Law of Agency Chapter 2

Broker Jack listed seller Pete's property three months ago. jack has decided that he would like to purchase Pete's property for his own investment property portfolio. What is the BEST thing to do to protect Jack from an accusation that he breached his fiduciary duties in this transaction?

Either jack or pete should obtain an appraisal of the property's value

A prospective buyer wants to make an offer on an office building listed by Broker Bob. Bob thinks that the buyer would qualify for financing and would bring needed tenants to the area. the buyer asks Bob how much money below the asking price he should offer. What should Bob do?

Reaffirm the asking price and explain why it is a fair price

Under which of the following scenarios would a real estate license be required?

A person acts as an agent for another person in a real estate transaction and expects to be paid a fee.

Acting as a subagent, Lucy shows a property to a buyer. Lucy notices water stains on the carpet near the entrance to the guest bathroom and on the vinyl tile at the back door. The buyer is greatly interested in the property. Lucy should

point out the condition to the buyer and then notify the listing associate about possible plumbing leaks and drainage problems

A buyer contracts to purchase a property from a seller for $212,000. Two weeks before closing, a buyer's agent for another company delivers an offer for $205,000. The listing associate should

present the offer to the seller as a potential backup offer for further negotiation

The fiduciary duty of confidentiality includes withholding information about all of the following EXCEPT?

condition of the property

An owner of several single-family residential properties hires a licensed real estate broker to manage her properties. The licensee approves all tenants, signs all rental agreements, makes decisions regarding repairs, pays all expenses for the owner, and hires/fires all apartment employees. The relationship between the owner and the property manager is one of

General Agency

What type of agency relationship typically exists between brokers and sponsored sales associates, where sales associates make decisions and conduct transactions on behalf of the sponsoring broker, while the broker assumes significant liability for the agent's actions?

General Agency

the relationship between a broker and a sales associate is usually one of

General Agency

Owner Harry Nelson bought his home at the top of the real estate market. Now he wants to sell because he needs to move into an assisted care facility. When Broker Bob meets Harry to discuss the listing price, Harry says he wants to list the property at $150,000 more than what Bob thinks is reasonable. What should Bob do?

Guide Harry to list the property at a reasonable price

Broker Bob is the agent representing Seller Sam on the sale of Sam's ranch. A customer who was shown the property asks " Bob, do you know that the new highways are going to make that land go up in value. What do you think it will be worth in 5 years?" How should Bob repsond?

He should not answer because a customer is not entitled to the broker's price opinion

Which of the following sets of words MOST accurately describes how an agent should treat a customer?

Honestly and fairly

The buyer of a large property provided an earnest money check to the seller's broker. Later that same day, the buyer phoned the broker and asked that the check not be deposited for two days because of a temporary liquidity issue. What should the listing broker do?

Inform the buyer that the contract will be nullified if the deposit is delayed.

What should an agent do if a client requests an unlawful action?

Inform the client that the request is illegal and refuse to comply

Which is NOT a fiduciary obligation owed to a client?

Inspection

Jasmine, a sales associate with Oak Ridge realty, is contacted by her college roommate, Chelsea whom she has seen or spoken to in 12 years. Chelsea's job just relocated to town, and she wants to purchase a condominium. if Jasmine acts as a subagent of the seller, which statement is TRUE?

Jasmine may act as a subagent, but only with full disclosure and permission of the seller

Real Estate Agents owe clients six fiduciary duties. Which duty is the "prince" of all fiduciary duties?

Loyalty

Broker Bob operates an office with five sponsored salespeople. Bob is the agent representing seller Sam on the sale of his ranch. Steve, a salesperson who is sponsored by Bob, overhears a conversation in which Sam says he'd be willing to divide the land into smaller parcels if he does not have a reasonable offer within 90 days. Steve's cousin would like to buy a portion of Bob's land. Can Steve share what he overheard to help the client with an eventual sale?

No, Steve shares obligations of loyalty and confidentiality to the broker's client

A seller based her listing price on the comparative market analysis prepared by the broker. A buyer purchased the property at that price. One month later the seller learned that the broker under-priced the property by using inappropriate comparable properties. is the agent liable to the seller?

No, a seller had an obligation to know the value of the property.

After prolonged negotiations a seller has accepted a buyer's offer. The buyer is eager to move ahead, but needs to change the closing date by one week. Can the seller's agent change the closing date without involving the seller?

No, the change cannot be made without client approval

Gail used broker Bob as a buyer's agent when she was interested in buying a townhome last year. She gave up that idea when she realized that she would prefer the privacy of a free-standing home. This year, she is interested in making an offer on a home that Bob has listed. Can Bob reveal what he knows about Gail's exemplary credit history to the seller?

No, the information was gained through Bob's agency relationship with Gail

What amount of knowledge of real estate law is expected of real estate agents who are NOT attorneys?

Non-attorney agents must spot common problem areas and direct their clients to expert help when the clients require specific advice.

A prospective buyer learned her dream house was for sale one day after the owner of the house accepted the offer. the buyer insists on making an offer. What should the listing agent do?

Present the offer to the seller

Which of the following pieces of information is the listing agent on an office building required to make to a customer who is interested in the property?

Terms of lease held by current tenant

Which of the following statements best describes the relationship between a salesperson and a client in a real estate transaction?

The salesperson is a special agent of the client.

Which of the following is not a category of agency in a real estate transaction?

Transactional Agent

Broker Jimmy listed and sold a property for Harold, during which time Jimmy became aware that Harold was about to file for divorce and bankruptcy. Harold now wishes to quickly purchase another property that is listed by another brokerage company on a seller financing arrangement. As a subagent of the seller, Jimmy

cannot disclose Harold's financial situation because he gained the information in the course of an agency relationship

the Duty of Confidentiality

never ends unless the principal releases the agent from the duty

A real estate licensee must NOT

give legal advice (unless the licensee is also a Texas licensed attorney)

To provide a reasonable care and diligence to a client, a licensee must

have a basic knowledge of real estate law

A professional real estate licensee

knows when it is time to enlist the help of other professionals

The Information About Brokerage Services form is designed to

reduce the confusion about the agency relationship

As an agent of the broker, sales associate generally do NOT

reject offers from prospective buyers that are below the listing price

The agency relationship is established between

sponsoring broker and the principal

Which of the following facts about a buyer-customer must a broker disclose to a client?

the customer making the offer is a relative

Why would a broker hesitate to accept a power of attorney from a seller client?

to avoid a potential conflict of interest