Unit 10 Real Estate Agency

Question 1

Define buyer representation agreement

Answer 1

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. 155

Question 2

Define buyer’s agent

Answer 2

A real estate professional who is under contract to locate property for a buyer and represent the buyer’s interests in a transaction. 156

Question 3

Define client

Answer 3

The principal in an agency relationship or other form of representation. 153

Question 4

Define customer

Answer 4

The third party or nonrepresented consumer for whom some level of service is provided. 166

Question 5

Define designated agency

Answer 5

A process that accommodates an in-house sale in which two different agents are involved. The broker designates one agent to represent the seller and one agent to represent the buyer. 165

Question 6

Define designated agent

Answer 6

A real estate professional authorized by a broker to act as the agent for a specific principal in a particular transaction; also may be called assigned agent or appointed agent. 165

Question 7

Define dual agency

Answer 7

Representing both parties to a transaction. This is unethical unless both parties agree to it, and it is illegal in some states. 163

Question 8

Define express agreement

Answer 8

An oral or written contract in which the parties state the contract’s terms and express their intentions in words. 154

Question 9

Define express agency

Answer 9

An agency relationship based on a formal agreement between the parties. 154

Question 10

Define fiduciary

Answer 10

One in whom trust and confidence is placed; a reference to a real estate professional employed under the terms of a listing contract or buyer representation agreement. 73

Question 11

Define fiduciary relationship

Answer 11

A relationship of trust and confidence, as between trustee and beneficiary, attorney and client, or principal and agent. 156

Question 12

Define fraud

Answer 12

Deception intended to cause a person to give up property or a lawful right. 166

Question 13

Define implied agency

Answer 13

If the actions of the parties imply that they have mutually consented to an agency relationship, an implied agency relationship is formed. 155

Question 14

Define implied agreement

Answer 14

A contract under which the agreement of the parties is demonstrated by their acts and conduct. 155

Question 15

Define latent defect

Answer 15

A hidden structural defect that could not be discovered by ordinary inspection and that threatens a property’s soundness or the safety of its inhabitants. Some states impose on property sellers and real estate professionals a duty to inspect for and disclose latent defects. 167

Question 16

Define listing agreement

Answer 16

A contract between an owner (as principal) and a real estate professional (as representative of the owner) by which the real estate professional is employed to find a buyer for the owner’s real estate on the owner’s terms, for which service the owner agrees to pay a commission or other form of compensation. 155

Question 17

Define negligent misrepresentation

Answer 17

Occurs when the real estate professional should have known that a statement about a material fact was false. 166

Question 18

Define nonagent

Answer 18

An intermediary between a buyer and a seller, or a landlord and a tenant, who assists one or both parties with a transaction without representing either. Also known as a facilitator, transaction broker, transaction coordinator, and contract broker. 155

Question 19

Define principal

Answer 19

(1) A sum loaned or employed as a fund or an investment, as distinguished from its income or profits. (2) The original amount (as in a loan) of the total due and payable at a certain date. (3) A main party to a transaction—the person for whom an agent works. 153, 237, 429

Question 20

Define puffing

Answer 20

Exaggerated or superlative comments or opinions. 166

Question 21

Define special agent

Answer 21

One who is authorized by a principal to perform a single act or transaction; a real estate professional is usually a special agent authorized to find a ready, willing, and able buyer for a particular property, when representing a seller, or a special agent authorized to find a suitable property, when representing a buyer. 159

Question 22

Define transaction broker

Answer 22

Helps both the buyer and the seller with paperwork and formalities in transferring ownership of real property, but who is not an agent of either party. 165

Question 23

Define universal agent

Answer 23

A person empowered to do anything the principal could do personally. 158 (Kyle 544)

Question 24

Define Agency by Ratification

Answer 24

An agency relationship created after the fact. (Kyle 519)

Question 25

Define buyer’s broker

Answer 25

A residential real estate professional who represents prospective buyers exclusively. 170

Question 26

Define employment contract

Answer 26

A document evidencing formal employment between employer and employee or between principal and agent or representative. In the real estate business, this generally takes the form of the agreement between broker and sales associate, client representation agreement (including a listing agreement or buyer representation agreement), or property management agreement. 3, 155, 176

Question 27

How to remember the fiduciary responsibilities Cold AC

C
O
L
D

A
C

Answer 27

Care
Obedience
Loyalty
Disclosure
Accounting
Confidentiality