Chapter 3: Agency, Brokerage, and Ethical Considerations KEY TERMS

Question 1

Agent

Answer 1

one authorized to act for another

Question 2

Antitrust laws

Answer 2

regulations prohibiting price-fixing

Question 3

Attorney-in-fact

Answer 3

person authorized to act under a power of attorney

Question 4

Broker

Answer 4

one authorized to act for another in real estate transactions

Question 5

Buyer’s broker

Answer 5

agent who takes a buyer as the principal

Question 6

Client

Answer 6

principal who engages an agent

Question 7

Commission

Answer 7

broker’s usual compensation

Question 8

Consumer Information Statement

Answer 8

written explanation of a business relationship

Question 9

Customer

Answer 9

third party in a transaction, not the principal

Question 10

Disclosed dual agent

Answer 10

one who works for both the seller and the buyer

Question 11

Disclosure

Answer 11

revealing to another any pertinent information

Question 12

Dual agency

Answer 12

brokers taking both parties as principals

Question 13

Employee

Answer 13

salesperson whose broker pays Social Security, regulates hours, etc.

Question 14

Fiduciary

Answer 14

one who owes special duties to another

Question 15

Fiduciary relationship

Answer 15

trust and confidence between parties

Question 16

Fraud

Answer 16

intentional or unintentional misleading of another, who is harmed thereby

Question 17

General agent

Answer 17

one empowered for a wide range of actions

Question 18

Independent contractor

Answer 18

salesperson who sets own hours, pays own estimated income taxes, etc.

Question 19

Kickback

Answer 19

illegal sharing of a commission with seller

Question 20

Latent defect

Answer 20

problem not discoverable by normal prudent inspection

Question 21

Law of agency

Answer 21

rules governing conduct of agents

Question 22

Listing agreement

Answer 22

contract by which the owner retains a broker to find a buyer

Question 23

Meeting of the minds

Answer 23

agreement between a buyer and seller on major points

Question 24

Megan’s Law

Answer 24

legislation requiring that communities be alerted to the presence of sex offenders

Question 25

Power of attorney

Answer 25

written authorization of agency

Question 26

Principal

Answer 26

the one employing an agent; the client

Question 27

Procuring cause

Answer 27

the one who brings about a sale

Question 28

Puffing

Answer 28

harmless exaggeration as salesmanship

Question 29

Ready, willing, and able buyer

Answer 29

one qualified and prepared to purchase

Question 30

Salesperson

Answer 30

person licensed to assist a real estate broker

Question 31

Special agent

Answer 31

one authorized to act for another in a specific transaction

Question 32

Subagent

Answer 32

agent of an agent

Question 33

Transaction broker

Answer 33

one who facilitates a transaction without functioning as an agent

Question 34

Code of Ethics

Answer 34

standards of conduct adopted by REALTORS®

Question 35

Conflict of interest

Answer 35

problem when serving best interests of both the client and oneself

Question 36

Errors and omissions insurance

Answer 36

real estate equivalent of malpractice coverage

Question 37

Fraudulent misrepresentation

Answer 37

intentional fraud

Question 38

Graduate, REALTOR® Institute

Answer 38

designation awarded for advanced study

Question 39

Innocent misrepresentation

Answer 39

unintentional deception committed in ignorance

Question 40

National Association of REALTORS®

Answer 40

private nationwide organization of brokers and salespersons

Question 41

Negligent misrepresentation

Answer 41

fraud committed by someone who should have known better

Question 42

New Jersey REALTORS®

Answer 42

statewide group of real estate licensees who choose to join

Question 43

REALTOR®

Answer 43

member of a private national organization

Question 44

Standard of care

Answer 44

competence normally expected