

When must a written information statement be delivered to prospective parties?

At the first meeting

According to the Texas Real Estate Act, when is a licensee required to provide any prospective parties a written information statement of possible roles the licensee may have in the transaction?

At the first meeting where substantial information about the property is discussed

When writing company agency policy, which of the following is NOT a part of basic agency philosophy?

Interacting with buyer's agents The basic agency philosophy of a company agency policy will center upon; a strict adherence to state disclosure laws, company disclosure guidelines, and a summary of company policy.

Why is it so important for agents to provide accurate disclosure to all parties in a timely manner?

It provides all parties the opportunity to make accurately informed decisions.

If a broker buys an out-of-state policy guide or creates one using a textbook, what should he or she be sure to do?

Make sure the plan conforms with all current state law where the broker is located. A broker should develop a company disclosure policy that complies with all state laws. If a broker buys an out-of-state policy guide or creates one using a textbook, he or she should carefully modify it to conform to Texas rules and regulations.

What does a licensee do?

Prepares for representation in each transaction, chooses what party he or she will represent

What is one way a licensee could have his or her license suspended or revoked?

Receiving compensation without all parties full knowledge and consent

Which act specifies the duties of licensees to disclose their agency relationships?

The Texas Real Estate License Act The Texas Real Estate License Act specifies the duties of licensees to disclose their agency relationships.

What happens if a buyer provides confidential information to an agent without knowing the agent represents only the seller?

The seller would have an unfair advantage since the agent would be required to share the information with the seller. If a buyer reveals confidential information to a licensee representing a seller, the licensee is obligated to pass that information to the seller, which gives the seller an unfair advantage in negotiations.

What part of disclosure is the most important to ensure parties have all the information they need to make informed decisions?

Timing The timing of disclosure is of the utmost importance and ensures that parties to a transaction can make decisions and take actions without misunderstanding existing agency relationships.

What should a listing agent do if a buyer comes to an open house and wants to make an offer on the agent's listing?

Treat the buyer as a customer and make immediate disclosures regarding agency options and positions.

A licensee should specifically address undecided status in any discussions with

a buyer, tenant, seller, landlord, or other licensees. Agency and other working relationships should be defined as soon as possible to avoid any confusion among the parties, including the licensee. .

The best defense a company has regarding agency problems is

a well thought out written agency relationship policy that all agents are required to use.

A company's best defense to prevent problems in the area of agency is

a well-defined, written policy regarding agency relationships that is approved and practiced by the brokerage.

Real estate licensees must discuss all proposed

agency relationships with buyers and sellers - landlords and tenants - so they may make informed decisions.

If a licensee meets a seller while touring new listings or during a showing, he or she must

always disclose agency status to the seller.