Unit 8 - Agency Contracts

Question 1

An employment contract between a property owner (as principal) and a real estate firm/broker (as agent) by which the broker is employed to find a ready, willing and able buyer for the owner’s real estate on the owner’s terms, for which service the owner agrees to pay a commission.

Answer 1

listing agreement

Question 2

A document evidencing formal employment between employer and employee or between principal and agent. In real estate, this is generally a listing agreement, a buyer agency agreement or a management agreement.

Answer 2

employment contract

Question 3

A national registry, managed by the Federal Trade Commission, that lists the phone numbers of consumers who prefer to limit the telemarketing calls they receive.

Answer 3

National Do Not Call Registry

Question 4

Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition.

Answer 4

antitrust laws

Question 5

Brokers conspiring to set fixed compensation rates

Answer 5

price fixing

Question 6

Brokers agreeing to limit their areas of trade or dealing to certain areas or properties

Answer 6

allocation of customers or markets

Question 7

One who is prepared to buy property on the seller’s terms and is ready to take positive steps to consummate the transaction; one of the agent’s requirements for entitlement to commission.

Answer 7

ready, willing, and able buyer

Question 8

The effort that began a chain of events that brings about the desired result. Under an open listing, the broker who is the procuring cause of the sale receives the commission.

Answer 8

procuring cause

Question 9

A principal-agent relationship in which the broker is the agent for the buyer, with fiduciary responsibilities to the buyer. The broker represents the buyer under the law of agency.

Answer 9

buyer agency agreement

Question 10

A small fee paid by the client upon creation of a buyer agency relationship as an advance partial compensation for services; it may be nonrefundable or applied to final compensation due depending on the agency agreement.

Answer 10

retainer fee

Question 11

Compensation that is due and payable upon the creation of a valid sales contract for property located by the buyer’s agent.

Answer 11

success fee

Question 12

A real estate transaction involving two or more brokerage firms, one firm representing the seller and the other representing the buyer.

Answer 12

co-brokered sale

Question 13

Two brokerage firms teams up to sell a property, usually to create more effective marketing for the listing client.

Answer 13

co-listing

Question 14

A listing agreement under which the broker’s commission is contingent on the broker personally producing a ready, willing, and able buyer before the property is sold by the seller or another broker.

Answer 14

open listing

Question 15

A listing contract under which the owner appoints a real estate broker as the exclusive agent for a designated period of time to sell the property, on the owner’s stated terms, for a commission. The owner reserves the right to sell without paying anyone a commission if the owner sells to a prospect who has not been introduced or claimed by the broker.

Answer 15

exclusive-agency listing

Question 16

A listing contract under which the owner appoints a real estate broker as the exclusive agent for a designated period of time to sell the property, on the owner’s stated terms, and agrees to pay the broker a commission when the property is sold, regardless of who sells the property.

Answer 16

exclusive right-to-sell listing

Question 17

An agreement between an unlisted property owner and a broker to secure payment for the broker if the property is sold to the particular buyer named in the agreement; it does not create a general listing and may not create agency at all - only compensation for a buyer’s agent.

Answer 17

protection agreement AKA

one-shot listing

Question 18

Arrangement where consumer asks licensee to perform specific real estate services for a set fee; unbundling of services; limited service firms.

Answer 18

fee-for-service agreement

Question 19

A marketing organization composed of member brokers who agree to share their listing agreements with one another in the hope of procuring ready, willing, and able buyers for their properties more quickly than they could on their own. Most accept only exclusive right-to-sell or exclusive-agency listings from their member brokers.

Answer 19

multiple listing service (MLS) AKA

cooperative listing service (CLS)

Question 20

The length of property along the street or waterfront.

Answer 20

frontage

Question 21

A listing based on the net price the seller will receive if the property is sold. The broker can offer the property for sale at the highest price obtainable to increase the commission. This type of listing is illegal in many states - it is legal but not encouraged in North Carolina.

Answer 21

net listing

Question 22

Written agency agreements must: (4)

Answer 22

1. Be signed by all parties;
2. include the broker’s real estate license number;
3. have a definite termination date; and
4. contain the prescribed non-discrimination provision

Question 23

Full service listing contracts (3)

Answer 23

1. Open
2. Exclusive Agency
3. Exclusive-right-to-sell

Question 24

A carry-over or protection clause in a listing contract that says the listing broker is entitled to commission for a time period after expiration of the listing term if the property is transferred to a prospect that the broker introduced to the property during the listing term; override clause. The clause is void if the property is listed with another broker.

Answer 24

extender clause AKA override clause

Question 25

A comparison of the prices of recently sold homes that are similar to a listing seller’s home in terms of location, styles, and amenities; an estimate of market value

Answer 25

comparative market analysis (CMA) AKA

broker price opinion

Question 26

The state law that requires sellers to provide a prescribed property disclosure statement to any prospective buyer prior to presentation of first offer on the property. Exemptions include new construction, foreclosed properties, and lease purchases but not for sale by owner transactions.

Answer 26

North Carolina Residential Property Disclosure Act

Question 27

Since 2015, a separate North Carolina disclosure form that must be completed by most sellers of residential dwellings regarding the status of mineral, oil, and gas rights.

Answer 27

Mineral and Oil and Gas Rights Mandatory Disclosure Statement

Question 28

Buyer’s Agent Responsibilities (10)

Answer 28

1. Give and review the WWREA brochure with the buyer;
2. Explain agency duties and responsibilities;
3. Ensure that property agency contract is executed;
4. Properly qualify the prospective buyer/client (preferable by mortgage loan officer);
5. Obtain and verify info about the property, including (if applicable) the RPOADS, MOGS, Lead-based Paint Addendum, and the Owner Association Disclosure and Addendum, etc.
6. Disclose agency status to all parties to the transaction;
7. Discover and disclose material facts about the property;
8. Perform a CMA to assist buyer in determining an appropriate offer price;
9. Assist in the preparation, presentation, and negotiation of offers submitted by and on behalf of the buyer/client
10. Assist the buyer/client with preparation for closing the transaction

Question 29

Termination of Listings (7)

Answer 29

1. Completion or fulfillment of the purpose for which the agency was created (the best way)
2. Expiration of the terms of agency
3. Mutual agreement to terminate the agency
4. Breach by one of the parties, such as abandonment by the agent or revocation by the principal (breaching party might be liable for damages)
5. By operation of law, as in bankruptcy of the principal (because title to the property would be transferred to a court-appointed receiver)
6. Destruction or condemnation of the property.
7. Death or incapacity of either party (NOT the agents)

Question 30

Standard ceiling height

Answer 30

8 feet

Question 31

Minimum ceiling height

Answer 31

7 feet

Question 32

Ceiling Height under Beams and Ducts

Answer 32

6 feet 4 inches

Question 33

Sloped Ceilings

Answer 33

If at least half of counted area is 7 feet or higher, it can include other area with ceiling height of at least 5 feet

Question 34

Square Footage

Answer 34

Must be directly accessible from other heated living space

Interior stairs count on both levels accessed

Question 35

Types of Buyer Agency Contracts (2)

Answer 35

1. Non-exclusive (just establishes relationship - does not obligate buyer to pay)
2. Exclusive (obligates buyer to pay)