Agency
A relationship established between a principal and a real estate agent
Agent
The person who is authorized to represent and act on the behalf of another person
Brokerage Agreement
A written or oral agreement for brokerage services in exchange for compensation
Client
A person who is being represented by an agent
Consumer
A person requesting or receiving licensed services
Customer
A person who is not represented by an agent, but receiving ministerial acts
Ministerial Acts
Acts performed by a licensed agent for a customer that are informative or clerical in nature
Fiduciary Relationship
A relationship in which one party places special trust, confidence, and reliance in another
Principal
The person who hires the agent and delegates to the agent the responsibility of representing the principal's interests
Universal Agent
the principal empowers the agent to perform any and all actions that may be legally delegated to an agency representative. The instrument of authorization is the power of attorney.
General Agent
the principal delegates to the agent ongoing tasks and duties within a particular business or enterprise. Such delegation may include the authority to enter into contracts.
Special Agent
also known as a specific agent. Under a special agency agreement, the principal delegates authority to conduct a specific activity, after which the agency relationship terminates. In most cases, the special agent may not bind the principal to a contract.
Agency coupled with an interest
an agency relationship in which the agent has an interest in the property that is being sold. This type of agency cannot be revoked by the principal, nor is it terminated if the principal dies.
Real estate brokerage is based on what kind of agency?
Special Agency
What is a duty agent?
The person who is given the opportunity to answer the phones or greet someone walking off the street in an attempt to find leads
What are the fiduciary duties assigned to do?
Place the client's needs above the desires of the brokers and salespeople
Single Agency
when a licensee represents a either a seller/landlord or a buyer/tenant directly and exclusively as an agent. This relationship is normally bound by a written agency agreement, or listing agreement having a specified and limited duration
Subagency
practiced between brokerage firms where "cooperating" licensees, of other firms, are subagents of the listing supervising broker of the principal. Subagency is legal in Texas. A subagent is a license holder who:
Represents a principal through cooperation
Intermediary Agency
where a licensee represents both sides of a transaction in an agent-client capacity. In a firm, intermediary agency can occur in two ways:
The supervising broker or a single licensee represents both parties.
One of the principal broker's agents represents
What four types of agency positions are recognized in Texas?
Seller's agent (single agent)
Subagent
Buyer's agent (single agent)
Intermediary
When must a seller's agent provide a written statement about brokerage services to a party?
At the time of the first substantive dialogue with the party
When must a buyer's agent provide a written statement about brokerage services to a party?
At first contact with the seller, landlord, or either party's agent
Licensee
Someone who is licensed in Texas as a salesperson or broker
Subagent
A licensee who is not affiliated with the client's broker, but who represents the client as a cooperating broker
Sponsoring Broker
A person who has responsibility for the real estate activities of a salesperson or another broker working under him or her (also known as an employing broker)
Seller's Agent
A broker licensee who represents the seller in a transaction (also known as the listing agent)
Buyer's Agent
A broker licensee who represents the buyer in a transaction (also known as the selling broker or cooperating broker)
Intermediary
A broker licensee who works for both the seller and the buyer in the same transaction (a special agency alternative allowed in Texas)
In any real estate transaction, what is the best way to turn a customer into a client?
The best way to turn a customer into a client is by written agreement - a listing agreement with a seller or a buyer's representation agreement.
General Agency
This agency relationship between the broker and the salesperson is created with an independent contractor agreement. It explains all the duties of the broker and the salesperson while the two are in this relationship.
Express Agency
When an agency relationship begins, the best type for both the broker and the client is a relationship in which everything is very clear, concise, and understandable. This is a situation in which both parties know what they are supposed to do and what the
Open Listing
The broker verbally agrees to attempt to find a ready, willing, and able buyer for a seller, but this is not an exclusive arrangement between the seller and broker. The seller has shared this same opportunity with other brokers. It is just a matter of whi
Implied Agency
When a salesperson says or does something that creates agency such as giving advice to a customer, giving an opinion to a customer, or negotiating on the customer's behalf
What is the most important task a broker needs to perform with the seller-principal?
to give a market analysis of what the property is worth.
What is required to turn a customer into a "client or principal?
A written and signed agency agreement (listing agreement or buyer's agency agreement) is required to work with a client or principal.
Ostensible Agency
This occurs when a court declares that the licensee was acting like an agent. The judge would then in effect say, "Therefore, you were the agent." This means that now the licensee and the broker are responsible for their actions and that if the complainan
Implied Authority
The broker has implied authority to work on behalf of the client when he or she has verbally formed agency with the seller or buyer. The broker will not make decisions on behalf of the client. The broker will give the client a list of possible options on
Agency by ratification is also known as what?
Agency after the Fact
A broker may enter into an agreement to work for free. Which type of agency does this create?
This type of agency is a gratuitous agency
Which of the parties in a buyer's agency agreement makes the ultimate decisions?
The buyer-principal always makes the final decisions.
What is the broker's responsibility to a client?
The broker is responsible for meeting the needs of the client above the needs of everyone else, including him or herself.
What is a licensee's responsibility to a client?
Since the licensee is representing the broker, he or she has the same responsibility to the client that the broker does.
What types of things is a broker NOT authorized to do for a client?
The broker does not have the authority to do certain things such as:
Accepting an offer on a listing even if it is for the full purchase price. Only the owner can decide whether or not to accept an offer
Allowing the buyer to move into the property before
When a broker becomes a property manager, what is his or her agency relationship to the owner and to the tenants?
The broker has an agency relationship with the owner, who is the principal. The tenant is a customer, so there is no agency relationship between the broker and the tenants.
COALD
Care Obedience Accountability Loyalty Disclosure
The Law of Agency
An agency relationship imposes fiduciary duties on both the client and the agent, but mostly the agent. These duties are both moral and ethical, but also legal
What exception exists to the duty of obedience when working with a client?
An agent is not bound by the duty of if the principal's directions are not legal.
An agent's fiduciary responsibilities to a client usually end when the transaction closes. This is not true of which duty?
Confidentiality.
What is the name of the Texas' disclosure statement?
Seller's Disclosure of Property Condition
What is a material fact?
A material fact is anything that the customer may not be able to discover by himself that would change his approach on whether or not to continue with the transaction.
All lenders require a buyer to get what type of insurance?
Title insurance policy
What policy is being practiced when a listing agent warns the buyer where the licensee's loyalties reside?
Honesty
Third Party
defined as a person who is not a principal in a real estate transaction; in other words, not in an agency relationship with a licensee. Customers are considered third parties, until such time as they might choose to become clients by entering into an agen
15 Minute Rule
15 minutes after the moving van leaves, a neighbor will be disclosing what the real estate agent should have disclosed.
What are the three types of misrepresentation?
Innocent
Negligent
Fraudulent
What is the best way to handle questions regarding structural issues of a building?
Inform the buyer to seek out professional advice.
What type of lawsuits are most often brought against brokers?
Misrepresentation
What is meant by a material fact?
A material fact is an issue that would be useful for a reasonable person to know when making a decision.
What is meant by a latent defect?
A latent defect is not readily observable or readily discoverable by reasonable means.
What is a patent defect?
A patent defect is a problem or issue with a property that is obvious to most people.
What type of stigma is commonly known to many, but only taken seriously by a small select group?
Minimal Stigma
In-house sale
is one in which the seller is being represented by the broker and the buyer is also obtaining help from the same office. This could happen when the buyer is a customer. It could also happen when the buyer is a client of the same firm that the seller is a
caveat emptor
Let the Buyer Beware
Subagency
refers to a specific client representation relationship between a property broker or real estate agent and another real estate broker or agent who brings the buyer to the property. Subagency exists when the buyer is a customer and there are two brokers in
When does buyer agency exist?
Buyer agency exists when the broker represents the buyer exclusively in the real estate transaction.
List three services that need to be clarified by the buyer agent to the client.
Assisting in determining favorable financing
Providing information relating to market values
Giving advice during contract negotiations
procuring cause agent
The agent who ultimately caused the buyer to purchase the home and earned the commission
Buyer Agency
Buyer agency exists when the broker represents the buyer exclusively in the real estate transaction.
A buyer-agency relationship can be created by verbal agreement or by implication and be expressed in writing or orally. A buyer's agent spends time discus
Assignable Contract
A contract which the rights can be given, or assigned, to some other party. The parties should understand if a contract is assignable or not before entering into negotiations.
Contract Acceptance
The seller's acceptance of the offer is effective only if delivered in writing to the buyer or buyer's agent. The buyer can revoke the offer at any time before the seller's acceptance. The acceptance should be dated and timed.
Gross Price Method
Which method of broker compensation helps reduce the concerns over excess commission expense and double charging, and is easier for the seller to understand and respond to a customary sales price offer?
exclusive-right-to-represent agreement
the agent does not sell a house; he or she assists the buyer-client in purchasing a home.
Whose responsibility is it to find out things about a listing that a seller might not want to disclose?
The Buyer's Agent
What is the person called that is allowed to receive a commission that is offered by the listing broker?
Cooperating Broker
Dual agency
occurs when the same brokerage represents both the seller and the buyer under a written agreement. Dual agency changes the type of representation the broker and any agents in that company can provide.
How does an agent become an undisclosed dual agent?
By conduct that misleads a buyer into thinking that the agent represents him or her
Which transaction model has been used to replace dual agency?
Transaction Brokerage
A transaction broker has fiduciary responsibilities towards which party?
Neither side of the sale
What transaction model was developed to replace dual agency?
Intermediary
intermediary with appointments
This occurs when the broker appoints one agent to represent the seller and another agent to represent the buyer.
Which document is used to notify clients that intermediary has happened?
Notification of Intermediary Relationships
What is the best way for a broker to avoid intermediary relationships?
Establish a policy that when one person in the transaction is a client, then the other one will be a customer.
What is a sales person who has been designated as an intermediary without appointment forbidden to do?
Give Advice
Which agency is sometimes practiced when brokers decide intermediary transactions are too complicated?
Non-Agency
A transaction broker must
remain legally neutral
A broker's policy that allows intermediary without appointments mostly benefits
Agents
Common law
evolves through a series of steps that allow for gradual change.
The best way to practice intermediary is
with appointments
specialized real estate transaction
usually involves three or more parties and a number of party representatives. Often a person involved in a transaction incorrectly assumes that everyone in the transaction knows the role of everyone else. exchanges, syndications, farm sales, and leases of
What is the number one rule that a broker must follow when working a 1031 Exchange?
Disclosure to all parties
A real estate syndicate
is a financial services group formed temporarily for the purpose of handling a large transaction that would be difficult or impossible for an individual entity to handle. Syndication allows companies to pool their resources and share risks.
Unintended dual agency
is when an agent creates a dual agency relationship by taking on responsibilities that normally should be done by a cooperating agent?
Accidental Dual Agency
When an agent creates a dual agency situation, but the intent was not to purposely deceive anyone.
Agency Relationship
Agency is a relationship in which a person from the public now has a licensed broker and the broker's salespeople to assist the client in accomplishing either selling a property, buying a property, or leasing a property.
What is the minimum number of disclosures required whether working for a buyer-client or seller-client?
Three
Rescission
is when both the client and the broker agree to end the relationship that they are in.
How much time notice is required when a licensee decides to leave his or her broker?
There is no notice required
Revocation by the Client
Some sellers will not be happy with the lack of progress in showing and selling their home. The client can request the listing be revoked. This is termed
Renunciation
When the broker wants to end the relationship
What are agreements between brokers and clients called?
Employment Contracts
What are the 3 ways a broker enters into an employment contract with a principal?
Listing/Landlord Agreement
Buyer/Tenant Agreement
Property Management Agreement
Ethics
rules of conduct or accepted behavior based on moral principles.
What are the five professional ethics canons:
Fidelity
Integrity
Competence
Consumer Information Form
Discriminatory Practices
What are the four sections of the Code of Ethics?
Preamble
Duties to Clients and Customers
Duties to the Public
Duties to REALTORS�
How many Articles are included in the Code of Ethics?
17
What are the two forms of informal dispute resolution?
Ombudsman and Mediation