Real Estate Agency in Practice study set
Maximum fines under FTC Do-Not-Call are approximately:
$43,792 per call
If Maurice is emailing his clients a weekly update of new homes in the area, all of the following will be required in his email, except:
Days on market for each home listed When licensees send out emails, they must always include their contact information along with the information of their brokerage. An unsubscribe or "opt out" option is also required per CAN-SPAM.
Antonio is a newly licensed agent and begins making phone calls to fsbo owners that he finds on www.forsalebyowner.com. Before calling any owners, Antonio should be sure that he does which of the following?
Look up the FTC Do Not Call Registry Before making any unsolicted phone calls, agents should check the FTC Do Not Call Registry to see if any of the phone numbers they plan to call are on that list. Fines for calling a number on this list are $43,792 per call. You can only call FSBO if you have a buyer that wants to see a specific property.
Which party typically pays the broker fee?
Seller. Typically the seller pays the broker's fee, and the buyer's agent is paid with a split of the listing(seller's)agent's commission.
Under the Dodd Frank Act's new TRID rules, the HUD-1 was replaced with:
The Closing Statement
If an agent called 2 people on the FTC Do Not Call List, how much might they be facing in penalty fines?
$87,584 If an agent calls a number on the FTC Do Not Call List, the fine is $43,792 per call. 2 people x $43,792 = $87,584
Francis bought a house for $100,000. At a minimum, he wants to recoup what he paid when he sells it. He will have to pay $1,100 in attorney's fees, $650 in recording fees, and 5% to a broker. For what price should he sell?
$107,106 To calculate what Francis should sell for, first add his costs (treating his net profit as a cost, since he must receive it when he sells his house): $100,000 + $1,750 = $101,750. Next, divide the seller's costs by the difference between 1 and the commission to find his sales price: $101,750 / 0.95 = $107,105.27 (rounded up to $107,106).
Rich and Rebecca want to net $200,000 on the sale of their Cape Cod cottage after paying closing costs of $5,000 and broker's fees of 5%. For what price should they sell?
$215,789 The first step is to add the costs to the net amount. Then you divide by 95%, since this is the percentage of the total that the home sells for, which the sellers get to keep for themselves. The other 5% goes to the brokers. So the math would look like this: Step 1: $200,000 + $5,000 = $205,000. Step 2: $205,000 / .95 = $215,789.
Dobby and Winky sold their English cottage with Hogsmead Village Realty. They were ecstatic the property sold so quickly and were happy to pay the 5.5% total commission to listing agent, Harry. Hogsmead Village Realty paid Dean, an agent from Diagon Alley Brokerage, a 2% commission for bringing a buyer who fell in love with the property. The sale closed on December 15th for $857,500. If Harry was paid an 80/20 split with his broker, how much did he make on the sale?
$24,010 How we calculate Harry's commission: Step one: We first need to determine what how much commission is paid out at closing; $857,500 x .055 = $47,162.50 Step two: We now need to determine what percentage of the commission went to Hogsmead Village Realty. 5.5% total commission - 2% that went to the buyer brokerage (Diagon Alley) = 3.5% commission to listing brokerage Step three: Next, we find out what the total commission to Hogsmead Village Realty was $857,500 x .035 = $30,012.50 Step four: Finally, we figure out what went to Harry $30,012.50 x .80 (Harry's split) = $24,010
Nick earns a $5,000 commission on a sale. He was paid 2% of the sale as his split. What was the sale price?
$250,000 Nick's commission is 2% of the sales price, so the sales price is $5,000 / 0.02 = $250,000.
An owner wants to net $300,000 on the sale of her home. Assuming that she has $2,000 in costs, and is paying a broker a commission of 6%, how much should she sell for at a minimum?
$321,277 Add costs to desired net income amount: $300,000 desired net + $2,000 costs = $302,000. The 6% commission calculated off of the sales price means that this figure represents 94% of the sales price (100% - 6% commission = 94%). So, $302,000 / .94 = $321,277 sales price.
Jeannie wants to net a profit of $350,000 on the sale of her South Boston condo. She plans to have the condo professionally painted at a cost of $3,500 and staged at a cost of $8,000. She wants to include these costs so that her profit will cover them. If she plans to hire her friend and Realtor, Jenny at a 4.5% commission, what should she list her condo for?
$378,534 First we add profit plus costs = $350,000 + $3,500 + $8,000 = $361,500. Then we divide by the total percentage of the home sale that the seller will keep which is 100%-4.5% = 95.5%. Then we divide $361,500 / .955 = $378,534 ? Check this one
A seller would like to receive $500,000 from the sale of their home. The seller will pay a 6% commission. The seller will also be paying off a mortgage with a balance of $96,000 and will have $4,000 in closing costs. For what price should the property be listed?
$638,298 add the amount the seller would like to receive ($500,000) with the amount of the expenses ($96,000 loan balance + $4000 closing costs) which equals $600,000. We would then subtract the commission percentage from 1 (1 - .06 ) which equals 0.94 and divide by that number (600,000 / .94) which equals $638,298.
Sherman Anti Trust laws would make all of the following illegal, except:
A buyer's agent acting as a dual agent and receiving double commission Group boycotting, claiming there are "set standard" rates of commission, not allowing for negotiation of commissions and discussing commissions are all violations of the Sherman Antitrust Act. Dual agency is not illegal under the act.
An offer can be terminated by any of the following, Except:
A loss of license by the listing agent. Agency licensing issues will not terminate or impact otherwise valid offers. Withdrawal before it has been accepted in writing, a Counter offer & Destruction of the property can terminate an offer however.
An associate broker working at Homes Realty receives an exclusive right to sell a property located at 101 Main Road. The listing belongs to:
Homes Realty Associate brokers are brokers working for another broker. Since listings belong to the brokerage or the employing broker, the listing in this example belongs to Homes Realty.
Frank, Sammy, Dean, and Joey all own competing real estate offices in Las Vegas. The four of them come to an agreement to set the commission percentage at an exorbitant 10% and to split up the Las Vegas area into four sections, where they would each only work in their own section. Can they do this?
No, because commission rates are always negotiable between the real estate office and consumer, and dividing the market in such a way is also not allowed. The Sherman Anti-Trust Act is a federal law which prohibits anticompetitive activities, such as price fixing and divisions of a market. Frank, Sammy, Dean and Joey making agreements to set a standard commission rate and to divide the market would be illegal under the Sherman Anti-Trust Act.
A listing contract is best described as a(n):
Service Contract A listing contract is essentially a service contract. The agent is offering services to the seller. It does not have to be exclusive.
Phyllis and Stanley were talking about what they charge their sellers for listing commissions. They both charge 3.5%. Another agent, Jim walks by during their conversation and overhears them talking. The best thing for Jim to do is:
Tell Phyllis and Stanley that they are in violation of the Sherman Anti-Trust Act and walk away Under the Sherman Anti-Trust Act, commissions are always negotiable, and in order to avoid anti-competitive business practices, real estate agents are never allowed to discuss with one another the commissions they charge or earn.
Contingent sales (also known as "tying arrangements") are prohibited by:
The Sherman Anti-Trust Act of 1890 The Sherman Anti-Trust Act prohibits contingent sales or "tying agreements," where the purchase of one item also requires the buyer to purchase another product or service from the seller.
Uniform commission schedules between brokerages violates:
The Sherman Antitrust Act This is an example of an antitrust law violation prohibited by The Sherman Antitrust Act. Commissions and contracts are always negotiable; agents are prohibited from discussing and establishing uniform commission schedules with other brokerages.
In order to earn a commission, a real estate agent must be what?
The efficient and procuring cause of sale Efficient and procuring cause means that it was the agent's effort that brought a ready, willing and able buyer.