Unit 10: Real Estate Agency

listing agreement

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.

implied agreement

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

latent defect

A hidden structural defect that could not be discovered by ordinary inspection and that threatens a property's soundness or the safety of its inhabitants

universal agent

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

buyer representation agreement

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.

designated agency

A process that accommodates an in-house sale in which two different agents are involved. The broker designates one agent to represent the seller and one agent to represent the buyer.

buyer's agent

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

Which of the following is considered dual agency?

A real estate professional's acting for both the buyer and the seller in the same transaction

fiduciary relationship

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

express agency

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

nonagent

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.

express agreement

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

Real estate agency relationships are governed by which kinds of law?

Common law, statutory law, and administrative law

fraud

Deception intended to cause a person to give up property or a lawful right.

Maria tells her agent in confidence that she must sell fast and may accept less than the list price. The agent tells a buyer the seller will accept up to $10,000 less than the list price. Which is TRUE?

Disclosure was improper and possibly illegal, regardless of the agent's motive.

puffing

Exaggerated or superlative comments or opinions.

transaction broker

Helps both the buyer and the seller with paperwork and formalities in transferring ownership of real property, but who is not an agent of either party.

implied agency

If the actions of the parties imply that they have mutually consented to an agency relationship

What does the phrase the law of agency is a common law doctrine mean?

It is part of a body of law established by tradition and court decisions.

negligent misrepresentation

Occurs when the real estate professional should have known that a statement about a material fact was false.

designated agent

One or more of a broker's licensee affiliates assigned by the broker to represent one client to the exclusion of all other clients in the same transaction, as well as to the exclusion of all other licensees affiliated with the broker.

special agent

One who is authorized by a principal to perform a single act or transaction

general agent

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

dual agency

Representing both parties to a transaction. This is unethical unless both parties agree to it, and it is illegal in many states.

In MOST situations, the relationship between real estate broker and seller is what type of agency?

Special

A seller, anxious to sell, listed her home for $190,000 and signed an agency agreement with a broker who then told a buyer to submit a low offer. The buyer offered $175,000 and the seller accepted. Which of the following statements is TRUE?

The broker has violated the agency relationship with the seller.

A broker tells a buyer, "This home has the most beautiful river view." In fact, the view includes the river and the back of a shopping center. Which is TRUE?

The broker is merely puffing.

Which statement is TRUE of a real estate broker acting as the agent of the seller?

The broker is obligated to render loyalty to the seller.

Which of the following is NOT a valid reason to terminate an agency relationship?

The buyer wanted to work with a new agent, but the terms of agency had not yet expired and the current agent did not agree to terminate.

law of agency

The law that governs the relationship between a principal and his or her agent.

A real estate agent's duty of confidentiality usually extends for how long?

The period of time specified in state law

A real estate broker lists a woman's home for sale for $189,500. Later that same day, a man comes into the broker's office and asks for general information about homes for sale in the $130,000 to $140,000 price range but refuses representation by the broker's company at this time. Based on these facts, which statement is TRUE?

The woman is the broker's client; the man is a customer.

principal

a main party to a transaction- the person for whom the agent works

agent

a person who acts or does business for another

stigmatized property

a property that has been branded as undesirable because of the events that occurred in or near it

The requirement that brokers promptly deposit funds entrusted to the broker into an escrow account is an example of how brokers fulfill the fiduciary duty of

accounting

disclosed dual agency

an agency relationship in which the agent represents two principals simultaneously, with their knowledge or permission

Undisclosed Dual Agency

an agency relationship in which the agent represents two principals simultaneously, without their knowledge or permission

A real estate professional's duties to a customer do NOT include

being primarily responsible to the customer.

In a dual agency situation, a broker may represent both the seller and the buyer in the same transaction if

both parties consent in writing to the dual agency.

common law agent duties

care, obedience, accounting, loyalty, and disclosure

A broker receives a check for earnest money from a buyer and deposits the money in the broker's personal interest-bearing checking account over the weekend. This action exposes the broker to a charge of

commingling.

Evidence of an agency relationship can be found in the

conduct of the parties.

If a buyer's agent reveals to the seller that the buyer must move within one month, this action would violate the agent's fiduciary duty of _______________ to the buyer.

confidentiality

In the common law of agency, an agent owes the principal all of the following EXCEPT

consideration.

Although not available in all states, when a person is authorized by the broker to act as the agent of a specific principal-seller (in an in-house sale by two agents), this agent is called a _________ agrent.

designated

Some states allow two sales associates in the same brokerage to represent opposing sides to a transaction without creating a dual agency by using a(n)

designated agency.

Even when a property is sold as-is or with a seller___________ , agents should still disclose known problems with the property if they could affect the health and well-being of the occupants.

disclaimer

The fundamentals of general agency law have changed dramatically over the past two hundred years.

false

The intentional misrepresentation of a material fact in such a way as to harm or take advantage of another person is called

fraud

fiduciary

held in trust; confidential

Statements of opinion are permissible

if there is no intention to deceive.

A broker may unintentionally establish an agency relationship by means of an

implied agreement.

statutory law

laws enacted by legislature

caveat emptor

let the buyer beware

The written employment contract that establishes the agency relationship between the seller and the broker is called a _________ agreement

listing

A real estate broker acting as the agent of the seller

must promote and safeguard the seller's best interests.

When the broker should have known that a statement about a material fact was false, it is considered

negligent misrepresentation.

The functions of a facilitator or intermediary are those of a(n)

nonagent.

Megan's Law

promotes the establishment of state registration systems to maintain residential information on every person who kidnaps children, commits sexual crimes against children, or commits sexually violent crimes.

Buyers hire an agent to help them purchase a home and want seller financing because they filed for bankruptcy two years ago. The agent is

required to disclose the information under the Fair Credit Registry Act.

administrative law

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

A real estate agent's duty of confidentiality usually extends for the period of time

specified in state law.

The federal legislation known as Megan's Law has promoted the establishment of

state registries of residential information on sex offenders.

single agency

the agent represents only one party to a transaction.

Designated agency is MOST likely to occur when

the buyer and the seller are represented by the same company

client

the principal

agency

the relationship between a principal and an agent wherein the agent is authorized to represent the principal in certain transactions

common law

the rules established by tradition and court decisions

The listing broker and the seller find a small roof leak in the attic. Because the property is being sold "as is,

the seller and the broker must both disclose this material fact.

customer

third party or non represented consumer for whom some level of service is provided

In traditional common law, 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

errors and omissions insurance

type of insurance that covers liability for mistakes and negligence in the usual activities of a real estate office