Chapter 9

Question 1

Antitrust Laws

Answer 1

Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition.

Most violations of antitrust laws in the real estate business involve either price fixing (brokers conspiring to set fixed compensation rates) or allocation of customers or markets (brokers agreeing to limit their areas of trade or dealing to certain areas or properties)

Question 2

Buyer-Agency Agreement

Answer 2

A principal-agent relationship in which the broker is the agent for the buyer, with fiduciary responsibilities to the buyer. The broker represents the buyer under the law of agency

Question 3

Comparative Market Analysis

Answer 3

A comparison of the prices of recently sold homes that are similar to a list- ing seller’s home in terms of location, style, and amenities; an estimate of market value

Question 4

Employment Contract

Answer 4

A document evidencing formal employment between employer and employee or between principal and agent. In real estate, this is generally a listing agreement, a buyer agency agreement or a management agreement

Question 5

Exclusive-Agency Listing

Answer 5

A listing contract under which the owner appoints a real estate broker as the exclusive agent for a designated period of time to sell the property, on the owner’s stated terms, for a commission. The owner reserves the right to sell without paying anyone a commission if the owner sells to a prospect who has not been introduced or claimed by the broker

Question 6

Exclusive-Right-To-Sell Listing

Answer 6

A listing contract under which the owner appoints a real estate broker as the exclusive agent for a designated period of time to sell the property, on the owner’s stated terms, and agrees to pay the broker a commission when the property is sold, regardless of who sells the property

Question 7

Extender Clause

Answer 7

A carry-over or protection clause in a listing contract that says the listing broker is entitled to commission for a time period after expiration of the listing term if the property is transferred to a prospect that the broker introduced to the property during the listing term; override clause. This clause is void if the property is listed with another broker

Question 8

Fee-For-Service Agreement

Answer 8

Arrangement where consumer asks licensee to perform specific real estate services for a set fee; unbundling of services; limited service firms

Question 9

Frontage

Answer 9

The length of property along the street or waterfront

Question 10

Listing Agreement

Answer 10

An employment contract between a property owner (as principal) and a real estate firm/broker (as agent) by which the broker is employed to find a ready, willing and able buyer for the owner’s real estate on the owner’s terms, for which service the owner agrees to pay a commission

Question 11

National Do Not Call Registry

Answer 11

A national registry, managed by the Federal Trade Commission, that lists the phone numbers of consumers who prefer to limit the telemarketing calls they receive

Question 12

Net Listing

Answer 12

A listing based on the net price the seller will receive if the property is sold. Under a net listing, the broker can offer the property for sale at the highest price obtainable to increase the commission. While this type of listing is illegal in many states, it is legal but not encouraged in North Carolina

Question 13

North Carolina Residential Property Disclosure Act

Answer 13

The state law that requires sellers to provide a prescribed property disclosure statement to any prospective buyer prior to presentation of first offer on the property. Exemptions include new construction, foreclosed properties and lease purchases but not for sale by owner transactions

Question 14

Open Listing

Answer 14

A listing agreement under which the broker’s commission is contingent on the broker personally producing a ready, willing, and able buyer before the property is sold by the seller or another broker

Question 15

Override Clause

Answer 15

A carry-over or protection clause in a listing contract that says the listing broker is entitled to commission for a time period after expiration of the listing term if the property is transferred to a prospect that the broker introduced to the property during the listing term; override clause. This clause is void if the property is listed with another broker

Question 16

Price Fixing

Answer 16

Brokers conspiring to set fixed compensation rates

Question 17

Procuring Clause

Answer 17

The effort that began a chain of events that brings about the desired result. Under an open listing, the broker who is the procuring cause of the sale receives the commission

Question 18

Protection Agreement

Answer 18

An agreement between an unlisted property owner and a broker to secure payment for the broker if the property is sold to the particular buyer named in the agreement; it does not create a general listing, and may not create agency at all—only compensation for a buyer’s agent. Sometimes called a “one-shot” listing.

Question 19

Ready, Willing, and Able Buyer

Answer 19

One who is prepared to buy property on the seller’s terms and is ready to take positive steps to consummate the transaction; one of the agent’s requirements for entitlement to commission

Question 20

Retainer Fee

Answer 20

A small fee paid by the client upon creation of a buyer agency relationship as an advance partial compensation for services; it may be non-refundable or applied to final compensation due depending on the agency agreement

Question 21

Success Fee

Answer 21

Compensation that is due and payable upon the creation of a valid sales contract for property located by the buyer’s agent