chapter 12: Real Estate Brokerage and Listing Contracts

Question 1

what do brokers do

Answer 1

bring buyers and seller together

collect commission for a successful transaction

Question 2

net commission

Answer 2

difference between required price and actual price

Question 3

commissions are usually paid by

Answer 3

sellers

Question 4

net listing

Answer 4

the seller is assured a certain fixed net price for the property and the broker is allowed to retain any amount of the actual sales price above that figure

Question 5

law of agency

Answer 5

gives a broker or salesperson the right to act for a principal in trying to buy or sell a property

Question 6

a real estate broker can be paid by

Answer 6

anybody

Question 7

a real estate sales person can be paid by

Answer 7

only their broker

Question 8

principal

Answer 8

the person giving authority to an agent

Question 9

universal agent

Answer 9

power to act for principal in all matters

Question 10

general agent

Answer 10

power to act within limits of a business or employment relationship
-property manager

Question 11

special agent

Answer 11

power to act in a specific event or transaction

-brokers

Question 12

fiduciary relationship

Answer 12

the special duties and obligations to a principal required of an agent including:

• confidientiality
• obedience
• accounting
• loyalty
• disclosure
• skill and care

Question 13

example of principal and agent

Answer 13

principal= rider
agent = horse

Question 14

duties of principal

Answer 14

open
honest
fair

Question 15

listing contract

Answer 15

-creates an agency relationship (special agent)
- a contract for services not for real estate
-usually between seller and broker
-increasingly between buyer and broker
-frequently involves subagency through multiple listing service
-

Question 16

dual agency

Answer 16

representing both buyer and seller

• must be disclosed to all parties
• both principals must give written consent

Question 17

buyer agency agreement

Answer 17

broker receives compensation for successfully locating a property for the buyer to purchase

Question 18

multiple listing service

Answer 18

sharing of property sales listings by a number of real estate brokers with an agreement as to how costs and commissions are to be shared

Question 19

subagency

Answer 19

the agency role of a broker is extended to one or more additional brokers, who also become fiduciary of the principal and are empowered to act on his or her behalf. the subagent shares any commission with the original broker. this agency chain can extend through multiple agents in the case of MLS

Question 20

problem of dual agency

Answer 20

-works closer with one than the other

Question 21

designated agent

Answer 21

brokerage representing both sides appoints seperate agent for each

Question 22

buyer agent by law

Answer 22

salesperson showing a house becomes buyer agent unless declaring otherwise

Question 23

transaction broker

Answer 23

not an agent for buyer or seller

-also called facilitating or intermediary broker

Question 24

types of brokerage relationships

Answer 24

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Question 25

most common problem in real estate brokerage relationships is

Answer 25

unintended dual agency

Question 26

licensing laws

Answer 26

state laws that authorize persons who meet specified qualifications to engage in a business or profession

Question 27

broker license

Answer 27

can operate own brokerage agency - most complete license - responsible for completion of documents used in sales and leases, for handling money held in trusts for clients, and for the actions of their employees

Question 28

salesperson license

Answer 28

must work for a broker | -usually an independent contractor of the brokerage firm

Question 29

real estate commission

Answer 29

appointed commission responsible for overseeing the implementation and administration of a state's real estate license law. it is usually empowered to grant, revoke, or suspend licenses and otherwise discipline real estate brokers operating in the state

Question 30

industry certifications

Answer 30

- realtor - CCIM: certified commercial investment member - SIOR: society of industrial and office realtors - IREM: certified property manager of the institute of real estate management

Question 31

general requirements to obtain a RE license

Answer 31

- 18+ 21 for broker - high school education - 70 classroom hours

Question 32

recovery fund

Answer 32

reserve of funds collected from real estate license fees to pay for losses to clients legally judged to have been caused by a licensed salesperson or broker. the existence of such funds varies from state to state

Question 33

errors and omission insurace

Answer 33

some states require licensees to purchase to cover damages arising from professional mistakes

Question 34

license law infractions

Answer 34

``` mishandling trust money improper handling of fees failure to provide required information misrepresentation and fraud improper business practices ```

Question 35

anti-discrimination laws

Answer 35

title 8 of the civil rights act of 1968 prohibits discrimination by race, color, religion, national origin, sex, familial status and handicap including: - refusal to rent or sell - offering different terms and conditions - selective advertising - blockbusting - denying home loans - denying real estate services - coercing, intimidating or interfering with exercise of these rights

Question 36

innovations in brokerage

Answer 36

- buyer brokerage - advertising, document preparation, administration of transactions - discount brokerage - electronic marketing

Question 37

listing contracts

Answer 37

- an agreement between the owner of real estate and a real estate broker or brokerage firm that allows the broker to attempt to sell the property. - a broker earns a commission by finding a ready, willing and able buyer for the specified price and terms

Question 38

open listing

Answer 38

a contract between a property owner and a broker that gives the broker the right to market the property -lack of exclusivity

Question 39

exclusive agency listing

Answer 39

requires the sellers to pay a commission to the broker if the property is sold by anyone other than the owners

Question 40

exclusive right of sale listing

Answer 40

the sellers list their property with one broker and agree to pay that broker a commission if the property is sold within a specified time or if not specified, within a reasonable time - the broker will be owed a commission if any other broker or even the owner sells the property during the contract period

Question 41

deriving a gross selling price to achieve a target net price

Answer 41

slide 25

Question 42

considerations in selecting a broker

Answer 42

- how will the firm market the property - amount and type of advertising - experience with the firm? - general reputation in the community?