Essentials of Intermediary Brokerage

Question 1

What does an agent owe the principal?

Answer 1

Fiduciary duties

Question 2

Name 4 of the 7 fiduciary duties?

Answer 2

Loyalty
Diligence
Confidentiality
Obedience
Disclosure
Accounting and
Reasonable Care

Question 3

What population segment does an exclusive buyer firm represent?

Answer 3

Only buyers of real estate

Question 4

In the early 1980s, the Federal Trade Commission found what percent of home buyers who believed that the agent they worked with was representing them?

Answer 4

Over 70% of all buyers

Question 5

What sales model was developed to allow one broker to sell another broker’s listings?

Answer 5

Multiple Listing Service (MLS)

Question 6

MLSs use what type of compensation system?

Answer 6

MLSs required that compensation be based on the cooperating broker acting as a subagent of the listing broker, rather than an agent of the buyer.

Question 7

What are the results of an agent splitting a commission?

Answer 7

The listing agent is dictating the amount of the fee to be earned by the selling agent.
The listing agent creates a substantial roadblock for the selling agent to freely negotiate a fee with the buyer.
By accepting the split, the selling agent is accepting a subordinate role in the transaction.

Question 8

What is the person called that is allowed to receive a commission that is offered by the listing broker?

Answer 8

Cooperating broker

Question 9

Features of Dual Agency

Answer 9

Dual agency prohibits an agent in the listing firm from acting exclusively for either party.
Dual agency requires the informed written consent from both the client parties.
In a dual agency, confidential information about price, other offers, terms and motivation for pursuing a transaction must be kept confidential.
Dual agents may not advocate for one party to the detriment of the other.
Within limits, dual agents owe the same fiduciary duties to both seller and buyer.

Question 10

Dual agency is not illegal in many states

Answer 10

However, undisclosed dual agency is.

Question 11

Transaction broker

Answer 11

one that provides third-party real estate services to buyers and sellers. A transaction broker must remain legally neutral, but can assist the buyer and the seller in a transaction. The transaction broker might be described as a professional coordinator. A transaction broker often charges a flat fee, rather than a percentage of the sale.

Question 12

Following are some tasks that a transaction broker routinely performs:

Answer 12

Assists the buyer in preparing an offer
Helps the seller in deciding what price to ask
Facilitates communications between the two parties
Helps write a contract
Helps both buyer and seller fulfill the conditions of the contract
Coordinates the closing

Question 13

Define dual agency.

Answer 13

Dual agency occurs when the same brokerage represents both the seller and the buyer under a written agreement.

Question 14

How does an agent become an undisclosed dual agent?

Answer 14

By conduct that misleads a buyer into thinking that the agent represents him or her

Question 15

Which transaction model has been used to replace dual agency?

Answer 15

Intermediary Brokerage

Question 16

Neither side of the sale

Answer 16

A transaction broker has fiduciary responsibilities towards which party?

Question 17

What transaction model was developed to replace dual agency?

Answer 17

Intermediary

Question 18

What two items must be present for the broker to act as intermediary?

Answer 18

A written consent for it to happen and a description of what the compensation will be.

Question 19

Define intermediary with appointments

Answer 19

This occurs when the broker appoints one agent to represent the seller and another agent to represent the buyer.

Question 20

Which document is used to notify clients that intermediary has happened?

Answer 20

Notification of Intermediary Relationships

Question 21

What confidential information can agents share when acting as an intermediary agent?

Answer 21

Condition of the property or information that a client has authorized to tell the other client

Question 22

How long does confidentiality last in an intermediary relationship?

Answer 22

Forever

Question 23

Under what circumstance in an intermediary relationship can one agent be appointed to both the buyer and seller?

Answer 23

Never

Question 24

What is it called when the broker represents no one in an intermediary relationship?

Answer 24

Intermediary without appointments

Question 25

What position must the broker take when intermediary with appointments is in effect?

Answer 25

The broker steps out of the transaction and lets the agents do all of the negotiating.

Question 26

Which two people in the office can the broker not appoint to an intermediary position?

Answer 26

The broker him or herself and the agent already working for the other client.

Question 27

What occurs if the broker is absent and appointments are necessary?

Answer 27

The broker is allowed to delegate someone else the responsibility to make appointments.

Question 28

What is the Notification of Intermediary Relationship called when it is attached to a sales contract?

Answer 28

An addendum

Question 29

What is the goal of turning intermediary without appointments to intermediary with appointments?

Answer 29

For all clients to receive maximum representation.

Question 30

What is the best way for a broker to avoid intermediary relationships?

Answer 30

Establish a policy that when one person in the transaction is a client, then the other one will be a customer.

Question 31

What practice does intermediary brokerage maintain?

Answer 31

The practice of keeping the buyer as a customer throughout the transaction.

Question 32

What action have some brokers taken because intermediary relationships seem just too complicated?

Answer 32

They practice non-agency

Question 33

Beginning in September of 2005, TRELA no longer permitted brokers to act as common law dual agents

Answer 33

Brokers are now required to act as intermediaries when representing more than one party.

Question 34

Common law systems

Answer 34

are the foundation for business and commercial enterprises in the United States. As such, real estate transactions are heavily based on common law and practices.

Question 35

As an agent, you must obey

Answer 35

a client's instructions. That's only if their instructions are legal and are in accordance with the contract.

Question 36

An exclusive buyer firm

Answer 36

is a broker that represents only buyers of real estate. Exclusive buyer firms never take listings and never represent the seller in a real estate transaction.

Question 37

Transaction brokers have no

Answer 37

fiduciary responsibility towards either party in a transaction

Question 38

The benefit of intermediary relationships

Answer 38

comes when the broker appoints at least one salesperson to represent the seller and another (or other) salesperson to represent the buyer. This is called intermediary with appointments.

Question 39

A Notification of Intermediary Relationships

Answer 39

Informs your clients of the intermediary relationship