Ch.3

Question 1

agent

Answer 1

anyone who has a real estate license.

Question 2

broker

Answer 2

Key player, primarily responsible for various activities on behalf of the public.
*responsible for the actions of salespeople/agent

Question 3

salesperson

Answer 3

can do all the activities that the state requires a license for . However, a salesperson cannot work indipendently; must work under a broker.

Question 4

associate broker

Answer 4

person has a broker license but chooses to work under another broker.

Question 5

broker/salesperson get paid

Answer 5

check is made out to the broker, the broker then pays the salesperson. The split between the two is entirely negotiable; depending on experience.

Question 6

financial responsibilities of a property manager

Answer 6

• creating an annual operating budget
• collecting rents
• setting rents
• paying bills
• preparing periodic financial reports

Question 7

physical responsibilities of a property manager

Answer 7

• analysis of the building
• preparation of capital and repairs budgets
• maintenance

Question 8

CART

Answer 8

controlling
avoiding
retaining
transferring

Question 9

boiler and machinery insurance

Answer 9

because of how expensive heating and a/c systems are in large buildings, this type of insurance covers the replacement and repair of this machinery.

Question 10

casualty insurance

Answer 10

covers losses caused by theft, vandalism, and burglary.

Question 11

co-insurance

Answer 11

owner takes on part of the risk by self-insuring for a portion of the risk. Incorporating a large deductible before insurance starts to pay off.

Question 12

errors and omissions insurance

Answer 12

covers property managers against any errors they make in the performance of their duties. *does not cover fraud/stupidity

Question 13

fire and hazard insurance

Answer 13

also called all-risk, all-peril policy basically covers loss of property caused by fire, storms, and other types of damaging conditions with the exception of flooding and earthquakes.

Question 14

liability insurance

Answer 14

covers losses caused by injuries at the result of negligence on the part of the landlord.

Question 15

rent loss insurance

Answer 15

also called business interruption insurance or consequential loss insurance. It pays the owner of the building for the loss of rent from tenants if destroyed by fire.

Question 16

surety bond

Answer 16

provides payment whenever something is not done within an agreed period of time.

Question 17

property management agreement

Answer 17

• who;property owner and property manager
• where;property to be managed
• how long-term of length
• what;managers duties need to be clearly defined
• what;manager’s authority as an agent
• what info and when; reporting
• who pays what; allocation of expenses
• how much; the fee
• what the landlord wants

Question 18

independent contractor vs. employee

Answer 18

• IC are responsible for paying their own taxes and social security.
• They can deduct certain business expenses from their pretax pay that an employee can’t deduct.
• IC can work their own hours and do the job their own way, employees must work certain hrs.

Question 19

Sherman Antitrust Act

Answer 19

federal law that prohibits activities that are considered to be in restraint of trade and therefore against costumer interests, *forbids any type of price fixing in any industry.
example: Martha Stewart

Question 20

United States vs Foley

Answer 20

the result of this case determined that even if no actual consultation occurred between individuals about price fixing, the mere discussing fees between brokers is illegal unless working together on the same deal.

Question 21

Market allocation

Answer 21

agreement among competitors to divide the market in some way.

Question 22

Group boycotts

Answer 22

when competitors get together and agree not to do business with someone- violates the SAA.

Question 23

Tie-in arrangement / Tying agreement

Answer 23

any requirement to buy one product or service on condition that you buy another product or service.

Question 24

special agent

Answer 24

agent who is hired by someone to represent that person in one transaction.
*a real estate agent who represents someone in the sale or purchase of a house.

Question 25

general agents

Answer 25

*a property manager
an agent who represents someone in a range or group of activities; collects rent, authorizes repair, negotiates leases etc.

Question 26

universal agent

Answer 26

an agent who acts on a clients behalf in all matters and situations.
*power of attorney in a real estate matters

Question 27

principal

Answer 27

*client

is the person with whom you have an agency agreement, that is, the person you agreed to represent.

Question 28

customer

Answer 28

*third party

the person you do not represent (buyer)

Question 29

buyer agency

Answer 29

when the agent represents the buyer not the seller.

Question 30

dual agency

Answer 30

*illegal in some states

when the agent represents both the buyer and seller

Question 31

transactional brokerage

Answer 31

*broker represents neither buyer nor seller

broker brings the buyer and seller together, negotiates the deal, and handles some or all of the paperwork.