Buyer's Agent's Benefits, Compensation and Disclosures

Question 1

In addition to price, there are many other items to be negotiated in the contract counteroffer stage of negotiations including but not limited to:

Answer 1

Earnest money and down payment deposits
Financing and seller financing (if applicable)
Interest rate, commissions, and terms
Home warranty, termite inspection, repairs, and inspection contingencies
Assessments, appraisal, closing costs, title report
Possession date, hazard insurance, extensions
Personal property inventory (what stays and what doesn’t).

Question 2

Assignable contract

Answer 2

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.

Question 3

Contract Acceptance

Answer 3

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.

Question 4

In a buyer representation with a broker, the buyer can do what with regards to the agreement?

Answer 4

The buyer can tailor the agent services to meet the buyer’s needs and adjust the compensation accordingly.

Question 5

A licensee motivated to show and sell the client all available properties that meet the client’s requirements has a commission that is what?

Answer 5

Guaranteed and Protected

Question 6

In addition to having greater control, what can an agent do with an agency agreement?

Answer 6

The agent can ask more questions, find out if the buyer is pre-qualified, and has little concern about losing the buyer to a FSBO or another broker.

Question 7

What is an assignable contract?

Answer 7

A contract which the rights can be given, or assigned, to some other party.

Question 8

Regardless of who will be responsible for payment of commission to the broker, how should these agreements be handled?

Answer 8

Always in writing

Question 9

Generally, the buyer’s broker’s fee is paid from where?

Answer 9

From the sales proceeds at closing

Question 10

What is a retainer fee?

Answer 10

advance payment of service

Question 11

When should clients be brought into the middle of a commission dispute between brokers?

Answer 11

Never

Question 12

Buyer paid fees can take many forms including:

Answer 12

Hourly rate
Percentage fee
Flat rate

Question 13

An alternative method of buyer’s broker compensation is the gross price method

Answer 13

The buyer pays the gross purchase price and the seller pays the buyer’s broker’s commissions.

Question 14

advantages of the sellers paying the commission are:

Answer 14

Presents no suggestion of interfering with the listing broker’s commission agreement with the seller
Allows no reasonable basis for procuring cause disputes
Clears up questions of who works for whom and who pays whom
Protects the buyer-client from having to pay the broker’s commission at closing if the seller refuses to pay, but it provides the option to do so should the situation require
Protects the buyer’s agent from the listing agent’s chances of losing commission due to breach of agreement or a badly worded listing agreement
Works equally well for listed, unlisted, MLS, or non-MLS property
Does not trigger the TRELA prohibition concerning payments from more than one party to the transaction without knowledge and consent of both parties
Places responsibility for securing the compensation of the buyer’s broker directly on the client whose interests were served by the broker

Question 15

disadvantages of the sellers paying the commission are:

Answer 15

May change some expected tax advantages for the parties
Is relatively untested in the courts in Texas
Could delay closings if there is confusion among lenders concerning the transaction

Question 16

What barriers prohibit the seller from paying the buyer’s broker fee or authorizing the listing broker to share fees with the buyer’s broker?

Answer 16

There are no legal barriers that prohibit the seller from paying the buyer’s broker fee

Question 17

A written acknowledgment of buyer representation is in the form of a what?

Answer 17

An agency disclosure form

Question 18

Name three forms of buyer paid fees.

Answer 18

Hourly Rate, Flat Fee, Percentage Fee

Question 19

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?

Answer 19

Gross price method

Question 20

The sellers must:

Answer 20

Disclose all known lead-based paint hazards in the house.
Keep signed acknowledgements for three years as proof of compliance.
Give buyers a pamphlet prepared by the US environmental protection agency (EPA) called Protect Your Family from Lead in Your Home.
Allow buyers a ten-day opportunity to test the house for lead. `

Question 21

If the sellers are selling a home built before 1978

Answer 21

they must comply with the Residential Lead-Based Paint Hazard Reduction Act of 1992.

Question 22

The agent may counsel the client on what items to ask the seller to agree to including but not limited to:

Answer 22

All adverse environmental conditions to be removed
All required building permits have been issued
The property is the same or the required improved condition at the time of closing as the buyer contracted it to be
The property is clear of debris and the plumbing, heating, air conditioning, electrical systems, and appliances are all in good working condition
No personal property items will be substituted for those at the property when it was shown and that were expected to remain with the property by contract

Question 23

What must a broker provide to a buyer?

Answer 23

A Written Statement describing seller agency, buyer agency, and intermediary brokerage.

Question 24

The National Association of Realtors® Code of Ethics and Standards of Practice require that the buyer’s agent disclose the relationship to the listing agent when?

Answer 24

At First Contact

Question 25

Because of better disclosure rules, regulations, and laws, agents are required to provide better service to whom?

Answer 25

Their clients

Question 26

A report the seller provides the buyer that discloses information about the property is called what?

Answer 26

Property disclosure form

Question 27

Buyers’ brokers

Answer 27

frequently develop their own buyer agency agreements.

Question 28

Regardless of who will be responsible for payment of commission to the broker

Answer 28

These agreements should be in writing

Question 29

Throughout the course of negotiations within a buyer-agent relationship, the buyer-agent must act with care when it comes to:

Answer 29

Price and appraised value
Earnest money
Contingencies
Fixtures and inventory
Seller financing
Condition of Property

Question 30

Generally, the buyer’s broker fee is paid

Answer 30

out of the sales proceeds either from an authorized commission split between brokers or through a credit from the seller to the buyer then paid to the broker, at closing.

Question 31

The “Broker Information and Ratification of Fee” section in the standard TREC contract form ….

Answer 31

details under what conditions and in what amount any compensation will be paid from the listing broker to the broker bringing the buyer.

Question 32

There usually is a written acknowledgment of buyer representation

Answer 32

in the form of an agency disclosure form, with a written confirmation included with the purchase contract.

Question 33

The broker should make any agency disclosures in writing

Answer 33

and try to obtain the signature of the buyer acknowledging receipt of the disclosures and written statement.

Question 34

TRELA requires

Answer 34

that agents disclose their representation to other parties and to the agents of other parties at the time of first contact.