Law of Agency Unit 5 Quiz

A Broker is NOT required to provide a broker price opinion to which of the following?

A customer. Brokers are required to provide a broker price opinion or comparative market analysis to a seller they represent, when they are purchasing property on their own behalf, or in a listing presentation. Brokers are not required to give a broker price opinion to a customer.

Which of the following is a benefit enjoyed by buyers who enter buyer-agency relationships?

Access to a larger marketplace. Traditional agents frequently limit their search of properties to those properties in which the broker's commission is protected. Thus, they limit their search to properties listed in-house or in the MLS. The buyer's agent whose guarantee of commission is protected, although not necessarily paid, by a buyer-client, is motivated to show the buyer all available properties that meet the stated requirements, including open listings and for-sale-by-owner properties.

The role of the licensee in an exclusive right-to-represent buyer agreement is to

Assist the buyer in making a purchase. This agent's emphasis is on helping the client evaluate different properties and alternative courses of action, and then getting the best deal possible once having elected to go forward with negotiations on a property.

Tom is the buyer's agent for several employees of a large corporation that is expanding its local office. Tom is meeting with Marsha, who is the listing agent for several townhomes that might be suitable for these clients. When must Tom tell Marsha of his agency relationship with the buyers?

At first contact. The NAR Code of Ethics and Standards of Practice requires that the buyer's agent disclose that relationship to the listing agent at first contact and provide written confirmation of that disclosure no later than the signing of the purchase agreement.

When must information about a brokerage services statement be given to a party in a real estate transaction ?

At the first substantive dialogue. The License Act requires that the information about services statement be provided in writing at the first substantive dialogue with a party in a real estate transaction. While TREC has approved a form that licensees may use, they are not required to use the form to give the written statement

Ruth, a buyer's broker, asked the listing broker if she is willing to split the commission on a transaction. The listing broker would not agree to the split. What should Ruth do?

Explain the situation to the buyer. If the listing broker is not authorized to split the commission, the buyer's broker should advise the buyer of that fact. The buyer then may decide to reduce the offering price to a net amount that reflects that the buyer is to pay his broker's fee.

Allisa, a licensed sales associate, transfers sponsorship of her license from Bay Area Realty to Crystal City Realty. What is TRUE regarding the buyer agency agreement Allisa signed with George while still with Bay Realty?

George remains a client of Bay Area Realty.

If a buyer is purchasing a property that will be financed by a Department of Veterans Affairs (VA) loan,

Is a buyer's broker fee cannot be included in the loan amount. The VA does not allow lenders to include buyer's broker's fees in the loans to be paid by veteran purchasers. A VA transaction can include a buyer's broker, but the broker must be compensated by or through the seller.

The fee to be paid to a buyer's broker by a buyer-client is determined by agreement between

Is buyer's broker and the buyer. There are two issues in regards to the commission agreements: how much will the broker be paid and by whom.

When determining whether to require a retainer fee, a broker should

Is establish a consistent fee policy for all clients.

In Texas, when a buyer contracts with a buyer's broker, determining which broker was the procuring cause of the sale, and therefore deserving of the commission,

Is generally a nonissue. The procuring cause is the effort that brings about the desired result, and thus identifies the broker deserving of the commission.

Which of the following statements BEST describes a benefit of buyer agency to the broker?

Is no liability for acts of the listing agent. Broker agents must follow the same licensing procedures as other licensees, and they are held to the same ethical and legal standards. They have no agency relationship with either the seller or the listing broker, and they are not vicariously liable for their acts.

When a buyer forms an agency relationship with a broker, the buyer can expect that the broker will

Is provide data relating to market values for properties that the buyer may be interested in purchasing. An important part of buyer representation is to provide the buyer with information so that the buyer may make wise, informed choices.

According to its licensing law, which of the following items is required in a buyer-representation contract in Texas?

Is termination date. A specific termination date on any buyer-representation contract is required by Texas state licensing law. The expiration period is fully negotiable and can be longer or shorter than in a listing agreement with a seller.

Why may a buyer choose to pay for the owner's title insurance policy?

Is to choose the title insurer. The buyer may want to consider paying for the owner's title insurance policy to have the nonnegotiable right, under the Real Estate Settlement Procedures Act (RESPA), to choose the title insurer.

Is it permissible for a seller to pay a buyer's broker fee?

Is yes, it should be stated in the contract. No legal or ethical barriers prohibit the seller from paying the buyer's broker fee. This is a matter of contract and may be handled in advance by appropriate language in both the seller's listing agreement and the buyer-representation agreement.

What is the purpose of the option fee?

It gives the buyer the unrestricted right to terminate the contract within a specified period of days.

Jeff paid a retainer fee to Elena, who agreed to serve as his buyer's broker. After two frustrating months of not seeing any properties, Jeff canceled his contract with Elena. Can Elena retain Jeff's money?

No, Elena did not provide service to Jeff. If a retainer fee is to be taken, some benefit or service must accrue to the person paying the fee; otherwise, it may be considered one of the two unconscionable acts under the Texas Deceptive Trade Practices and Consumer Protection Act.

When a buyer forms an agency relationship with a broker, the buyer can expect that the broker will

Provide data relating to market values for properties that the buyer may be interested in purchasing. An important part of buyer representation is to provide the buyer with information so that the buyer may make wise, informed choices.

Which of the following BEST explains why a buyer's broker may prefer to be paid directly by the buyer?

Remove control of payment from a nonclient.

What is the name of the form that MOST sellers must use to disclose that a property meets Texas Property Code?

Seller's Disclosure of Property Condition

Which of the following actions regarding earnest money cannot be requested by the buyer's agent?

That the buyer's escrow funds be deposited in the buyer agent's deposit account

At what point is the seller's acceptance of an offer from a buyer effective?

When it is delivered in writing to the buyer or the buyer's agent

Buyer representation agreements in Texas are promulgated by which of the following entities?

The Texas Association of REALTORS In Texas, buyer representation agreements are not promulgated by any state agency or the legislature. The Texas Association of REALTORS® has created listing agreements and buyer representation agreements for use by REALTOR® members.

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. Nonexclusive single (or seller) agency brokers do not act as intermediaries.

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

The broker represents the seller, and the buyer-customer is unrepresented. Nonexclusive single (or seller) agency brokers do not act as intermediaries.

A license holder is required to disclose that the license holder is a broker or salesperson in all of the following real estate transactions, EXCEPT when acting on behalf of

The license holder's sibling. License holders must disclose in writing that they are broker or salesperson each of the listed cases, except when buying or selling property on behalf of a sister or a brother. The disclosure must be in writing in any contract of sale or rental agreement or in any other writing given before entering into any contract of sale or rental agreement.

Which of the following is a disadvantage of exclusive buyer agency representation?

The possibility of earning commissions from both the listing side and the selling side of the business is eliminated.

Must a buyer's agent disclose his relationship with a buyer to an owner who is selling a property on her own?

Yes, at first contact. If a property is not listed, the buyer's agent should disclose the relationship to the seller at first contact and make any requests for compensation from the seller at that time.

Is it permissible for a seller to pay a buyer's broker fee?

Yes, it should be stated in the contract. No legal or ethical barriers prohibit the seller from paying the buyer's broker fee.

Broker Bob has a buyer-representation contract with buyer Jay Sterling. Do the licensees who work in Bob's office have any relationship with Sterling?

Yes, they automatically represent Sterling.

Broker Bob has a buyer-representation contract with buyer Jay Sterling. Do the licensees who work in Bob's office have any relationship with Sterling?

Yes, they automatically represent Sterling. If the broker has a buyer-representation agreement with the buyer, under Texas law, all licensees associated with that broker also represent the buyer and must act in that buyer's best interests in any transaction.

The role of the licensee in an exclusive right-to-represent buyer agreement is to

assist the buyer in making a purchase.

A Broker is NOT required to provide a broker price opinion to which of the following?

is a customer. Brokers are required to provide a broker price opinion or comparative market analysis to a seller they represent, when they are purchasing property on their own behalf, or in a listing presentation. Brokers are not required to give a broker price opinion to a customer.

Which of the following sellers is required to provide the Seller's Disclosure of Property Condition?

is a relocation company. A relocation company's sale of real estate is not among the listed exceptions in which the Seller's Disclosure of Property Condition need not be provided to a buyer. The sellers in the remaining three answers are among the list of exceptions.

Which of the following BEST explains why a buyer's broker may prefer to be paid directly by the buyer?

is remove control of payment from a nonclient. An experienced buyer's broker, not wanting a nonclient to control payment, may prefer being paid directly by the buyer rather than receive a commission split from the listing broker or be paid directly by the seller at closing.

A nonexclusive single agency broker is meeting with a prospective buyer to discuss whether the broker's services would be a good "fit" for the consumer. Why should the broker show all the firm's listings to a consumer before agreeing to represent that buyer as a client?

is to avoid a potential conflict of interest if the buyer wants to purchase an in-house listing. The broker practicing nonexclusive seller agency never acts as an intermediary.

An amount predetermined by the parties to an agreement as the total amount of compensation an injured party should receive if the other party breaches a specified part of the contract is the definition of which of the following?

liquidated damages. The buyer's agent should explain the purpose of earnest money as part of a real estate contract.

Broker Sue of Holy Loch Realty has scheduled several showings for Gus, a buyer-client. One of the showings is for a property on Loch Awe Road. Three years ago, Sue was in a buyer-agency relationship with the current owner in the purchase of that property. In regard to the property on Loch Awe Road, Sue

must disclose that all of these are true. Because Sue had a previous agency relationship with the owner of the property, she must remember that any information obtained during that agency relationship remains confidential.

Exclusive buyer's brokers do not

take listings. Exclusive buyer's brokers do not take listings, because they represent the interest of buyers.

In which of the following situations is a broker/seller NOT required to provide a written disclosure regarding the broker's license status?

when the broker is selling property for the broker's sister. License holders buying or selling property on their own behalf or on behalf of a spouse, parents, or children must disclose in writing that they are licensed real estate brokers or salespersons in any contract of sale or rental agreement or in any other writing given before entering into any contract of sale or rental agreement.