General Principles Of Agency
A buyer's agent would NOT recommend that the buyer seek expert advice if the buyer asked,
"How long has the property been on the market?"
In response to the question by a buyer of how much to offer, the best response of the listing agent is,
"I am not sure, but I think a full price offer should be accepted."
Which of these would be considered dual agency?
A broker acting for both the landlord and the tenant in the same transaction
A buyer makes an offer on a property and gives the listing agent a check for $1,000 for earnest money. The listing agent deposits the check into his personal account and, a week later, wrote the broker a check from his account to deposit into the broker's trust account. Has the agent fulfilled his fiduciary duty to the client?
No, because he has commingled funds.
Shortly before closing on her home, a seller learns that her listing broker is related to the buyer. The listing broker has not disclosed that relationship to the seller. If the seller later refuses to pay the listing broker his commission, will the broker likely prevail in a lawsuit to recover the commission?
No, because the broker has violated his fiduciary duties to the seller.
After signing a listing contract with a homeowner, the owner tells the listing agent that because his home is in such good condition, he does not want the home sold to any buyers with small children. The agent takes the listing and obeys the owner's instructions by not showing the home to any buyers with small children. He discourages other agents from showing the home to families by telling them the home is not suitable for a family. Are the agent's actions legal?
No, because refusing to show a property to buyers with families violates fair housing laws.
A listing agent is frustrated that a property has been on the market for over two months, and the agent wants to sell the home quickly. The listing agent shares with a nonrepresented buyer that the home has been on the market for a long time and so the seller would welcome any offer on the home. The buyer makes an offer at a price lower than he had expected to offer. Has the agent violated any duties to the seller?
Yes, the agent has violated his fiduciary duty by disclosing a fact that could benefit the buyer.
An individual who is authorized and who consents to represent the interests of another person above their own interests is
an agent.
All of these events terminate an agency relationship EXCEPT
an appraisal with a value less than the selling price.
A buyer entered into a buyer agency agreement that gave him the right to purchase property on his own and not pay the buyer's agent. This BEST describes
an exclusive agency buyer agency contract
A buyer has signed a contract with a broker to compensate the broker even if the buyer purchases the property from a relative. This is called
an exclusive buyer agency contract.
A buyer signed a listing contract and agreed to pay the buyer's brokerage firm when the buyer purchased any property. The buyer signed
an exclusive buyer agency contract.
The type of listing contract that provides for payment of a commission to the broker even though the owner makes the sale without the broker's aid is called
an exclusive right-to-sell listing
An agent for a brokerage firm has six listings. Another agent for the same firm represents a buyer who wants to purchase one of the six listings. The firm's broker appoints the listing agent as an agent for the seller, while appointing the other agent to represent the buyer in the same transaction. The broker has both the seller and the buyer sign a statement acknowledging that arrangement. The arrangement that results is
designated agency.
A landowner subdivides her acreage and offers the lots for sale. A broker tells her that he can sell the lots. After the broker sells some of the lots, the landowner refuses to pay him a commission. The broker can
do nothing.
A buyer and a seller are both represented by the same real estate brokerage firm acting as an agent in the same transaction. In this transaction, the firm is practicing
dual agency.
Under an exclusive agency listing, the listing broker would be entitled to a commission EXCEPT
if the seller sells the property himself to a relative moving from out of town.
In order for a listing contract to be enforceable, MOST states require that the contract be
in writing.
A listing salesperson acting as the seller's agent is holding an open house. The state does not allow dual agency. A buyer starts a conversation about the property and tells the salesperson she is an investor looking for a number of properties. The salesperson states that the seller of the property will take less and that the salesperson can represent the buyer in the purchase of this property and others. In this case, the salesperson
is an undisclosed dual agent who acted in bad faith.
A real estate broker was responsible for a chain of events that resulted in the sale of one of his client's properties. The broker's efforts are called
procuring cause.
When showing a property, an agent exaggerates the property's benefits. This practice is
puffing, which is legal as long as there is no misrepresentation.
A broker is hired as a buyer's agent. The buyer confides that he filed for bankruptcy two years ago. The buyer would like to find a seller who is willing to carry the loan. In this situation, a correct statement about the broker's responsibility regarding disclosure of the bankruptcy when presenting the offer to purchase is that the broker is
required to disclose the bankruptcy because it is a material fact—information important to the seller's evaluation of the offer.
By executing an agency listing contract with a seller, a real estate brokerage firm becomes
the agent of the seller.
In a real estate transaction, the term fiduciary typically refers to
the agent's relationship to the principal.
A seller has listed her home with a broker for $190,000. The listing broker tells a prospective buyer to submit a low offer because the seller is desperate to sell. The buyer offers $185,000 and the seller accepts it. In this situation,
the broker has violated his fiduciary relationship with the seller.
A broker has an exclusive right-to-sell listing on a building. The owner is out of town when the broker gets an offer from a buyer to purchase the building. The buyer must have an answer from the seller before the seller is scheduled to return to the city. Under these circumstances,
the broker must obtain the signature of the seller to effect a contract.
A listing taken by a real estate salesperson is an employment contract between the seller and
the brokerage firm.
A buyer signs a buyer agency contract with a broker agreeing to pay commission to the buyer broker but with the expectation that the seller will actually pay the commission. However, the buyer learns that the seller has not agreed to a sharing of the commission with the buyer agent. The buyer refuses to pay any commission to the broker. In this case,
the buyer has breached the agency contract with the broker and will be held liable for the broker's commission.
The principal in a real estate transaction is
the client of the brokerage.
All of these are typically found in a listing contract EXCEPT
the date the broker will schedule an open house.
All of these reasons are valid bases for terminating a listing or buyer's contract EXCEPT
the death of the salesperson.
A listing contract will usually include all of these EXCEPT
the multiple listing service (MLS) standard commission rate.
The multiple listing service (MLS) clause in a listing contract provides that
the seller grant permission for the broker to make the listing available through an MLS.
The final decision on a property's listing price should be made by
the seller.
Unless some other written agreement has been made, the brokerage will usually receive the brokerage commission when
the transaction is closed.
All of these are true of an open listing and an exclusive agency listing EXCEPT
under each listing, the broker earns a commission regardless of who sells the property, as long as it is sold within the listing period.
Good faith as applied to agency is BEST defined as
using honest and sincere intentions.
A listing agent brings an offer from his separated spouse to his seller. The agent and his spouse, though separated, still own the property. The agent does not tell the seller, his client, that the buyer is his spouse, because she has retained her maiden name throughout the marriage. The agent's action
violates his duty of disclosing material facts to the seller.
A listing agent does not disclose to his client that he has agreed to manage a duplex for the buyer once it has been sold. The agent's action
violates his duty of disclosing material facts to the seller.
Each of two brokerage companies claimed full commission for the sale of a property that was listed by both of the firms under an open listing agreement. The broker who is entitled to the commission is the one who
was the procuring cause of the sale.
A property manager is hired to manage a property while the owner is overseas for two years. The property manager is
a general agent.
A property manager is typically
a general agent.
A seller has told the listing agent that the agent must only represent the seller in the sale of the property. In this case, the first guide for the agent is to obey
all lawful instructions of the owner.
The law of agency is a common-law concept. As common law, it is
part of a body of law established by tradition and court decisions.
Before the buyer signs a buyer agency contract, a real estate professional must do all of these EXCEPT
obtain financial information from the buyer.
A brokerage represents the owner in the sale of the owner's property. Which of these events will terminate that agency relationship?
A fire destroys the owner's property.
Real estate professionals owe what duties to consumers they don't represent?
Honesty, disclosure of material facts, and accounting of all funds
A brokerage represents the owner in the sale of the owner's property, which has a salesperson acting as the listing agent. Which of these events will terminate that agency relationship?
During the listing, the owner of the property dies.
A woman tells her neighbor, a real estate broker, that she is thinking about selling her home. The broker contacts several prospective buyers to whom she has shown her firm's listings in the past month. One of the buyers makes an attractive offer on the woman's home without even seeing the property. The broker goes to the woman's house and presents the offer, which the homeowner accepts. What is the agency relationship between the homeowner and the broker?
Implied agency
Which statement is TRUE of a listing contract?
It is an employment contract for the professional services of the brokerage.
The listing contract on a residential property states that it expires on May 2. Which event would NOT terminate the listing?
On April 15, the owner tells the listing broker that the owner is dissatisfied with the broker's marketing efforts.
Under which of these listing agreements can owners of listed property sell the property on their own without having to pay the listing broker a commission?
Open listing and exclusive agency listing
The typical relationship between a listing broker and a seller represents what type of agency?
Special
The relationship between a broker and a seller is generally what type of agency?
Special agency
Which statement is TRUE of a real estate broker acting as the agent of the seller?
The broker has a fiduciary obligation of loyalty to the seller.
Designated agency will MOST likely occur under what circumstance?
The buyer and the seller in the same transaction are both represented by the same brokerage firm.
A salesperson lists a residence. The owner confides to the salesperson that a lower price would be acceptable. The salesperson tells a prospective buyer that the seller will accept up to $5,000 less than the asking price for the property. Based on these facts, which statement is TRUE?
The disclosure is improper—and possibly illegal—regardless of the salesperson's motive.
A real estate broker learns that her neighbor wishes to sell his house. The broker knows the property well and is able to persuade a buyer to make an offer for the property. The broker then asks the neighbor if she can present the offer, and the neighbor agrees. At this point, which statement is TRUE?
The neighbor is not obligated to pay the broker a commission.
A real estate broker lists her neighbor's home for $212,000. Later that same day a buyer to the community comes into her office and asks for information on houses for sale in the $180,000‒$225,000 price range. The broker offers to represent the buyer as a buyer's agent, but the newcomer refuses representation by her company at this time. Based on these facts, which of these statements is TRUE?
The neighbor is the broker's client, and the buyer is her customer.
A brokerage firm has an exclusive right-to-sell listing and represents the owner in the sale of the owner's property. Which of these events will terminate that agency relationship?
The owner declares personal bankruptcy.
Which of these does NOT create an agency relationship?
The payment of money or commissions
A salesperson who works for ABC Realty was the buyer's agent for a property that was listed by XYZ Realty. The seller agreed to pay the commission. From whom will the salesperson receive her commission check?
The principal broker of ABC Realty
Which of these BEST defines the common law of agency?
The rules of law that apply to the responsibilities and obligations of a person who acts for another
A salesperson working with a commercial client for the first time follows the client's orders and drafts a contract for the purchase of a small strip center. Which of these is TRUE?
The salesperson is illegally practicing law and is most likely not competent.
A buyer agency contract states that the contract expires on April 30. Which event would NOT terminate the buyer agency contract?
The salesperson leaving the brokerage firm
The listing contract on a residential property states that it expires on June 30. Which event would NOT terminate the listing?
The salesperson who signed the listing dies on March 15.
A real estate broker lists a home as agent for the seller. Later that same day, a buyer comes into the office and asks for general information about homes for sale in the area. Based on these facts, which statement is TRUE?
The seller is the broker's client; the buyer is a consumer.
A real estate broker hired by an owner to sell a parcel of real estate must comply with
all lawful instructions of the owner.
A buyer's agent knows that a property has been on the market for a time longer than normal for the neighborhood and type of house. Her buyer decides to write an offer above the listed price of the home because the buyer is in a hurry to find a home and move in. The buyer's agent does not mention to the buyer the length of time the home has been on the market. Has the buyer's agent violated any duties to the buyer?
Yes, the agent should disclose the time on the market because that fact creates a more favorable opportunity for the buyer to offer a lower price.
The principal to whom a real estate broker provides professional opinions and counsel is
a client
A real estate agent acting as a single agent owes either fiduciary or statutory agency duties to any of these EXCEPT
a customer.
All listing agreements must contain
a definite contract termination date.
MOST states require that listing and buyer representation contracts contain
a definite contract termination date.
Fiduciary means that there is
a legal relationship between parties that creates a position of trust and confidence.
A contract that secures the employment of a brokerage firm to find a ready, willing, and able buyer for a seller is
a listing contract.
A listing broker is typically
a special agent.
A broker helps a buyer and a seller with paperwork but does not have fiduciary obligations to either party. The broker's activity in this situation is that of
a transaction broker.
A broker helps a buyer and a seller with paperwork but does not represent either party as an agent. This arrangement is
a transaction brokerage.
A listing agent loses the seller's house keys. The agent has breached her fiduciary duty of
accounting.
A listing contract in which payment of the commission is contingent on the broker's being able to produce a buyer before the property is sold by the owner or another broker is called
an open listing.
Whether or not state law requires the time when an agent must disclose his firm's agency alternatives, good business practice requires that an agent make a disclosure about agency
before any confidential information is disclosed about an individual's motivation or financial situation
An agency relationship in which a broker represents both the seller and the buyer in the same transaction would require all of following EXCEPT
both the seller and the buyer are required to allow the broker to share price, terms, and motivations with the other party.
A broker may act as a dual agent and represent both the seller and the buyer in the same transaction if
both the seller and the buyer give their informed consent, usually in writing.
A listing contract must be signed by
both the seller and the listing broker.
A seller listed his residence with a broker with a contract that agreed to pay the broker a 5% commission. Within several weeks, the broker brought an offer at full listing price and the terms of the listing from buyers ready, willing, and able to pay cash for the property. However, the seller rejected the buyers' offer. In this situation, the seller
owes a commission to the broker.
A listing broker knows that a known sex offender lives within a block of a home she has listed. The prospective buyers are a family with three small children. The broker
may have a responsibility under state law to inform the buyers of the offender's presence in the neighborhood.
A salesperson representing a seller suggests to a buyer that the seller might accept less than the listing price. The salesperson in this situation
may have unintentionally created an undisclosed dual agency by suggesting that the buyer offer less than the listing price.
A broker was told by her principal not to advertise her property in a certain newspaper, which was out of the area. The broker complied because he
must obey the lawful instructions of her principal.
A real estate broker acting as the agent of the seller
must promote and safeguard the seller's best interest.
The amount of commission that is paid to a salesperson is determined by
mutual agreement with the salesperson's broker.
Under the common laws of agency, in a typical agency relationship between broker and client, the broker's commission is determined by
negotiation in advance.
A seller has listed a property under an exclusive agency listing with a broker. If the seller sells the property personally during the term of the listing to someone who learns about the property through the seller, the seller will owe the broker
no commission.
A listing agent's duty of care to a seller includes all of these EXCEPT
sharing the seller's financial situation with a buyer in order to expedite a sale.
According to its state's laws, a brokerage firm is allowed to have an agency relationship with only one party in the same transaction. This relationship is known as
single agency.
The type of agency that exists when a broker represents the seller or the buyer, but not both, in a transaction is
single agency.
A broker who has done a proper comparative market analysis (CMA) discusses the probable market value of the property with the seller, and the seller wants an unrealistic price on the property. The broker may do all of these EXCEPT
take the listing at the seller's proposed price, planning on reducing the price himself in the future when the seller is more realistic.
A property owner individually signed a 90-day listing contract with a brokerage. The owner was killed in an accident before the listing expired. Now the listing is
terminated automatically because of the death of the principal.
Last month a broker took a listing on a property. She now learns that her client has been declared incompetent by the court. Her listing now is
terminated.
The broker protection clause in a real estate listing contract provides
that the property owner will pay the listing broker a commission if, within a specified time after the listing expires, the owner transfers the property to someone the broker originally introduced to the owner.
It is the duty of an agent to disclose to the principal every material step taken in the transaction of the principal's business. This duty exists because
the agent has fiduciary obligations to the principal.
