Texas Real Estate Agency Unit 12

Which of the following is TRUE of E&O insurance? A. E&O insurance covers fraud. B. E&O insurance is not required of any broker. C. E&O insurance is required of certain types of brokers. D. E&O insurance issues are not addressed in TRELA.

B. E&O insurance is not required of any broker.

Which term BEST describes a real estate license holder, working through a listing broker, who is paid a fee for working with a buyer but is not an agent of the buyer? A. Listing broker B. Subagent C. Finder D. Buyer's broker

B. Subagent

Listing brokers A. always offer subagency to other brokers. B. should explain brokerage policies regarding representation of clients. C. are not required to use disclosures other than those in the listing contract. D. may assume that sellers are aware of how commissions are split with other brokers.

B. should explain brokerage policies regarding representation of clients.

Which of the following does a license holder typically not address or do for a seller before a listing agreement is signed? A) The Information About Brokerage Services Notice B) The brokerage firm's agency disclosure form C) The license holder's agency position D) Showing the property to potential buyers and buyer's agents

D) Showing the property to potential buyers and buyer's agents explanation: Before a listing is signed, the license holder must clearly explain in what capacity the agent will serve on behalf of the seller, as well as provide any company disclosures and the written IABS Notice. Showing the property is done after the listing agreement is signed.

All commissions in a residential real estate transaction are usually paid A) when the representation agreements are signed. B) by each of the parties. C) in advance. D) from the seller's proceeds.

D) from the seller's proceeds. explanation: While commissions are typically paid from the seller's proceeds, they can be paid by each of the parties or however authorized in the representation agreements. All commissions are negotiable.

If a listing broker receives an offer from a buyer's broker in which the buyer's broker's fee is to be paid by the seller, the listing broker should A. reject the offer. B. renegotiate the offering. C. increase the listing fee. D. present the offer to the seller.

D. present the offer to the seller.

Brokers should do all of the following EXCEPT A. use written disclosures. B. clarify their roles in the transaction. C. use the help of others when needed. D. warrant the condition of a property.

D. warrant the condition of a property.

Which of the following is a TRUE statement regarding the TREC advertising rules and law? A) Brokers are no longer required to use in their advertising a term such as broker or agent to signify that they are real estate brokers. B) Sales agents are required to include their license number in any advertising. C) Brokers are required to include their license number in any advertising. D) Brokers are required to include a designation such as broker or agent to signify that they are real estate brokers.

A) Brokers are no longer required to use in their advertising a term such as broker or agent to signify that they are real estate brokers. explanation: SB 2212 (2017) prohibits the commission from requiring that license holder advertising use the term broker or agent or similar designation, reference the commission, or include their license numbers. (TRELA 1101.156)

A broker wishing to act as an intermediary in a transaction may do so only if A. all parties give written approval. B. the buyers give written approval. C. the sellers give written approval. D. the parties give written or verbal approval.

A. all parties give written approval.

In a multiple-offer situation, the broker should do which of the following? A) Reject all the offers on behalf of the seller and tell all who made an offer to resubmit their best offer. B) Provide the offers to the seller as they come in, unless otherwise directed by the seller. C) Provide the highest offer to the seller and hold the other offers until the seller has made a decision on the highest offer. D) Notify the agents of all potential buyers that there are multiple offers and explain the differences between the offers to each agent.

B) Provide the offers to the seller as they come in, unless otherwise directed by the seller. explanation: The agent should discuss the possibility of multiple offers with the seller before the situation arises so they are prepared to respond accordingly. A broker is not legally required to submit the highest or cash offer first. An agent should be careful not to treat potential buyers unfairly or to give some information to one potential buyer without providing the same information to all the potential buyers.

When working with a buyer on a transaction, a license holder who is subagent for the seller must act in the best interests of the A) listing agency's brokerage. B) seller. C) subagent's brokerage. D) buyer.

B) seller. explanation: Another broker as subagent for the seller must, at all times, act in the best interests of the seller.

Which of the following is a TRUE statement regarding the contract negotiation process when a license holder is representing a buyer? A) Neither party should concede to any of the other parties' terms. B) The negotiations should be even-handed and neutral. C) The negotiations should get the best terms and conditions possible for the client. D) The sales agent should be careful to treat both parties fairly.

C) The negotiations should get the best terms and conditions possible for the client. explanation: The agents are working as skillfully as possible to advocate for their own buyer/client to get the best price, terms, and conditions possible. At the end of the bargaining process, both parties will have conceded in some areas. Successful negotiations result in a skillfully honed agreement where both parties, with some compromise, achieve their primary goals.

Who can pay the buyer's broker's fee? A. Seller B. Buyer C. Both seller and buyer D. Neither seller nor buyer

C. Both seller and buyer

If earnest money is used to liquidate damages in a transaction, the listing broker is A. not entitled to share in the earnest money. B. entitled to share in the earnest money. C. entitled to share in the earnest money only if the listing agreement or purchase agreement contains such a provision. D. not entitled to share in the earnest money because listing agreements and purchase agreements never contain such a provision.

C. entitled to share in the earnest money only if the listing agreement or purchase agreement contains such a provision.

If a second offer is received by the listing broker while a seller is deliberating an offer, the broker A. must not present the second offer until the seller has made a decision on the first offer. B. must present the offer but explain to the seller that the second offer can be considered only as a backup offer and cannot be acted on until the first offer is negotiated. C. must present the second offer and explain that the seller is free to consider the second offer without regard to the first offer. D. should advise the license holder bringing the second offer that the seller is deliberating a first offer and to delay bringing a second offer until negotiations on the first offer are completed.

C. must present the second offer and explain that the seller is free to consider the second offer without regard to the first offer.

When selecting properties to show a buyer/ customer, the license holder A. should select those properties that best match the buyer's desires. B. should show only the company's listings because of fiduciary duties to their sellers. C. should match available properties with the buyer's needs, desires, and ability to pay. D. always should show properties somewhat above the buyer's desired price range because buyers typically "buy up" from their initial requested price range.

C. should match available properties with the buyer's needs, desires, and ability to pay.

Why must a broker ensure the competency of a sales agent in the services he provides to a party in a real estate transaction? A) Because a sales agent is vicariously liable for the acts of the client B) Because the sales agent has the authority to bind a client C) Because the sales agent does not have authority to bind the broker D) Because the broker is responsible for the sales agent's actions

D) Because the broker is responsible for the sales agent's actions explanation: A broker is vicariously liable for the acts of the agent's sponsored sales agents. The remaining answer are not true.

When should a listing agent work with the seller to establish a sales price for property? A) When the seller counteroffers on an offer, the listing price is firm and it is the same as the sales price B) After the seller signs the listing agreement, but before an offer is made on the property C) After an offer is made because the first offer will establish a minimum sales price D) Before the seller signs the listing agreement

D) Before the seller signs the listing agreement explanation: The listing price is included in the listing agreement, so it should be determined before the listing agreement is signed.

Under a typical listing agreement, what duties does the broker and the sales agent owe to the seller? A) Only the broker owes fiduciary duties to the seller. B) The broker owes fiduciary duties to the seller, and the sales agent owes fiduciary duties only to the broker. C) Only the sales agent owes fiduciary duties to the seller. D) Both the broker and the sales agent owe common law fiduciary duties to the seller.

D) Both the broker and the sales agent owe common law fiduciary duties to the seller. explanation: The broker and the sales agent both owe fiduciary duties, common law duties of agency, and all statutory and regulatory duties to the principal/seller.

Which information should a broker who is acting as subagent to the seller obtain from the listing broker? A) The types of buyers the seller wants to target B) The lowest price the seller will accept C) The racial composition of the community D) How earnest money deposits will be handled

D) How earnest money deposits will be handled explanation: The subagent should never consider obtaining improper information, such as the types of buyers a seller wants to target or the racial composition of the community. In addition, the subagent will probably not be privy to confidential information the seller may share with the listing agent, such as lowest acceptable offer. The subagent should inquire about the listing broker's policies regarding handling earnest money deposits, using a lockbox, drafting offers, choosing an escrow company, and placing a loan.