unit 10: real estate agency

The seller's agency agreement may allow the seller's broker to make use of the services of other real estate professionals in the broker's firm, as well as other real estate professionals who are part of the broker's MLS. Under such an arrangement,

, the compensation for a cooperating broker will be paid by the seller's broker out of the commission paid by the seller

examples of implied agency

-buyer asks to see other homes at open house -broker shows home and makes an offer for buyer

examples of express agency

-seller signs listing agreement -buyer signs representation agremeent

Depending on state law, information that must be disclosed could include

-the identity of prospective purchasers, which may include any relationships the purchasers might have with the agent (such as when the agent or a relative of the agent is a purchaser); -the purchaser's ability to complete the sale or offer a higher price; -any interest or prospective interest the agent has in the buyer or the buyer's business (such as the broker's agreement to manage the property after it is purchased) -an incorrect market value of the property.-

the fiduciary relationship between the principal and the agent by which the agent is authorized to represent the principal in one or more transactions.

AGENCY

he relationship in which the agent is held in a position of special trust and confidence by the principal.

FIDUCIARY

TRUE OR FALSE: An express agreement occurs when the actions of the parties indicate that they have mutually consented to an agency.

False

One in whom trust and confidence is placed; a reference to a real estate professional employed under the terms of a listing contract or buyer representation agreement.

Fiduciary

Commingling client monies with personal or general business funds is

ILLEGAL

If the principal is the buyer, the agent may not disclose the buyer's willingness to

If the principal is the buyer, the agent may not disclose the buyer's willingness to

A contract between an owner (as principal) and a real estate professional (as representative of the owner) by which the real estate professional is employed to find a buyer for the owner's real estate on the owner's terms, for which service the owner agrees to pay a commission or other form of compensation.

LISTING AGREEMENT

implied agreement in practice

Prospective buyers enter a real estate office asking to see a property listed with another brokerage. A real estate sales associate immediately calls the sellers' representative and makes an appointment to show the property. Without having the prospective buyers sign a written representation agreement, the sales associate drives them to the house. The intent of the parties to create an agency relationship can be inferred from the actions of the sales associate.

TRUE OR FALSE: The relationship in which the agent is held in a position of special trust and confidence by the principal is one of a fiduciary.

TRUE

The term client is also used when

a broker represents someone in a relationship other than an agency.

A broker may be considered a nonagent when dealing with

a customer (someone other than the person the broker represents).

Neither real estate brokers nor real estate sales associates may sell property in which they have

a personal interest without informing the purchaser of that interest

an agent must be able to report the status of all funds receieved from or on behalf of the principla

accounting

following state law regarding the receipt of funds from clients and customers

accounting

the rules and regulations created by real estate commissions and depatments as authorized by the legislature

administrative law

fiduciary relationship betwen the principal and the agent

agency

Depending upon state law, the duty of confidentiality could terminate on conclusion of the

agency relationship, or it could extend for a number of years, or foreve

individual who is authorized and consents to represent the interests of another person

agent

the individual who is authorized and consents to represent the interests of another person in dealings with a third person

agent

The sales associates of a real estate broker act as

agents(representives) of the broker

If the principal is the seller, the agent may not reveal such things

as willingness to accept less than the listing price or urgency to sell, unless the principal has authorized the disclosure, and often the authorization must be in writing

In a real estate transaction in which an agency relationship is established, the principal is the

buyer or the seller or the landlord or the tenant

A principal-agent relationship in which the real estate professional acts on behalf of the buyer, usually as an agent, with fiduciary responsibilities to the buyer.

buyer represenation agreement

An express agency relationship between a buyer and a broker is created by a

buyer representation agreement

A real estate professional who is under contract to locate property for a buyer and represent the buyer's interests in a transaction

buyers agent

an agent must exercise a reasonable degree of care in transacting the principals business

care

using a reasonable degree of skill and expertise in acting on a princlaplas behalf

care

Under the common law of agency, an agent owes the principal the six duties of

care obedience, loyalty, disclosure, accounting, and confidentiality, which can be remembered as COLD-AC.

the ______ is the principal to whom the agent give advice and counsel

client

the principal in a real estate transaction for whom a real estate broker acts as agent.

client

the rules established by tradition and court decisions

common law

agency relationships in real estate transactions are governed by what three londs of law?

common law statutory law administrative law

the principal also must

compensae the agent according to the terms of the agency agreement

the principals primary duties are to

comply with the agency agreement and cooperate with the resonable expections of the agent--- that is, the principal must not hinder the agent and must deal with the agent in good faith

The agent is entrusted with certain ___________ and has _____________to the principal

condidential information and fiduciary responsibilites

keeping the principals personal information private

condidentiality

an agent owes the principal condifentiality in carrying out agency obligations

confidentialty

the relationship between the principal and agent must be

consensual

illefal use of uch entrusted money

conversion

Insurance companies normally exclude

coverage for fraud and violations of civil rights and antitrust laws

The third party or nonrepresented consumer for whom some level of service is provided who is entitled to fairness and honestly

customer

the buyer's agent must disclose

deficiencies of a property and the sales contract provisions and financing that may affect the buyer's decision to purchase

the source of compensation does not

determine agency

a agent is duty-bound to inform the principal of certain relevant facts concerning the transaction, particularly those mandated by state law

disclosure

revealing to a prospective buyer that the agent is related to the property seller is

disclosure

liability for errors and negligence in the listing and selling activities of a real estate broker and often the broker's sales associates

errors and omissions (E&O) insurance

the duty of confidentiality does not

expire

An agency relationship based on a formal agreement between the parties.

express agency

An oral or written contract in which the parties state the contract's terms and express their intentions in words.

express agreement

the customer is entitiled to

factual information and fair and honest dealings as a consumer but doesn not receive advice and counsel or have an expectation that information disclosed to the agent will remain confidential

TRUE OR FALSE: The fundamentals of agency law have changed dramatically over the past two hundred years.

false

A relationship of trust and confidence, as between trustee and beneficiary, attorney and client, or principal and agent.

fiduciary relationship

the agent works __________ and

for the principaland with the customer

the client can expect

full diclosure of all relevant information learned by the agent

One who is authorized by a principal to represent the principal in a specific range of matters.

general agent

A property manager hired by the owner of income-producing property is typically a

general agent for the owner

A real estate broker who represents the buyer is expected to

help the buyer locate suitable property and evaluate property values and neighborhood and property conditions, and complete offers and counteroffers, as allowed by law, with the buyer's interest in mind.

If the agent represents the seller, care and skill include

helping the seller arrive at an appropriate and realistic listing price, discovering and disclosing facts that affect the seller, and properly presenting, as allowed by law, the contracts and other documents that the seller signs along with making reasonable efforts to market the property, such as advertising and holding open houses, and helping the seller evaluate the terms and conditions of offers to

If the actions of the parties imply that they have mutually consented to an agency relationship, an implied agency relationship is formed.

implied agency

A contract under which the agreement of the parties is demonstrated by their acts and conduct.

implied agreement

an agency may also be created by

implied agreement

An express agreement, in which the parties formally express their

intention to establish an agency and state its terms and conditions, may be either oral or written.

An agency relationship between a real estate seller and a broker is generally created by a written employment contract, commonly called a

listing agreement

an agent must place the principals interests above those of all others, including the agents own interests

loyalty

refusing to withhold an offer from a seller until a second offer is recives

loyalty

A representative who does not make a reasonable effort to properly represent the interests of the principal may be found

negligent by a court of law

An intermediary between a buyer and a seller, or a landlord and a tenant, who assists one or both parties with a transaction without representing either. Also known as a facilitator, transaction broker, transaction coordinator, and contract broker.

nonagent

an agent must act in good faith at all times, with obedience toward principals lawful instructions, in accordance with the agency agreement

obedience

following a buyers instructions as to the type of property that is sought

obedience

an agency relationship may be created by an

oral or wrtitten agreement

indivdual who hires someone and delegates to that person the responsibility of representing his or her interests

principal

The agency agreement between a broker and client usually authorizes the broker to act on the

principals behalf

the agent supports and defends the

principals interests not the customers

The duty of disclosure includes

relevant information or material facts that the agent knows or in some cases what the agent should have known

the customer may be

represented by a separate agent

The broker is the principal in dealings with

sales associates

the agent represents only one of the parties to a transaction, and there is a distinction between the level of services that the agent provides to the client the agent represents and those services that the agent provides to the other party, who is the customer

single agency relationship

the laws enacted by the legislature

statutory law

Nonagents are often subject to specific

statutory responsibilities.

Principals expect the agent's skill and expertise in real estate matters to be

superior to that of the average person

the buyer representation agreement stipulates the

the activities and responsibilities the buyer expects from the broker in finding the appropriate property for purchase or rent

a buyers agent can also be paid by

the buyer directly

An agency relationship can be classified based on

the extent of the agent's authority

implied agreement occurs when

the parties act as though they have mutually consented to an agency, even if they have not entered into a formal agency agreement

an agent does not necessarily represent

the person who pays the agents commission

The agent's fiduciary relationship of trust and confidence means that the real estate broker owes

the principal certain duties

The representative is liable to

the principal for any loss resulting from the representative's negligence or carelessness.

Remember, a real estate sales associate can only receive compensation from

the sales associates employing broker

All states forbid agents to buy property listed with

them for their own accounts or for accounts in which they have a personal interest without first disclosing that interest and receiving the principal's consent

the agent may be denied compensation on the grouds that

there is no written agreement as required by law

A seller's real estate agent is also expected

to disclose information about known material defects in the property to prospective buyers

A person empowered to do anything the principal could do personally.

universal agent

he most fundamental way in which an agent exercises care is to

use that skill and knowledge on a principal's behalf

The universal agent's authority to act on behalf of the principal is

virtually unlimited

The employment agreement of broker and sales associate must be in

writing

can an agency exist without an fee involved-- what is it called?

yes, gratuitous agency