1: Brokerage Agreements

In a typical listing agreement, the agent's promise is -delivering a ready and willing buyer -due diligence in marketing the property for sale -finding a prospective buyer

Delivering a ready and willing buyer. Typically, an agent fulfills their contractual obligation when delivering a ready and willing buyer.

The street address and possibly the legal description, size of the lot, zoning, tax parcel number, municipality, school districts, easements, etc..

Description of the property

Which goes to which : Exclusive agency, exclusive right to sell, open listing, net listing -The listing broker will receive commission for the sale unless the owner sells it themselves -Regardless of who sells the property, the listing broker will receive commission -The seller sets a price he's willing to accept; the broker receives any excess amount as commission -The seller can have as many brokers as they choose

Exclusive Agency -The listing broker will receive commission for the sale unless the owner sells it themselves Exclusive right to sell -Regardless of who sells the property, the listing broker will receive commission Net listing -The seller sets a price he's willing to accept; the broker receives any excess amount as commission Open listing -The seller can have as many brokers as they choose

A bilateral? unilateral? contract between the seller and broker that gives the broker exclusive right to represent the seller in the sale of the property. The broker is compensated ONLY if someone other than the seller finds the buyer.

Exclusive agency

Representation by a single brokerage - broker is paid only if they find a suitable property that buyer eventually purchases

Exclusive agency buyer agency agreement

Jonah lists his home with PDQ Realty, allowing them to put a sign in the yard, lists it in MLS, and advertise it in the local newspaper. During the listing period, Jonah sells the home to his brother and is not obligated to pay PDQ any commission. What type of listing did Jonah have with PDQ? -exclusive agency -net listing -non-exclusive right to sell -open listing

Exclusive agency. Under an exclusive agency agreement, the seller can still sell the property on their own and not owe a commission. In an exclusive agency listing, unlike an open listing, only the listing brokerage can put a sign in the yard and advertise it.

broker is paid the negotiated fee even if buyer purchases property through another brokerage or themselves

Exclusive buyer agency agreement

A bilateral contract between seller and broker that gives the broker exclusive right to represent the seller in sale of the property, and broker has sole right to market and promote the property. The broker is compensated no matter who produces the buyer.

Exclusive right to sell

The seller lists her house with new age realty. The next day, the seller goes to work and mentions listing her house. A coworker expresses interest in the listing. Which listing would entitled a broker to a commission if the coworker makes acceptable offer to the seller? -exclusive agency -exclusive right to sell -net listing -open listing

Exclusive right to sell

True or False: An open listing is likely to result in better service since there are more brokers working for the seller

False. It's more likely that exclusive listing agreements result in better service for sellers than open listing agreements because the broker's claim to a commission is more secure, so he is likely to work harder to bring about the sale

True or False: Harry wants to sell his house, so he signs an open listing agreement with Joe of Lots-O-Wealth Realty. Harry promises to pay Joe a commission only if he finds a ready, willing, and able buyer. This is an example of a bilateral contract.

False. This is a unilateral contract. Harry made a promise to pay commission on the condition that Joe finds a buyer. Joe has no obligation to find that buyer, however.

True or False: Broker Liz has a listing agreement to find a ready, willing, and able buyer for Chuck's house. This gives her incidental authority to include his house on her sunday morning "Real estate roundup" television show

False; advertising must be done with the written consent of the seller. This is one of those items that should be negotiated before a seller signs a listing agreement.

Which type of listing provides the greatest opportunity for an agent to get paid? -exclusive agency -exclusive right to sell -open

It's more likely that an exclusive right to sell listing will result in compensation, since the agent is paid when the property sells no matter who finds the buyer.

What is the most common way to create an agency relationship between a home seller and a broker? -buyer broker agreement -by implication -listing agreement -oral contract

Listing agreement is an employment contract that creates an agency relationship between a seller and a broker.

A method of compensation - property owner agrees to accept a stipulated amount, and no less, upon the sale of property. The broker retains any amount over the seller's net as commission

Net listing

Seller Sam calls a real estate agent to list his home. Sam tells the agent he wants $156,000 in his pocket at closing and the agent can have the rest for commission. What type of listing with this be? -exclusive agency -exclusive right to sell -net listing -open listing

Net listing

Do you think it's necessary for a real estate broker to have the listing on a property in order to advertise it?

No, you don't have to have the listing; you just have to have written permission from the owner to advertise the property

Licensee Fred's employing broker has an exclusive buyer agency agreement with client Gail indicating that she will pay 3% of the sales price if she finds the house of her dreams. Do you think that Fred is required to disclose his commission from Gail to the listing broker?

No. Fred has no legal or ethical obligation to disclose the terms of agreement between his employing broker and client Gail to anyone, including the listing broker.

Buyer can enter into many brokerage agreements. Broker earns commission only if his agency introduces the buyer to the property they purchase

Non-Exclusive or Open buyer agency agreement

Indication if the seller is willing to pay the cooperating broker or buyer's broker, and how much. Negotiable.

Offer of cooperation

A non-exclusive unilateral agreement given by a seller to as many brokers as they chose. The broker who is the procuring cause of sale receives a commission. Often includes a broker protection clause that extends after the agreement expires.

Open listing

Anyone having share of ownership in the property to be sold: The brokerage company name, the employing broker, any licensee working with the seller, and other brokers if applicable

Parties to the contract

The best way to understand ownership issues is to order a ____________ - a title company will examine all recorded documents related to ownership of the property. The report will reveal any issues needed to be resolved before property can be transferred, including names of all owners required to sign the deed.

Preliminary title report

Let's say Gail falls in love with a house, but the listing broker is not offering a commission split, or perhaps it's for sale by owner. What are Gail's options at this point? Select all correct responses. -Ask Fred to ask the listing broker to share the commission -Include a clause in her offer requiring the seller to pay the 3% commission -Pay the 3% commission to Fred's broker herself -wait until her agency agreement expires and make an offer on the house on her own

She is contractually obligated to see that fred's employing broker gets the negotiated 3% commission one way or another. If she doesn't want to pay it herself, she could include a clause in her offer requiring The seller to pay the 3% commission. The seller is unlikely to agree, but she can certainly ask. One thing Gail could NOT do is ask fred to ask the listing broker to share the commission. This would be interfering with the existing contract between a seller and the listing broker. Of course, if the buyer agency agreement did not include any sort of broker protection clause, Gail could wait until the contract expires, and if the house is still on the market, make an offer on her own. If Gail was unscrupulous, she might claim that fred never showed her that particular house.

A listing on a property could be considered a(n) -offer to sell -option to purchase -solicitation of offers to buy -unilateral promise to sell

Solicitation of offers to buy - A real estate listing is not considered a property owners offer to sell, but instead, invites buyers to make an offer

Idenmnification Clause

Statement that buyer and seller will not sue each other in the event that misinformation was shared in-between them

True or false: A contract that creates an agency relationship between a property owner and a property manager is a lease.

The contract between a property owner and property manager is called a property management agreement

You are currently associated with Ace Realty. They recently change the commission structure and so you're looking for a new employing broker. You decide to go to work for tiptop real estate. On your last day at Ace, you have three active listings. What happens to them? -Ace can agree to sell the listings to tiptop -ace has the option to let you take the listings with you if you agree to give them their commission split -the listings remain at Ace -you can take them with you to tiptop

The listings remain at Ace. A listing agreement is a contract between the client in the employing broker at Ace. As such, the broker owns those listings and you cannot take them with you, even if you were the agent who worked to get the signed listing agreements.

True or False: Commission is always negotiable between a sponsoring broker and a client

True

True or false : A broker with an open listing on Shelly's house gets commission only if he is the procuring agent

True

Now, let's say Gail was exceedingly pleased with Fred's service. She could choose to pay the full 3% she contracted for. If Fred's employing broker received Gail's 3% and the listing broker's 2%, Fred's still not obligated to inform the listing broker. ?

True, Fred has no obligation to inform the listing broker of any compensation he receives from a buyer client

True or False: Lisa wants to sell her house, so she signs an exclusive right of sale agreement with broker Lori of Lakeside Realty. Lisa promises to pay Lakeside a commission when the house sells. This is an example of a bilateral contract.

True. This is a bilateral contract since seller Lisa and broker Lori have both made a promise. Lori promises to market Lisa's house and Lisa promises to pay her if it sells.

Of these which is LEAST likely to be negotiable in a listing agreement? -the brokers cooperation with other brokers -the commission -whether there is an end date -the scope of activities permitted

Whether there is an end date - most states require listing agreements to contain a definite termination date. The other items are negotiable, and a licensee must inform the consumer of that fact.

What if the listing broker offers a commission split to a buyer's agent? Would Fred be obligated to disclose that to client Gail?

Yes. If the listing broker is offering to pay the buyer's agent 2% of the 6% commission, for example, Fred IS obligated to inform client Gail of the fact.

Lois signs the exclusive agency agreement, excluding two named prospects for 10 days. Two weeks after she signs, another broker brings a buyer through the house. He puts in an offer that Lois accepts, did the original broker earn commission on this deal?

Yes. With an exclusive agency agreement, the broker earns commission if anyone other than the seller or named exclusions introduces the buyer to the property.

Tenants secure the services of a broker through a ____________________

brokerage agreement

Buyers secure the services of a broker through a _________________

buyer agency agreement / buyer representation agreement / buyer brokerage agreement

Sellers secure the services of a broker through a ____________________

listing agreement

Landlords secure the services of a property manager through a ________________________ , which is also a type of brokerage agreement

property management agreement

Conflict of interest

statement that any conflict of interest will be disclosed

What are the typical elements to a listing agreement?

-Parties to the contract -Description of the property -Asking price -Term -Payment of the broker's fee -Fair housing statement -Offer of cooperation -Disclosure statement -Personal and leased property -Permission to advertise

The listing broker is offering to pay a buyer's agent 2% of the 6% commission. Gail's contract with Fred's employing broker promises a 3% commission. What, if anything will Gail owe Fred's employing broker if she buys that house? -1% -2% -3% -nothing

1% - Gail would only have to pay 1%, assuming that provision was included in the agreement. If the buyer agency agreement did not specifically credit the buyer for commission paid by the seller, Gail might be obligated to pay her buyer's broker 3%.

Which agreement limits the buyer to representation by a single brokerage, and the broker is paid the negotiated fee only if the broker finds the property that the buyers eventually purchase? -buyer agency agreement -exclusive agency buyer agency agreement -exclusive buyer agency agreement -open buyer agency agreement

An exclusive buyer agency agreement makes certain the broker is paid the negotiated fee only if the broker finds the property that the buyer eventually purchases

The proposed gross sales price as determined by the seller - amount should include any outstanding taxes, mortgage loans, broker commissions, and other costs

Asking price

For corporate contracts, you need a copy of the ________________ that grants the contract authorization

Board resolution

Which contract would NOT be considered a brokerage agreement? -Amy signs a contract with Billy to find an apartment for her to lease -Brad signs a contract with Carol to purchase her house -Cathy signs a contract with Dennis to manage one of his properties -Dusty signs a contract with Ernest to market his house for sale

Brad signs a contract with Carol to purchase her house. A contract between a buyer and seller is a purchase contract, and a brokerage is not a party to this.

Brokerage contracts are employment agreements that establish the agency relationship between a ________ and a _______ .

Client and a real estate broker