Chapter 13 - The Brokerage Business Flashcards

1
Q

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

A

intangible assets

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2
Q

_____ is a valid distinction between a corporation and a proprietorship?

A

A corporation has perpetual existence; a proprietorship terminates upon the owner’s death

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3
Q

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

A

collusion.

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4
Q

A locally-owned brokerage affiliated with a national franchisor for purposes of enhanced image and resources is an example of a …

A

real estate franchisee

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5
Q

critical skills in real estate brokerage

A

Listing, marketing, facilitating transactions, and managing information

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6
Q

Real estate sales agents are legally authorized to

A

represent their employing broker in procuring clients and customers

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7
Q

_____ is the core activity of real estate brokerage

A

Procuring customers for clients and effecting transactions

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8
Q

A salesperson’s commission rate and structure is established by

A

competitive conditions

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9
Q

The core activity of real estate brokerage is the

A

business of procuring a buyer, seller, tenant, or property on behalf of a client for the purpose of completing a transaction.

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10
Q

To generate business, as well as achieve the transactional objectives of clients, a broker must be proficient in four skill areas:

A

 obtaining a client listing
 marketing a listing
 facilitating the closing of a transaction
 managing market information

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11
Q

Types of business ownership that may broker real estate

A

individual
sole proprietor for-profit corporation general partnership limited partnership joint venture

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12
Q

Types of business ownership that may not broker real estate

A

non-profit corporation business trust
co-operative association

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13
Q

In addition to being organized as a sole proprietorship, partnership, corporation or joint venture, a brokerage may be:

A

 independent or affiliated
 specialized in a type of property
 specialized in a type of transaction
 specialized in a type of client

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14
Q

A brokerage that is not affiliated with a franchise is an

A

independent agency.

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15
Q

A franchised brokerage is an

A

independently-owned company that enters into a licensing arrangement with a franchisor to participate in various benefits offered in exchange for compensation

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16
Q

Franchisors generally offer local franchisees:

A

 the use of a recognized trade name
 national and regional advertising
 training programs
 standardized operating procedures
 a national referral system

In exchange, a franchisee pays the franchisor start-up fees and a portion of gross income.

17
Q

State real estate license laws provide for two distinct licenses to conduct real estate brokerage:

A

the broker license and the salesperson or sales agent license.

18
Q

A salesperson may not:

A

 bind a client to any contract
 receive compensation directly from a client
 accept a listing or deposit that is not in the name of the broker

19
Q

In accepting employment from a broker, a salesperson generally makes a commitment to:

A

 work diligently to sell the broker’s listings
 work diligently to procure new listings
 promote the business reputation of the broker
 abide by the broker’s established policies
 fulfill the fiduciary duties owed clients as their subagent
 maintain insurance policies as required by the broker
 have transportation for conducting business, as required by the broker
 conform to ethical standards imposed by broker and trade organization
 uphold all covenants and provisions of the employment agreement

20
Q

In employing a salesperson, a broker generally makes a commitment to:

A

 make the brokerage’s listings available
 make the brokerage’s market and property data available
 provide whatever training was promised at the time of hiring
 provide whatever office support was promised at the time of hiring
 uphold the commission structure and expense reimbursement policy
 conform to ethical standards imposed by the broker’s trade organization
 uphold all covenants and provisions of the employment agreement

21
Q

An agent’s commission schedule is a comprehensive summary of commission splits under various circumstances, including:

A

 listing and selling side
 salesperson’s level of sales performance
 broker’s level of expense reimbursement to agent
 the particular policies or organization of the agency
 prevailing commission splits in the market

22
Q

When marketing activities produce prospects, the agent’s marketing role becomes more interpersonal. An agent must now:

A

 qualify prospects’ plans, preferences, and financial capabilities
 show properties that meet the customer’s needs
 elicit the buyer’s reactions to properties
 report material results to the seller or listing agent

23
Q

Pre-closing responsibilities are:

A

An agent’s foremost duty following acceptance of an offer is to submit the contract and the earnest money to the employing broker
 assisting the buyer in obtaining financing
 assisting the seller in clearing title
 assisting the seller in completing property repairs
 recommending inspectors, appraisers, attorneys, and title companies
 assisting in communications between principals
 assisting in the exchange of transaction documents

24
Q

Conversion is the act of

A

misappropriating escrow funds for the broker’s business or personal use.

25
Sherman Antitrust Act.
Enacted in 1890, the Sherman Antitrust Act prohibits restraint of interstate and foreign trade by conspiracy, monopolistic practice, and certain forms of business combinations, or mergers.
26
Clayton Antitrust Act
The Clayton Antitrust Act of 1914 reinforces and broadens the provisions of the Sherman Act
27
Anti-competitive behavior
The effect of antitrust legislation is to prohibit trade practice and trade restraints that unfairly disadvantage open competition.
28
Collusion.
Collusion is the illegal practice of two or more businesses joining forces or making joint decisions which have the effect of putting another business at a competitive disadvantage. Businesses may not collude to fix prices, allocate markets, create monopolies, or otherwise interfere with free market operations.
29
Price fixing
is the practice of two or more brokers agreeing to charge certain commission rates or fees for their services, regardless of market conditions or competitors
30
Market allocation
is the practice of colluding to restrict competitive activity in portions of a market in exchange for a reciprocal restriction from a competitor: "we won't compete against you here if you won't compete against us there."
31
Tie-in agreements
the sale of one product or performance of a service is tied to the sale of another, less desirable product or service. For instance, “I will sell you this car, but you have to hire my brother-in-law to drive it.” Or, more likely, “I will list and sell your old home if you hire me to find you a new home to purchase.” Tie-ins restrict competition and limit the freedom of the consumer.
32
A _____ sets forth all terms and conditions of the agreement, including exactly what is being sold.
sale contract
33
An ___________ is an agreement for transferring any and all real property involved in the transaction
assignment or real estate sale agreement
34
Tangible business assets include
 cash and marketable securities  inventory  trade fixtures and equipment  real property  accounts receivable
35
Intangible business assets include:
 the company name  trademarks  copyrights  licenses  contracts for future sales of goods or services  goodwill
36
In any case, the value of the business is a function of the following:
 past, present, and future net profits, and capitalized value of these  amount of risk and certainty associated with realizing future profits  value of all assets as reflected in the books of account  impact of goodwill on the value of the business  prices paid for similar businesses  all other risks associated with the business
37
A real estate syndication is
a form of investment in which two or more investors contribute capital to a pool for the purpose of acquiring, managing, and selling an investment property for a profit.