Unit 10: Agency and Listings

Question 0

Common law of agency specifies fiduciary duties to principal (OLD CAR)

Answer 0

Obedience - agent must be lawful

Locality- must place interest of principal above all others

Disclosure- all known material facts about property must be disclosed to principal and all parties including benefits of transaction, risks, defects

Confidentiality: keep principal’s confidential information private (PTM…price, terms, motivation)

Accounting: any money or personal property entrusted to agents must be accounted for

Reasonable: skill, care, and diligence

Question 1

Parties to Agency Relationship

Answer 1

1) Principal : employs another to act on his behalf
2) agent/fiduciary: one who is employed to represent a principal
3) consumer third party- customer not represented by any broker
4) Faculitator/ transaction broker- licensee who provides service w/o being an agent

Question 2

Broker in charge

Answer 2

Responsible for

1) all contracts, agency, and purchase agreements
2) supervising all salespersons and broker associates
3) has agency relationship with the principal

Question 6

Salesperson

Answer 6

Employed to represent broker and brokerage firm

Can be employee or independent contractor (must have written agreement)

Question 7

One who employs an agent to act in his behalf

Answer 7

Principal

Question 8

Commissions

Answer 8

Charged by brokerage firms for their services.

Set by negotiations

Determined by the brokerage firm

Question 9

Exclusive right to sell

Answer 9

Listing agreement in which the brokerage firm is paid regardless of who sells the property

Maximum protection to brokerage

Bilateral agreement

Question 10

Open listing

Answer 10

Listing that allows an owner to list concurrently with more than one broker

Question 11

Fiduciary Relationship

Answer 11

Relationship of a broker to the principal

Question 12

Dual Agent

Answer 12

When a broker serves as agent for both the buyer and seller

Typically requires written consent of both parties

Question 13

Earnest money

Answer 13

Buyer’s broker should deliver to the listing broker immediately when the offer becomes a contract

Question 14

Boycotting

Answer 14

When a group of agree to not use the services of an inspector, lender, and attorney or agree not to show another firm’s listings

Question 15

Owns all contracts

Answer 15

Brokerage firm

Question 16

Employing broker (or broker in charge)

Answer 16

Responsible for:

1) all contracts, agency (employment) and purchase agreements
2) supervises all salespersons and broker associates
3) has the agency relationship with the principal

Question 17

Salesperson or broker associate

Answer 17

Can be an employee or independent contractor

• if employee, brokerage must withhold taxes. Is not guaranteed vacations, set schedules or established work hours
• if independent contractor, must have a written independent contractor agreement stating that they may set their own work hours and will pay their own taxes and insurance. Not required to own a cell phone, work certain hours or attend sales meetings

Question 18

Third party

Answer 18

Not a party to the particular agency agreement

Consumer third party is customer and not represented by any broker

Question 19

OLD CAR (fiduciary duties to the principal)

Answer 19

O: obedience

L: loyalty- place interest of principal above all others

D: disclosure- all known material facts to principal and all parties , benefits of the transaction as well as risks or defects

C: confidentiality- keep principals confidential info private (price terms motivation )

A: accounting- any $ entrusted to agent must be accounted for

R: reasonable skill, care, and diligence

Question 20

Special agency

Answer 20

Created when an agent is authorized to perform a particular act w/o the ability to bind the principal

Listing brokerage firm to seller

Buyer brokerage firm to buyer

Question 21

General agency

Answer 21

Created when an agent is authorized to perform a series of acts associated with the continued operation of a particular business. Agents have a limited ability to bind the principal

Salesperson or assoc broker to employing broker

Property manager to property owner

Question 22

Universal agency

Answer 22

Created when an agent is authorized to perform in place of the principal . Agents have unlimited ability to bind the principal

Agents authority comes from legal form called power of attorney , which creates an attorney -in-fact

Agent legally replaces principal -can accept/reject offers and sign for principal

Question 23

Agency

Answer 23

Determined by who employs (not pays) the agent

Express agreement is created by direct statement. Oral or written but only written commission agreements are enforceable

Question 24

Implied agency

Answer 24

Created thru agent’s actions

Advising an un represented third party , such as recommending an offer price

Question 25

Brokerage Relationship Disclosure Requirements

Answer 25

A brokerage disclosure form must be provided to the consumer (seller or buyer) at first substantial contact and b4 broker receives any confidential information

Buyers agent: disclose to seller/seller agent b4 showing property

Seller agent: disclose to buyer/buyer’s agent before scheduling a property showing

Question 26

Brokers disclose:

Answer 26

In writing if they are a principal or have any interest in the property

Question 27

Sherman antitrust act

Answer 27

Price fixing is not allowed. All fees and commissions charged to public are always negotiable Brokers may not discuss commissions outside of their own firm

Question 28

Sherman antitrust fines

Answer 28

Up to $100,000 and 3 years in prison for individual infractions Corporations may be fined up to $1,000,000 Civil liabilities include 3 times the damages plus attorney fees and legal costs

Question 29

Listing (fiduciary) agreement

Answer 29

An employment contract that appoints a brokerage firm as on owners special agent for the specific purpose of funding a buyer who is ready, willing and able to buy according to the terms of the contract

Question 30

Parties to a listing agreement

Answer 30

Seller: principal/client Brokerage firm: agent/fiduciary

Question 31

Elements to a listing agreement

Answer 31

1) in writing 2) price & terms : listing price/financing terms 3) amount and/or method of compensation: flat fee, %, net listing 4) negotiable commission clause: commissions always negotiable, both parties must agree 5) define beginning and ending date (automatic renewal clause not allowed) 6) MLS clause 7) broker protection/extension/safety/holdover/extender clause : brokerage entitled to commission if prospect buys for a time period after listing expires . Terminates if owner lidt w/ other agency 8) signature from ALL property owners 9) earnest money clause: states listing broker will hold

Question 32

Exclusive agency

Answer 32

Brokerage paid if property sells UNLESS owner finds buyer Bilateral agreement

Question 33

Open/non exclusive agency

Answer 33

Only the brokerage firm that procures the buyer gets paid Seller can sign agreements with more than 1 firm Sale to a buyer automatically terminates all other open listings with or without notice

Question 34

Obligations of broker under listing agreement

Answer 34

Pays fees to only licensed brokers; no fees to unlicensed persons May pay referral fees to other brokerage firms, never directly to broker associates Verify that all marketing is correct and truthful Complete visual assessment of property Answer 3rd party questions with honesty and clarity

Question 35

Termination of agency agreements

Answer 35

Full performance, closing or expiration of agreement Death or bankruptcy of principal or brokerage firm Destruction of improvements Breach by either party Mutual rescission