Texas Real Estate Agency Unit 5
Rarely used unless the agent has a great deal of experience in representing buyers
Noncontingent flat fee
The buyer/tenant representation agreement belongs to which of the following? A) The broker B) The supervising license holder for the firm C) The buyer D) The sales agent
A) The broker explanation: The broker, not the licensed associate of the broker, owns the buyer/tenant representation agreement. The buyer representation agreement belongs to the broker who has authorized the sales agent to enter into the agreement with the buyer on behalf of the broker.
Is the buyer's agent's fiduciary duty to a buyer different from a seller's agent's fiduciary duties? A) The fiduciaries duties are the same B) The buyer's agent has fewer fiduciary duties C) The seller's agent has fewer fiduciary duties D) The buyer's agent has more fiduciary duties
A) The fiduciaries duties are the same explanation: The buyer's agent is held to the same standard of performance in dealing with the buyer that the listing broker is held to in dealing with the seller. There is nothing unique about the responsibility and duties of the buyer's agent. There is no new fiduciary duty or ethical responsibility that the buyer's agent must learn.
Is it permissible for a seller to pay a buyer's broker fee? A) Yes, it should be stated in the contract. B) No, only the seller's broker can pay that fee. C) No, only the buyer can pay that fee. D) Yes, it can be decided at the closing.
A) Yes, it should be stated in the contract. explanation: 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.
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, A) is generally a nonissue. B) will be negotiated between the listing broker and the cooperating buyer's broker. C) will be extremely difficult. D) must be submitted for arbitration.
A) is generally a nonissue. explanation: The procuring cause is the effort that brings about the desired result, and thus identifies the broker deserving of the commission. Procuring cause issues sometimes arise in disputes between the cooperating broker acting as a subagent and the listing broker where both advise the buyer without knowledge of the other's involvement. Or worse, the listing broker is conflicted in regards to payment of the cooperative commission, because the buyer-customer used the services of more than one subagent. The typical buyer representation agreement in Texas is one whereby the buyer gives the broker the exclusive right to act as the client's agent for the purpose of acquiring property. The written contract also indicates that the broker earns the commission as soon as the buyer enters into a contract to buy in the market area, regardless of whether the buyer or the buyer's agent found the property. As long as the buyer also agreed in the written agency agreement to pay the broker the agreed fee, even if the seller refuses, then the buyer-broker's fee is a nonissue because the buyer's agent may pursue legal action against the buyer-client.
Megan, a broker, entered into a buyer representation agreement with Sue, a buyer, using the TAR Residential Buyer/Tenant Representation Agreement. The commission agreement under paragraph 11A was for 2.5%. Sue subsequently enters into a $210,000 purchase contract with a seller. The listing office agrees to pay a buyer's broker 2% of the sales price. How much commission is Megan entitled to at closing? A. $5,250 ($4,200 from the listing broker and $1,050 from Sue) B. $4,200 ($4,200 from the listing broker and zero from Sue) C. $9,450 ($4,200 from listing broker and $5,250 from Sue) D. $5,250 (zero from the listing broker and $5,250 from Sue)
A. $5,250 ($4,200 from the listing broker and $1,050 from Sue)
The listing broker has agreed to pay the cooperating broker a fee of 2% of the sales price. The buyer is represented and has agreed in writing to pay her broker a nonrefundable $2,000 flat fee. Which statement is TRUE? A. All parties must be notified of the compensation agreement between the buyer and her broker. B. As an agent of the buyer, the broker has no duty to disclose the dual compensation. C. The broker for the buyer may disclose the dual compensation only if authorized to do so by his client. D. The dual compensation must be disclosed only if it impacts on the ultimate tax advantage of the buyer.
A. All parties must be notified of the compensation agreement between the buyer and her broker.
When a buyer's agent shows a property listed through an MLS, the agent is the fiduciary of which of the following? A. Buyer B. Buyer's broker C. Seller D. MLS
A. Buyer
The increase in buyer representation is due primarily to A. better disclosure and information required of brokers. B. the infusion of more buyers into the marketplace. C. brokers seeking and promoting compensation by both parties. D. all of these.
A. better disclosure and information required of brokers.
Which of the following is a benefit enjoyed by buyers who enter buyer-agency relationships? A) Greater access to owners B) Access to a larger marketplace C) Access to more financing options D) Lower commission rates
B) Access to a larger marketplace explanation: 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.
If a buyer is purchasing a property that will be financed by a Department of Veterans Affairs (VA) loan, A) no buyer's broker fee is permitted. B) a buyer's broker fee cannot be included in the loan amount. C) a buyer's broker fee cannot be paid though a commission spit with the listing broker. D) the buyer's broker must be compensated by the buyer.
B) a buyer's broker fee cannot be included in the loan amount. explanation: 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 A) buyer's broker and the listing broker. B) buyer's broker and the buyer. C) broker and TREC. D) buyer's broker and the seller.
B) buyer's broker and the buyer. explanation: There are two issues in regards to the commission agreements: how much will the broker be paid and by whom. The amount to be paid to the buyer's broker (as with the listing broker) is strictly negotiable between the broker and the client. Federal antitrust law prohibits broker's fees and the sharing of fees between brokers to be set within the industry; fees must be negotiable. A common approach to the question of who pays, however, is for the broker to initially seek payment from the seller, either directly or through the listing office. Using this method, the buyer-clients would be responsible for paying their agents directly only if the seller or the listing office refuses or fails to pay. Although Texas law does not require that listing contracts or buyer representation contracts be in writing, the broker who has no written agreement for compensation has no recourse against a consumer who fails to pay the fee [§ 1101.806(c)].
In which case must a real estate broker obtain a written agreement with a buyer? A. Broker to act as a buyer's agent B. Broker wishing to take legal action against a buyer for commission C. Both of these D. Neither of these
B. Broker wishing to take legal action against a buyer for commission
Which requires that a buyer purchase only through a particular broker? A. The buyer pays the broker a commission. B. The buyer signed an exclusive representation agreement. C. The buyer asked the agent to help negotiate the purchase of an already identified property. D. The buyer signed an open buyer representation agreement.
B. The buyer signed an exclusive representation agreement.
Buyer representation agreements A. are promulgated forms available from TREC. B. impose duties on buyers' brokers similar to those that listing agreements impose on sellers' brokers. C. differ from listing agreements in that listings require definite termination dates while buyer representation agreements do not. D. in order to be binding, must provide that the buyer compensate the broker for the representation services.
B. impose duties on buyers' brokers similar to those that listing agreements impose on sellers' brokers.
Buyer agency A. must be created with a written buyer representation agreement. B. may be created by the actions of a license holder, as well as by written agreements. C. while legal, is seldom practiced by brokers in Texas. D. excludes the possibility of a brokerage firm's obtaining listings from sellers.
B. may be created by the actions of a license holder, as well as by written agreements.
Which of the following is the best practice for license holders to establish a buyer/agency relationship? A) An oral express agreement with a handshake B) An agreement created by operation of law C) A written agreement signed and dated by all the parties to the agreement D) An express agreement signed by the broker
C) A written agreement signed and dated by all the parties to the agreement explanation: The best practice by license holders to assure that all parties clearly understand and agree to promises made, and the rights and obligations of the parties to an agency agreement, is to have it in writing and signed and dated by all parties to the agreement.
Which of the following agency relationships is NOT available between a license holder and a buyer in a typical buyer/tenant representation agreement? A) Intermediary agency B) General agency C) Dual agency D) Special agency
C) Dual agency explanation: A license holder can represent a buyer as a general agent, special agent, or intermediary, but real estate license holders cannot engage in dual agency in a real estate transaction in Texas.
Under the TREC-promulgated Information About Brokerage Services Notice, there are blank spaces on the last page that are used for what purpose? A) To bind the person to an agency agreement to the broker B) To indicate that the broker has disclosed to the person who the broker represents C) For the person receiving the notice to acknowledge receipt of the notice D) To indicate that the broker read the notice to the person verbatim
C) For the person receiving the notice to acknowledge receipt of the notice explanation: Many times, the party receiving the notice thinks that it obligates them in some way if they sign or initial the notice, and consequently, they may refuse. The notice includes a statement that states, "This notice is being provided for information purposes. It does not create an obligation for you to use the broker's services. Please acknowledge receipt of this notice below and retain a copy for your records." That is the purpose of the party's initials and the date.
In which of the following situations is a broker/seller NOT required to provide a written disclosure regarding the broker's license status? A) When the broker is selling property for the broker's spouse B) When the broker is selling property for the broker's daughter C) When the broker is selling property for the broker's sister D) When the broker is selling property for the broker's parent
C) When the broker is selling property for the broker's sister explanation: 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 sales agents in any contract of sale or rental agreement or in any other writing given before entering into any contract of sale or rental agreement.
Credits the buyer with a specified amount from the sales proceeds
Commission split
Which is a possible benefit of buyer agency? A. Greater client loyalty B. Better protection against conflicts of loyalty C. No liability for acts of the listing broker D. All of these
D. All of these
Which would be a disadvantage of exclusive buyer agency? A. The broker would not be able to list a property owned by the buyer/client. B. The broker could never earn full commission on an in-house sale. C. There is a potential conflict of interest if two buyer/clients wish to offer on the same property. D. All of these are potential disadvantages.
D. All of these are potential disadvantages.
More recent method of payment that is slowly gaining acceptance
Gross price
Payable regardless of any title transfer
Hourly rate
TREC trust account rules apply to how this type of compensation must be handled.
Retainer fee