REU Unit II Module One Quiz

What are a seller's obligations if something material changes after the required disclosures have been made to the buyer?

Amend the form, deliver the revised version to the buyer, and make reasonable repairs before closing.

What is the difference between a subagent and an agent?

An agent is authorized by a principal to represent them; a subagent is authorized by an agent to represent the principal the agent represents. In a typical transaction, the broker is the agent to the principal, while the salesperson is the sub-agent.

What is a general agent?

An agent who is authorized to perform a range of acts on the behalf of the principal. A general agent is authorized to perform a range of acts on behalf of the principal. For example, a property manager has a general agency that gives the agent authority to complete a range of tasks for the owner of the property.

What is a special agent when referring to the real estate industry?

An agent who is granted limited authority on behalf of the principal. Almost all real estate agents are acting as special agents. A real estate salesperson is a common example of a special agent.

Which of the following statements is true?

Everyone listed on the seller's deed must sign the listing contract. A seller's deed lists all of the parties who have legal interest in the property, and everyone listed on the deed must sign the listing contract. You'll want to review the deed while preparing for your pre-listing meeting. If the property doesn't have a clear deed or all parties aren't willing to sign, then you can't sell the house.

All of the following are potential red flags that you may come across during your pre-listing meeting, except which statement?

Potential issues with the buyer's ability to obtain financing. The pre-listing meeting is held between a real estate agent and a potential seller, not a buyer. During this meeting, you'll have the chance to uncover some potential red flags, including unrealistic price expectations, significant problems with the property, and features that require additional documentation and/or disclosures.

Which of the following is an example of a universal agent?

Power of attorney A universal agent is defined as an agent who has complete authority over any activity of the principal; for example, power of attorney.

Describing a house as the "best house on the block" is an example of...?

Puffing Puffing involves making extravagant or exaggerated claims. For example, the agent tells a prospective buyer that the property is the "best property in the neighborhood".

Sydney's brother Lawrence is a real estate salesperson in a prestigious brokerage that is a member of several active MLS services. Sydney wants to sell her condo, and she wants to negotiate a listing agreement with her brother that will allow him to make 100% of the commission. Which statement is true?

Sydney should negotiate a listing agreement with Lawrence's sponsoring broker. It's very unlikely she'll be able to get 100% for Lawrence, but she may be able to negotiate a listing agreement that gives Lawrence a significant split of any commission as a subagent. A listing agreement can only be signed between a seller and a broker. A salesperson may operate as a sub-agent to the broker, but they can never sign a listing agreement with a seller. The broker will want to share part of the commission with the prospective buyer's broker in order to increase their chances of selling the property more quickly.

Charles Finnegan is a real estate agent with a subscription to the MLS. As part of his subscription, he gets a certain number of listings he can place each month. When he enters the information for the home, the Product Data Sheet includes a Remarks field. What is the best use of the "Remarks" field?

The remarks are the best opportunity to highlight the property's best features.

Who is most likely to request the services of a Transaction Broker?

Those who are experienced buyers or sellers of property. Experienced property sellers or buyers, and busy landlords with multiple properties for rent, are among some of the categories of real estate clients who might feel they don't need the advocacy and detailed participation of a dedicated agent to represent their interests. Such individuals can be perfectly served by a Transaction Broker. However, it must be remembered that a licensee acting as facilitator is required to recommend that each party seek additional expert advice, particularly when it involves fiduciary responsibilities. Those who are not familiar with real estate dealings or who need a bit of "hand-holding" would probably be better served by a licensee in an agency relationship.

When does apparent authority exist?

When no authority has been granted to the agent but the principal acts as if it has been granted.

With whom must principals be honest and fair?

With their agents. Principals have a duty to be honest and fair in their dealings with their agents.

If a prospective buyer declines to agree to an oral or written buyer's agency agreement, what role, if any, can you play in a transaction?

Work as the seller's agent or as a subagent. The correct answer is: "Work as the seller's agent or as a subagent." When a potential buyer declines, you are advised to provide them with a Working with Real Estate Agents brochure and check the box indicating you are working as a seller's agent or subagent.

Showing alternative properties not owned by the seller or landlord to a prospective buyer or tenant is something that, if done by a transaction broker...?

is specifically allowed under state statutes. There are several contingencies that specifically DO NOT constitute breaches of responsibility by a Transaction Broker. Showing alternative properties to a prospect is one example. Others include: listing other properties for sale or lease; showing properties that a buyer or tenant might be interested in to others; and serving "as a single agent, subagent or designated agent or broker, limited agent, disclosed dual agent for the same or for different parties in other real estate transactions." There is no requirement for disclosure in any of these listed situations.

In what circumstances are disclosures required when a licensee is acting as a principal?

Disclosures must be made if the licensee is acting as the principal for a house that he or she wants to buy, is selling his or her own property, is renting a property he or she owns or is representing a business entity in which he or she has a personal interest.

A property manager operates as a ..............agent.

General

Is puffing illegal?

No Puffing is not illegal, but it is highly discouraged.

Which is true about agency relationships?

The agent owes the most loyalty to the principal. The broker owes full fiduciary duties to their client; however, the broker must still be fair and offer reasonable skill and care to the customer.

What are the two requirements for a licensee to accept any type of incentive payment?

A licensee can accept an incentive payment as long as the details of that payment are included in the sales contract and the payment goes through the brokerage.

A transaction broker or facilitator is sometimes known as:

A non-agent. A Transaction Broker is sometimes known as a Non-agent because the relationship between licensee and client or customer does not rise to the level of agency in real estate lexicon. The level of service is less detail-oriented, and not usually as demanding as with an agency relationship, but there are stipulated duties and prohibitions, and the terms of the relationship must be agreed to by both sides prior to signing a real estate contract.

Which statement is true about a general agent?

A property manager is a type of general agent.

Selena is a licensed real estate broker. Her mother is moving into a nursing home. Her mother asks Selena to deal with the house she owns. The mother doesn't want to have to make any decisions regarding the house. She wants Selena to decide whether it makes more sense to sell or rent the home, to hire movers, sell or dispose of any left furniture and choose how best to invest any profits from a sale or rental. What type of agent is Selena when she is representing her mother in carrying out these duties?

A universal agent. A universal agent is defined as an agent who has complete authority over any activity of the principal; for example, power of attorney.

Which of these items must the seller disclose under the Disclosure Act?

A vacation rental agreement for the following summer.

Intentional misrepresentation is also known as...?

Active fraud

A Property Data Form includes which of the following information?

All of the answer choices provided are correct

What type of authority does not give actual authority?

Apparent authority.

An agent says he will have a cleaning service clean the property while the principal is present, and the principal says nothing even though the agent has not been given the authority to do that. What kind of authority does the agent have?

Apparent authority. The agent has apparent authority because the principal was present and did not say anything.

What do the seller and his agent have an obligation to do?

Avoid fraud. The seller and his agent have an obligation to avoid fraud.

When must a seller deliver the Disclosure form to a prospective buyer?

Before the buyer enters into a contract to purchase the property, unless the contract specifies otherwise.

If a seller fails to disclose a serious defect and the home is sold, who is liable if the buyer experiences problems and wants to sue?

Both the real estate agent and the seller may be held liable. If a seller fails to disclose a serious problem with a property that you sell, both you and the seller can be held liable if the buyer decides to sue.

It is difficult to prove false advertising because the consumer has to show that the statement was...?

Deceptive

What type of agency relationship exists when the real estate brokerage represents both the buyer and seller, but the broker-in-charge designates an individual associated licensee to act on each client's behalf?

Designated agency.

Why is the requirement to disclose all material facts to the principal a problem in a dual agency relationship?

Disclosing facts about a principal could help one principal while harming the other.

What is the definition of dual agency?

Dual agency occurs when an agent attempts to represent two opposing sides (buyer and seller) in the same transaction.

What type of authority does the agent have when the principal gives him or her specific instructions?

Express authority.

Francisco does not have an agency relationship with a customer that he has been showing different co-ops for sale. Which of the following statements is false?

He is not required to disclose that there have been bed bugs found in the building when the client asks, and he knows that the building has had bed bugs. He can just say I don't know, or lie and say no.

What must an agent NOT use to gain an unfair advantage?

His or her former position of confidence.

In what manner must principals interact with their agents?

Honestly and fairly.

Under which of the following circumstances would the agent's fiduciary duties extend beyond the termination of the agency relationship?

If the agent is holding money for the principal.

How must dual agency be agreed to?

In writing by all parties

Which is true about an agency relationship?

It can be created in writing, verbally or by implication. While an agency relationship may be created in writing, verbally, or by implication, it is always best to create an agency relationship in writing.

Which statement is true about dual agency?

It must always be disclosed to the competing principals.

In what situation would an agency relationship not result in compensation?

It would not result in compensation when an agent works for a buyer, represents a buyer and shows that buyer some homes but doesn't have that buyer sign a buyer's agreement. There would also not be compensation if that buyer purchases a FSBO home and a cooperation amount isn't being paid by the seller.

Susan is a real estate broker and believes that she owes every person she works with the same benefits of an agency relationship. Why is she incorrect?

It's not possible to put two competing interests first, but that is what an agency relationship requires.

Most buyer leads are typically discovered through the...?

Multiple Listing Service The MLS is still the most effective way to market a property.

Who is represented by a Transaction Broker in a real estate sale?

No single party. Sometimes known as a facilitator, the transaction broker owes allegiance to no single party, but rather works with both parties to a contract to buy, sell, or rent property, with the goal of moving it to successful agreement and closing.

Lionel Malcolm is a real estate agent representing seller Morty Rosenbaum. Morty tells Lionel that he knows that the basement contains asbestos and that Morty and his wife are unable to pay for the costly removal process. Instead, Lionel frantically tells Morty to keep this information under the lid. Morty agrees. Since state law requires that the seller disclose the presence of asbestos, Lionel and his hapless clients are committing ............ fraud by failing to disclose a material defect in an attempt to trick someone into buying the defective home at full market price.

Passive Passive fraud occurs when a broker knowingly fails to disclose a defect about which the broker has actual knowledge, but which is unknown to the buyer.

Intentional non-disclosure is also known as...?

Passive fraud Passive fraud occurs when a broker knowingly fails to disclose a defect about which the broker has actual knowledge, but which is unknown to the buyer.

What is the duty of compensation?

Paying the agent for doing the job they were hired to do.

............ refers to incredulous claims made by sellers or sellers agents to attract potential buyers.

Puffing

Which of the following is not something you'll have to do during your pre-listing meeting?

Review the seller's current mortgage documents.

A real estate salesperson operates as a ...........agent.

Special

What is implied authority based on?

Standard practices and customs. Implied authority is based on standard practices and customs. A listing agent is expected to have the authority to do whatever is necessary to list the property based on standard practices, regardless of whether the contract spells out every task.

Which statement most accurately describes the role of a subagent?

The agent authorizes the subagent to represent the interests of the principal. In a typical transaction, the broker is the agent to the principal, while the salesperson is the sub-agent.

What makes a non-exclusive buyer's agreement different?

The buyer can work with multiple real estate professionals. The correct answer is: "Buyer can work with multiple real estate professionals." Non-exclusive agreements can be helpful when buyers are not ready to work with just one person. It gives you an opportunity to locate a suitable property and make the sale. It does place you in a competitive situation with other industry professionals.

What would happen if a consumer chose to remain a customer rather than sign the buyer's agent agreement?

The consumer can do so which means there would be no agency relationship. If the consumer decides not to sign the buyer's agreement, the relationship would remain transactional on the broker's part. Therefore, there is no agency relationship in place at that point.

When must a licensee provide the Disclosure form to a customer or client?

The first practical opportunity when "substantial contact" occurs.

What consists of legal principals that regulate the principal-agent relationship.?

The law of agency. The law of agency consists of legal principals that regulate the principal-agent relationship.

What is the South Carolina Disclosure of Real Estate Brokerage Relationships form designed to document?

The legal relationship between prospective real estate clients and the brokerage agency. This form documents the relationship between prospective buyers and the brokerage agency, and is critical in establishing a legal relationship. In fact, no agency relationship exists until and unless the buyer or seller and the brokerage company and its associated licensee agree in writing to create a relationship.

Why might property being transferred or sold by a personal representative or trustee after the property owner's death be exempt from the Disclosure Act requirements?

The person handling the transfer of ownership likely does not know the history of the property sufficiently to be able to make required disclosures to prospective buyers.

Who acts as the principal to the listing broker?

The seller

For a contract to be valid and enforceable everything that legally has to go into the contract must be there, and the contract must also have?

The signatures of the parties to the transaction.

A transaction brokerage is another type of business relationship, whereby the only thing being represented is?

The transaction, not the parties.

Which of the following statements is NOT a duty of a Transaction Broker?

To act as a limited agent of both the seller and buyer or the landlord and tenant, with fiduciary responsibility to both. A Transaction Broker does not constitute an agency relationship because an agency relationship requires that a licensee act in the best interests of one specific party in a real estate transaction. It is only possible to act as an agent for both sides under a written Dual Agency Agreement, which is a highly restrictive form of agency, defined by specific duties and responsibilities.

When does the fiduciary duty owed to the principal typically end?

Upon termination of the agency relationship.

In what situations does an agreement to pay compensation result in an agency relationship?

When a real estate agent signs a compensation agreement, all parties agree that said agent is acting as a sole representative to that buyer in a particular transaction. The contract is what will specify exactly which tasks are to be performed by the real estate brokerage which determines what creates an agency relationship or not. When an agent signs an agreement to pay compensation, which is the equivalent to a consumer hiring a real estate firm for a task, the compensation agreement clearly states that all parties agree to the terms of the contract. That contract confirms that the agent is solely representing the buyer in said transaction. It also confirms the specific task to be performed by the real estate brokerage firm. This is when it's determined whether there is an agency relationship or not based on the task listed therein.

What is a third party?

Anyone who is outside of the principal-agent relationship.

What is the most common remedy in the case of a principal's breach of duties?

Civil liability. Civil liability is more common in cases of a principal's breach of duties.