course 3
use of an excluded prospect amendment is the only way a broker might not receive commission on sale
Exclusive Right-to-Sell Agency
At the first substantive communication with a party, an agent may just refer the party to their business website for the IABS Notice.
False. Posting the IABS Notice on your business website is a separate requirement under the rules. Delivery of the IABS Notice at the first substantive communication must be accomplished by one of the four methods set out in TREC Rule 531.20(c).
If Geni is Agent Andie's supervising broker, who is the principal in their general agency relationship?
Geni
At an open house, a license holder (without an agency agreement) greets a prospective buyer and shows them the house. The license holder never discloses who they do or do not represent, and the prospective buyer assumes the license holder represents the seller. What is this an example of?
Ostensible agency
A subagent
represents the seller and does so with the consent and cooperation of the listing broker.they're not sponsored by the listing broker.
On a listing sheet, what would a field stating "BC: 3" mean?
that the brokerage representing the buyer will receive 3% of the commission
An agent has obtained a buyer representation agreement with a new client. Who owes the client fiduciary duties?
the broker and all the sales agents at the firm
Seller agency is
the relationship between a real estate agent and the seller in the brokerage of homes.
In the event of an excluded prospect
the sales agent/broker and seller would agree to either a reduced fee or no fee. It could be a flat fee or a percentage of the sale price as compensation.
With a net listing
the seller establishes a minimum acceptable net price and the broker's commission comes from the difference between the seller's established minimum price and the price that the buyer is willing to pay.
Timothy has an agency relationship with Sarah, the purchaser of 4412 Castle Drive. Sarah has also agreed to a contract with Melissa, a licensed real estate inspector, to inspect 4412 Castle Drive. What is the relation of Melissa to Timothy?
third party
License holders are legally required to disclose if a murder happened on a property.
true
A lockbox on a vacant property should:
use a random set of numbers unrelated to the property for the combination
Agency by ratification is
when a license holder acts without authorization on behalf of a principal and the principal accepts those actions after the fact, thus affirming the actions taken and creating retroactive agency.
A malfunction is
when something is designed or built to perform a certain function and no longer does so.
Agency by estoppel is
agency that is imposed by law when it is determined that ostensible agency existed. It is typically created after the actions of the agent have already occurred and it is used to create legal accountability for the agent or the principal on whose behalf the agent acted. occurs in an environment of ostensible agency.
The Exclusive Agency Addendum to Listing (TAR 1403)
allows the seller to name excluded prospects and to designate how much (if any) the seller will owe the listing broker if the excluded prospect purchases the property.
A defect is
an item that was installed or is attached to the home and has an imperfection.
When does TRELA require that an IABS Notice be given?
at first substantive communication about a specific, real property.
When Avery informed the prospective tenant that the rental price would be negotiable after a month, which fiduciary duty did she violate?
confidentiality.
Open listings:
do not go on the MLS, also gives sellers the option to sell the property on their own without facing liability for a commission payment.
When Michelle followed Tamina's advice and accepted the offer, which fiduciary duty was Michelle demonstrating?
obedience
A license holder may not
only show a house to a third party if the third party's agent is present.
Paragraph 9: Competing Clients
outlines this possible scenario so that your buyers understand. If the time comes when more than one of your clients wants to put an offer on the same property, there are many different ways of approaching it.
Paragraph 16(A) clarifies that brokerage fees for listings, contracts, agreements, and commissions are
payable to the broker — and NOT the sales agent. This follows a certain logic since the listings, contracts, agreements, and clients belong to the broker in the first place.
Which of the following describes a condition that must exist in order for a licensed broker to share earned commissions with a foreign broker?
A Texas license holder must conduct negotiations within Texas.
trec rule 1
A broker should take net listings only when the principal insists upon a net listing and the principal appears to be familiar with current market values of real property.
boycott
An illegal group that is an agreement among between two or more competitors not to do business with another competitor for the purpose of inducing the other competitor to change its business practices.
Paragraph 17 addresses
This is a critical matter because the manner in which expenses are handled between a broker and an agent and is one of the primary tests used to determine whether the agent should be viewed as an employee or independent contractor for tax purposes.
Which document allows you to discuss with your buyer-client all of the duties and parameters that make your relationship work?
buyer representation agreement
How can buyer's agent fees be paid?
by commission from the home sale proceeds, a credit from seller to buyer upon closing, or broken retainer fees.
The Sherman Antitrust Act
is a landmark law that was passed in 1890 (so, a million years ago) that prohibits the formation of trusts, or monopolies, in the marketplace. It governs business by regulating anti-competitive conduct to promote fair competition on behalf of American consumers.
If a listing agreement does NOT state an end date:
it is illegal
Which of the following is a true statement about puffing?
its simply marketing
Paragraph 17(A) outlines
the basic, overriding approach to expenses between a broker and an agent (operating as an independent contractor) that each pays for their own expenses.
A listing agreement is a contract establishing an agency relationship between:
the broker and the seller
When a subagent works with a buyer
the buyer is their customer, NOT their client.
The broker representing a landlord in a real estate transaction is
the landlord's agent.
Once the buyer's offer is structured, the buyer's agent delivers to the offer to:
the listing agent
Who or what determines the commission earned by a listing broker?
the listing broker and seller
Morals are
the personal values derived from a system of beliefs.
The classic example of a general agency relationship is
the relationship between a broker and a sales agent.
The SDN is one of the few forms that is completed in its entirety by
the sellers of the home being listed for sale. (Remember, license holders may not complete this form.)
On whose behalf do sales agents sign written agency contracts?
their supervising broker
Paragraph 12: Receipt of Money by Associate speaks
to the importance of proper money management. The agent signing this agreement is committing to handling the receipt of any monies according to the contracts under which those funds are received. Likewise, the agent is agreeing to handle receipt of brokerage fees strictly as authorized by the broker.
OLD CAR
- Obedience - Loyalty - Disclosure - Confidentiality - Accountability - Reasonable Care
Jane just signed a listing agreement. Who determined the commission earned by the listing brokerage?
Jane and Jane's brokerage
There are four types of listing agreements:
Open listing Net listing Exclusive agency Exclusive right-to-sell listing
trec rule 2
Real estate license holders are obligated to advise a property owner with a net listing of the license holder's opinion of the market value of a property when:
Which of the following is an example of the use of an excluded prospect amendment?
Seller Sally agrees to give Broker Bob a 3% commission, except if her neighbor Sam purchases the property — then she'll only owe Bob 1%.
Which of the following is the best description of an "open listing"?
Seller will pay commission to any broker who was the procuring cause for the sale.
Is the broker authorized to place a keybox (lockbox) on the property? Where on the contract would you indicate your answer to that question?
The broker is authorized to place a lockbox on the property, and you should indicate that by checking the "is" box in Paragraph 7C(1).
Actual authority is
action taken by an agent for which they have permission, whether given through express or implied authority by a principal.
Which of the options below BEST describes "license holder"?
broker, sales agent
Permitted disclosures are those disclosures that are not required
but also not forbidden.
The agent and principal sign a TAR Residential Buyer/Tenant Representation Agreement or equivalent form.
buying
How on the contract should you indicate that the seller does NOT agree to allow the broker to show the property to buyers represented by the same brokerage?
checking to box provided for 9B
Which fiduciary duty did Michelle demonstrate when she informed Tamina about the buyer's first offer?
disclosure
an agent owes all parties
fair dealing
According to TRELA, license holders MUST advise buyers that they should:
get a title insurance policy.
license holders MUST advise buyers that they should:
give the abstract examined by an attorney
According to Texas law, license holders must advise all parties to:
have the abstract examined by a lawyer and to obtain a title insurance policy
You Still Need an Inspection
no SDN can replace a proper home inspection.
Since special agency relationships are limited
special agents are unable to make decisions that may bind or obligate their principals.
If the seller does not provide the buyer with a completed Seller's Disclosure Notice before signing the contract, the buyer has a legal right to:
terminate the contract within seven days of receiving the notice
Universal agency is
the broadest type of agency. gives agents the power to act on behalf of their principal and make decisions on behalf of the principal.(power of attorney)
What is the purpose of the MUD Disclosure?
to disclose whether or not the property is in a Municipal Utility District
If a buyer makes an offer that meets all parameters (such as the listing price), and the seller rejects your offer, your commission is now payable.
true
unlawful disclosures
which are disclosures that you are legally forbidden from making.
A license holder should not share information about properties on social media without:
written permission from the seller of the property
renunciation.
An agent may, at any time, decide to leave an agency relationship.
four major types of agency acts:
Listing, Buying, Leasing, Property Management
In special agency, a principal allows the broker to buy, sell, lease, or rent property, but
NOT manage a property.
Which of the following is most likely covered by an E&O insurance policy?
Negligence claim
Which of the following fiduciary duties survive agency termination?
accounting and confidentiality
Typically, brokerages pay their agents _________ of the commission left after they receive their percentage of the commission.
60-90%
Paragraphs 6 and 7 of the Independent Contractor Agreement
6: Legal and Ethical Compliance 7: Licenses and Trade Associations
A seller listed his property with an agent. He shared with the agent that a registered sex offender lives two doors away, and he does not want to disclose that. How should the agent respond if she plans to take the listing?
"The public can find that info online, but you are not required by Texas law to disclose that."
For a DTPA violation, the Consumer Protection Division may request a civil penalty to be paid to the state in an amount of up to ________ per violation.
$20,000
The elements of an antitrust violation are:
-An agreement -Between competitors -Imposes a restraint -Restraint is unreasonable
the 5 stages of buying:
-Buyer Becomes Client -Searching for Property -Making an Offer -Signing the Sales Contract -Closing Day
Which of the following is a key task that supports the overriding objective of a listing agreement?
-Creating CMAs (comparative market analysis) -Helping the principal stage their home -Constant review of MLS activity
The Four Ds of Disclosure
-Decide whom they represent -Disclose to all parties whom they represent -Document that sufficient disclosure was made in a timely manner -Do your duties based on the representation and disclosures you have made
3 exceptions to the written notice requirement include:
-If the transaction is for a lease less than a year with no plan for sale -If the party is already known to the license holder to be represented by another license holder -The interaction occurs at an open house and the communication concerns that property
Basic Questions for Buyers
-Is the buyer ready and qualified to buy? -What is the buyer's price range? -How much or how little assistance does the buyer need?
Who does TRELA §1101.005 provide licensing exemptions for?
-Licensed Auctioneers -Persons operating under a court order -On-site managers of an apartment complex
Paragraphs 1, 2, and 3 of the Independent Contractor Agreement clarify:
-That the parties to the agreement are the broker and the associate (sales agent) -The commencement date of the agreement (open-ended) -Key terms to be used in the agreement
Why might an agent attach a document as an addendum?
-To specify who is purchasing the property. -To ensure the agent is compensated for their efforts. -To spell out who the agent is ethically responsible for.
Paragraph 18:
Additional Notices
Paragraph 9:
Associate's Authority speaks to the issue of the agent performing according to the legal and ethical standards set forth in Paragraph 6, and it reiterates that the agent is always acting on behalf of the broker.
Paragraph 5:
Broker Obligations
Paragraph 11:
Broker's Fees
Paragraph 18(A)
Brokers and agents cannot "fix" or control fees they charge to their clients. That means they can't sit around at happy hour deciding to double their typical rate and try to get other agents to jump on the bandwagon. And this also serves as notification to the buyer that commissions are negotiable.
Fidelity, Integrity, Competency, Consumer Information, and Discriminatory Practices are all part of the:
Cannons of Professional Ethics
Paragraph 6:
Client Obligations
What form does the Canons of Professional Ethics and Conduct say must be on display in a readily noticeable location in each of the real estate brokers places of business?
Consumer Protection Notice 1-2
What is NOT one of the ways buyer agency can be created?
Dependent authority
Paragraph 13: Default
Each contract must list the consequences of defaulting on an agreed-upon arrangement. The focus is on failing to comply with the written action items and the effects of false representations.
A license holder can refuse a seller's decision to accept an offer that is not in their best interests.
FALSE
A seller is obligated to disclose prior water penetration - even if the defect has been cured - due to possible residual damage.
FALSE
What should a buyer NOT expect of their agent?
Frequent compromise
Paragraph 7(C)
Furthermore, the client has to promise that they're telling you the truth. In this case, you basically have to be your client's bartender, therapist, hairdresser, and religious confessor.
Paragraph 8
Here, you will mark whether or not your client is allowing the use of intermediary brokerage.
Paragraph 18(F)
Home security cameras are more prevalent than ever. This notice informs the buyer that they might be recorded without their consent when viewing properties. Also, the client should think twice before taking photos or videos of a home they're touring. This subsection warns the buyer that they should consult an attorney before recording on the property without the owner's consent.
license holders required to provide this notice to consumers can be delivered by hand by broker or sales agent, by first class mail or overnight common carrier delivery service, or in the body of or as an attachment of an email
IABS
What did Senate Bill 489 do?
Introduce intermediary practice as an option
Broker B agreed to take an exclusive agency agreement with a seller. Three weeks after Broker B entered the property into MLS and began a marketing program, the seller sold the property himself to a neighbor. Does Broker B get paid a commission or get reimbursed for his expenses?
Neither, unless there was an outside agreement. The seller maintained the right to sell and pay no one a commission with an exclusive agency listing.
Section 530 of the Revenue Act of 1978 is known as:
Safe Harbor
A buyer can compensate their agent by requiring them to get compensation from the seller first, and if unsuccessful, the agent can request that the buyer pays the commission.
TRUE
If a seller doesn't want to disclose a defect, what should the agent do?
Tell the seller that they are obligated by statute to make the disclosure.
Most lawsuits brought against Texas real estate professionals are under the:
Texas Deceptive Trade Practices Act
According to Paragraph A2, which of the following is NOT a reason that a buyer might be considered an "excluded prospect?"
The broker has listed the individual by name as an "excluded prospect."
All of the following statements are true about intermediaries EXCEPT:
The broker must treat both parties equally and honestly and maintain confidentiality of both parties.
Which of the following is NOT true if the a buyer representation agreement contains a termination clause?
The buyer can orally terminate the agreement.
What's a good rule of thumb in determining whether you should view the buyer as a customer or client?
The buyer should be viewed as a client if you expect to be compensated for your efforts and/or if you're acting on the buyer's behalf.
Paragraph 17: Special Provisions
This paragraph is a blank space set aside for the inclusion of factual statements and business details that need to be known by the parties. It is NOT a tool for modifying in any way the terms of the contract, which would be the unauthorized practice of law. Therefore, this section should almost always be left blank.
Paragraph 18(E)
This portion reminds the buyer of some of the pitfalls of residential service contracts, also known as home warranties.
Paragraph 18(B)
We certainly can't get through a contract without a nod to Fair Housing, and you should know these rules well.
collusion
While a brokerage firm is free to determine the commission or fee it will charge clients for services, representatives of the brokerage firm may not discuss such matters with representatives of any other brokerage firm. That would be considereda secret agreement or cooperation for an illegal or deceitful purpose.
Paragraph 17(E) is
a catch-all clause, indicating that the agent is responsible for all expenses related to performance of this agreement. It states that, while not obligated to do so, if the broker pays for any such expense, the agent will reimburse the broker upon demand.
What should come first in an agency policy outline for a brokerage company manual?
a general statement of agency philosophy
Tort reform is
a judicial movement that tries to limit the amount of recourse and awards that can go to a complainant. In other words, the less people stand to gain by suing someone, the less likely they are to sue them.
A substantive dialogue is one wherein the agent and buyer discuss ____.
a specific property
Which type of agent is not sponsored by, or associated with, the principal's broker?
a subagent
In 2005, Texas made changes to policies regarding dual representation by:
allowing dual representation to only be offered by brokers via intermediary process
A backup offer is
an offer made on a property already under contract.
If an agent has taken unfair advantage of another person because of their lack of knowledge and experience to a grossly unfair degree, the court will say the agent is guilty of _____.
an unconscionable action
Private remedies
are civil lawsuits brought by consumers against the alleged violators.
Public remedies
are those enforced by the Texas Attorney General's Office, specifically the Consumer Protection Division.
Paragraph 14
basically says that if things go south and there are legal proceedings related to this representation agreement, the winner of the case will be able to recover costs and attorney's fees from the losing party.
All real estate advertising (use of business stationary, newsletters, billboards, etc.) must be done only with the ____________ knowledge and consent.
broker's
Senate Bill 2212
clarifies that a person selling or offering to sell an option or assigning an interest in a contract to purchase real property is engaged in brokerage if they do not accurately disclose to potential buyers the nature of the interest offered.also amends the Property Code to require the seller of an equitable interest, when selling or offering to sell an option or assigning an interest in a contract to purchase real property, to disclose the same to any potential buyer.
Which of the following fiduciary duties NEVER terminates?
duty of confidentiality
Paragraph 15: Limitation of Liability
ensures that the broker is not responsible for personal injuries or damage to property that is not caused by the broker or their associates.
How many categories can behavioral control factors fall into?
four: degree of instruction, training, evaluation systems, type of instructions given
Paragraph 10: Confidential Information
fulfilling fiduciary responsibility requires that you do not disclose something that your potential buyer does not want to be disclosed, applies to marital status, citizenship, their savings, and whether or not they can afford to offer more for the home in question.
Paragraph 11(A)
goes over the choices in creating a commission structure. You have the choice to select a percentage of the gross sales price or a percentage of one month's rent in the case of acquiring a lease
When providing gratuitous agency for family or friends, what should an agent do?
have all terms and expectations in writing
Paragraph 10(B)
helps you deal with confidential information in a multiple offer situation. Remember, the seller's agent is not obligated to keep the terms of your offer confidential to any other buyers.
All parties in a transaction are owed
honesty and fair dealing.
Paragraph 14: Advertising
lays out the agent's obligations relating to the creation and use of advertising. All real estate advertising must be done only with the broker's knowledge and consent. What falls under the category of advertising is spelled out, including the use of business stationery and business cards.
Paragraph 16(B)
lays out the amount and manner in which the associate's fees will be paid. That will be detailed either by way of an attached fee schedule or as written in the space provided.
Paragraph 11: Ownership of Listings and Representation Agreements
makes clear that all listings, representation agreements, commission agreements, etc., in which the broker is a named party, are owned exclusively by the broker.
Paragraph 11(D)
of the contract mentions the portion regarding broker's fees, bonuses, and marketing incentives. These are commonly found in apartment leases or in MLS listings that offer a higher-than-average commission in order to lure fabulous agents to show their home.
buyer representation agreement
outlines the duties and implications of the broker-buyer agency relationship.
"Foreign broker" refers to any broker located:
outside the state of Texas
An independent contractor is
someone who is bound by contract to perform a certain job, but who is not considered an employee for federal or state income tax purposes.
Paragraph 10: Files and Confidentiality of Operations
speaks to the agent's obligation to properly maintain files and records in the broker's office and in the same fashion and format as the broker does.
To a client, what is a broker considered to be?
special agent
Ethics are
standards of conduct agreed upon and recognized by a particular group or culture.
Which of the following is NOT part of the "ACTR" risk evaluation process?
trade
"Rent-a-broker" is one of the common commission-based approaches to agent compensation.
true
IRS Code Section 3508(b) says that sales agents must be licensed to be considered independent contractors.
true
The Texas Workforce Commission is the primary resource regarding state and federal labor laws, rules, and regulations governing employment in Texas.
true
Your broker has to be a member of Texas Realtors to use the Independent Contractor Agreement for Sales Associate.
true
an in-house sale is
when a brokerage handles both sides of a real estate transaction
Ed, a potential buyer, has offered $15,000 over the listing price, and Sonia is putting in another offer. The seller's agent tells Sonia that Ed has offered a certain amount over the list price. Is this legal?
yes
can you terminate a the listing contract without getting permission from the client?
yes
A seller's agent might be able to help a third party buyer with ___ .
obtaining financing
Paragraph 17(B) lists the
"special expenses" that a broker incurs, such as desk fees, transaction fees, E&O premiums (Errors and Omissions Insurance), franchise fees, etc. These fees, which are to be paid by the agent, will be handled in one of three ways: -Deducted from the gross fees the broker receives and paid to the service providers prior to calculating the agent's fees -Invoiced to the agent by the broker -Charged to the agent in accordance with either an attached fee schedule or as written into the agreement
If the act or practice that is the subject of the proceeding was calculated to acquire or deprive money or other property from a consumer who was 65 years of age or older when the act or practice occurred, an additional amount of up to
$250,000 will be added.
Violations of any of the items contained in the DTPA's "laundry list"
(the 27 false, misleading, or deceptive acts or practices we just covered in Chapter 2)
Paragraphs 4 and 5 of the Independent Contractor Agreement are related in that they both address the performance of the sales associate (agent).
-4: Best Efforts -5: Exclusive Association
integrity
-avoid misrepresentation -employment of prudence and caution
The Five Selling Stages
-get the listing -sell the house -accept the offer -escrow period -closing day
After Termination
-stop marketing asap -fill out: -Termination of Listing (TAR - 1410) -Termination of Buyer/Tenant Representation Agreement (TAR - 1503)
Indemnification
-the broker suffers a loss as result of carrying out a performance on behalf of the principal. -unknown misrepresentation originated with the principal
In most cases, broker compensation, as a percentage of home price, falls somewhere between:
5 - 7%
A consumer wishing to pursue a DTPA claim must provide _________ written notice before filing suit. This is how long the agent has to respond to the complaint.
60 days
your average CMA will contain information about the following:
Active, Pending, Sold, Off-Market/Withdrawn/Canceled, and Expired Listings
Asking a client to sign all the paperwork at once is considered a best practice.
FALSE. Asking the client to sign all of the paperwork at once is inadvisable and could get an agent in trouble. Agents should wait for the appropriate times to get paperwork signed by their clients.
The agent's offer to call the tenant ahead of placing a key box on the property was sufficient in providing care for his client.
FALSE. The agent should advise his client to get permission in writing from her tenant to put a key box on the property.
And one last point about the ramifications of Paragraph 11:
If a broker were to die, go bankrupt, or lose their brokerage license, the listings, representations, and agreements that an agent generated for the brokerage would become orphans Because their owner lost all claim to them and the agent would have lost their sponsor.
Paragraph 8(B): No Intermediary Services
If this intermediary relationship involves an assignee within your brokerage, you are now only representing one of your clients, and you must do so to the best of your ability without spilling any potential information you may have regarding the other party.
Paragraph 16(D)
It addresses dispute resolution when two agents sponsored by the same broker both lay claim to a fee from a transaction that generates a brokerage fee payment. The two agents can work it out between themselves and come to an agreement for the split. If they can't agree, the broker will have to get involved.
All of the following statements are valid reasons to avoid agency relationships formed through oral agreements EXCEPT:
It is NOT enforceable against the broker.
Which of the following is NOT a key point to keep in mind regarding multiple offers?
Make all buyers aware of the details of best offer made so that they can revise their original offer if they wish to.
An unlicensed persons may legally do all of the following EXCEPT:
Make calls to determine whether persons are interested in buying or selling property.
Paragraph 16(E) clarifies that a broker would
NOT be liable to the agent for uncollected fees from a prospect AND that the broker retains sole discretion as to whether or not to enforce any agreement (fees) for brokerage services with a prospect.
Under a scenario where intermediary appointments are not made
No opinions or advice can be given to either party to the transaction.
Is a paint inspection or risk assessment for lead-based paint/hazards mandatory?
No, a homebuyer may waive the inspection opportunity
Legally, can a buyer's agent disclose information about their client's new baby?
No, due to the buyer's agent's fiduciary duty of confidentiality.
A seller tells his agent that his house had never flooded. The agent checks the flood zone map and finds the property is not within the limits. After the house is sold, it is discovered that the property has flooded many times before and the buyer is furious. Could the agent be in violation of the DTPA?
No, it was the seller who made the false claim, and the agent had no reason to doubt him.
Which of the following statements about pre-qualification and pre-approval is TRUE?
Pre-qualification involves figuring out appropriate home prices for the buyer, and pre-approval involves determining if a buyer is credit-worthy.
Exclusive Right-to-Sell Agency
Seller guarantees the named broker will receive a commission if the property is sold no matter who brings the buyer (unless an amendment to designate excluded prospects is used)
Which statement is TRUE regarding the IABS notice?
The IABS informs customers of the types of agency that exist but does NOT serve as sufficient notice of disclosure.
Who can terminate the buyer-agent relationship?
The agent or the buyer
Seller Simone told her agent she received an insurance check for water damage but spent the money on a new car. The damage was never repaired. What should Simone's agent do?
The agent should disclose the information, as it is a material fact about the property.
Paragraph 18(G)
The final notice in Paragraph 18 gives the client an important warning about how to avoid wire fraud.
Beware the Protection Period Loophole
The paragraph regarding the protection period is only in play if the listing runs its usual course and ends because it expired.If the representation agreement is terminated (This is a whole other class, y'all!), this paragraph is no longer a consideration.
Who determines the brokerage fee charged by a listing broker?
The principal and the broker
Paragraph 11(G):
The protection period is a period of time after the buyer's representation term ends in which the agent can still get compensation for their role in a transaction. This protects you in the event that you and your client part ways, and then they suddenly decide to put in an offer on that home you showed them. With a protection period in place, you are still part of the deal.
According to TREC Rules, earnest money must be delivered to an authorized escrow agent or deposited in a trust account within a "reasonable time," which the Commission has determined to be not later than ____.
The second working day after the date the broker received the funds
Why do documents need addenda?
These are the documents that supplement the contract but are not used every time. In particular, this portion is helpful to the agent to remind them that the IABS Notice is crucial to have, so it's a great one to habitually check off.
Paragraph 7(D)
This paragraph includes relocation companies or anyone else who is in some way financing the client's move.
Paragraph 7(A)
This paragraph makes it clear that the person, meaning the client, who signs this document allowing you to represent them in a transaction has the legal right to sign it. That speaks to things like capacity, meaning having the proper documentation to purchase property.
Paragraph 11(F): Additional Fees
This paragraph outlines any fees that will be due to the broker in addition to the agreed-upon commission. It says how much the broker will receive if they facilitate construction on the property and that the broker can collect fees from the service providers they recommend.
Paragraph 18(D)
This paragraph reminds your client that having an abstract reviewed by an attorney or getting a title policy should occur prior to any acquisition. And if a license holder uses a buyer representation agreement that does not contain this language, the Notice to Prospective Buyer must be used to convey this information.
Paragraph 18(C)
This short paragraph is another reminder that agents are many things: sometimes therapists, parents, or BFFs - but never an inspector, surveyor, attorney, appraiser, engineer, environmental assessor, or compliance inspector.
What is the purpose of the Intermediary Relationship Notice?
To give the buyer and the seller notice and for the buyer and the seller to accept the appointments
TREC is
a government agency created by the Texas Legislature to enforce TRELA.
Paragraph 12: Mediation
as of this version of the Residential Buyer/Tenant Representation Agreement,is agreed to from the beginning and is a mandatory part of any resolution process.
Paragraph 16(F) stipulates that
as with any other type of compensation related to services rendered on behalf of the brokerage, any bonus offered to the agent must be paid to the broker for distribution as prescribed in Paragraph 16(B) of this agreement.
Paragraph 16(C) states that the broker and the
associate earn their respective fees at the same time for brokerage services the associate performs (e.g., closings). When the broker receives broker fees, then associate fees become payable as well (with a few exceptions for arbitration, litigation, or court order).
Paragraph 15 states that
brokers have the right to "shuffle" leads and prospects around as they please — as long as they have good business reasons for doing so. This is true regardless of who might be responsible for bringing the leads and prospects to the brokerage.
Some of the 20 factors provided by the IRS can be placed into which of the following categories or buckets?
can be placed into three categories or buckets, including: financial control, behavioral control, and type of relationship.
Paragraph 8 of the Independent Contractor Agreement
clarifies the working relationship, identifying the agent as an independent contractor and NOT an employee nor a partner of the broker
Which of the following is one of the three main antitrust acts?
clayton acts
This is where we go back to Paragraph 3
clearly define the market area, giving us, as agents, enough room to work.
Paragraph 11(C): Earned and Payable Commission
clearly outlines the situations in which you have earned your commission. First, it simply states that the client has entered into a contract: specifically, a contract to buy or lease a property. So, at this point, if your client enters into a For Sale By Owner scenario, you are covered by Paragraph 6 under Client's Obligation to involve the Brokerage in any sales or leasing contract, and therefore your commission is earned.
Agents can specialize in things such as:
clients, property types, or services provided
Paragraph 8(A): Intermediary Status
comes into play when you have a buyer's representation agreement for a client and wish to show that client a home that your broker has under a listing agreement. Remember, this agreement is under the broker, not you, so this applies to all the agents under your broker.
Paragraph 16: Addenda
common addenda include: -Information Concerning Property Insurance -General Information and Notice to a Buyer -For Your Protection: Get a Home Inspection:
Paragraph 8(B) also commits the agent to
complete (and sign) a Statement of Understanding at the beginning of each year.
Which of the following is NOT one of the duties a principal owes a broker in an employment agreement?
compromise
lets consumers know that TREC regulates brokers and agents homepage of the business website must have a link in at least 10-point font.
consumer information
Which of the following events would NOT invalidate a listing agreement?
death of the sales agent
A buyer profile helps an agent:
determine the property needs and wants held by their client
Paragraph 7(B)
determines whether the client has or hasn't already signed one of these contracts with somebody else.
Including an "as is" clause:
does not release the seller from disclosing material facts.
A claimed filed under the DTPA has no statute of limitations.
false
As an agent, it is unethical and not advised to show the same property for sale to more than one client.
false
The factors of significant investment, unreimbursed expenses, and opportunity for profit or loss are all part of what's known as:
financial control
Because Priya included an "as is" clause in the contract, her claim is:
her claim is illegitimate because the commission of fraud supersedes any contract terms.
Which of the following are considered ministerial duties?
honesty, accounting, fairness, and reasonable skill and care
If a court finds the conduct of the seller or the agent was committed ____________, a court may award no more than ___________ times the amount of damages for mental anguish AND economic damages.
intentionally, three
Paragraph 11(B)
is only for percentages. Be knowledgeable about what traditional and typical commissions are for your area, but do not participate in price-fixing.
An equitable title
is the contractual right of the purchaser to conveyance of a property once all terms and conditions of the contract are met (and is also known as "equitable interest").
The mission of the Texas Real Estate Commission (TREC)
is to assist and protect consumers of real estate services, thereby fostering economic growth in Texas.
The mission of the United States Securities and Exchange Commission (or SEC)
is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
A non-exclusive broker agreement
leaves the buyer free to work with other agents to acquire a home.
Which of the following things is NOT a general duty of a broker or sales agent?
loyalty to all parties;accounting
Paragraph 11
makes it clear that your client is authorizing escrow to be used for fees and commissions. It even identifies which county the funds can be released in. This is a good time to discover whether the county in which the closing takes place (remote, close, out of state?) is the same as that of the property, and where that payment will be disbursed.
A geographic region in which similar homes compete for buyers is known as a _______.
market area
Which of the following expenses are a possible tax deduction for the real estate professional?
marketing expenses, home office, and education
Tortious interference
means that someone (in this case the backup offerer) is submitting an amazing offer to intentionally interfere with the transaction. In other words, they are intentionally causing damage in someone else's contractual relationship.
What does the integrity portion of the Canons of Professional Ethics charge license holders with avoiding?
misrepresentation
Misrepresentation is brought to court
more often than allegations of fraud. Fraud carries a higher burden of proof because there must be proof of intent.
Paragraph 4
nails down the timeframe during which you and your client will be beholden to each other.
Paragraph 13: Facilities
provides an area for the broker to list what, if any, brokerage office facilities will be made available to the agent signing the agreement.
Negligent misrepresentation violates the fiduciary duty of:
reasonable care
The duty a principal has to compensate the broker for expenses incurred on the principal's behalf is called ____.
reimbursement
When a client decides to end an agency relationship, it is called ____.
revocation
Laws are
rules that are enforced by a local, state, or federal government authority to help create order in society by establishing a "social contract" between citizens and the government.
After a contract is signed, an agent must deposit escrow funds no later than the close of the:
second business day
What document should an agent sign every year after their original independent contractor agreement took effect?
statement of understanding
Paragraph 11(E): Acquisition of Broker's Listing
states if your client decides to buy or lease a property listed within the brokerage, the final amount of compensation falls to the listing agreement that the broker has in place with that client.
A seller needs to bring all of the following on closing day EXCEPT:
tax records
Paragraph 16(G) states
that if the broker reassigns a prospect that the agent brought to the brokerage, the broker will compensate the agent for the loss of that prospect and will do so as prescribed in Paragraph 16(B) of this agreement.
Listing agreements may include a ready, willing, and able buyer clause
that may keep the seller on the line for paying the broker a commission even if the sale falls apart after a purchase offer has been made and accepted. Sellers can cross this off in the agreement and replace it with a statement saying the broker's commission is contingent on the home sale transaction closing and that the commission is to be paid from home sale proceeds.
Paragraph 17(C) states
that the broker and the agent are responsible for fees incurred for their respective license and trade memberships. It also clarifies that the agent will reimburse the broker for any expense incurred relative to licensing and memberships. In Texas, typical memberships will include: -National Association of Realtors -Texas Realtors -Local board associations (e.g., Austin Board of Realtors)
Paragraph 18 states
that the broker retains the right of offset for all purposes, deducting any amounts the agent owes to the broker from any amounts the broker owes to the agent.
Paragraph 17(D) clarifies
that the broker will NOT be providing a car for the agent. Instead, the agent is to own and operate their own car at their own expense — including carrying liability and property damage insurance on the vehicle (proof of which must be provided to the broker). If the agent doesn't maintain this insurance, the broker may: -Purchase coverage and request immediate reimbursement from the agent -Terminate this agreement
Paragraph 22 says
that the parties to the agreement are to understand that all notices under the agreement are to be in writing and are considered effective when delivered by hand, mail, fax, or email from one party to the other.
In a single agency
the agent represents only one side of a transaction.
dual agency relationship.
the agent represents the buyer and seller in a transaction, they must inform both the buyer and seller that they represent both parties. illegal in Texas
Paragraphs 16(H) and 16(I) address
the remaining points about associate (agent) fees, stating that if a circumstance arises that generates a fee not explicitly covered in this agreement or documents attached to the agreement, the broker will use their discretion to determine a fair and reasonable fee due the agent.
How can intermediary brokerage be created?
through writing only
The Residential Lead-Based Paint Hazard Reduction Act of 1992, also known as ______________, was meant to protect families from exposure to lead from paint, dust, and soil.
title x
An express authority agreement can be:
verbal or written
A principal has two meanings:
-A major party who is a part of a real estate transaction (buyer, seller, landlord, tenant). -An individual who authorizes an agent to represent their interests as a client in a real estate transaction.
There are two different types of customers:
-Customers with whom the license holder is working directly. -Customers represented by another license holder.
An agent needs to disclose two things:
-Disclosure of representation: must disclose to all parties their agency relationship. -Disclosure of property condition: must disclose all facts regarding property condition.
The Real Estate License Act has two separate disclosure requirements:
-License holders must disclose representation of agency upon first contact. -License holders must provide the Information About Brokerage Services (IABS) Notice upon "substantive" discussion.
What is a "material fact"?
A material fact is a fact that could possibly persuade a buyer or seller to change their decision if they knew about it
A third party is
ANY person involved in a real estate transaction with you who is not your client.
Exclusive Agency
Seller has an exclusive relationship with an agent but has the right to sell the property themselves without paying commission to the listing broker
Three Agency Types:
Special, General, and Universal
Which of the following IS a major reason why many listing brokers prefer to collaborate with buyer's agents more than subagents?
Subagency presents listing brokers with the liability of sales agents they have not trained.
Which of these forms satisfies the written property disclosure requirement?
The seller can make disclosures to the buyer using the Seller's Disclosure Notices provided by either TREC or TAR. Or, they can use a similar form provided by their brokerage or other association, provided that it contains, at minimum, all of the disclosures required by law.
Broker Alec agreed to take an Exclusive Agency Agreement with Seller Medha. Three weeks after Broker Alec entered the property into the MLS and began marketing, Medha sold the property herself to a neighbor. Which of the following is true?
With an exclusive agency listing agreement, Seller Medha agreed to list only with one broker (Broker Alec). However, she can still sell the property herself. Broker Alec is owed commission only if the property is sold by anyone other than the owner.
A seller had a roof repaired years ago. The roof shows no current problems. Does the seller still need to disclose the repairs?
Yes, the SDN needs to list any repairs in place.
A listing agent is
a broker representing a seller in a real estate transaction, a.k.a. seller's agent, seller's broker, or listing broker.
The broker who represents a client buying a home is most often called
a buyer's agent, or a buyer's broker.
An agency relationship is
a fiduciary relationship created when one party (client) authorizes another party (agent) to represent their best interests and the agent accepts that responsibility.
TRELA is
a law passed by the Texas Legislature to govern Texas real estate.
As defined in the Texas Real Estate License Act, what is a subagent?
a license holder who represents a principal through cooperation with the principal's broker
A customer is
a person on the other side of the transaction with whom the license holder does not have an agency relationship.
A client is
a person that an agent is representing, made official through a representation document.
Ostensible agency occurs when
a principal allows a license holder to act in such a way as to cause a third party to believe that license holder is the principal's agent.
A broker representing a tenant in a real estate transaction is
a tenant's agent.
Agency relationships require the consent of both parties (client and agent), which can be demonstrated by one of three methods:
action, written agreement, oral agreement
When a license holder is participating in a real estate transaction for which they have a personal interest, the license holder is required by law to disclose this to all parties involved in the transaction. This type of transaction is called
agency coupled with an interest.
Which of the following is NOT included in D - J of Paragraph 12?
holding the broker responsible for outstanding financial obligations
Which of the following are non-fiduciary duties?
honesty and fairness
The Information About Brokerage Services Form
informs clients of the types of license holders, a broker's minimum duties, and how a license holder can represent a party in a real estate transaction.
Which form does NOT need to be signed to fulfill statutory requirements?
intermediary relationship notice/IABS
An exclusive right-to-sell listing
is the more exclusive form of agency
The agent told his client that she MUST sign the IABS, and while advisable
it is not required by TREC to have a signature.
Which agreement is used to form an agency relationship between a seller and a listing agent?
listing agreement
