Unit 5 - Buyer Agency

Which of the following items are negotiable for a buyer in the purchase of real estate? A) Interest rate, due date, possession date B) All of these C) Earnest money deposit, seller financing, sales price D) Termite report, repairs, closing costs

All of these

A buyer as a customer and a buyer as a client will have the same level of loyalty to the broker. True False

False

A buyer's agent should NOT disclose to the buyer that the listing is overpriced for the area. True False

False

Buyers can expect their agent to "sell" them on a listed property. True False

False

No conflict of interest will ever arise out of exclusive buyer agency because the broker is not representing two parties at the same time. True False

False

Texas state licensing law does NOT require that a buyer-representation agreement have a specific termination date. True False

False

The buyer's agent is expected to tell the seller the buyer's future plans for the property. True False

False

The real estate license holder can, with proper disclosures, provide valuable services to a buyer without creating an agency relationship. True False

False

Under buyer agency, buyers do NOT have easy access to a larger market. True False

False

While confidentiality applies in agency relationships with sellers, it is not a fiduciary duty when representing buyers. True False

False

Under the TREC-promulgated Information About Brokerage Services Notice, there are blank spaces on the last page that are used for what purpose? A) To indicate that the broker has disclosed to the person who the broker represents B) To bind the person to an agency agreement to the broker C) To indicate that the broker read the notice to the person verbatim D) For the person receiving the notice to acknowledge receipt of the notice

For the person receiving the notice to acknowledge receipt of the notice

Must a listing broker provide a copy of a previous inspection report to a buyer? A) No, but if the inspection report discloses a material defect on the property, the listing agent must disclose the defect. B) Yes, several laws require disclosure of the inspection report to the buyer. C) Yes, the property code requires disclosure of the inspection report to the buyer. D) No, there is no law requiring disclosure of any defects noted in the inspection report.

No, but if the inspection report discloses a material defect on the property, the listing agent must disclose the defect.

According to its licensing law, which of the following items is required in a buyer-representation contract in Texas? A) Single-property stipulation B) Maximum commission fee C) Termination date D) Conflict-of-interest clause

Termination date

Who is the primary agent of the buyer in a buyer/agent relationship? A) The associate broker B) The designated broker for the firm C) The sales agent who negotiated the buyer representation agreement D) The broker

The broker

Gloria wants to buy a home in Austin. She has been searching the internet and has narrowed down her search to three areas. Gloria contacts Gordon at A-1 Realty for assistance. Gordon and Gloria sit down to discuss what Gordon can do for Gloria if she hires him as her agent. Gloria is concerned about how much she will have to pay Gordon for his services. How does the Texas Association of REALTORS® sample buyer representation agreement address payment of Gordon's commission. A) If seller does not pay the buyer's broker's fee, the broker will waive the feel. B) The broker will seek payment from the seller, but if the seller refuses, the buyer will owe half of the amount specified. C) The buyer is solely responsible for payment of the broker's commission. D) The broker will seek payment from the seller, but if the seller refuses, the buyer will pay the broker.

The broker will seek payment from the seller, but if the seller refuses, the buyer will pay the broker.

Assuming there is a valid written buyer representation agreement, what action can the buyer's agent take to receive compensation if the listing broker is never paid once a real estate transaction has closed? A) The buyer's agent has no recourse for payment. B) The buyer's agent can sue the seller for payment. C) The buyer's agent can sue the listing broker for payment. D) The buyer's agent can request payment from the buyer.

The buyer's agent can request payment from the buyer.

Nonexclusive single agency brokers form relationships, but they don't do transactions. True False

True

License holders do NOT need to disclose to buyers that they are license holders if the license holders are selling a property on A) the license holder's own behalf. B) behalf of the license holder's best friend. C) behalf of the license holder's spouse. D) behalf of the license holder's child.

behalf of the license holder's best friend.

The fee to be paid to a buyer's broker by a buyer-client is determined by agreement between A) buyer's broker and the buyer. B) broker and TREC. C) buyer's broker and the seller. D) buyer's broker and the listing broker.

buyer's broker and the buyer.

gross price

more recent method of payment that is slowly gaining acceptance

hourly rate

payable regardless of any title transfer

When a buyer forms an agency relationship with a broker, the buyer can expect that the broker will A) give legal advice and draft contract provisions to save the buyer legal fees, even though the broker is not an attorney. B) spare no expense to show the buyer properties anywhere in the state of Texas. C) provide data relating to market values for properties that the buyer may be interested in purchasing. D) only work with one buyer at a time until the transaction is closed.

provide data relating to market values for properties that the buyer may be interested in purchasing.

noncontingent flat fee

rarely used unless the agent has a great deal of experience in representing buyers

Betty represents Nash under a written buyer representation agreement. Before signing the buyer representation agreement with Betty, Nash spoke with James and explained that he was looking for a two-bedroom condo near downtown Seattle. James did not sign a buyer representation agreement with Nash, but James did show Nash the same condo Nash eventually ended up buying with Betty's assistance. James believes that he is owed the commission because he was the first one to show Betty the condo. James is alleging that he is A) the common cause of the sale to Betty. B) the good cause of the sale to Betty. C) the procuring cause of the sale to Betty. D) the probable cause of the sale to Betty.

the procuring cause of the sale to Betty.

The broker, not the licensed associate of the broker, is the primary agent of the buyer. True False

True

The fee to be paid to a buyer's broker by a buyer-client is determined by agreement between the buyer's broker and the buyer. True False

True

Which of the following is a TRUE statement regarding license holder advertising? A) A license holder need not include the name of her sponsoring broker in her advertising. B) A license holder must use the term broker in her real estate advertising. C) A license holder may not imply that a sales agent is responsible for operating a brokerage firm. D) A license holder must use the term agent in her real estate advertising.

A license holder may not imply that a sales agent is responsible for operating a brokerage firm.

Which of the following is the best practice for license holders to establish a buyer/agency relationship? A) An agreement created by operation of law B) An oral express agreement with a handshake C) An express agreement signed by the broker D) A written agreement signed and dated by all the parties to the agreement

A written agreement signed and dated by all the parties to the agreement

In which of the following capacities can a license holder work with a buyer? A) As a subagent of the seller B) All of these C) As an agent of the buyer D) As a subagent of the buyer

All of these

Why does a buyer representation agreement contain a definition termination date? A) Because TREC can take disciplinary action against a license holder for failing to include one B) Because an agreement without a termination date would violate laches laws C) Because the Texas Property Code requires it D) Because the Broker Lawyer Committee has included the provision in the promulgated listing agreements

Because TREC can take disciplinary action against a license holder for failing to include one

In which of the following situations would having a buyer-agency relationship be necessary to the buyer? A) Buyer wants to sell current property and purchase new one B) Buyer wants to remain anonymous C) More than one buyer D) Buyer requires VA financing

Buyer wants to remain anonymous

How is buyer agency created? A) By implication, operation of law, or express agreement B) Only by operation of law or expressly C) Only expressly or impliedly D) Only by implication or by operation of law

By implication, operation of law, or express agreement

Which of the following is the most widely accepted method of compensation for the buyer's broker in residential sales? A) Buyer-paid fee B) Commission-sharing with the listing broker C) Advance fee or retainer D) Hourly rate

Commission-sharing with the listing broker

A buyer whom you have never met has heard about your great skills in working with buyers, so he has made an appointment to consult with you about his real estate needs. As you make the state-required disclosures about the various relationships that are available when working with buyers, you carefully explain all the advantages a client receives that a customer does not. You suggest that an exclusive, buyer representation relationship would be the most appropriate one to select in this instance. The buyer immediately objects, stating that he would prefer being able to use the talents and skills of many agents in his search for a home. How can you convince the buyer that exclusive-agency representation with you is the best choice? A) Advise the buyer that some of the sales agents with whom he will work may be subagents of the seller and that, therefore, he will only receive the services of a customer. B) Suggest to the buyer that most of the license holders in the real estate business are incompetent, so it is much better just to work with you. C) Tell the buyer that the only license holders who would work with him under the conditions he described are new, inexperienced, and will agree to anything for the possibility of a commission. D) Explain to the buyer that when he works with multiple brokers, he will receive less, not more service, because all the brokers will assume that another broker will be the one who makes the sale.

Explain to the buyer that when he works with multiple brokers, he will receive less, not more service, because all the brokers will assume that another broker will be the one who makes the sale.

Which of the following is typically NOT addressed in a buyer/tenant representation agreement? A) Termination date B) Intermediary authority C) Broker's fees D) Property description

Property description

Which of the following is an advantage of exclusive buyer agency? A) The possibility of earning commissions from both the listing side and the selling side of the business is eliminated. B) A potential conflict of interest arises if two buyer-clients want to make offers on the same property. C) It reduces the possibility of the unauthorized representation of more than one party. D) Buyers sometimes want to sell and use brokers they're already familiar with.

It reduces the possibility of the unauthorized representation of more than one party.

Which of the following is TRUE regarding anonymity of a buyer principal? A) Although the anonymity of a buyer can be maintained, the buyer's agent has a fiduciary duty to the seller to disclose other relevant information about the buyer. B) Maintaining the anonymity of a famous buyer may keep the seller from increasing the asking price. C) Maintaining the anonymity of a famous buyer makes no difference to the transaction. D) Because the buyer's agent must disclose the buyer's name to the seller, anonymity is irrelevant.

Maintaining the anonymity of a famous buyer may keep the seller from increasing the asking price.

George, a new sales agent sponsored by Best Realty, does not obtain a written buyer representation agreement with Samuel although George has agreed to act as Samuel's agent in his purchase of a new home. Samuel prefers to use a handshake instead of a written agreement. Under which of the following options does George have the best chance of prevailing if Samuel refuses to pay him for his services after the sale has closed? A) George can sue Samuel for payment of the commission. B) George can sue the listing broker for payment of his commission. C) None of these. D) George can sue the seller for payment of the commission.

None of these.

retainer fee

TREC trust account rules apply to how this type of compensation must be handled

What are three benefits of a buyer/agency relationship to the buyer? A) Tailored buyer representation agreement, greater client loyalty, and stronger negotiating strategy B) Avoid conflict of loyalty, access to larger marketplace, and stronger negotiating strategy C) Access to larger marketplace, avoid conflict of loyalty, and greater client loyalty D) Tailored buyer representation agreement, access to larger marketplace, and stronger negotiating strategy

Tailored buyer representation agreement, access to larger marketplace, and stronger negotiating strategy

Buyer representation agreements in Texas are promulgated by which of the following entities? A) The Texas Real Estate Commission B) The Texas secretary of state C) The Texas Legislature D) The Texas Association of REALTORS®

The Texas Association of REALTORS®

A buyer's agent acting for an undisclosed principal may be able to negotiate a better price and better terms for the anonymous buyer. True False

True

A buyer's agent should do a comparative market analysis (CMA) for any property on which the buyer is considering making an offer. True False

True

A license holder must disclose in writing to a buyer if the license holder is the owner of a property that the buyer is considering. True False

True

An exclusive buyer-agent may encounter a conflict of interest if two buyer-clients want to make offers on the same property. True False

True

Buyer's agents are held to a higher standard of performance than if they were acting as a seller's subagent or the seller's listing agent. True False

True

Buyer-agency may be created by the actions of a license holder, as well as by written agreements. True False

True

Exclusive buyer agency reduces agent liability for undisclosed dual agency or for intermediary brokerage. True False

True

In which of the following situations is a broker/seller NOT required to provide a written disclosure regarding the broker's license status? A) When the broker is selling property for the broker's parent B) When the broker is selling property for the broker's daughter C) When the broker is selling property for the broker's sister D) When the broker is selling property for the broker's spouse

When the broker is selling property for the broker's sister

When is a buyer's commission earned under a typical buyer representation agreement? A) After the cooling off period in the contract B) When the buyer signs the buyer representation agreement C) When the buyer and seller execute a contract to purchase D) When the seller counteroffers on the buyer's offer

When the buyer and seller execute a contract to purchase

According to the TAR Buyer/Tenant Representation Agreement, which of the following is NOT part of the definition of "payable" in regard to when the buyer broker's fee is earned and payable? A) When the client breaches the buyer/tenant representation agreement B) When the client enters into a contract to purchase property C) When the closing of the contract to purchase occurs D) When the client breaches a contract to buy or lease property

When the client enters into a contract to purchase property

Must a buyer's agent disclose his relationship with a buyer to an owner who is selling a property on her own? A) No B) Yes, if the owner asks C) Yes, at first contact D) Yes, before presenting an offer

Yes, at first contact

Dee is a broker and has a buyer representation agreement with a buyer. May Dee be compensated by both the buyer and the seller? A) No, she can never receive compensation from other party B) Yes, with the buyer's consent C) Yes, with the consent of the other party D) Yes, but only with the full knowledge and consent of both parties

Yes, but only with the full knowledge and consent of both parties

Is it permissible for a seller to pay a buyer's broker fee? A) No, only the buyer can pay that fee. B) Yes, it can be decided at the closing. C) Yes, it should be stated in the contract. D) No, only the seller's broker can pay that fee.

Yes, it should be stated in the contract.

Broker Bob has a buyer-representation contract with buyer Jay Sterling. Do the license holders who work in Bob's office have any relationship with Sterling? A) No, broker relationships are always limited to the broker. B) No, buyer-broker relationships are always limited to the broker. C) Yes, they automatically represent Sterling. D) Yes, but only if they also signed the buyer-agency agreement.

Yes, they automatically represent Sterling.

The TAR Residential Buyer/Tenant Representation Agreement is a very good example of a buyer representation contract. Standard features of the TAR contract include A) a broker protection period. B) a universal power of attorney, naming the broker as the agent. C) the legal descriptions of each property the buyer might be interested in acquiring. D) an automatic renewal provision to extend the contract term.

a broker protection period.

If a buyer is purchasing a property that will be financed by a Department of Veterans Affairs (VA) loan, A) a buyer's broker fee cannot be included in the loan amount. B) a buyer's broker fee cannot be paid though a commission spit with the listing broker. C) the buyer's broker must be compensated by the buyer. D) no buyer's broker fee is permitted.

a buyer's broker fee cannot be included in the loan amount.

commission split

credits the buyer with a specified amount from the sales proceeds

Jack is a sales agent with a brokerage that offers both subagency and buyer brokerage and allows its sales agents to determine the best form to use when working with an individual buyer. Billy, a disagreeable and demanding purchaser, was referred to Jack by one of Jack's close friends. Billy plans to purchase a home in the $500,000 range. Billy wants service; he will not accept anything less than prompt, personal service. Billy is also somewhat well-known in certain circles, having written several best-selling historical novels. While he doesn't insist on complete anonymity, he has asked Jack to avoid disclosing his success and wealth to the sellers whose homes he views. He also wants to be certain that he can get the best possible price and sees the disclosure of this information as a detriment to that goal. As he told Jack, "I'm an author, not a negotiator. I want to work with someone who is a tough, strong advocate for my position. There's plenty of houses out there. I would rather lose a house I like than to overpay for it. And my definition of overpay is to pay anything greater than 20% under market value!" Jack concludes that Billy will need buyer representation services. What is the primary reason why Jack has decided this? A) Billy is demanding and difficult to get along with, so representing Billy is the obvious answer. B) Billy was referred by Jack's friend, and it would be a disappointment to his friend if he didn't provide Billy with buyer brokerage services. C) Billy is a famous author, so protecting Billy's identity from the sellers is very important. D) Billy needs a strong advocate in the negotiation for the home he is about to purchase.

Billy needs a strong advocate in the negotiation for the home he is about to purchase.