Listing Contracts

Question 1

What happens when a seller makes a counteroffer to a buyer’s original offer?

Answer 1

The original offer terminates and the counteroffer in effect becomes a new offer.

Question 2

What is a contingency and what is the most common contingency?

Answer 2

A contingency is a condition that must be met before the contract is enforceable. The most common contingency concerns financing.

Question 3

What does the escrow clause in a sales contract do?

Answer 3

It provides for the custody and disbursement of the earnest money deposit, and releases the escrow agent from certain liabilities in the performance of escrow duties.

Question 4

The relationship between the tenant and the landlord is called what?

Answer 4

Tenancy

Question 5

What is an important thing to remember about the enforceability of listing agreements?

Answer 5

They must be in writing to be enforceable.

Question 6

Describe an open listing.

Answer 6

An open listing is a non-exclusive listing that allows a seller or buyer to engage a number of different brokers to sell or help purchase property. The broker who brings the buyer or finds the suitable property gets the commission. If the owner sells the property or the buyer finds his or her own property, no commission is owed to any broker.

Question 7

What is the major difference between an exclusive right to sell listing and an exclusive agency listing?

Answer 7

With exclusive right to sell, the broker has the exclusive right to market the property and receive a commission regardless of who procures the buyer. With exclusive agency, the owner retains the right to find a buyer and sell the property and owe the exclusive broker no commission.

Question 8

How does a net listing create a conflict of interest for a broker?

Answer 8

It violates the broker’s fiduciary responsibility of putting the client’s interests above his or her own.

Question 9

List three common misconceptions concerning buyer agency.

Answer 9

Buyer agency must be created by written agreement to be lawful.
Buyer agency is too complicated for the average buyer or seller to understand.
Buyer agency is not recognized by lenders.
Buyer agency increases the risk of procuring cause disputes.
Buyer agency is illegal.
Buyer agency is prohibited by State laws or MLS rules.
Buyer agency does not permit the seller to pay the commission or allow the listing broker to split commissions with the buyer’s agent.

Question 10

The buyer’s agent should mention the potential need for the buyer to consult with whom?

Answer 10

Other expert advisors such as attorney, CPA, etc.

Question 11

Agents know that an exclusive-right-to-sell or exclusive-right-to-buy agreement provides what?

Answer 11

Better control over the transaction

Question 12

Unnecessary risks are taken when brokers do what with buyer agency agreements?

Answer 12

Write their own agreements

Question 13

Listing Agreement

Answer 13

a contract between a property seller and a broker or principal broker which authorizes the broker to act as an agent of the seller for compensation to offer the real property for sale or to find and obtain a buyer.

Question 14

Buyer rep agreement

Answer 14

the document a prospective buyer signs once he or she decides to work with a buyer’s agent at a particular brokerage.

Question 15

The mutual consent needed for a contract to be valid is reached through the process of

Answer 15

Offer and Acceptance

Question 16

In a typical real estate transaction, the buyers start the process by

Answer 16

making an offer using a purchase and sales contract form. The buyers can withdraw this offer any time before it is accepted by the sellers.

Question 17

The sale contract provides the

Answer 17

escrow instructions for handling and disbursing escrow funds. The earnest money is placed in a third party trust account or escrow. A licensed escrow agent employed by a title company, financial institution, or brokerage company usually manages the escrow.

Question 18

Contingency

Answer 18

a condition that must be met before the contract is enforceable

Question 19

A typical residential sale contract contains

Answer 19

the following kind of provisions. Parties, consideration, and property.

Question 20

A Lease

Answer 20

is a contractual arrangement calling for the lessee (user) to pay the lessor (owner) for use of an asset.

Question 21

Listing Agreement

Answer 21

a legally-binding contract that creates an agency relationship authorizing a broker to serve as the agent for a principal in a real estate transaction.

Question 22

Most listing agreements are bilateral employment contracts

Answer 22

meaning that the owner hires the broker and promises to pay a commission in exchange for the broker’s promise to locate a “ready, willing and able” buyer or tenant for the owner.

Question 23

Texas Real Estate License Act

Answer 23

states that only brokers may list, sell or rent property. Agents have authority to list, but all listings must be done in the name of a licensed broker

Question 24

Open Listing

Answer 24

is a non-exclusive contract, authorizing a broker to serve as the agent for either the sale or the purchase of property.

Question 25

Net Listing

Answer 25

is not technically a type of listing agreement. In a net listing, an owner sets a minimum amount that he wants to receive from the sale of the property and lets the broker have as commission any amount above the set minimum.

Question 26

The buyer's agent should mention the potential need for

Answer 26

the buyer to consult with other expert advisors, such as CPA, attorney, etc.

Question 27

Agents know that an exclusive-right-to-sell or exclusive-right-to-buy agreement provides

Answer 27

Better control over the transaction

Question 28

Buyer's brokers frequently develop their own buyer agency agreements

Answer 28

Brokers who draft their agreements without legal counsel may be taking unnecessary risks.

Question 29

Regarding Texas licensing laws and the common law

Answer 29

the buyer's agent is held to a higher standard of skill and care in working with the buyer than is a subagent of the seller or the seller's listing agent, who works with the buyer on a customer basis.

Question 30

Buyer's agents have an affirmative duty to their clients to

Answer 30

thoroughly investigate and completely disclose all facts that rely on a buyer's decision to buy.

Question 31

A buyer's agent is held to the same standard of performance in dealing with the buyer

Answer 31

that the listing broker is held to in dealing with the seller.

Question 32

The agent who ultimately caused the buyer to purchase the home and earned the commission is generally the

Answer 32

Procuring cause agent

Question 33

A buyer could sign an exclusive buyer agreement with one agent, but

Answer 33

the second agent who closes the transaction, depending on circumstances, could end up earning the commission