Agency Contracts (Sales) and Related Practices Flashcards
If a broker is representing a buyer or a tenant, the rule about having to have a written agreement can be broken provided that the temporary oral agreement is: (3)
Express. The oral agreement’s terms are clear and understood by all parties.
Nonexclusive. It does not keep the buyer or tenant from working with another broker.
Open-ended. The buyer or tenant can terminate the agreement at any time.
Per North Carolina Real Estate Commission Rule 21 58A.0104(a), agency contracts must: (5)
Be in writing 📄
Have a defined expiration date 📆
Contain the anti-discriminatory language prescribed by Commission Rule 58A.0104(b) 🚫
Be signed by all parties ✍️
Include the listing broker’s individual license number 🔢
The oral agreement must be put into writing if: (3)
An offer is made by any party in the transaction
Any attempt is made to obligate the buyer or tenant for a period of time
The agreement seeks to make the broker relationship exclusive
What two type of agreements are unlawful to be oral in NC
oral listing and oral property management agreements
The broker is still entitled to their commission even if the transaction doesn’t close, as long as the terms of the contract are met. The broker has still done their part by procuring a buyer, so they will earn their fee if a transaction doesn’t go through because:
The seller’s spouse won’t sign the contract.
The seller has a title defect.
The seller can’t deliver possession within a reasonable time.
The seller insists on terms that were not stated in the contract.
The buyer and seller both agree to cancel the contract after it has been signed.
doctrine of procuring cause.
Procuring cause is the defining action or actions that brought a buyer to purchase a property. Because of the doctrine of procuring cause, an agent who initiated an uninterrupted series of events that led to the sale is entitled to a commission even if the transaction doesn’t close.
The North Carolina Real Estate Commission does not resolve procuring cause disputes. T or F?
The North Carolina Real Estate Commission does not resolve procuring cause disputes — whether they be between a client and a broker or between two brokers. These disputes are settled in court, or in some cases, some boards of Realtors may have committees that can hear cases between brokers.
A broker should only accept compensation from
their firm. Anything else could be a conflict of interest and end up causing trouble.
The “retainer fee” is….can it be canceled out?
a nonrefundable, specified fee paid by the buyer after entering into an oral or written buyer agency contract. This retainer fee may or may not be credited towards any additional compensation the buyer’s agent might receive after fulfilling their obligation to find the buyer a suitable property to purchase.
The “success fee” is…….can it be canceled out?
a specified amount in the buyer agency contract that the buyer’s broker will earn upon the closing of the transaction.If the cooperating listing firm is splitting the commission and it is equal to or more than the amount of the success fee, the buyer does not owe their broker any additional compensation. If, however, the listing firm commission split is less than the success fee amount, the buyer would then need to make up the difference between the success fee amount and the compensation amount.
A buyer’s broker should have the owner/seller of an FSBO sign the
Unrepresented Seller Disclosure and Fee Agreement
When can an out-of-state broker receive a commission and/or referral fee in North Carolina?
A licensed North Carolina broker may pay a commission and/or referral fee to a licensed broker in another state, provided that the non-resident broker doesn’t conduct any of the negotiations for the transaction.
The protection period is
a limited time frame after an agency agreement ends where an agent can be owed compensation if certain situations occur.
Pro Tip: Keep a list of potential buyers who have looked at the property and have this list ready if your listing is set to expire.
commission rate formula
The paid divided by total will give you the percentage.
Paid ÷ Total = Percentage
Safe Harbor & TEFRA. explain it.
Section 530 of the Revenue Act of 1978 is known as the Safe Harbor — a place of refuge for those industries Congress felt were victims of an overly aggressive IRS practice of attempting to reclassify independent contractors as employees. Safe Harbor was initially viewed as a temporary truce between employers and the IRS. It was then extended several times and eventually became a permanent part of the Tax Equity and Fiscal Responsibility Act (TEFRA) in 1982.
A listing agreement is an agreement between:
A listing agreement is an agreement between a brokerage and a seller.
An open listing is
nonexclusive listing agreement that gives multiple brokers (and owners themselves) the right to sell the property.
in an exclusive agency listing, the seller agrees to list the property with
only one broker during a specified listing term. As with open listings, exclusive agency listings release the owner from any obligation to pay a commission in the event that the owner secures the sale of the property.
Exclusive Agency Listings: Potential Problems
Demotivation
First of all, as with an open listing, an exclusive agency listing can de-motivate a license holder if they feel the seller is not fully committed to them or is actively competing against them for the sale of the property. It is not unheard of to see marketing efforts — advertisements, flyers, etc. — coming separately from both camps.
A seller who states they do not plan to actively market the property themselves, but simply wants to reserve the right to sell it themselves if a buyer falls into their lap, might be looked at slightly more favorably by a broker.
Confusion
If a listing broker agrees to an exclusive agency agreement and offers to pay a cooperating broker’s fee to a buyer’s broker, this could bring a buyer, but could also cause confusion. The seller may step in to deal directly with a buyer, and sometimes the seller may offer different terms of sale.
The Washing of Hands
Lastly, if the seller finds a buyer themselves, once the seller tells the listing broker they will not be receiving any compensation per the agreement, that broker will likely wash their hands of the whole thing and walk away.
No compensation, no further broker support. This is an understandable reaction the seller needs to be prepared for.
Exclusive right to sell is the most common and most preferred (by brokers) type of listing agreement. This type of agreement states that as long as the property is sold within the
stipulated time frame of the contract, the listing brokerage firm named in the contract will receive a commission.
It does not matter how the sale is secured, whether by the listing broker, another broker, or by the owner finding a buyer without the listing broker’s assistance. Regardless, a commission must be paid to the listing brokerage who holds exclusive rights to the commission.
Limited Services Model contract explain
Limited service agreements are commonly used by FSBOs who do not want to pay for the full-service broker treatment, but want to pick and choose what they need help with.
Angela, a broker, makes a verbal agreement with Todd to sell his home. Once the home sells, though, Todd refuses to give Angela a commission. What can Angela do?
In North Carolina, a listing agreement must be in writing in order for you to protect your commission. If it’s a verbal agreement, and the seller decides they don’t want to pay you commission, you are out of luck. Get it in writing!
A valid listing agreement should not have a
clause for automatic renewal.
Which parties should be included in this first section of the listing agreement?
The seller and the listing brokerage firm should be listed in this first section. The contract is between the firm and the seller.
Automatic renewal is allowed only in _______ agreements.
property management agreements.
The listing price must be determined before
the seller signs the listing contract.
it’s much easier to prove in court that you previously procured a buyer during the listing period by having written proof. So, it’s very smart to
Document all interactions with prospective buyers. Keep attendance sheets at an open house so you get a record of every buyer who attends, AND you can also follow up afterward to try and get that sale!
Sellers can default by:
Refusing to sign an offer at the price and terms stated in the listing agreement
Defaulting on an executed sales contract
Agreeing with the buyer to modify or cancel an executed sales contract
Being in breach of the listing agreement
The North Carolina Association of REALTORS® Confirmation of Compensation Form (NCAR Form #770) is the form to use if
You find yourself needing to disclose to the seller that you’ve earned money from another party.
Though rare, it is possible that a listing agreement either does not allocate compensation for a buyer’s agent (leaving this area blank) or does not allocate the same amount of compensation for the buyer’s agent to which the buyer’s agent agreed.
In those situations, the buyer would be responsible for
Compensating their agent for any remaining amount to which they agreed in their buyer representation agreement.
What is the lockbox clause?
A clause stating that valuables will be held in a lockbox since the agent will be doing showings when the owners are not home
What is bankruptcy protection?
Bankruptcy protection, often referred to simply as “bankruptcy,” is a legal process designed to help individuals, businesses, or organizations that are unable to meet their financial obligations by providing them with a framework for managing their debts and, in some cases, discharging or reorganizing them.
What can be considered to be a numeral identification for the property?
tax parcel ID number
When a contract says to initial, it means to use the ____ initials.
sellers/buyers/agents
Antitrust laws are
promoting competition and preventing unfair trade practices and monopolies.
Collusion is
an unlawful agreement between competitors to monopolize a market, disadvantage other competitors, or otherwise undertake activities in violation of fair trade laws.
