Unit 8

Question 1

What are the four steps a broker should take to clarify agency relationships?

Answer 1

Four steps a broker should take to clarify agency relationships are:
* Decide in each particular transaction whether to represent the buyer or the seller, and whether intermediary brokerage is anticipated.
* Disclose to the buyer and the seller whom you represent as soon as there is an agreement on the representation.
* Document the disclosure with an adequate and timely written confirmation.
* Do as declared, acting consistently with the disclosed decision

Question 2

In deciding whether to act as an agent of a buyer, what are some relevant questions for a listing broker to ask?

Answer 2

Relevant questions for a listing broker to ask when deciding to act as an agent of the buyer are:
* Is there currently a possibility that this transaction could be an in‑house sale or will it be a cooperative sale?
* Is it clear to all that the buyer is currently a customer, or have we already acted as an agent for the buyer?
* Has there been any prior business relationship with the buyer or is a future relationship anticipated?

Question 3

In deciding whether to act as a subagent of a listing broker while working with a buyer, what are some relevant questions for another broker to ask?

Answer 3

Relevant questions for a broker to ask when deciding to act as a subagent are:
* Will the listing broker allow subagency?
* What is the company’s policy regarding subagency?
* Do I have a special relationship with the buyer that will create a conflict of interest?

Question 4

What are some key areas of the prospective agency relationship that the listing broker should discuss with the seller during the listing appointment?

Answer 4

Key areas of a prospective agency relationship that a listing broker should discuss:
* Information about agency relationships in general.
* Whether the property is to be listed in the MLS.
* Whether the prospective listing broker will act as an intermediary with buyers produced from the broker’s client pool.
* Who will have access to listing information?
* Will other licensees be other authorized to cooperate in the search for buyers?
* Will other licensees be subagents of the seller or buyer’s agents?
* The sharing of fees with a subagent and/or a buyer’s broker.

Question 5

When is the best time to make the disclosure of seller agency to the buyer?

Answer 5

Before substantive discussions about a specific property have begun.

Question 6

Learning Objective: Explain how the policy of Decide, Disclose, Document, and Do clarifies agency relationships and ensures proper agency disclosures.

Answer 6

Answer:
The policy ensures that agency relationships are clearly defined, disclosed, and followed throughout the transaction process.

• Decide: License holders must determine whom they will represent in each transaction and ensure this is established consensually.
• Disclose: Agency relationships must be disclosed early to all parties to ensure informed decision-making.
• Document: Proper documentation of disclosures and decisions helps avoid confusion or legal disputes.
• Do: License holders must act consistently with their disclosed roles and fulfill their duties as agreed.

Question 7

Learning Objective: Describe the steps for creating a company policy for disclosure.
Answer:

Answer 7

Answer:
Creating a company policy involves:

• Deciding on agency roles: The broker determines the types of relationships (e.g., exclusive buyer agency, intermediary, etc.) the firm will offer.
• Reviewing legal requirements: Policies must align with Texas law and TRELA regulations.
• Developing detailed procedures: Include guidance for handling common scenarios, disclosure requirements, and use of forms.
• Training staff: Ensure all associates understand and adhere to the policies.
• Updating regularly: Policies must evolve with changes in laws, market conditions, and firm goals.

Question 8

Key Point Question 1: Why must a brokerage firm decide the role it and its associates will play in each transaction?

Answer 8

Answer:
Because real estate transactions vary widely, a brokerage firm must decide what role the firm and its associates will play.

Question 9

Key Point Question 2: When must a license holder provide full disclosure to transaction participants?

Answer 9

Answer:
Once agency roles in a specific transaction have been decided, the license holder must give full disclosure to all participants in that transaction.

Question 10

Key Point Question 3: Why is it critical for a license holder to document all aspects of a transaction?

Answer 10

Answer:
Throughout the transaction, the license holder should take great care to properly document all aspects of the transaction.

Question 11

Key Point Question 4: Why is it essential for license holders to follow through on their disclosed roles?

Answer 11

Answer:
Once committed to a course of action, license holders must follow through and perform as agreed.

Question 12

Key Point Question 5: What should a firm’s written company policy include regarding agency relationships?

Answer 12

Answer:
The firm must develop a written company policy outlining the basic agency philosophy, how to handle common real estate situations, dealing with other firms, and use of agency forms.

Question 13

When should a license holder disclose to the buyer the agency status of the listing broker?
A. On recordation of the deed
B. At the first contact with the buyer
C. When the purchase contract is signed
D. When the buyer telephones the broker to arrange an introductory meeting

Answer 13

Answer: B. At the first contact with the buyer
Reasoning for the answer: TRELA requires that the agency status of the listing broker be disclosed at the first contact with the buyer to ensure transparency.

Question 14

Which is the BEST stage of the transaction to present the required TRELA Section 1101.558(d) written statement to the seller regarding agency options?
A. Just before submission of a first offer to the seller
B. Immediately after listing the seller’s property
C. Immediately prior to signing the listing agreement
D. At the time of the first substantive dialogue with the seller

Answer 14

Answer: D. At the time of the first substantive dialogue with the seller
Reasoning for the answer: Proper timing ensures the seller is informed early in the process about agency options, allowing them to make informed decisions.

Question 15

The other broker working with a buyer might represent
A. the buyer.
B. the seller.
C. the listing broker.
D. all of these.

Answer 15

Answer: D. all of these
Reasoning for the answer: Depending on the transaction, the other broker may represent the buyer, the seller, or act on behalf of the listing broker.

Question 16

The listing broker should discuss all of the following with the seller at the time the broker takes the listing EXCEPT
A. offer of subagency.
B. sharing of the listing fee.
C. listing in the MLS.
D. buyer’s motivation.

Answer 16

Answer: D. buyer’s motivation
Reasoning for the answer: While agency roles, fees, and MLS listing are critical, discussing buyer motivation may not be relevant at the listing stage.

Question 17

If a buyer/customer tells the listing broker that the buyer will pay up to the listed price but first wants to submit an offer 10% below that price, what should the broker tell the seller?
A. The buyer is qualified.
B. The buyer has made a good offer.
C. Don’t risk losing the buyer by making a counteroffer.
D. The buyer is willing to pay up to the listed price.

Answer 17

Answer: D. The buyer is willing to pay up to the listed price
Reasoning for the answer: The broker has a fiduciary duty to the seller and must relay all relevant information, including the buyer’s willingness to pay the listed price.

Question 18

When buyers attending open houses are “merely lookers,” there is
A. no need for license holders to disclose their relationship with the seller.
B. still a need for license holders to disclose their relationship with the seller in writing.
C. still a need for license holders to disclose their relationship with the seller, at least orally.
D. no need for license holders to disclose their relationship with the seller unless a buyer asks.

Answer 18

Answer: C. still a need for license holders to disclose their relationship with the seller, at least orally
Reasoning for the answer: Even if buyers are not actively engaged in negotiations, license holders must disclose their relationship with the seller to ensure transparency and avoid any misunderstanding.

Question 19

The buyer is considered to have received the required disclosure of agency when the license holder
A. delivers the TREC Information About Brokerage Services notice to the buyer and has the buyer sign the form.
B. delivers the TREC Information About Brokerage Services notice to the buyer.
C. discloses the agency relationship, either verbally or in writing, to the buyer.
D. completes a purchase contract for the buyer.

Answer 19

Answer: C. discloses the agency relationship, either verbally or in writing, to the buyer
Reasoning for the answer: TRELA allows agency disclosure to be made verbally or in writing, but it must be done clearly and early in the relationship.

Question 20

There is no requirement for a license holder to deliver the written notice (Information About Brokerage Services) to a buyer who is
A. seeking to be represented by the firm.
B. represented by another agent.
C. referred by a former client.
D. a friend.

Answer 20

Answer: B. represented by another agent
Reasoning for the answer: If the buyer is already represented by another agent, the license holder is not required to provide the IABS Notice as per TRELA guidelines.

Question 21

When buyers’ agents show a property listed by another firm, those buyers’ agents must
A. deliver the Information About Brokerage Services Notice and disclose their representation of the buyer to the seller.
B. verbally disclose their representation of the buyer to the seller.
C. deliver the Information About Buyers’ Services Notice to the seller.
D. assume that the seller has been informed of the representation.

Answer 21

Answer: B. verbally disclose their representation of the buyer to the seller
Reasoning for the answer: TRELA requires that buyers’ agents disclose their representation to the seller, which can be done verbally during the interaction.

Question 22

A broker should develop company policies that outline
A. how to handle common real estate situations.
B. how to deal with other firms.
C. use of agency forms.
D. all of these.

Answer 22

Answer: D. all of these
Reasoning for the answer: Comprehensive company policies should address handling real estate situations, interactions with other firms, and the use of agency forms to ensure clarity and compliance.