Real Estate Agency & Real Estate Agency in Practice

Question 1

What is “agency” governed by?

Answer 1

The “Law of Agency”.

The legal framework around agency.

Question 2

What are the 3 parties in an agency relationship?

Answer 2

Principal (client)
Special Agent (broker)
Subagent (salesperson)
*Remember that the broker is principal to the sales person.

Question 3

What are the three types of agency?

Answer 3

Expressed: Directly stated.
Implied: Never directly states, but exists (usually because of someone’s actions.
Apparent/Ostensible: Agency that doesn’t exist at all, but appears to.
*If is important to make it clear who you work for in a transaction.

Question 4

What are agency obligations?

Answer 4

OLD CAR
O-Obedience: Follow all of your clients instruction; but do NOT break the law.
L-Loyalty: Put your client’s interest first.
D-Disclosure: Tell your clients anything that would reasonable want to know; affirmatively.
C-Confidentiality: Keep confidential any info your client would not want disclosed that you do not need to disclose.
A-Account: Account for/return any client money.
R-Reasonable care: Protect your client from things that can go wrong.

Question 5

What are the 3 types of agents?

Answer 5

Universal Agent: Handles a client’s everything.
General Agent: Handles everything in one aspect of a client’s life.
Special Agent: Handles a client in one thing only.

Question 6

What MUST an agent disclose to all potential buyers?

Answer 6

Material defects.
-Physical defects
-Defects rooted in the surrounding land
-Defects in an offer
Megan’s Law Issues.
-The catch all term for the sex offender registry.
-Best to research the sex offenders on the registry in the area and present that information to all potential buyers.

Question 7

What must an agent NOT disclose to any potential buyers?

Answer 7

Anything that will compromise your clients bargaining position that you’re not required to disclose.

Question 8

What might an an agent need to disclose depending on who they work for?

Answer 8

Property Stigmas (deaths in the house, crimes in the house, ghosts, etc.)

• If you represent the seller, you don’t disclose this info UNLESS directly asked. You cannot lie.
• If you represent the buyer, you affirmatively disclose this info.

Question 9

What happens if you fail to disclose something you should have?

Answer 9

An agent, providing they knew about something bad they should have disclosed, could face triple damages and attorney fees. If it best to have a “seller disclosure form” filled out and to do your research on the property.

Question 10

Seller disclosure form

Answer 10

Form a seller fills out that lists everything about the property.

Question 11

Tristram’s Landing v. Wait

Answer 11

Controls when you’re entitled to a real estate commission.
Rules:
-Must be the procuring cause of the sale.
-Must produce a ready, willing & able buyer.

Question 12

FTC do not call

Answer 12

• Prohibits unsolicited telemarketing to a residential “do not call list”.
• Punishable by fine of $43,792 per call.

Question 13

CAN-SPAM

Answer 13

Can send spam emails IF you include an opt-out & your business address.

Question 14

COPPA

Answer 14

Children’s Online Privacy Protection Act

Strictly regulates the collection of information from children < 13 yrs. old.

Question 15

Interstate Land Sales Disclosure

Answer 15

Requires the registration of property developments w/ either >25 lots or >20 acres w/ the CFPB if they’re going to be sold on interstate basis.

Question 16

Sherman Anti-Trust Act

Answer 16

Designed to curtail anti-competitive business practices. like:
-price fixing
-geographic segmentation
-boycotts of non-competitors
-tying arrangements/contingency sales
Violations of this act result in fines of $1M for a corporation or $100k and 3 years federal jail for individuals.
Makes everything negotiable like:
-commissions
-contracts   
-listing terms
-etc.

Question 17

Commission math:

Seller needs $100k profit. Seller pays agent 5% and a lawyer $2,500. What should they sell the house for?

Answer 17

Solution:
100,000+2,500= 102,500
100%-5%=95%
102,500/.95=107,894.74
Answer: seller should sell property for 107,894.74