Law of Agency: Chapter 12

An EBR can exist with someone who made an inquiry with the broker's company within the last ____ months.

3 months

TREC requires brokers to keep transactional records for at least ______ years from the date of a closing or the termination of the contract.

4

Errors and Omissions Policy

A contract between an insurance company and a broker/license holder

Errors and Omissions Policy

According to TRELA Section 1101.355. BUSINESS ENTITIES. (a) To be eligible for a license under this chapter, a business entity must: (2) provide proof that the entity maintains errors and omissions insurance with a minimum annual limit of $1 million for each occurrence if the designated broker owns less than 10 percent of the business entity. An errors and omissions policy (E & O policy) is a contract between the insurance company and the broker/license holder; therefore, each policy should be scrutinized to determine coverage issues and duties of the insured. Most E &O policies require timely and full disclosure of potential claims. Remember that brokers are responsible for the sales agents working with them and E&O Insurance can protect your business from claims of wrongdoing.

T or F: Brokers may not require additional education over the amount required by TREC to ensure competency in the scope of the agent's practice of real estate.

False

T or F: Consistently means for two-three months.

False

T or F: Having half-hour planning periods typically does not work well for many agents.

False

T or F: The first and the oldest accepted form of macro target marketing is Demographic Farming.

False

T or F: The first two or three transactions new real estate professionals usually close are with a seller.

False

T or F: The homeowner today sells every 5 years on average.

False

T or F: Most sales are made at the agent's first contact with the buyer.

False Most sales are made after the 5th-12th contact with the buyer

FSBO

For Sale By Owner

Geographic Farming

Marketing to a specific area or location

Demographic Farming

Marketing to a specific set of people sharing many commonalities

Need for Agency Policy - Scope of Authorization

Section 535.2 of the TREC Rules requires brokers to maintain written policies and procedures addressing a variety of matters, including the relationship between the broker and agents sponsored by or associated with the broker, competency of agents, compensation issues, maintenance of trust accounts, and maintenance of business records in general.

Dodd-Frank Wall Street Reform and Consumer Protection Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) was signed into law in July 2010. The purpose of the law is to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ''too big to fail,'' to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes. The Dodd-Frank Act makes sweeping changes to the financial regulatory system in response to the financial crisis in 2008. The law is complex, in part requiring the creation of new agencies, the consolidation of existing agencies, and mandating financial regulatory agencies to adopt new rules pursuant to stated timelines to implement the various and far-reaching requirements of the law. While the Dodd-Frank Act targets financial regulatory reform, it will have an impact on the real estate industry, primarily because mortgage lending is a significant part of most real estate transactions. In addition, certain provisions in the Dodd-Frank Act established new requirements for appraiser independence.

RESPA Compliance and Related Matters

The Real Estate Settlement Procedures Act (RESPA) first passed in 1974. It applies to transactions with loans on residential property (1-4 units). RESPA requires certain disclosures that spell out the costs associated with the transaction, outline lender servicing, and escrow practices, and describe business relationships between settlement service providers. RESPA is intended to: -help consumers become better shoppers for settlement services; and -eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services.

RESPA

The Real Estate Settlement Procedures Act (RESPA) is a federal law to protect purchasers of residential real estate with federally related financing.

Risk Management

The need to have policies and procedures in place to reduce the brokerage and its agents' exposure to liability and lawsuits.

T or F: A buyer would want to know if an agent is a buyer's agent or a seller's subagent.

True

T or F: The RENE certification course can aid in developing negotiation strategies.

True

T or F: The buyer may seek the services from a buyer specialist like an ABR.

True

T or F: Advertisements promoting rebates must disclose terms of rebates.

True

T or F: Fair Housing laws are federal, state and local laws that are designed protect people from discrimination in housing.

True

T or F: Potential buyers begin as unrepresented customers and remain in that status until they enter into an agency relationship.

True

T or F: Specifically, before making a cold call, a license holder must verify whether the number is on the National Do-Not-Call-registry.

True

T or F: While the Dodd-Frank Act targets financial regulatory reform, it will have an impact on the real estate industry, primarily because mortgage lending is a significant part of most real estate transactions.

True

Which of the following would NOT be a service an agent would provide a buyer client? a) Staging of a property b) Negotiating c) Transaction Management d) Counseling

a) Staging of a property

Agent Ignacio has a listing appointment with a potential seller client. After walking around the house with the seller, Ignacio decides he would like to make the seller an offer to purchase the house from the seller. Ignacio informs the seller of his intentions and encourages the seller to find a different agent to represent him. Did Agent Ignacio act appropriately? a) Yes, as an agent for the seller, Ignacio would have been in a position to put his interests before those of his client breaching his duty to the client. b) No, since Agent Ignacio is honest and has integrity, he could represent the seller and himself as the buyer as long as the seller approves of the situation.

a) Yes, as an agent for the seller, Ignacio would have been in a position to put his interests before those of his client breaching his duty to the client.

Agent Larry is representing a seller who has completed a seller's disclosure notice. Larry notices a broken window that the seller has left off of the disclosure notice. At an open house, an unrepresented buyer asks for a copy of the seller's disclosure notice. Along with the disclosure notice, Larry discloses the broken window. Has Larry disclosed properly? a) Yes, the listing agent is required to disclose all material defects known to the agent. b) No, Larry was not given permission by his client to disclose the broken window.

a) Yes, the listing agent is required to disclose all material defects known to the agent.

According to TREC's Safe Harbor Policy, the broker's name must be at least __________________ the largest item of contact information. a) the same size as b) 50% the size of c) twice the size of d) 25% of the size of

b) 50% the size of

T or F: Which of the following is NOT considered a type of advertising by TREC? a) Billboards b) Email communication c) Business Cards d) Social Media

b) Email communication

ABC Real Estate sponsors 35 agents who have a varying degree of experience in real estate. Bob Jones, the broker for ABC Real Estate, has orally given the agents a list of how he wants the agents to conduct his business. If he actively supervises the agents, has he fulfilled his responsibility under the law? a) Yes, through supervision and oral instruction, the broker has fulfilled his responsibility. b) No, TREC rules require a broker to have written policies and procedures for the sponsored agents.

b) No, TREC rules require a broker to have written policies and procedures for the sponsored agents.

Sales Agent, Estelle, has been referred to a buyer by a friend she has helped previously buy and sell real estate. The new buyer has asked Estelle to represent her to buy a commercial property which is her specialty. The buyer is looking in a part of the state Estelle has never worked before. Should Estelle represent the buyer? a) Yes, since Estelle is knowledgeable about commercial real estate, she can work anywhere in the state without additional risk. b) No, representing a buyer in unfamiliar geographic territories could cause unforeseen issues creating risk for Estelle, her broker, and the buyer.

b) No, representing a buyer in unfamiliar geographic territories could cause unforeseen issues creating risk for Estelle, her broker, and the buyer.

Which of the following must be included on every advertisement. a) Sales Agent's License Number b) Broker's License Number c) Broker's Name d) Sales Agent's Name

c) Broker's Name

Considering an agent's duties to a client (OLD CAR), the duty of _______________ has no expiration date. a) Loyalty b) Obedience c) Disclosure d) Confidentiality

d) Confidentiality

Dodd-Frank Act

signed into law in July 2010 to promote the financial stability of the US by improving accountability and transparency in the financial system, to end "too big to fail", and to protect the US taxpayer