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Law of Agency > Essentials of Intermediary Brokerage > Flashcards

Essentials of Intermediary Brokerage Flashcards

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1
Q

What does an agent owe the principal?

A

Fiduciary duties

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2
Q

Name 4 of the 7 fiduciary duties?

A 
Loyalty
Diligence
Confidentiality
Obedience
Disclosure
Accounting and
Reasonable Care
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3
Q

What population segment does an exclusive buyer firm represent?

A

Only buyers of real estate

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4
Q

In the early 1980s, the Federal Trade Commission found what percent of home buyers who believed that the agent they worked with was representing them?

A

Over 70% of all buyers

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5
Q

What sales model was developed to allow one broker to sell another broker’s listings?

A

Multiple Listing Service (MLS)

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6
Q

MLSs use what type of compensation system?

A

MLSs required that compensation be based on the cooperating broker acting as a subagent of the listing broker, rather than an agent of the buyer.

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7
Q

What are the results of an agent splitting a commission?

A

The listing agent is dictating the amount of the fee to be earned by the selling agent.
The listing agent creates a substantial roadblock for the selling agent to freely negotiate a fee with the buyer.
By accepting the split, the selling agent is accepting a subordinate role in the transaction.

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8
Q

What is the person called that is allowed to receive a commission that is offered by the listing broker?

A

Cooperating broker

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9
Q

Features of Dual Agency

A

Dual agency prohibits an agent in the listing firm from acting exclusively for either party.
Dual agency requires the informed written consent from both the client parties.
In a dual agency, confidential information about price, other offers, terms and motivation for pursuing a transaction must be kept confidential.
Dual agents may not advocate for one party to the detriment of the other.
Within limits, dual agents owe the same fiduciary duties to both seller and buyer.

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10
Q

Dual agency is not illegal in many states

A

However, undisclosed dual agency is.

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11
Q

Transaction broker

A

one that provides third-party real estate services to buyers and sellers. A transaction broker must remain legally neutral, but can assist the buyer and the seller in a transaction. The transaction broker might be described as a professional coordinator. A transaction broker often charges a flat fee, rather than a percentage of the sale.

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12
Q

Following are some tasks that a transaction broker routinely performs:

A

Assists the buyer in preparing an offer
Helps the seller in deciding what price to ask
Facilitates communications between the two parties
Helps write a contract
Helps both buyer and seller fulfill the conditions of the contract
Coordinates the closing

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13
Q

Define dual agency.

A

Dual agency occurs when the same brokerage represents both the seller and the buyer under a written agreement.

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14
Q

How does an agent become an undisclosed dual agent?

A

By conduct that misleads a buyer into thinking that the agent represents him or her

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15
Q

Which transaction model has been used to replace dual agency?

A

Intermediary Brokerage

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16
Q

Neither side of the sale

A

A transaction broker has fiduciary responsibilities towards which party?

17
Q

What transaction model was developed to replace dual agency?

A

Intermediary

18
Q

What two items must be present for the broker to act as intermediary?

A

A written consent for it to happen and a description of what the compensation will be.

19
Q

Define intermediary with appointments

A

This occurs when the broker appoints one agent to represent the seller and another agent to represent the buyer.

20
Q

Which document is used to notify clients that intermediary has happened?

A

Notification of Intermediary Relationships

21
Q

What confidential information can agents share when acting as an intermediary agent?

A

Condition of the property or information that a client has authorized to tell the other client

22
Q

How long does confidentiality last in an intermediary relationship?

A

Forever

23
Q

Under what circumstance in an intermediary relationship can one agent be appointed to both the buyer and seller?

A

Never

24
Q

What is it called when the broker represents no one in an intermediary relationship?

A

Intermediary without appointments

25
Q

What position must the broker take when intermediary with appointments is in effect?

A

The broker steps out of the transaction and lets the agents do all of the negotiating.

26
Q

Which two people in the office can the broker not appoint to an intermediary position?

A

The broker him or herself and the agent already working for the other client.

27
Q

What occurs if the broker is absent and appointments are necessary?

A

The broker is allowed to delegate someone else the responsibility to make appointments.

28
Q

What is the Notification of Intermediary Relationship called when it is attached to a sales contract?

A

An addendum

29
Q

What is the goal of turning intermediary without appointments to intermediary with appointments?

A

For all clients to receive maximum representation.

30
Q

What is the best way for a broker to avoid intermediary relationships?

A

Establish a policy that when one person in the transaction is a client, then the other one will be a customer.

31
Q

What practice does intermediary brokerage maintain?

A

The practice of keeping the buyer as a customer throughout the transaction.

32
Q

What action have some brokers taken because intermediary relationships seem just too complicated?

A

They practice non-agency

33
Q

Beginning in September of 2005, TRELA no longer permitted brokers to act as common law dual agents

A

Brokers are now required to act as intermediaries when representing more than one party.

34
Q

Common law systems

A

are the foundation for business and commercial enterprises in the United States. As such, real estate transactions are heavily based on common law and practices.

35
Q

As an agent, you must obey

A

a client’s instructions. That’s only if their instructions are legal and are in accordance with the contract.

36
Q

An exclusive buyer firm

A

is a broker that represents only buyers of real estate. Exclusive buyer firms never take listings and never represent the seller in a real estate transaction.

37
Q

Transaction brokers have no

A

fiduciary responsibility towards either party in a transaction

38
Q

The benefit of intermediary relationships

A

comes when the broker appoints at least one salesperson to represent the seller and another (or other) salesperson to represent the buyer. This is called intermediary with appointments.

39
Q

A Notification of Intermediary Relationships

A

Informs your clients of the intermediary relationship

Law of Agency (23 decks)

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