Essentials of Intermediary Brokerage Flashcards
What does an agent owe the principal?
Fiduciary duties
Name 4 of the 7 fiduciary duties?
Loyalty Diligence Confidentiality Obedience Disclosure Accounting and Reasonable Care
What population segment does an exclusive buyer firm represent?
Only buyers of real estate
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?
Over 70% of all buyers
What sales model was developed to allow one broker to sell another broker’s listings?
Multiple Listing Service (MLS)
MLSs use what type of compensation system?
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.
What are the results of an agent splitting a commission?
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.
What is the person called that is allowed to receive a commission that is offered by the listing broker?
Cooperating broker
Features of Dual Agency
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.
Dual agency is not illegal in many states
However, undisclosed dual agency is.
Transaction broker
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.
Following are some tasks that a transaction broker routinely performs:
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
Define dual agency.
Dual agency occurs when the same brokerage represents both the seller and the buyer under a written agreement.
How does an agent become an undisclosed dual agent?
By conduct that misleads a buyer into thinking that the agent represents him or her
Which transaction model has been used to replace dual agency?
Intermediary Brokerage
Neither side of the sale
A transaction broker has fiduciary responsibilities towards which party?
What transaction model was developed to replace dual agency?
Intermediary
What two items must be present for the broker to act as intermediary?
A written consent for it to happen and a description of what the compensation will be.
Define intermediary with appointments
This occurs when the broker appoints one agent to represent the seller and another agent to represent the buyer.
Which document is used to notify clients that intermediary has happened?
Notification of Intermediary Relationships
What confidential information can agents share when acting as an intermediary agent?
Condition of the property or information that a client has authorized to tell the other client
How long does confidentiality last in an intermediary relationship?
Forever
Under what circumstance in an intermediary relationship can one agent be appointed to both the buyer and seller?
Never
What is it called when the broker represents no one in an intermediary relationship?
Intermediary without appointments
What position must the broker take when intermediary with appointments is in effect?
The broker steps out of the transaction and lets the agents do all of the negotiating.
Which two people in the office can the broker not appoint to an intermediary position?
The broker him or herself and the agent already working for the other client.
What occurs if the broker is absent and appointments are necessary?
The broker is allowed to delegate someone else the responsibility to make appointments.
What is the Notification of Intermediary Relationship called when it is attached to a sales contract?
An addendum
What is the goal of turning intermediary without appointments to intermediary with appointments?
For all clients to receive maximum representation.
What is the best way for a broker to avoid intermediary relationships?
Establish a policy that when one person in the transaction is a client, then the other one will be a customer.
What practice does intermediary brokerage maintain?
The practice of keeping the buyer as a customer throughout the transaction.
What action have some brokers taken because intermediary relationships seem just too complicated?
They practice non-agency
Beginning in September of 2005, TRELA no longer permitted brokers to act as common law dual agents
Brokers are now required to act as intermediaries when representing more than one party.
Common law systems
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.
As an agent, you must obey
a client’s instructions. That’s only if their instructions are legal and are in accordance with the contract.
An exclusive buyer firm
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.
Transaction brokers have no
fiduciary responsibility towards either party in a transaction
The benefit of intermediary relationships
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.
A Notification of Intermediary Relationships
Informs your clients of the intermediary relationship
