Real Estate national exam ch 10 Flashcards
D: Listing Agreement
The employment contract between a broker and a real estate seller.
It is a contract for the professional services of the real estate broker by which the broker is authorized to represent the principal (and the principal’s real estate) to consumers.
That authorization includes obtaining and submitting offers for the property.
D: Exclusive right-to-sell listing
One broker is employed as the seller’s sole representative.
The listing broker is given the exclusive right, or authorization, to market the seller’s property.
If the property is sold while the listing agreement is in effect, the seller must pay the broker a commission, regardless of who sells the property.
In other words, if the seller finds a buyer, with or without the broker’s assistance, the seller must pay the broker a commission.
What are the types of listing agreements?
- Exclusive Right to Sell
- Exclusive Agency
- Open Listing
D: Exclusive Agency Listing
One broker is authorized to act as the exclusive agent of the principal, but the seller retains the right to sell the property without the obligation to pay the broker.
When a request is made by a property owner for this type of agreement, the broker would, understandably, be very reluctant to list the property.
The request usually means that the seller is reasonably confident of having the contacts needed to be able to sell the property directly and is only listing the property with a broker to show that the offer to sell is sincere.
For the broker, this type of listing is very risky and somewhat odd because the broker is placed in the position of making the effort to market the property only to be in competition with the client to find a buyer.
D: Open Listing
AKA: Nonexclusive Listing
The seller retains the right to employ any number of brokers as agents.
The listing brokers market the property simultaneously, and the seller is obligated to pay a commission only to the listing broker who successfully produces a ready, willing, and able buyer. If the seller personally sells the property without the aid of any of the listing brokers, the seller is not obligated to pay a commission to any of them.
The terms of an open listing must be negotiated and should be in writing to protect the successful listing broker’s ability to collect an agreed-on fee from the seller.
An offer to purchase brought to the seller by a buyer’s broker should specify the commission or fee to be paid to the buyer’s broker out of the sale proceeds unless the buyer has agreed to compensate the broker by a separate commission or fee.
D: Net Listing
The provision specifies that the seller will receive a net amount of money from any sale, with the excess going to the listing broker as commission.
The broker is free to offer the property at any price greater than that net amount.
Because a net listing can create a conflict of interest between the broker’s fiduciary responsibility to the seller and the broker’s profit motive, it is illegal in many states and discouraged in others.
D: Multiple Listing Clause
May be included in an exclusive listing.
It is used by brokers who are members of the multiple listing service (MLS).
Under the provisions of most MLSs a participating broker makes a
unilateral offer of cooperation and compensation to other member brokers.
A broker’s agreement to represent a property seller may be terminated for the following reasons:
- The agreement’s purpose is fulfilled by the transfer of title to the buyer.
- the agreement’s term expires
- The property is destroyed, to its use is changed by some force outside the owner’s control.
- Title to the property is transferred by operation of law.
- The broker and the seller mutually agree to cancel the agreement.
- Either the broker or the seller breaches the agreement.
- Either the broker or the seller dies or becomes incapacitated.
D: Automatic Extension Clause
Such as a clause providing for a base period of 90 days that “continues thereafter until terminated by either party hereto by 30 days’ notice in writing.”
Extension clauses are illegal in some states, and many listing contract forms specifically provide (as may be required by law) that there can be no automatic extension of the agreement. Some courts have held that an extension clause actually creates an open listing rather than an exclusive agency agreement.
D: Broker Protection Clause
This clause provides that the property owner will pay the listing broker a commission if, within a specified number of days after the listing expires, the owner transfers the property to someone the broker originally introduced to the owner.
This clause protects a broker from losing a commission in the event that the transaction is not completed (and, perhaps, is intentionally delayed) until after the listing expires.
D: Comparative Market Analysis (CMA)
AKA: Competitive Market Analysis
This clause provides that the property owner will pay the listing broker a commission if, within a specified number of days after the listing expires, the owner transfers the property to someone the broker originally introduced to the owner.
This clause protects a broker from losing a commission in the event that the transaction is not completed (and, perhaps, is intentionally delayed) until after the listing expires.
What information is needed for a listing agreement?
- Names & Relationship if any, of the owners.
- Street Address and legal description of the property
- Size, type, age, and construction of improvements.
- Number of rooms and their sizes.
- Dimensions of the lot.
- Existing loans, including the name and address of each lender, the type of loan, the loan number, the loan balance, the interest rate, the monthly payment of principal, interest, taxes, and insurance (PITI), whether the loan may be assumed by the buyer and under what circumstances, whether the loan may be prepaid without penalty, and whether or not the lender has approved a short sale (one in which the sales price is less than the amount of the outstanding loan balance) and, if so, whether the seller will incur a personal debt for the difference.
- Possibility of seller financing or the willingness to agree to a lease option in which the property is leased to a prospective buyer who will have the right to purchase the property during or at the end of the lease term at an agreed-upon price.
- Amount of any outstanding special assessments and whether they will be paid by the seller or assumed by the buyer.
- Zoning classification of the property
- Current or most recent year’s property taxes.
- Neighborhood amenities
- Real Property, if any, to be removed from the premises by the seller and any personal property to be included in the sale of the buyer.
- Any additional information that would make the property more appealing and marketable
- Required disclosures regarding property condition.
What are the provisions in a listing agreement?
- Names of all parties to the contract.
- Brokerage Firm
- Description of the premises
- Listing Price
- Broker’s Authority & Responsibilities
- Brokers Compensation
- Real Property & Personal Property
- Leased Equipment
- Proposed Dates for closing & Buyer’s possession
- Closing
- Evidence of Ownership
- Encumbrances
- Home Warranty Program
- Termination of the contract
- Broker Protection Clause
- Warranties by the owner
- Indemnification (Hold Harmless) Wording
- Nondiscrimination (Equal Opportunity) Wording
- Antitrust Wording
- Signatures of the parties
- Date the Contract is Signed
D: Buyer Representation Agreement
A principal-agent relationship in which the real estate professional acts on behalf of the buyer, usually as an agent, with fiduciary responsibilities to the buyer.
