Chapter 12

Broker Judd has the listing for a property that customer Nelson wants to buy. A license holder in Judd's office has explained intermediary brokerage to Nelson. Nelson responds, "I don't want any part of that dual agency! I've had that once and no one paid attention to my interests." How should Judd reply?

The answer is "What we can offer you is intermediary brokerage, which is different than the dual brokerage of the past. With intermediary brokerage, a license holder will be appointed to place your interests above all others."

Which of the following statements would be the BEST way to begin an explanation of a brokerage's policy on intermediary brokerage to a customer who is interested in entering a seller agency agreement?

The answer is "intermediary brokerage is a method of handling the transaction if a suitable buyer for your property is identified who does not have a relationship with another broker."

Cindy is an associate broker at Best Realty and represents Sandy under a written listing agreement. So far, the firm has received one offer that Cindy has passed on to Sandy for review and possible counteroffer. Sandy has not yet countered to the first offer and a second one comes in. Which of the following is the appropriate thing for Cindy to do under these circumstances?

The answer is Cindy should notify Sandy and tell her to consider the second offer before making a decision on the first offer.

David is a sales agent sponsored by Wurst, Realty. Wurst, through David, is working for a buyer, Frank, in the purchase of a condominium. What is David and Wurst's agency relationship with Frank after a written buyer representation agreement is signed?

The answer is David is Frank's special agent, and Wurst is Frank's special agent.

David is a sales agent sponsored by Wurst, Realty. Wurst, through David, is working with a buyer, Frank, in the purchase of a condominium. What is David and Wurst's agency relationship with Frank before the buyer representation agreement is signed?

The answer is Frank is David and Wurst's customer, and David is Wurst's general agent.

In a typical conversation between a broker who works alone and a property owner who is interested in selling, which topic might require the MOST extensive explanation of subagency?

The answer is MLS.

What is the UETA?

The answer is a state law that makes electronic transactions the equivalent of written agreements if the parties agree.

During the listing presentation, it would be appropriate for broker Ted to present the statutory written statement regarding brokerage services. Ted should also caution the sellers that until they definitely decide to list with him, they should not reveal information that may later hurt their negotiation position with a buyer because Ted might later be required to reveal that information should he be dealing with a buyer-client. What else should Ted discuss with the sellers during the listing presentation?

The answer is all of these are topics. A license holder has a duty to represent the interests of his client. Warning prospects to be careful about revealing confidential information that may be harmful to their negotiating strategy, however, is an excellent example of the license holder's ethical duty to treat other parties to the transaction fairly. [22 TAC § 531.1] Presenting the statutory statement not only meets the requirement under the law [§ 1101.558(c)-(d)] but also affords the license holder the opportunity to smoothly introduce the broker's office policies as they relate to the roles described in the statutory statement. The seller must make a choice, but it must be an informed choice based on disclosed limitations on brokerage services (i.e., single agency office, no offer of subagency, etc.).

What must a broker be prepared to prove if a lawsuit is filed against the broker?

The answer is all of these. The broker must be prepared to prove in a legal dispute with a consumer that important information was, in fact, provided or, on the other hand, that such disclosure was prohibited by law. Brokers also can help protect themselves by clarifying their roles in the transaction to the buyer and the seller.

Before a buyer engages a broker under a written buyer representation agreement, what type of relationship does the broker have with the buyer?

The answer is an arm's-length relationship.

Why should a license holder who works with a buyer clarify who the client represents in the real estate purchase transaction process?

The answer is because the Real Estate License Act requires it.

Wes is a broker associate with Best Realty. Wes is working with Teresa on the sale of an historic hotel she inherited from her mother. There are several potential uses for the property, given its location. When should Wes discuss such things as market conditions, as well as other conditions such as environmental, economic, geographic, and demographic that might affect the hotel salability?

The answer is before Teresa signs the listing agreement.

Customer Henry met Broker Judd when Henry called Judd's office to ask about a property listed on the internet. That property is not suitable, but Henry agreed to Judd's offer to look at another property. At what point must Judd clarify whether he is going to be working with Henry in a subagent capacity or in a buyer's agent capacity?

The answer is before looking at properties listed on the MLS.

When should a broker clarify what they can and cannot do to a consumer?

The answer is before offering to assist consumers in a transaction.

Ralph is a sales agent working with a seller on the sale of the seller's home. This is the first time the seller has sold real property. At what point in the transaction process should Ralph discuss agency issues with the seller?

The answer is before the seller signs the listing agreement.

When should a listing agent work with the seller to establish a sales price for property?

The answer is before the seller signs the listing agreement.

A nonexclusive seller agency broker will not earn an undivided commission when

The answer is both sides of a transaction require representation.

Julie, the principal broker with O'Keeffe Realty, is representing buyer Ken in the purchase of a property listed by broker John at RBI Realty. The amount of commission to be paid to Julie by Ken is determined by agreement between

The answer is buyer Ken and broker Julie.

Which of the following phrases BEST represents how a seller generally regards brokers other than the listing broker who may show their property?

The answer is conduits of information to customers.

Once a listing agreement is signed, but before an offer is made on the property, which of the following should the seller's agent do for or discuss with the seller?

The answer is create a marketing strategy for the seller's approval.

Caroline is in the process of selling her home, and she has signed a listing agreement with A-2 Realty's James, a sales agent with the firm. Caroline has agreed to intermediary agency in the listing agreement. What issues or matters are typically not addressed before an offer is made on the property, but after the listing agreement is signed?

The answer is discuss what personal property items go with the property.

David is a sales agent sponsored by Wurst Realty. Wurst, through David, is working with a buyer, Frank, in the purchase of a condominium. David is in the process of explaining the various agency relationships available to work with Frank. Which of the following is NOT an agency relationship David can enter into with Wurst?

The answer is dual agency. While Wurst can engage in intermediary, buyer agency, and subagency, dual agency is not authorized in Texas.

All the following are practical ways that a broker can minimize risk to the brokerage and thereby decrease the potential of financial loss EXCEPT

The answer is eliminate all verbal communication (i.e., put everything in writing) with the client.

Broker Jerry has received two offers on one of his listings, each for $87,500. One couple is Hispanic. Which topic would NOT be relevant to address during Jerry's presentation of the two offers to his client?

The answer is ethnicity of each buyer.

When first dealing with a prospective buyer-customer, it would NOT be appropriate for broker Isaac to

The answer is explain that market trends recently have been toward a very strong buyer's market.

Which of the following is NOT a service one would expect that a broker or sales agent would provide to a buyer if the agent represented the buyer?

The answer is explaining the seller's legal remedies if buyer defaults.

All commissions in a residential real estate transaction are usually paid

The answer is from the seller's proceeds.

Which of the following is NOT a negotiating point or item one would expect that a broker or sales agent would point out to a seller if the agent represented the seller?

The answer is giving the buyer a right of first refusal to acquire the seller's adjoining property.

Which information should a broker who is acting as subagent to the seller obtain from the listing broker?

The answer is how earnest money deposits will be handled.

A brokerage firm does primarily residential sales and leasing. The firm has an opportunity to manage 100 residential properties for an investment firm, although no one in the firm has property management experience other than one sales agent who manages her own property. Which of the following is the BEST course of action?

The answer is look to hire a team to specialize in property management, ideally hiring a broker with property management experience.

A broker is working with a buyer but does not represent the buyer. The broker should NOT provide which of the following services for the buyer customer?

The answer is negotiate on behalf of the buyer.

If a listing broker is working with a buyer/customer, which of the following is NOT permissible for the broker to do?

The answer is negotiate on behalf of the buyer.

Tally is a broker working with a buyer, but the buyer has not signed a buyer representation agreement. The buyer understands fully that Tally is not her agent, but the buyer is working with Tally nonetheless as Tally's customer. Sherry is a broker representing the seller under a written listing agreement. Is Sherry obligated to share her compensation with Tally if the buyer Tally is working with purchases the property?

The answer is no, Sherry's duty to cooperate does not include an obligation to compensate another broker.

If a seller retains the earnest money as liquidated damages when a buyer defaults on the sales contract, are the listing agent and other agent (either subagent or buyer's agent) entitled to receive a share of the retained earnest money under the TREC-promulgated residential contract, the TAR residential listing agreement, or buyer/tenant representation agreement?

The answer is no, only the listing agent is entitled to receive a portion of the retained earnest money pursuant to the listing agreement.

A brokerage firm has a policy of representing sellers and buyers, but never in the same transaction. What type of agency policy is this?

The answer is nonexclusive single agency.

Les Stoker, a broker who practices nonexclusive single agency, is acting as a seller/agent for Hedy Black, a long-term client. Les has another client who showed interest in Black's property. Stoker explained the situation to the buyer/customer, and the buyer/customer decided to go ahead with the transaction as an unrepresented buyer. When Stoker told Black about the situation, including his inability to disclose information about the buyer that was gained through the agency relationship, Black refused to accept the situation. She told Les, "You're my broker and you owe your full allegiance to me. You should tell me everything I can use to benefit from this transaction." What should Les do if this seller/client continues to object to his position?

The answer is refer the seller to another broker for representation.

Before listing the property, the seller

The answer is should be given a copy of the listing contract to review.

Which of the following does a license holder typically not address or do for a seller before a listing agreement is signed?

The answer is showing the property to potential buyers and buyer's agents.

TREC rules require which of the following regarding maintenance of transaction-related records?

The answer is that such records be maintained for at least four years.

What should a license holder ensure that the buyer understand, regardless of who the license holder represents?

The answer is that the license holder does not warrant the condition of the property.

other offers will come in after the seller has entered into a contract to sell?

The answer is the agent should first discuss with the seller whether the seller wishes to entertain back-up offers before the situation arises.

In a multiple-offer situation, what should the seller's agent tell the buyer or buyer's agents about the other offers?

The answer is the agent should tell the offerors the same thing, depending on what information the seller authorizes the agent to disclose.

Which of the following is NOT a TRELA-required service that a broker must provide to the broker's client?

The answer is the broker must be present at closing.

Which BEST describes the role of an intermediary broker?

The answer is the broker offers representation to both parties.

A listing or buyer's broker practices nonexclusive single agency without intermediary. Practically speaking, this type of agency policy results in which of the following?

The answer is the broker represents either the buyer or the seller, but not in the same transaction.

In which of the following situations might a nonexclusive single (or seller) agency broker earn an undivided commission?

The answer is the broker represents the seller, and the buyer-customer is unrepresented.

Which statement is FALSE concerning nonexclusive seller agency?

The answer is the broker will be unable to conduct an in-house sale.

What type of relationship does a nonexclusive single agent broker have with a buyer interested in purchasing one of the broker's listings?

The answer is the buyer is a customer.

Of the following, which is one of the most frequent basis for complaints against license holders?

The answer is the license holder's failure to disclose material facts.

Martin is a broker of a small brokerage firm with seven sponsored sales agents. Under a typical written property management agreement solicited by a sales agent on behalf of the firm, in what capacity does the sales agent act?

The answer is the sales agent serves as Martin's general agent and the general agent of the property owner.

Why might a broker practicing nonexclusive seller agency terminate agency with a buyer?

The answer is to maintain an agency relationship with a seller. The broker will withdraw from representing one or both clients if the buyer is interested in a property listed by that broker.

Which of the following is a good way for a license holder to prove that information was provided as required by the Real Estate License Act or TREC rules, or other laws?

The answer is to provide all disclosures in writing whether required by law or not.

Can a party to a real estate transaction be bound to a contract that is signed electronically?

The answer is yes, if both parties agree to conduct a transaction by electronic means.

Under a typical listing agreement, what duties does the broker and the sales agent owe to the seller?T

he answer is both the broker and the sales agent owe common law fiduciary duties to the seller.