Section 6, Unit 3: Agency Creation and Termination

Question 1

require that the brokerage, and all the brokers and agents within that firm, act in a fiduciary capacity for either the buyer or the seller in a real estate transaction, but not for both. This type of firms prohibit their licensees from representing opposing sides in a transaction.

Answer 1

Single Agency

Question 2

you represent the seller. It’s your duty to advocate solely for the seller and seek a sale of the property at the best price available or a price that’s acceptable to the seller.

Answer 2

Seller Agency

Question 3

• Invest your time and energy in marketing and selling the property.
• Inform the seller of the responsibility to make all required property condition disclosures.
• Negotiate contract terms in accordance with the seller’s wishes.
• Ensure that the buyer’s earnest money is deposited by the contracted deadline.
• Communicate all offers and counter-offers to the seller.

Answer 3

Seller Agent Duties

Question 4

you exclusively represent the buyer. In the past, ____ was not properly practiced in residential real estate. The licensee’s commission was drawn from the sale of a property, so it was assumed that buyers didn’t need to be represented in the transaction and were regarded only as customers.

Answer 4

Buyer Agency

Question 5

• Show them properties that meet their criteria and fall within their budget.
• Ensure that they receive all required property condition disclosures from the seller.
• Ensure that they understand the importance of due diligence, including a professional inspection of the property.
• Review transaction documents with them, clarifying anything that could be confusing, without stepping outside the scope of your license (in other words, refer buyers to an attorney for interpreting any legal consequences or language).
• Negotiate contract terms that are fair and agreeable to them.

Answer 5

Buyer Agent Duties

Question 6

when a licensee from a competing firm works under the listing agent. It’s rarely seen.

Answer 6

Sub Agency

Question 7

means that a real estate brokerage firm, and all the brokers and agents for that firm, can act in a fiduciary capacity for both the buyer and seller in the same transaction. They are required to provide all fiduciary duties to each party, except for the duty of undivided loyalty.

Answer 7

Dual Agency

Question 8

exists when one licensee represents both the buyer and seller in a transaction. In that case, the licensee is the dual agent, and his broker is also a dual agent.

Answer 8

Single-license dual agency

Question 9

exists when two agents from the same brokerage represent the buyer and seller in a transaction.

Answer 9

Dual licensed dual agency

Question 10

is one way that states may allow a broker to avoid dual agency even when two agents from the same brokerage are involved. The broker designates two of the brokerage’s agents: one to represent the buyer and one to represent the seller. In such a scenario, the two agents are designated agents, and the broker is a dual agent in the transaction. The two designated agents and the broker must generally follow rules that attempt to protect the clients’ interests. This allows each client to have the benefit of single agency, but the brokerage earns the commission from both sides in the transaction.

Answer 10

Designated agency

Question 11

means that all parties fully understand the ramifications and purpose of dual agency. This requires foreknowledge of the fiduciary duty that will be lost when agreeing to dual agency: undivided loyalty. Dual agency must be consensual, and written consent must be received from both parties.

Answer 11

informed consent