Study: Course 3 Exam

Lisa, a licensee with Hometown Realty, is accompanying her buyer, Francis, to an open house. Travis, the seller's agent, approaches Lisa and asks what brings them to the open house today. In order to properly disclose her agency status, how should Lisa respond?

"Hi, I'm Lisa. I'm an agent for Hometown Realty. This is Francis, who is my buyer client."

What does it mean to be a buyer's agent

A buyer's agent represents the buyer of a home per a written agreement

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

A court-appointed guardian

Barry owns a brokerage firm. His firm's policies and procedures manual hasn't been updated in three years, and several of the items in the manual are out of date. What might happen?

A lawsuit could occur, and the PPM would not be useful in Barry's defense.

Jarvis is a broker in Houston. He is currently working on a real estate transaction on behalf of two parties. Both parties are aware of the broker's activity with each other and both parties have provided written consent acknowledging their approval. Jarvis is working as a what?

An intermediary

What information must the intermediary disclose even if the seller doesn't want the intermediary to disclose the information?

Any disclosures required by law, such as a material defect that the seller is required to disclose

Maurice is meeting with a buyer who is also selling his current home. Which question should Maurice ask to pre-qualify the buyer?

Are you currently working with any other agents?

Licensee Rudolph agrees to work as a buyer agent for Blitzen. Blitzen, who considers herself a bit of a law aficionado, notices the buyer representation agreement has an automatic extension clause. Knowing this, what can you deduce?

Automatic renewals in agency agreements are prohibited by law.

Lisette is an employee at ABC Brokerage. She's not licensed and her role is to answer phones and process paperwork. She's supervised by broker Bob. Which of the following statements is true?

Bob can control the number of hours that Lisette works each day.

If a broker finds themselves in a situation where acting as an intermediary is necessary, the broker must obtain written consent from whom?

Both parties, regardless of the situation

In what way is intermediary brokerage similar to statutory dual agency?

Both require signed consent from both parties to the transaction.

Who has to approve a sub-agency agreement in order for it to be valid?

Both the broker and the principal

When working with a client on a real estate sale, a real estate licensee is usually acting as which type of agent?

Special

Marla's excited about closing on a cute lakefront cottage. But when she reads the report from the home inspection, she learns that the chimney leaks and that there is water damage in several places. This wasn't on any of the seller's disclosures. Which of these is the best option for Marla?

Terminate the agreement and ask for a refund of her earnest money

Mark is a sales agent on his way to meet a potential buyer for the first time. What written statement should he give to the potential buyer?

The Information About Brokerage Services form

Juan is interested in reviewing the types of agency agreements that are allowed at the brokerage where he works. Where can he find that information?

The PPM

Under which of the following circumstances would the client and agent most likely mutually agree to terminate a listing?

The agent and client don't agree on the best way to price, maintain, and market the property.

In an intermediary relationship, who must treat all parties impartially and fairly?

The broker acting as an intermediary

In a buyer agency relationship, whom does the licensee represent?

The buyer

In a real estate transaction in which you represent the seller, your duty to other parties is to ______.

Treat them honestly and fairly

Which of the following agreements formalizes the relationship between a broker and a buyer?

A buyer representation agreement

Josephina is a broker in the same firm as Emilia. Josephina sticks to representing one client, because she knows how hard it is to not favor one party over another in the same transaction. Josephina is acting in which capacity?

A single agent

Melissa signed a listing agreement with seller Sue after they'd discussed her commission and duties. What else should Melissa have included in the listing agreement?

A termination date

In Texas, who's owed guidance on their performance?

Sales agent

Which of the following is a protected class under federal fair housing laws?

Sex

Rachel is a supervising broker. Which of the following is a true statement about her responsibilities?

She's responsible for all agents and associated brokers of her firm.

What's an advantage an in-person meeting has over another way of communicating with a potential buyer client?

Since they've had face time with the licensee, buyers are more likely to stay with that broker

Which type of worker, though an independent contractor, is defined as an employee by statute for certain employment tax purposes? A food delivery driver who is paid on commission is an example.

Statutory employee

A buyer who discovers after closing that a seller wasn't honest about the property condition on the required disclosures can ______.

Sue the seller

After closing, a buyer discovers the seller wasn't honest about the property condition on the state's required disclosures. What can the buyer do?

Sue the seller for fraud or breach of contract

Which of the following options is something that you would only do for a buyer client and not a buyer customer?

Suggest an earnest money amount based on the practices in your area.

Chester has been providing some real estate services for new buyer customer Tom. Which of these is a task that Chester may only perform if he signs an agency agreement with Tom?

Suggest negotiation terms for a listing would like to buy

Zara is a listing agent. While talking to a prospective buyer, Zara assures the buyer that she'll take care of everything, and handle the sale for the buyer. What might the buyer think?

That the buyer is represented by Zara

You're the listing agent representing Stacey, the seller. Barb is a potential buyer who's made an offer through her agent, Daniel. Who are the third parties in this transaction?

Barb and Daniel

In addition to guidelines and standards, what other information do policies and procedures manuals contain?

Best practices and core business processes

Licensee Kylie is preparing for a buyer presentation. What is the main purpose of this presentation?

Building trust with the buyer

You represent a buyer in a transaction that includes a 2% cooperating agent commission to be paid by the seller. Who's your client?

Buyer

Why has buyer representation increased since the late 1980s?

Buyers have become more aware of who works for whom

Joan is representing the buyer, Carlton, and Reggie is representing the sellers, Zeb and Teresa Martin. Carlton's Great Aunt Matilda has agreed to pay any portion of Joan's commission the sellers don't cover. Teresa's father, Teddy, has agreed to pay half of the sales commission that will be owed to the listing agent. Which of these statements is true?

Carlton and the Martins are the agents' principals in this transaction.

You're the seller's agent for Tira Miller. Jenny Oostburg is a potential buyer. What best describes Tira's relationship to you?

Client

You might tell a new client, "This means that I, as the agent, have to keep certain private information you tell me, or that I find out otherwise in our relationship, to myself," when describing your duty of ______ to the client.

Confidentiality

In a real estate transaction, which two parties are owed the same duties?

Customers and other parties

What does it mean to say that dual agency was permitted by common law?

Dual agency was permitted because there was sufficient precedent for it in the courts.

Which one of the following tasks must licensees perform for seller clients?

Ensure that the buyer's earnest money is deposited. A licensee must ensure the collection of the earnest money deposit from the buyer. Earnest money may be used as liquidated damages by the seller in the event of buyer default, so it's in the seller's best interest to ensure it's been deposited.

There are three types of listing agreements. They are exclusive right-to-sell, _______, and open listing.

Exclusive agency

In general, what is the term for a person who's been placed in a position of loyalty and trust?

Fiduciary

Licensees owe which of the following duties to third parties?

Honesty and fairness

The client owes the agent the primary duties of compensation, information, ______, and availability.

Indemnification

Which duty requires the client to provide complete, accurate, and timely information to the agent?

Information

Jamie is a buyer about to meet with a broker to discuss a specific property. Which of the following documents should the broker share with Jamie first?

Information About Brokerage Services

Which one of the following forms must be used by a broker during the first substantive dialogue with a consumer to explain how intermediary brokerage works?

Information About Brokerage Services

Mary is interested in a property listed by Anthony. Mary has worked with Anthony before, and would like to be represented by him in this transaction. She understands that Anthony represents the seller and agrees to dual representation. What legal concept in Texas law currently applies?

Intermediary brokerage

Acting as an intermediary without written consent from the buyer ______ a violation of the intermediary rules.

Is always

Rebecca is pleased that her agent, Jerry, has helped her sell her property. What happens to their agency relationship after the sale?

It's terminated by completion of their goal to sell the property.

What provision in the listing agreement contains the instruction, "Seller instructs Broker to market the property at the following price: $_______"?

Listing Price

What's one of the most fundamental of all fiduciary duties, and is the one that underlies all other duties?

Loyalty

In which of these situations did the licensee breach the fiduciary duty of loyalty?

Margo tells her seller client Troy that his property is worth less than it really is so he will get a quick sale.

Who is required to complete a property disclosure notice in Texas?

Most sellers of single-family residential properties

Agency is established by mutual consent, so by which of the following may it be successfully terminated?

Mutual agreement

Jamie is a listing agent. Which of the following statements would constitute a prohibited disclosure to a third party?

My seller is willing to go as low as $300,000.

Henry is Monica's listing agent. As Monica's agent, Henry has a duty to account for and properly handle her funds and ______.

Paperwork

A _______ is "a party to a transaction, and the person for whom the agent acts."

Principal

Which of the following duties is owed to both clients and customers?

Prompt presentation of all written offers and counter-offers

What does the letter R in the acronym for fiduciary duties (OLD CAR) stand for?

Reasonable skill and care

Which of the following is an example of a material fact?

The seller would not have accepted an offer had the fact been known.

The listing agent can help the buyer, but does not represent the buyer. Whose interests must the listing agent put first?

The seller's interests

What is an in-house sale?

When one client of the brokerage wants to buy from or sell to another client of the brokerage

What option will you find in the Intermediary provision?

Whether or not the seller will permit the agent or the agent's firm to also represent the buyer in the transaction

Phoebe is a seller agent for the Browns. The Davises present an offer to Phoebe to purchase the Browns' property. Who is Phoebe's customer?

The Davises

You're running your own brokerage, and your new licensee, Tawny, swindles one of her clients out of $25,000. Is your license at risk?

Yes, because a broker is ultimately responsible for the actions of their licensees.

If a licensee fails to give a prospective client the Information About Brokerage Services form, can the licensee's broker be subjected to a disciplinary action in the event of a consumer complaint?

Yes, because supervisory brokers can be disciplined for violations committed by their licensees.

Who benefits from a stronger negotiation strategy in the buyer agency relationship?

The buyer

Who benefits from the limitation of liability for acts of the listing broker in the buyer agency relationship?

The buyer's agent

Which fiduciary duty may continue even after the transaction closes?

The duty of accounting

Which fiduciary duty requires agents to handle their clients' funds and paperwork properly?

The duty of accounting

Which of the following can be an effective risk management tool for brokerage firms?

The firm's policies and procedures manual

A prospective buyer is curious why a previous owner is selling such a perfect home. The licensee knows that the previous owner recently died due to complications from AIDS. How should the licensee respond to the prospective buyer's inquiry?

The licensee can't disclose that a previous owner had HIV or AIDS.

Before entering into a listing agreement with a seller, you should negotiate _____

The listing price

What information would you expect to find in the Access to the Property provision?

Any restrictions on the times the property can be accessed

April and Wayne are the buyer and seller of a condo, respectively. April is represented by Steve. Wayne is represented by Wanda. Name the principal(s) in this transaction.

April and Wayne

After the closing, Donna ensures that her client has keys to the property and copies of all the transaction paperwork. Which fiduciary duty is Donna performing?

Accounting

Leanne continues to show a property to prospective buyers even though her listing agreement with the seller has expired. The seller continues to allow her to do so and potential buyers assume Leanne is the seller's agent. What type of agency is this considered?

Agency by estoppel

Although Ophelia hasn't signed a buyer agency agreement with Randall, she continues to ask him to show her homes, and Randall does. What type of agency is this considered?

Agency by ratification

Alma is an unlicensed assistant in Texas. Which of the following tasks is she permitted to perform for her broker?

Answer the phone and forward messages to the broker.

A real estate licensee is acting as what type of agent when assigned by the broker to represent one party in an in-house transaction?

Designated

Ned represents Sofia in the sale of her townhome. Luciana represents Sofia's buyer, Arturo. What is Luciana's responsibility to Sofia?

Disclose that the buyer will not have the funds for the down payment unless he sells his current home.

In 1993, the Texas legislature modified common law dual agency to create statutory dual agency. What did statutory dual agency permit?

Disclosed dual agency

If you fail to notify your client of a conflict of interest, in addition to the duty of loyalty, what other duty have you breached?

Disclosure

The duty of ______ requires a licensee to reveal all material facts that are pertinent to the transaction to all third parties.

Disclosure

When you're involved in a transaction, lenders, appraisers, and other service providers are all ______.

Third Parties

Monica meets a colleague from another firm, Kate, for lunch, and discovers that a former seller client, Reuben, is now Kate's buyer customer. Monica tells Kate, "You know Reuben inherited a bunch of money right before he sold his house, right?" Which of these statements is true?

This is a breach of confidentiality because confidentiality survives forever.

What could happen if two agents working under the same broker were representing both the buyer and seller in a transaction?

This would create dual agency and would violate license law.

Which section of the TREC One to Four Family Residential Contract (Resale) identifies the party who will pay for title insurance and the extent of the policy coverage?

Title Policy Survey

Which of the following is an example of sub-agency?

Kayla is a licensee with ABC Realty and lists a property for seller Devon. Maurice is a salesperson with XYZ Realty Group and brings a buyer to the table, but owes fiduciary duties to the seller.

In which of these situations has the licensee compromised the duties of loyalty and disclosure?

Nate didn't tell his client about a conflict of interest related to the sale of his client's property.

Eliza is an unlicensed assistant for the In It to Win It Team at Best Nest Realty. Tom is an associate broker on the team. Which of these activities must be performed by Tom and not Eliza?

Negotiating a commission with a client

Shari's clients want her to post that there are "no showings on weekends" on the MLS. Shari knows that will significantly cut down on their market exposure. Her duty of reasonable skill and care is in conflict with her duty of ______.

Obedience

Which of these would be a breach of Margo's fiduciary duty of confidentiality?

When asked by the buyer's agent if the seller was firm on his price, Margo said, "Everything's negotiable," and winked at the other agent.

Can a licensee who represented seller Smith in one transaction represent a different seller, Jones, in another transaction where Smith is the buyer?

Yes, but confidential information learned during the former relationship cannot be disclosed.

You're working with Angela, your buyer customer. Since there's no agency relationship in place, it's important for her to understand which of the following?

You represent the seller