Real Estate Online - Brokerage/Agency Relationships

The acronym used to remember the fiduciary responsibilities that a real estate agent has to the principal is:

The answer is OLD CAR. Obedience, loyalty, disclosure, confidentiality, accounting, and reasonable skill and care.

A seller has told the listing agent that she will take less than the asking price. The listing agent stated this in a marketing session at the board of REALTORS. In this case, the listing agent's statement is:

The answer is a breach of confidentially. An agent may not share any confidential information with anyone unless he or she has written permission.

The relationship between a real estate agent and his or her client is which of the following?

The answer is a fiduciary relationship. An agent and principal have an agency relationship. An agency relationship is a fiduciary relationship. Agents (or fiduciary) must be loyal to their clients, fully disclose all material facts to their clients, account for all moneys to their clients, use skill, care, and diligence, and obey all lawful instructions of their clients. Universal agency is created by a power of attorney. General agency is most typically found in property management contracts. Dual agency is between an agent and two or more parties.

A licensee acting on behalf of a property owner is best described as:

The answer is a fiduciary. An agent is a fiduciary (holding a position of trust). An agent (or fiduciary) must be loyal to his principal, fully disclose all material facts to his or her principal, account for all moneys to his or her principal, use skill, care, and diligence, and obey all lawful instructions of his or her principal. An agent is a dual agent if representing more than one principal in the transaction. An agent is an implied agent if acting without express authorization, but assuming authority based on the principal's actions.

A seller listed her townhouse with a local real estate broker. The listing is an example of.

The answer is a special agency. Listing and buyer representation contracts create special agency.

The relationship established between a principal and an agent is known as:

The answer is agency. The relationship is agency, with the agent having fiduciary obligations to the principal.

Someone who is employed by and has the legal authority to act for someone else is called a(n):

The answer is agent. Agents are authorized to act for the principal.

"Single agency" refers to:

The answer is an agent who represents only one party. Single agency means the agent represents only one party.

Which of the following statements about brokerage operations is correct?

The answer is an exclusive agency listing permits the owner to sell without being liable for a commission. An exclusive agency listing provides that the broker is entitled to a commission if any agent sells the property. This allows the owner to sell the property himself and not be liable for a commission. The broker's commission is established by negotiation and not limited by law. Agreements between brokers or between brokers and salespersons may be oral. The broker can receive a commission if he procures the buyer during the listing period and the seller accepts the offer or negotiates the sale after the listing period expires according to the protection (safety) clause found in most listings.

An agent is approached by a couple to find them a home. When should the agent disclose to the couple that she works for the seller?

The answer is as soon as possible. Disclosure must be made as soon as possible and before any confidential items are shared by the consumer.

When should licensees disclose whom they represent to members of the public?

The answer is as soon as possible. Disclosure must be made as soon as possible and before any confidential items are shared by the consumer.

The person to whom a power of attorney is granted is called the:

The answer is attorney-in-fact. Universal agency gives the "attorney in fact" unlimited power to bind and act in place of the principal. An attorney at law is a lawyer.

As an agent for the seller, a principal real estate broker, is usually authorized to do all of the following EXCEPT:

The answer is bind the client under a sales contract. Listing authorizes the broker to act as an agent, in a fiduciary capacity, to find a buyer for the property. It does not usually give the broker authority to accept offers and bind the seller to a sale or to reject offers on behalf of the seller. The broker, instead, must submit all written offers to the seller for acceptance or rejection. Generally, the listing will authorize ads, "for sale" signs, and cooperation with other brokers.

A real estate agent for the seller is usually authorized to do all of the following EXCEPT:

The answer is bind the principal under a sales contract. A listing authorizes the broker to act as an agent, in a fiduciary capacity, to find a buyer for the property. It does not usually give the broker authority to accept offers and bind the seller to a sale or to reject offers on behalf of the seller. The broker, instead, must submit all written offers to the seller for acceptance or rejection. Generally, the listing will authorize ads, "For Sale" signs, and cooperation with other brokers.

Which of the following breaches ethical standards?

The answer is both underpricing and overpricing properties. Both underpricing and overpricing properties breach a licensee's ethical duty.

To create buyer agency, the agent and buyer sign a:

The answer is buyer agency contract. Buyer agency is created by a buyer agency contract.

It is improper for a broker representing the owner to:

The answer is disclose to a buyer that a homeowner will take less than the list price. An agent must be honest regarding the property. Being honest does entail disclosing defects in the property and advising a party to seek expert advice when necessary. Agents may not share confidential information of the principal they represent unless given written permission

A buyer's agent who is calling to set up a showing on a listed property should disclose the fact that she represents the buyer so that the listing agent can avoid:

The answer is divulging confidential information. The listing agent should avoid sharing the sellers confidential information with anyone, but in particular, a buyer's agent.

An agent representing both the buyer and seller in the same transaction is called:

The answer is dual agency. Acting as an agent for both parties is dual agency. Transaction brokerage is non-agency. Representing only one party is single agency,. Dual capacity occurs when an agent is also a principal in the same transaction.

The position of trust assumed by the broker as an agent for the principal is described most accurately as a:

The answer is fiduciary relationship, which is a position of trust. An agency relationship is a fiduciary relationship. Agents (or fiduciaries) must be loyal to their principal; fully disclose all material facts to their principal; account for all moneys to their principal; use skill, care, and diligence; and obey all lawful instructions of their principal.

When an agency relationship is created, the agent has a relationship to the principal known as a:

The answer is fiduciary relationship. The obligations an agent owes the principal create the fiduciary relationship. It may be an exclusive or general agent relationship.

A listing broker shows a buyer a rural property. When the buyer asks about getting a water permit, the broker says it should not be an issue, even though he is aware that the seller was recently denied a water permit. After closing, the buyer is also denied a water permit. The broker's behavior is considered to be:

The answer is fraud. Fraud is a deceitful misstatement of a material fact known to be false, done with intent to deceive or with reckless indifference as to its truth, and relied upon by the injured party, to his or her detriment (damage).

The type of agency, which is typical in property management, in which the agent has limited authority to bind the principal is known as:

The answer is general. A general agent such as a property manager has limited power to bind the principal. Universal agency gives the "agent in fact" unlimited power to bind and act in place of the principal. Special or specific agency has no power to bind the principal.

A broker receives two offers, at practically the same time, on a property he has listed. He gets one directly from a proposed buyer. The other comes from a cooperating broker, and, if it is accepted, he will get only 1/4 of the commission. Under these conditions, which of the following statements is TRUE?

The answer is he should submit both offers to the seller and let the seller make his choice. An agent must promptly submit all written offers to the seller until the seller accepts an offer. The agent does not have to submit offers in the order received.

When a real estate agent represents more than one party in a transaction and this representation of more than one party is with knowledge and written consent of all parties,:

The answer is his action is called a "dual agency." Representing two principals in a transaction is a "dual agency." This is legal if both principals are aware of it and give their consent. Single agency is representing only one party in the transaction.

As a listing agent, what obligations do you owe to an unrepresented buyer?

The answer is honesty and fairness. An unrepresented buyer is a customer who is owed honesty and fairness.

In the seller's property disclosure, the seller failed to disclose that he had electrical work done by an unlicensed handy man. He also told the salesperson that all work on the home was done by license professionals who pulled permits. After closing, the buyer discovered a number of electrical issues and sued both brokerage firms, the seller's agent and the buyer's agent. In this case, the seller's agent:

The answer is is innocent of any wrongful act. Both agents are liable for material facts of which they knew or should have known. Neither of the agents would have been expected to know these facts. However, the buyer's agent should have recommended that the buyer have the property inspected. The seller's agent and brokerage firm did nothing wrong.

A dual agency is:

The answer is legal if written consent by both parties is given. Dual agency, if allowed by the state agency law, requires the written consent of both parties.

The prime obligation of an agent to the client is:

The answer is loyalty. The agent's prime obligation is to be loyal to his or her client. Therefore, the agent must fully disclose all material facts to the client, account for all moneys to the client, use skill, care and diligence, and obey all lawful instructions of the client.

A real estate agent:

The answer is may act as dual agent with the knowledge and written consent of both parties. An agent may represent any number of parties in a transaction, provided he or she has the knowledge and written consent of all parties to do so. While the agent is a fiduciary, he or she is not neutral and must represent the interest of his or her principal.

Any commission paid to a broker under a buyer-broker agreement:

The answer is may be paid by either the buyer or seller. The brokerage firm's commission may be paid by either the buyer or seller. It is typically paid by the seller. However, commissions are always negotiable, so they can be paid by the buyer.

Any commission paid to a broker under a listing agreement:

The answer is may be paid by either the buyer or seller. The brokerage firm's commission may be paid by either the buyer or seller. It is typically paid by the seller. However, commissions are always negotiable, so they can be paid by the buyer.

A listing broker trying to make a sale:

The answer is may make statements of opinion as long as they are noted as such and are not intended to deceive. Opinions are acceptable as long as they are stated as opinions and not intended to deceive. All material facts, even if unpleasant or not brought up by the party, need to be disclosed.

At the time of her death, Mrs. Sampson, a licensed broker, had 50 listings. The business, including all its assets, was left to her daughter, Jane Jones, who was also a licensed real estate broker. If the daughter wished to legally collect commissions on the sale of the listed properties, she would be required to:

The answer is negotiate a new listing with each of the 50 property owners. Agency agreements are personal contracts, and therefore, terminate with the death of the principal or the agent. They cannot be sold, assigned, or inherited. To collect commissions, the daughter must negotiate new listings.

In a single agency relationship, a real estate broker represents:

The answer is only a buyer or seller, not both. Single agency means the agent represents only one party.

A buyer's single agent presenting an offer to the listing agent represents:

The answer is only the buyer. A single buyer's agent represents only the buyer.

A written instrument giving authorization to a person to act as an agent on behalf of another for one specific act or transaction is called:

The answer is power of attorney. An attorney-in-fact is created by a power of attorney. An agency in real estate is created by a listing agreement or buyer's brokerage agreement.

The party who is represented by an agent is always called the:

The answer is principal. An agent represents a principal who may or may not be a seller.

A person who hires or appoints an agent is called the:

The answer is principal. The principal is the party the agent works for and who the agent owes fiduciary duties to. An attorney-in-fact is one type of agent. An agent has a fiduciary responsibility to the principal.

The type of agency a listing agent has with a principal is known as:

The answer is special agency. Special or specific agency, which a listing agent has, gives the agent no power to bind the principal. A general agent, such as a property manager, has limited power to bind the principal. Universal agency gives the "agent in fact" unlimited power to bind and act in place of the principal. Dual agency is representing two parties in the same transaction.

A real estate broker representing the seller usually is a(n):

The answer is special agent. A special agent is an agent given authority to represent the principal in one specific transaction. The broker is not given general agency authority to perform in a range of matters. He is given authority to try to arrange a sale of the property for the seller. This authority is given in the listing agreement and creates an express agency rather than an ostensible (apparent) agency or a broader universal agency.

A listing agreement between a real estate brokerage firm and a seller is known as what form of agency?

The answer is special. Special or specific agency, which a listing agent has, gives the agent no power to bind the principal. A general agent, such as a property manager, has limited power to bind the principal. Universal agency gives the "agent in fact" unlimited power to bind and act in place of the principal.

The duty of loyalty to a principal's interests requires a listing agent to:

The answer is submit all written offers received on the property. Listing agents must submit all written offers to their principal.

Under a buyer representation contract, a salesperson working for this broker must represent:

The answer is the buyer's interest. Buyer representation contracts create buyer agency, with the firm representing the buyer.

In creating a valid agency relationship, the party or parties who must be legally competent include.

The answer is the principal(s) and agent. All parties must sign the listing contract.

Under a listing contract, a salesperson working for the listing broker must represent:

The answer is the seller's interest. Listing contracts create seller agency, with the firm representing the seller.

In the most common kind of agency relationship, a real estate broker represents:

The answer is the seller. While buyer agency has increased, it is still most common for an agent to represent the seller.

A broker who does NOT have an agency relationship with any of the parties and who performs ministerial acts for one or more of the parties for compensation is known as a(an):

The answer is transaction broker. A designated agent is an affiliated licensee who is assigned by the broker to represent only one client in a transaction, while another licensee is assigned by the same broker to represent a different client in the same transaction. A dual agent is a broker who has an agency relationship with both the seller and the buyer or both the landlord and the tenant in the same transaction.

Which form of agency gives the agent the broadest powers to act for the principal?

The answer is universal agency. Universal agency allows the agent unlimited power to bind and act for the principal.

The type of agency in which an agent has legal authority to act in place of the principal is known as:

The answer is universal agency. Universal agency gives the "attorney in fact" unlimited power to bind and act in place of the principal. General agency has limited power to bind the principal, and special or specific agency has no power to bind the principal.

An agent owes her principal the duty of following all instructions. In the event that the principal asks the agent to commit an unlawful act, the agent should:

The answer is withdraw from the listing. When required to commit an unlawful act, the agent should refuse, and withdraw from the agency relationship.