Unit 4 Flashcards
Objective 1: Describe the requirements for and different types of listing agreements and arrangements, which include express and implied agreements, exclusive right to sell listings, exclusive-agency listings, open listings, and net listings.
Answer: Listing agreements establish the agency relationship between a broker and a seller. The primary types of listing agreements include:
Express Agreement: Explicitly stated terms and conditions, either written or oral.
Implied Agreement: Created by actions or conduct, without formal documentation.
Exclusive Right to Sell: The broker has the exclusive right to represent the seller and is entitled to a commission even if the seller finds the buyer.
Exclusive Agency: The broker has exclusive rights, but no commission is earned if the seller finds a buyer independently.
Open Listing: The seller may list with multiple brokers, and only the broker who brings a buyer is entitled to a commission.
Net Listing: The broker receives a commission based on any amount over a predetermined net price agreed to by the seller.
Objective 2: Describe the benefits of seller agency and how choosing to represent sellers only affects a brokerage’s practices (i.e., exclusive seller agency vs. nonexclusive seller agency).
Answer: Choosing to represent sellers exclusively allows a brokerage to focus on the seller’s interests and avoid potential conflicts that arise from representing both parties.
Exclusive Seller Agency: The brokerage only represents sellers and does not engage in dual agency, ensuring loyalty and minimizing conflicts of interest.
Nonexclusive Seller Agency: The brokerage may represent multiple sellers but not exclusively, and it can involve other brokers to assist in the transaction.
Objective 3: Explain what subagency is, how it is created, and the concerns associated with subagency arrangements.
Answer: Subagency is a type of agency relationship in which a broker, with the principal’s consent, appoints other brokers to assist in selling the property. The subagent works on behalf of the seller and owes fiduciary duties to the seller, not the buyer. Concerns with subagency include confusion about representation, lack of direct relationship with the client, and potential legal liability for actions of the subagent.
Objective 4: Describe the disclosures required of a seller’s agent to a seller and to a buyer.
Answer: Disclosures required by a seller’s agent include:
To the Seller: The agent must disclose all material facts about the property, market conditions, and any offers received.
To the Buyer: The agent must disclose any known defects or issues with the property, ensuring transparency and compliance with state laws. Additionally, the agent must provide the Information About Brokerage Services (IABS) form and explain agency relationships.
Keyterm: Exclusive Right to Sell
Meaning: A type of listing agreement in which the broker has exclusive rights to market and sell the property. The broker receives a commission regardless of who finds the buyer.
Keyterm: Exclusive Agency Listing
Meaning: A listing agreement in which the broker represents the seller exclusively, but the seller retains the right to find a buyer without owing a commission to the broker.
Keyterm: Open Listing
Meaning: A non-exclusive listing that allows multiple brokers to market the property. Only the broker who brings the buyer receives the commission.
Keyterm: Net Listing
Meaning: An agreement in which the broker’s commission is any amount above a specified price agreed to by the seller. This type of listing is discouraged due to potential conflicts of interest.
Keyterm: Procuring Cause
Meaning: The broker whose actions directly result in a sale, entitling them to commission. This concept is critical in resolving disputes when multiple brokers claim to have found the buyer.
Keyterm: Exclusive Agency Addendum
Meaning: An addendum that can be attached to a listing agreement, specifying any exceptions or additional terms for the exclusivity of the agency.
Keyterm: Seller’s Disclosure Notice
Meaning: A form required by Texas law, where sellers disclose known material defects of the property to prospective buyers.
Keyterm: Listing Agreement
Meaning: A contract between a broker and a seller, authorizing the broker to market and sell the property under specific terms and conditions.
Keyterm: Broker’s Authority
Meaning: The rights granted to a broker in a listing agreement, including the authority to market the property, advertise, and negotiate with potential buyers.
Keyterm: Commission Agreement
Meaning: A separate agreement that outlines how commission will be shared among brokers involved in a sale, particularly when there are multiple agents or brokers working together.
Keyterm: MLS (Multiple Listing Service)
Meaning: A database system that brokers use to share information about properties available for sale, providing increased exposure for listings and facilitating cooperation between brokers.
Keyterm: Protection Period
Meaning: A period following the termination of a listing agreement during which the broker may still be entitled to a commission if the property sells to a buyer they introduced during the listing period.
Keyterm: Cooperation with Other Brokers
Meaning: The practice of working with other brokers to sell a property, often through the MLS, where commission agreements and cooperative relationships are established.
Keyterm: Subagent
Meaning: A broker or sales agent who represents a principal through cooperation with the principal’s broker, usually in a property listing. Subagents owe fiduciary duties to the principal and must act in their best interest.
Keyterm: Subagency
Meaning: A type of agency relationship in which a broker, with the principal’s consent, appoints other brokers to assist in selling the property. The appointed subagents owe their duties to the principal and work under the listing broker.
Keyterm: Exclusive Seller Representation
Meaning: An agency relationship where the broker represents only the seller in a transaction and works solely in the seller’s best interest, without representing the buyer in any capacity.
Keyterm: Nonexclusive Seller or Single Representation
Meaning: An agency relationship where the broker represents the seller but is not the exclusive representative. Other brokers may represent the seller, and the broker is not guaranteed compensation if they do not procure the buyer.
Keyterm: Intermediary Agency
Meaning: A special form of agency in Texas where the broker represents both parties (buyer and seller) in a real estate transaction, with the written consent of both parties. The intermediary broker must remain impartial and cannot disclose confidential information of either party unless required by law.
Keypoint Question: What are expressed listing agreements, and how are they created?
Keypoint Answer: Expressed listing agreements can be written or oral. These agreements explicitly state the terms and conditions agreed upon by the parties, forming a clear and legally enforceable agency relationshi
Keypoint Question: What are implied listing agreements, and how are they created?
Keypoint Answer: Implied listing agreements are created by the words or conduct of the parties, even without a formal agreement. The relationship is inferred based on the actions of both parties, leading to an understanding that an agency relationship exists.