Chapter 8 Concepts

Question 1

All written agency agreements must have these 4 things:

Answer 1

(1) be signed by all parties;

(2) include the broker’s real estate license number;

(3) have a definite termination date; and

(4) contain the prescribed nondiscrimination provision.

Question 2

What is a Listing Agreement?

Answer 2

With a listing agreement, the broker/firm is hired to represent the seller-principal, but real property is not transferred.

An agreement for brokerage services between a broker and an owner of real property must be in writing from the outset of the relationship [see Rule A.0104(a)].

Question 3

Exception to the oral agency agreement rules (for dual agency):

Answer 3

if sellers did not originally give permission for dual or designated dual agency in the listing agreement and the buyer agency agreement has not been reduced to writing, the sellers can orally amend their written listing agreements to authorize either type of dual agency at a later date. This oral consent to dual agency must be reduced to writing prior to submission of the first offer on the property.

Question 4

Soliciting active clients of other firms/brokers

Answer 4

Article 16 of the REALTOR® Code of Ethics prohibits members of the National Association of REALTORS® from the solicitation of business from a consumer that is party to an active exclusive agency agreement with another REALTOR®

Question 5

Do Not Call Laws/Rules

National Do Not Call Registry

Answer 5

it is a list of telephone numbers from consumers who have indicated their preference to limit the telemarketing calls they receive. The registry applies to any plan, program, or campaign to sell goods or services through interstate phone calls. The registry does not limit calls by political organizations, charities, or telephone surveyors.

Question 6

Do Not Call Laws/Rules

-You can call for ________ after the consumer’s last purchase, delivery, or payment, even if the consumer is listed on the National Do Not Call Registry

-Up to ________ after the consumer makes an inquiry or submits an application.

Answer 6

-18 months

-3 months

Question 7

-Brokers are __________ from calling registered owners of for-sale-by-owner properties or owners of expired listings with another firm since these solicitation scenarios are subject to the Act.

-On the other hand, a _________ may call for sale by owners that are on the Registry if the buyer-client is interested in the property.

Answer 7

-Prohibited

-buyers agent

Question 8

CAN-SPAM Act

Answer 8

The Controlling the Assault of Non-Solicited Pornography and Marketing Act (CAN-SPAM) of 2003 restricts spamming by email. Any mass marketing by email should include a prominent opt-out instruction.

Question 9

North Carolina’s do-not-call statute mirrors the federal rules and piggybacks on the federal registry. Penalties on the _______ level are up to $11,000 per call and North Carolina fines range from _______ to ________ depending on the violation.

Answer 9

-Federal

• $500 to $5000

Question 10

None of these do-not-contact laws prohibit real estate licensees from canvassing for business or soliciting clients by using postal mail or going ________.

Answer 10

-door-to-door

Question 11

Working with brokers licensed in other states or jurisdictions (foreign broker)

-You can share with brokerage from another state if actively licensed from which he is making a referral and does not enter that state to engage in ____________.

Usually results in a ________ being paid to the out of state broker (Most states require ___________ to be paid to the firm who then pays the referring broker or salesperson.) The reverse holds true as well.

Answer 11

-brokerage activity

-referral fee

-referral fees

Question 12

Working with brokers licensed in other states or jurisdictions (foreign broker)

A North Carolina broker should secure a written _____________ and not assume that the out-of-state broker can or will be able to pay them. To be eligible to receive a referral fee, the broker must have a current, active North Carolina license at the time of making the referral. These fees must usually be paid to the out-of-state broker’s_________ and not directly to the out-of-state broker.

Answer 12

-compensation agreement

-firm

Question 13

Antitrust laws

1. Generally, these laws prohibit monopolies and contracts, combinations, and conspiracies that unreasonably restrain trade. The most common antitrust violations are (3)

The broker’s challenge is to avoid any suggestions of attempts at price-fixing as well as the actual practice. Hinting in any way to prospective clients that there is a going rate of compensation implies that rates are, in fact, standardized. A broker must ________ to clients that the rate stated is only what the firm charges.

Answer 13

1. price fixing, group boycotting and allocation of customers or markets

-clarify

Question 14

Antitrust laws

The penalties for such acts are severe. For example, under the federal _____________ Act, people who are found guilty of fixing prices or allocating markets may be punishable by a maximum ___________ fine and ________ in prison. For corporations, the penalty may be as high as $1 million. In a civil suit, a person who has suffered a loss because of the antitrust activities of a guilty party may recover ________ the value of the actual damages plus attorney’s fees and costs.

Answer 14

-Sherman Antitrust

-$100,000

-3 years

-triple

Question 15

price fixing

Answer 15

is the practice of setting prices for products or services rather than letting competition in the open market establish those prices. In real estate it occurs when brokers agree to set sales commissions, fees, or management rates, and it is illegal.

Question 16

Group boycotting

Answer 16

occurs when two or more businesses conspire against other businesses or agree to withhold their patronage to reduce competition. Group boycotting is illegal under the antitrust laws.

agreements conspire to eliminate competition and are illegal.

Question 17

Broker’s Entitlement to a Commission

1) What ways can commission be paid?

2) When/how is commissioned earned?

3) Who can pay provisional brokers?

Answer 17

1) Commissions can be
-Percentage accepted. Gross sales price
-Flat fees
-Hourly

2) Earned upon
-Getting an offer from a ready, willing & able buyer

3) North Carolina provisional brokers can only be paid directly by their employing brokers, not directly by a principal.

Question 18

A ready, willing, and able buyer is financially qualified, prepared to buy on the seller’s terms, and ready to take positive steps toward consummation of the transaction by showing willingness to enter into an enforceable contract. Even if the transaction is not consummated, the broker still may be entitled to a commission when the seller

Answer 18

-has a change of mind and refuses to sell,
-has a spouse who refuses to sign the deed,
-has a title with uncorrected defects,
commits fraud with respect to the transaction,
-is unable to deliver possession within a reasonable time,
-insists on terms not in the listing, or
-has a mutual agreement with the buyer to cancel the transaction.

Question 19

Procuring Cause of Sale

1) What is it?

2) What makes you a volunteer in NC?

Answer 19

The effort that results in the sale of property - the act of bringing a ready, willing and able buyer to a seller resulting the sale of the seller’s property

In North Carolina, a broker who causes or completes such action without a written agency contract that promises compensation is deemed a volunteer and has no legal claim to compensation

Question 20

Prior to the first meeting with sellers, brokers should advise their sellers to have the following documents and information available:

Answer 20

-Copy of seller’s deed

-Copy of survey (if available)

-Copy of protective covenants and homeowners’ association information (including dues and assessments)

-Balance due on seller’s mortgage(s) and status of mortgage(s)

Question 21

What is a Buyer Agency Agreement?

Answer 21

A contract for real estate brokerage services between a buyer and a real estate agent. The broker receives compensation for successfully locating a property for the buyer to purchase.

Question 22

retainer fee & success fee

Answer 22

-retainer fee is typically an amount of compensation, usually paid up front by the buyer/client when the buyer agency agreement is established

-success fee is due and payable by the buyer/principal on the signing and acceptance of an offer to purchase property found by the buyer’s agent. Typically, however, it is actually paid at closing.

Question 23

North Carolina Commercial Real Estate Broker Lien:

Answer 23

-allows a real estate broker with a written agency agreement to represent a property owner in a commercial transaction to place a lien on the property to be sold or leased to protect the broker’s commission

Question 24

North Carolina Commercial Real Estate Broker Lien

The lien must be filed in a sales transaction after the broker has fully performed but before closing; in a lease transaction, the broker has up to _________ after tenant possession to file the lien. The lien must be satisfied within __________ and is ______ to all mechanics’ liens.

Answer 24

-90 days

-18 months

-inferior

Question 25

What is a Co-brokered sale?

How is the MLS compensation decided?

Answer 25

A real estate transaction involving two or more brokerage firms, one firm representing the seller and the other representing the buyer.

the amount of compensation paid by the listing firm to the selling firm is negotiable; however, firms that participate in an MLS routinely disclose the amount of compensation that will paid to a successful selling firm.

Question 26

in-house sale (splitting fees for the same firm)

Answer 26

where the listing agent and the selling agent work for the same firm, the brokerage company determines what the split will be to each licensee based on company policies

Question 27

Co-listing

Answer 27

An agreement in which two brokerage firms join forces to list the same property and mutually agree to share the commission.

Question 28

Types of Listing Agreements Generally Used:

Answer 28

(1) open listing

(2) exclusive-agency listing

(3) exclusive right-to-sell listing.

Question 29

Open Listing

1) What is it, who can sell and who is entitled to commission after the sale?

2) Is this the most popular agreement? If not, what is?

Answer 29

1) An agreement between an owner and possibly many brokers. If a broker produces a ready willing, and able buyer, a commission is due.

However, the owner still has the right to sell his/her property and is not obligated to pay a commission to anyone.

2) No, Exclusive Right to Sell Listing

Question 30

Exclusive Agency Listing

1) What is it, who can sell and who is entitled to commission after the sale?

2) Is this the most popular agency agreement?

Answer 30

1) Only one broker is authorized to sell & If the owner finds a buyer, no commission is owed

2) No, Exclusive Right to Sell Listing

Question 31

Exclusive Right to Sell Listing

1) What is it, who can sell and who is entitled to commission after the sale?

2) Is this the most popular agency agreement?

Answer 31

1) Only one broker is authorized to sell as exclusive agent & the broker receives a commission no matter who finds the buyer

most common form of listing agreement and the most preferred form for brokers

Question 32

when a specific property is not currently listed with any real estate brokerage firm, a buyer agent may use a North Carolina __________ __________ to secure a commission if that particular property is purchased by the Buyer Agent’s buyer-client. Such an agreement does not create a general listing or any agency relationship between the seller and buyer agent.

Answer 32

protection agreement

Example: A broker may use a protection agreement when she has a buyer-client who is interested in a specific type of property. The broker knows this buyer would be interested in a particular house that is “For Sale by Owner.” However, the broker does not want to suggest that the buyer view the house because the broker could lose the opportunity to earn a commission. Instead, the broker might first approach the homeowner/seller and ask whether he would agree to pay her a commission if her client decided to purchase the home.

Question 33

Fee-for-services agreement

Answer 33

is the arrangement where the consumer decides which services are needed and then works with and pays the broker solely for those services.

Question 34

Multiple Listing Services

1) What is the MLS?

2) What are some of the advantages for a buyer and seller

Answer 34

An MLS is a marketing organization whose members make their listings available for showing and sale through all the other member licensees.

An MLS offers advantages to licensees, sellers, and buyers. Licensees develop a sizable inventory of properties to be sold and are assured a portion of the commission if they list property or participate in the sale of another licensee’s listing. Sellers gain because the property is exposed to a much larger market. Buyers gain because of the variety of properties on the market.

Question 35

Minimal requires for Listing Contract Forms (14)

Answer 35

Agency disclosure

The names of all parties to the contract

Term of listing agreement

Description of the property

Listing price

Brokerage fee

Protection period clause

Authority to cooperate with other firms

Firm’s duties

Seller’s representations and duties

Handling of earnest money

Dual agency

Miscellaneous provisions

Due diligence by agent

Question 36

Agency Disclosure

1) What is it?

2) When is this form to be given?

3) How long must this form be on file signed?

4) Agency disclosure must happen before a broker begins to gather

Answer 36

1) The disclosure of the relationship in which one party (agent) acts for or represents another (principal) under the authority of the latter.

2) real estate broker at first substantial contact with a prospective buyer or seller in all real estate sales transactions must give and review the agency disclosure form

3) The form must be completed appropriately, hopefully signed by the buyer/seller, and a copy retained by the broker for three years.

4) Agency disclosure must happen before a broker begins to gather information to complete a listing agreement. The prospective client must be cautioned about sharing confidential information until the agency relationship is established.

Question 37

What are the terms of a listing agreement?

Answer 37

-all written agency agreements must specify a definite termination date of the agency relationship

-must provide for a definite period of time with an automatic termination date

-If the property has not been sold by midnight of the termination date, the listing agreement is automatically terminated without notification being required of either party

-If mutually acceptable, the listing can be either extended or renewed in writing

-Automatic extension or renewal clauses are prohibited in all agency agreements except for property management agreements that allow the landlord to terminate with notice at the end of any contract period.

Question 38

Description of the property (listing agreement)

1) What should all listing agreements include about property?

2) Note that in addition to the real property, all items of ______

Answer 38

1) All listing agreements should include a clear and precise description of the real estate to be sold. Legal Description not necessary but WISE to be included

2) Note that in addition to the real property, all items of personal property that are to be included in the sale should be adequately described

Most listing agreements include a section that lists the items of personal property that will be left with the real estate when it is sold and the items of real property (fixtures) the seller expects to remove at the time of sale. Each item should be explicitly identified (brand name, serial number, color), even though some items may become points of negotiation should a ready, willing, and able buyer be found.

Question 39

Brokerage Fee (in the agreement)

listing agreement must specify the compensation to be paid to the __________

The brokerage fee must be __________ between the parties (therefore, it cannot be preprinted on a standard form)

real estate brokers cannot state or _______ that the brokerage fee is ____ by law

Answer 39

-broker

-negotiate

-imply

-set

Question 40

Authority to cooperate with other firms (in the agreement)

______ firm’s authority from the seller to cooperate with other real estate firms in the procurement of a buyer for the seller’s property

The _______ must also grant permission for the listing firm to compensate other firms through the sharing or splitting of the brokerage fee.-listing

Answer 40

-listing

-seller-client

Question 41

Due diligence by agent

Identifying all parties with ownership interests can be challenging if there are deaths, divorces, and/or remarriages, so preliminary title searches are becoming more popular. If applicable, the seller must be informed of the seller’s duty to give the buyer a property disclosure statement under the __________________________________

Answer 41

-North Carolina Residential Property Disclosure Act

Question 42

Due diligence by agent

If the property is a residential structure built prior to 1978, the agent must also explain the requirement for _________________. The agent should also gather such pertinent information as legal descriptions.

Answer 42

-lead paint disclosure

Question 43

Due diligence by agent

The agent’s duty to discover and disclose ___________, including defects in the property, begins with a thorough personal inspection of the property.

Answer 43

-material facts

Question 44

Net Listing

Answer 44

A net listing provision refers to the amount of money the seller will receive if the property is sold. The seller’s property is listed for this net amount, and the broker is free to offer the property for sale at any price higher than the listing price.

If the property is sold, the broker receives from the seller any proceeds exceeding the stipulated net amount to be retained by the seller. Although not illegal in North Carolina, this type of listing is not recommended because of an obvious conflict of interest.

Question 45

Extender Clause

Answer 45

which provides that the property owner will pay the listing broker a commission if, within a specified number of days after the listing expires, the owner sells, rents, leases, or options the property to or exchanges the property with someone the owner originally met or made contact with through the broker

Question 46

What is a an override clause?

Answer 46

usually parallels the terms of the listing agreement; for example, a six-month listing might carry a broker protection clause of six months after the listing’s expiration.

To enforce this clause, the listing broker must provide the seller, within a specified time, the names of potential buyers who looked at the property during the listing period. However, to protect the owner and prevent owner liability for two separate commissions, most of these clauses stipulate that they cannot be enforced if the property is listed under a new listing agreement, either with the original listing broker or with another broker.

Question 47

How is square footage usually reported in North Carolina?

Answer 47

The living heated area

Question 48

The living heated area

Answer 48

Heated living area refers to space heated by permanent, conventional heating systems. Additionally, the space must be finished and directly accessible from other living areas.

**It should be noted that the NCREC has developed a helpful brochure, Residential Square Footage Guidelines, where the NCREC has defined heated living area and established guidelines for the treatment of stairs, rooms with low, sloped ceilings (to be described as living area, a room must have ceilings no shorter than five-feet tall, and at least seven-feet tall in half of the room) and rooms that are open from the floor of one level to the ceiling of the next higher level.

Question 49

above grade

Answer 49

-is defined as space on any level of a dwelling which has living area and no earth adjacent to any exterior wall on that level.

-Space that is “at” or “on grade” is considered “above-grade.

Question 50

Below Grade

Answer 50

-is space on any level which has living area, is accessible by interior stairs, and has earth adjacent to any exterior wall on that level.

Question 51

North Carolina Real Estate License Law does not require that brokers advertise or report the square footage, but:

Answer 51

-if brokers do communicate square footage, the NCREC expects the information to be verifiable and accurate. Additionally, as of 2016, brokers must retain copies of sketches, calculations, photos, and other documents used or relied upon to determine square footage for at least three years.

Question 52

Comparative Market Analysis (CMA)

Answer 52

-Essentially, a CMA compares the prices of recently sold and/or listed properties that are similar in location, style, and amenities to the subject property.

-If no such comparisons can be made, or if the seller feels the property is unique in some way, a full-scale real estate appraisal—a detailed estimate of a property’s value by a professional certified appraiser—may be warranted.

Question 53

Avoiding Conflicts of Interest (Residential & Commercial)

Answer 53

However, a broker can represent the buyer of commercial listing if the broker owns less than 25% interest and the buyer consents after full written disclosure of broker’s ownership interest. Even if the broker obtains the buyer’s consent, brokers should not take advantage of buyers, nor fail to disclose material facts.

Question 54

A listing agreement may be terminated for any of the following reasons:

Answer 54

-Completion or fulfillment of the purpose for which the agency was created (the best way to terminate a listing)

-Expiration of the terms of the agency

-Mutual agreement to terminate the agency

-Breach by one of the parties, such as abandonment by the agent or revocation by the principal (The breaching party might be liable for damages.)

-By operation of law, as in bankruptcy of the principal (because title to the property would be transferred to a court-appointed receiver)

-Destruction or condemnation of the property

-Death or incapacity of either party (Notice of death is not necessary. Note that if a property is listed with a brokerage firm and the listing agent dies, the listing would not be terminated because the listing belongs to the firm.)

Question 55

A ________________ is a personal service contract with the brokerage firm (not the individual broker), and its success depends on the personal efforts of the broker who is party to the agreement. The broker cannot turn over the listing to another _________. If the broker abandons the listing by failing to work toward its fulfillment or if he or she revokes the agreement, the property owner cannot force the broker to comply with it. The property owner can, however, sue the broker for damages.

Answer 55

-listing agreement

-broker

Question 56

The North Carolina Residential Property Disclosure Act

1) What is it?

2) When should it be given?

Answer 56

1) requires that the sellers of most residential properties containing one to four units give the buyer a Residential Property and Owners’ Association Disclosure Statement, if required (see Residential Property and Owners’ Association Disclosure Statement).

2) The statement must be given to the buyer no later than the time the buyer makes an offer on the property.

Question 57

The Residential Property Disclosure Act also allows the owner to make no representations as to the condition of the property except as otherwise provided in the purchase and sale agreement. As befits a ___________ state, an owner who decides to make no representation as to the condition of the property has no duty to disclose those defects, whether or not the owner knows about them.

Answer 57

-caveat emptor

Question 58

The North Carolina Residential Property Disclosure Act

1) The purchaser’s right to cancel shall expire if not exercised prior to the following, whichever occurs first:

2) Can a buyer rescind the sales contract?

Answer 58

1. The end of the third calendar day following the purchaser’s receipt of the disclosure statement
2. The end of the third calendar day following the date the contract was made
3. Settlement or occupancy by the purchaser in the case of a sale or exchange
4. Settlement in the case of a purchase pursuant to a lease with option to purchase

If the buyer decides to rescind the sales contract, the buyer must give the seller written notice of the withdrawal within the three-day period. The buyer who exercises this rescission right is entitled to a full refund of any deposit monies given to the seller.

Question 59

The North Carolina Residential Property Disclosure Act

1) The purchaser’s right to cancel shall expire if not exercised prior to the following, whichever occurs first:

2) Can a buyer rescind the sales contract?

Answer 59

1. The end of the third calendar day following the purchaser’s receipt of the disclosure statement
2. The end of the third calendar day following the date the contract was made
3. Settlement or occupancy by the purchaser in the case of a sale or exchange
4. Settlement in the case of a purchase pursuant to a lease with option to purchase

If the buyer decides to rescind the sales contract, the buyer must give the seller written notice of the withdrawal within the three-day period. The buyer who exercises this rescission right is entitled to a full refund of any deposit monies given to the seller.

Question 60

North Carolina Residential Property Disclosure Act Exclusions (3)

Answer 60

1. New builds that have never been inhabited
2. Foreclosure Sales
3. Any rent-to-own scenarios

Question 61

Mineral and Oil and Gas Rights Mandatory Disclosure Statement

1) What is the Mineral and Oil and Gas Rights Mandatory Disclosure Statement?

2) What happens if the owner does not provide the disclosure to the prospective buyer before the offer is made?

3) Is it possible to sever mineral, oil and gas rights from real property? If so, how?

4) Is a disclosure statement required for all transactions?

Answer 61

1) requires the current property owner to disclose whether the mineral and/or oil and gas rights were severed from the property by the previous owner, by the current owner, and whether the current owner intends to sever the rights from the property prior to transfer of title to the buyer.

2) If the owner does not provide the disclosure to the prospective buyer before the offer is made, the buyer may, under certain conditions, be able to cancel the contract without penalty, by personally delivering or mailing written notice to cancel to the owner or owner’s agent within three calendar days of receiving the disclosure, or three calendar days following the date the contract was executed, whichever occurs first.

3) To sever the rights, property owners may either convey the rights to another by deed, or an owners may reserve ownership of the rights when conveying the property to another. If the mineral and/or oil and gas rights are severed from the property, the owners of those rights may have the permanent right to drill, mine, explore, and remove the subsurface minerals and/or oil and gas from the property.

4) Only for some transactions. But is required for the sale of improved property, including transfers involving new construction, leases with the option to purchase where the lessee occupies the property, and transfers where both parties agree a Residential Property and Owner’s Association Disclosure Statement is not to be provided.

Question 62

Mineral and Oil and Gas Rights Mandatory Disclosure Statement

1) Is it possible to sever mineral, oil and gas rights from real property? If so, how?

2) Is a disclosure statement required for all transactions?

Answer 62

1) To sever the rights, property owners may either convey the rights to another by deed, or an owners may reserve ownership of the rights when conveying the property to another. If the mineral and/or oil and gas rights are severed from the property, the owners of those rights may have the permanent right to drill, mine, explore, and remove the subsurface minerals and/or oil and gas from the property.

2) Only for some transactions. But is required for the sale of improved property, including transfers involving new construction, leases with the option to purchase where the lessee occupies the property, and transfers where both parties agree a Residential Property and Owner’s Association Disclosure Statement is not to be provided.

Question 63

1. The following 4 transactions are subject to the Mineral and Oil and Gas Rights Mandatory Disclosure Statement (MOGS):
2. If you fall within the 4 categories, when must you provide the MOGS to they buyer and what must be separately disclosed in that

3) Do MOGS apply to vacant land? If so, why?

4) Who informs the owners that they must provide MOGS?

Answer 63

1:

-Sales subject to the Residential Property Disclosure Act (i.e., selling residential property consisting of not less than one nor more than four dwelling units)

• The first sale of a dwelling never inhabited (i.e., new construction)
• A lease with option to purchase where the lessee occupies the dwelling
• Sale of residential property where the parties agree not to complete a Residential Property and Owner Association Disclosure Statement (RPOADS)

2) Owners of residential property falling within any of the four categories must provide the MOGS to the buyer no later than the time the buyer makes an offer. The disclosure statement must be signed by the seller, and the buyer(s) should also sign the form merely to acknowledge its receipt.

3) Ironically, this MOGS does not apply to sales of vacant land, in part because the General Assembly chose to insert the disclosure requirement into the Residential Property Disclosure Act. That Act only applies to sales of residential property containing one to four dwelling units.

4) A broker acting as an agent must inform owners of their legal obligation to provide the Mineral and Oil and Gas Rights Mandatory Disclosure Statement (and RPOADS, if applicable) and the possible consequences of not providing the statement. So long as the broker advises the owner of their statutory obligation to provide the disclosure, then the broker will not be responsible for the owner’s refusal to provide any disclosure required under the Act.

Question 64

1) What type of contract is a WORKING WITH BUYERS Contract?

2) What must be discussed by a broker and buyer before entering an agreement?

3) Explain the process of how a Working With Buyers Agency contract should unfold?

Answer 64

1) employment contract (buyer agency agreement or buyer representation)

2:

-the broker should make the same disclosures to the buyer that the broker would make to a seller in a listing agreement

-licensee should explain the forms of agency available and the parties’ rights and responsibilities under each type

-specific services provided to a buyer-client should be clearly explained

-Compensation

3) All buyer scenarios in North Carolina must start with a thorough explanation of agency relationship options no later than first substantial contact. Prospective buyers must receive a copy of the NCREC’s Working with Real Estate Agents form and a review of agency options available with the broker’s firm. A decision must be made as to what agency relationship will exist between the buyer consumer and the broker before the agent can provide any brokerage services to the buyer. Let us explore the different ways a broker can legally work with a buyer-consumer.

Question 65

Nonexclusive Buyer Agency Agreement

Is this an non-exclusive relationship with one agent or brokerage? If not, what is the max allowed?

Answer 65

1) No. And there is not cap to the number of agents he can work with. This also frees the buyer to view and purchase property through a seller’s subagent or to purchase property directly from a property owner.

Question 66

Oral buyer agency

1) Is this allowed in North Carolina?

2) Is this an exclusive verbal commitment?

3) What is the termination date?

4) Is the oral suggested over the written?

5) When should this be presented in writing?

Answer 66

1) Yes. Permits licensees to work initially as a buyer or tenant agent under an express oral buyer agency agreement. After proper review of agency options in the Working with Real Estate Agents form, a buyer/tenant consumer may wish representation but elect to postpone the execution of a written agency agreement

2) All oral buyer/tenant agency agreements must be nonexclusive, which means the client may work with other agents or independently and the relationship may be terminated by the agent or the client with notice at any time.

3) Open-ended, there is no definite termination date

4) No. Only preferred when confidential information is tossed around with and/or the customer refuses to sign a written agency agreement. Written agency agreements are strongly preferred and should be secured as soon as possible.

5) At the latest, an oral buyer/tenant agency agreement must be reduced to writing not later than the time any party to the transaction makes an offer to buy, sell, rent, lease, or exchange property to another. Virtually any written agency agreement will satisfy the Rule’s requirement for written agency, whether the agreement is nonexclusive or limited to one particular property.

Question 67

What happens if the buyer refuses to enter into a written agency agreement? Explain the process.

Answer 67

An agent shall not continue to act as a buyer or tenant agent if the client refuses to enter into a written agency agreement when required by the rule. If the client refuses to reduce the oral agency to writing, the only way the agent can go forward in the transaction is if the client will allow the agent to switch to acting as a seller’s subagent. This change must be agreeable to the seller as well as the buyer. Such a shift in agency affiliation is strongly discouraged by the NCREC because the oral buyer agent is quite likely to have gathered confidential information about the buyer client while showing property. If the client will neither reduce agency to a written agreement nor authorize the agency switch to seller’s subagent, a broker is forbidden to present any offers on behalf of the unrepresented buyer/tenant; despite Rule 58A.0106(a) that mandates timely presentation of all offers. Brokers cannot be forced to comply with a rule that will cause them to violate another rule or law. Brokers are strongly advised to refrain from developing any offer until agency has been reduced to writing.

Question 68

Do you have to notify a client of a oral buyer agency?

Answer 68

No, BUT the NCREC strongly recommends that the broker send the client a letter that confirms the terms of the verbal agreement, including dual agency authorization if approved. Termination of oral agency may be tendered verbally; although follow-up written communication is recommended. Firms do not have to allow oral buyer/tenant agency; it is only an agency option.

Question 69

What are the responsibilities of a Buyer’s Agent?

Answer 69

-A buyer’s agent must consider the buyer’s desires and financial qualifications.

-give and review the Working with Real Estate Agents form with the buyer;

-explain agency duties and responsibilities;

-ensure that a proper agency contract is executed;

-properly qualify the prospective buyer/client (preferable approach is by a mortgage loan officer);

-obtain and verify information about the property, including, if applicable, the Residential Property and Owners’ Association Disclosure Statement, the Mineral and Oil and Gas Rights Mandatory Disclosure Statement, the Lead-based Paint Addendum, and the Owner Association Disclosure and Addendum, etc.;

-disclose agency status to all parties to the transaction;

-discover and disclose material facts about the property;

-perform a CMA to assist buyer in determining an appropriate offer price;

-assist in the preparation, presentation, and negotiation of offers submitted by and on behalf of the buyer/client; and

-assist the buyer/client with preparation for closing the transaction.

Question 70

a buyer-client is interested in a property that is not listed with a full service real estate firm

Answer 70

There are two scenarios that would necessitate a buyer’s agent to contact the property owner directly: a for sale by owner (FSBO) or a property listed with a limited service real estate firm that directs all property inquiries to the property owner.

Question 71

Dual Agency

1) When must dual agency be presented?

Answer 71

1) A real estate brokerage firm whose policy allows dual agency, electing to represent both the buyer(s) and the seller(s) in the same transaction, must use a written dual agency agreement—no later than the making of the first offer—to modify existing relationships that were created when entering into either a listing contract or a buyer-agency contract.

Question 72

Dual Agency

1) When must dual agency be presented?

Answer 72

1) A real estate brokerage firm whose policy allows dual agency, electing to represent both the buyer(s) and the seller(s) in the same transaction, must use a written dual agency agreement—no later than the making of the first offer—to modify existing relationships that were created when entering into either a listing contract or a buyer-agency contract.

Question 73

The dual agency authorization in the standard agency agreements contains:

Answer 73

-provisions for agreeing to dual agency;

-the broker’s role as a dual agent;

-the seller’s and the buyer’s roles; and

-provisions for the option of designated dual agency.

Question 74

Commission Rate Formulas

1) How do you solve for your commission?

2) How do you solve for the sales price?

3) How do you solve for the commission rate?

4) How do you solve for the net to seller?

Answer 74

1. Sales price × commission rate = commission
2. Commission ÷ commission rate = sales price
3. Commission ÷ sales price = commission rate
4. Sales price × (100% − commission rate) = net to seller

Question 75

Broker commissions are typically based on the _______ sales price.

Answer 75

Gross Sales Price

Question 76

North Carolina Residential Property Disclosure Act

1) How can the North Carolina Residential Property Disclosure Act be given?

2) Can this form be substituted for another?

Answer 76

1) The property disclosure statement may be included in the sales contract, in an addendum to the contract, or in a separate document.

2) The form is a state-mandated form and must be used when required. No other form can be substituted. Additional forms may be used, however, such as a copy of a home inspection.