12. Listing Agreements Flashcards
What is a listing agreement?
A legally enforceable real estate agency agreement between a broker and a client, authorizing the broker to perform a stated service for compensation.
What laws govern a listing agreement?
Agency law and contract law.
Who are the principal parties in a listing agreement?
The listing broker and the client, who may be a buyer, seller, landlord, or tenant.
What are fiduciary duties in the context of a listing agreement?
The agent has a commitment to fulfill fiduciary duties to the client in the agreement.
What is the scope of authority in a listing agreement?
Typically a special agency that limits the broker’s authority to specific activities related to generating customers.
What is a bilateral agreement?
An agreement where both parties promise to perform certain actions, common in exclusive listings.
What is an open listing?
A non-exclusive authorization to sell or lease a property, allowing the owner to work with multiple brokers.
What is a net listing?
An agreement where the owner sets a minimum acceptable amount from the transaction and the broker keeps any excess as commission.
What is a buyer agency agreement?
An agreement that creates a fiduciary relationship with the buyer, similar to seller listings.
What is a transaction broker agreement?
An agreement where the broker is in a non-agency relationship with the seller or buyer, not bound by fiduciary duties.
What is a multiple listing?
A provision in an exclusive listing that authorizes the broker to place the listing into a multiple listing service.
What are the causes for termination of a listing agreement?
Performance, infeasibility, mutual agreement, rescission, revocation, abandonment, lapse of time, invalidity, and breach.
What is due diligence in the context of a listing agreement?
Verifying the accuracy of statements regarding the property, owner, and client’s authority to act.
What is the main item of performance for the client in a listing agreement?
Payment of compensation if the agreement calls for it.
What matters should a listing agreement address?
The amount and structure of the compensation, potential disputes over who has earned compensation, and the client’s liability for multiple commissions.
How is a broker’s commission determined?
The amount of a broker’s commission is whatever amount the client and broker have agreed to.
What forms can compensation take?
Compensation may be in the form of a percentage of the sale or lease price, or a flat fee.
What is procuring cause?
The concept that decides disputes over commissions, determining who is entitled to the commission based on who found the customer.
What are the two principal determinants of procuring cause?
- Being first to find the customer. 2. Being the one who induces the customer to complete the transaction.
Give an example of procuring cause.
Broker A shows Joe the property on Monday, and Broker B shows Joe the same property on Friday. Joe buys the property, and Broker A will probably be deemed the procuring cause.
This is because Broker A first introduced Joe to the property.
How is compensation for buyer brokers typically structured?
Buyer agency agreements stipulate compensation as a client-paid retainer fee or a commission contingent upon a completed transaction or procured seller.
Who typically pays the buyer broker’s commission?
It is common for the agent to be paid by the seller, but the buyer may pay if the seller refuses to offer compensation.
When is the commission typically earned?
The commission is customarily earned when a sales contract is completed by the transacting parties.
What are some causes for termination of a listing?
- Performance 2. Infeasibility 3. Mutual agreement 4. Revocation 5. Abandonment 6. Breach 7. Lapse of time 8. Invalidity of contract 9. Incapacitation or death of either party 10. Involuntary title transfer 11. Destruction of the property.
What are the listing expiration regulations for open listings?
In most states, open listings do not require a stated expiration date and expire after a ‘reasonable’ period of time as locally defined.
In order to sell interests in a syndication, an agent must
obtain a Series 22 securities license
A syndication is
a group of inactive investors who join with a number of active partners to purchase, manage, and sell properties for a profit
In business brokerage, the notion of goodwill is best defined as
the value or price of the business over and above the value of its other assets
A broker is reviewing the balance sheet of her new listing to sell a business. Three of the entries on the books are licenses, trademarks, and goodwill. These would be examples of
intangible assets
A corporation would like an agent to sell its country grocery store. Included in the sale are the inventory, equipment, and real property. The agent locates a fullprice buyer who does not want to acquire any of the business’s actual or potential liabilities. To do this transaction, the corporation would most likely
propose an asset sale
Two leading agencies jointly agree to raise commissions charged a certain class of client to 8% of the sales price. Which of the following is true?
The brokers have illegally fixed prices
The three principal brokerage firms in a market agree to pay sales agents 15% more than any other competitor currently in practice. This is an example of
collusion
Real estate advertising is a regulated activity. One important restriction in placing ads is
the advertising must not be misleading
Commingling is the practice of
mixing escrow funds with the broker’s operating funds
Conversion is the act of
appropriating client or customer deposits for use in the agency’s business
When a property is “under contract,”
the principals have entered into a sale contract and must satisfy any contingencies prior to closing
In obtaining offers from a buyer, an agent must be careful to
avoid disclosing what price the owner will accept
In marketing an owner’s property, the objective of an agent’s marketing plan is to
expose the property to the maximum number of prospects in relation to marketing expenses and efforts
The objective of the listing presentation is to
provide all information necessary for the owner to execute the listing
Pricing property correctly is pivotal to marketing listings, because
underpricing a property does not serve the best interests of a client
Three of the most important skills involved in the listing process are
locating clients, pricing property, and making listing presentations
A salesperson’s commission rate and structure is established by
competitive conditions
An important commitment employing brokers make to salespeople is
providing them with all listings in the agency
An important distinction between an independent contractor salesperson (IC) and an employee salesperson is
the IC is responsible for taxes; the broker does not withhold
Real estate sales agents are legally authorized to
represent their employing broker in procuring clients and customers
The term “Realtor”
may only be used by brokers belonging to the National Association of Realtors®
Which of the following characterizes a real estate franchisee?
A locally-owned brokerage affiliated with a national franchisor for purposes of enhanced image and resources
Two real estate companies agree to conjoin their resources for the development and sale of an apartment complex, for which profits will be shared equally. This is an example of
a joint venture
One similarity between a general partnership and a limited partnership is that
both may broker real estate if properly licensed
Which of the following is a valid distinction between a corporation and a proprietorship?
A corporation has perpetual existence; a proprietorship terminates upon the owner’s death
Which of the following best summarizes the critical skills in real estate brokerage?
Listing, marketing, facilitating transactions, and managing information
What is co-brokerage?
Outside brokers acting as subagents assist a listing agent in procuring a customer
