MRE_Chapter5

Question 1

Caveat Emptor

Answer 1

Let the buyer beware

Question 2

The common law Doctrine of Caveat Emptor

Answer 2

Buyers were pretty much on their own

Question 3

ARELLO

Answer 3

Association of Real Estate License Law Officials (ARELLO)

Question 4

Purpose of License Laws

Answer 4

• Establishing basic requirements for obtaining a real estate license - Defining which activates require licensing - Describing the acceptable standards of conduct and practice for licensees - Enforcing those standards through a disciplinary system

Question 5

Brokerage

Answer 5

The business of bringing parties together

Question 6

Real Estate Broker

Answer 6

A person licensed to buy, sell, exchange, or lease real property for others and to charge a fee for these services

Question 7

Broker-Salesperson Relationship

Answer 7

• A real estate salesperson is any person licensed to perform real estate activates on behalf of a licensed real estate broker. - A broker is fully responsible for the action performed by the Salesperson

Question 8

Real Estate Assistants

Answer 8

Is a combination of office manager, marketer, organizer and facilitator who has a fundamental understanding of Real Estate industry

Question 9

Commission Earned When..

Answer 9

• A completed sales contract has been executed by a ready, willing and able buyer The contract has been accepted and executed by the seller Copies of the contract are in possession of all Parties

Question 10

Procuring Cause

Answer 10

To be a procuring cause, the broker must have started a chain of events that resulted in a sale. Like Conducting Open Houses, Placing Advt, Showing House,etc.

Question 11

A ready, willing and able buyer

Answer 11

Is one prepared to buy on the seller’s terms and ready to complete the transaction

Question 12

Broker entitled for commission (non-consummated situation)

Answer 12

• If seller had a change of mind and refused to sell - Seller spouse reused to sign the deed - Seller had a title with uncorrected defects - Seller committed fraud with respect to the transaction - Seller was unable to deliver possession - Seller insisted on terms not in the listing - Seller had mutual agreement with the buyer to cancel the transaction

Question 13

Graduated Commission Splits

Answer 13

Splits the commission based on the commission value. Like 50/50 up to $25000, 60/40 for $25000 to $30000, etc

Question 14

Unbundling Services

Answer 14

Offering services in a piecemeal fashion

Question 15

Agent’s Seller Services

Answer 15

• Prepare the property for sale - Performing Competitive Market Analysis (CMA) & Pricing the property - Assisting with marketing the property using MLS & web sites - Locating & screening buyer - Drafting a purchase sales agreement - Assisting with the closing transaction

Question 16

Agent’s Buyer Services

Answer 16

• Consulting on renting vs. buying - Mortgage pre-approval - Consulting on a buyer’s desired location - Visiting properties & checking properties - Drafting a purchase sales agreement & help with negotiation - Assisting with the closing transaction

Question 17

FSBOs

Answer 17

Sale By Owners

Question 18

Minimum level of services

Answer 18

• Accept delivery of and present offers and counteroffers to the client - Assist the client in developing , negotiating and presenting offers and counteroffers - Answer the client’s questions about offers, counteroffers and contingencies

Question 19

Independent Contractor Requirements

Answer 19

• The individual must have a current Real Estate license - The licensee must have a written contract with the broker that species that the licensee will not be treated as an employee - Atleast 90% of the individual’s income as a licensee must be based on sales production and not on number of hr worked

Question 20

Anti-trust Violations

Answer 20

• Price-Fixing - Group Boycotting - Allocation of customers - Allocation of markets - Tie-in Agreements

Question 21

Price Fixing

Answer 21

Practice of setting prices for products or services rather than letting competition in the open market set the price

Question 22

Group Boycotting

Answer 22

When two or more business conspire against another business or agree to withhold their patronage to reduce competition

Question 23

Allocation of Customers/Markets

Answer 23

• An agreement between real estate broker to divide their markets and refrain from competing for each other’s business. - Allocation may be by Geographic Basis, Price Range , Category of housing , etc.

Question 24

Tie-In Agreements

Answer 24

aka ‘Tying Agreements’, are agreements to sell one product only if the buyer purchases another product as well. The sale of the first(desired) is tied to purchase of second.

Question 25

Penalties for Antitrust

Answer 25

• Under Federal Sherman Antitrust Act, people who fix prices or allocate markets may be penalize up to a $1 million fine and 10 Years in prison. Sometime it may be as high as $100 million

Question 26

Treble-Damages

Answer 26

An individual who has suffered a loss because of an antitrust activity may sue for threefold the damages sustained

Question 27

VOW

Answer 27

Virtual Office Website. This is replaced by Internet Listing Display Policy

Question 28

IDX

Answer 28

Internet Data Exchange policies , also replaced by Internet Listing Display

Question 29

Blanket opt-out Provision

Answer 29

Those MLS participants interested in keeping their listing off of competitor’s web sites cannot then display other real estate broker’s listings

Question 30

Common Internet Advt Law

Answer 30

• All electronic communication by the real estate license must include the licensee’s name, office address & broker affiliation - Real Estate professionals must disclose their status as a real estate broker or sales persons on each page of the web site that contain advt. - The listing of only salesperson’s name without the sponsoring broker’s name in an advt is prohibited - An advertisement must be a true representation and not be misleading

Question 31

UETA

Answer 31

Uniform Electronic Transaction Act - An enforceable contract using electronic means and has been enacted in most states

Question 32

E-Sign

Answer 32

Electronic Signatures in Global and national commerce act

Question 33

UETA’s Key Provisions

Answer 33

• A contract cannot be denied its legal effect just because an electronic media was used - A record or signature cannot be denied its legal effect just because it is in electronic format - If a State’s law requires a signature on a contract and electronic signature is sufficient - If a state’s law requires a written record, an electronic record is sufficient