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29 Cards in this Set
- Front
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This document that defines the relationship between the real estate firm and the seller is the: listing agreement exclusive agency contract purchase contract disclosure statement |
A: listing agreement The listing agreement that clearly defines the relationships and agreements between the broker and principal. |
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Termination of an offer can occur by: A counteroffer by the seller The death of the offeror Withdrawal by the purchaser All of the above |
A: All of the above Remember this is an offer not a contract until accepted by the seller |
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An agency is created when: owner of a property gives a person a power of attorney to sign documents a broker allows a broker to represent him or her in his absence at a meeting an owner tells a broker she can inspect the property an owner authorizes a broker to represent her in the sale of her property |
A: an owner authorizes a broker to represent her in the sale of her property The broker is then the seller's agent and is employed to do a specific task. |
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Implied agency (also known as Implication) arises when: an agent accepts an oral listing a principal accepts an oral listing one person behaves toward another in a way that suggests or implies that he is acting as that other person’s agent |
A: one person behaves toward another in a way that suggests or implies that he is acting as that other person’s agent An agency may be created by implication (implied agency) when one person behaves toward another in a way that suggests or implies that he is acting as that other person’s agent. If the other person reasonably believes that there is an agency relationship, and the supposed agent fails to correct that impression, he may owe the other person agency duties. More info: Under general agency law, an agency relationship may be formed in four ways: by express agreement, by ratification, by estoppel, or by implication. Most agencies are created by express agreement: the principal appoints someone to act as her agent, and the agent accepts the appointment. An agency is created by ratification when the principal gives approval after the fact to acts performed by another. Under the legal doctrine of estoppel, a person is not allowed to take a position that contradicts her previous conduct, if someone else has relied on the previous conduct. An agency can be created by estoppel when it would be unfair to a third party to deny the agent’s authority, because the principal has allowed the third party to believe there was an agency relationship. An agency may be created by implicationwhen one person behaves toward another in a way that suggests or implies that he is acting as that other person’s agent. If the other person reasonably believes that there is an agency relationship, and the supposed agent fails to correct that impression, he may owe the other person agency duties. |
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The law of agency is: a statutory law established by the Constitution the end result of common law, court decisions, and local practices a law that defines the rights of the United States government real estate laws enforced by the Real Estate Commission |
A: the end result of common law, court decisions, and local practices The law of agency is the end result of common law, court decision, and local practices. |
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A seller may employ more than one broker to assist in selling his or her home. This would be accomplished through a(n): exclusive right listing exclusive agency listing net listing open listing |
A: open listing Open listings offer the least amount of protection to the broker because whoever sells the property gets the commission. |
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Mutual assent to a real estate contract is indicated by: offer and acceptance acknowledgment seals habendum clause |
A: offer and acceptance Mutual assent to a real estate contract is offer and acceptance |
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All of the following are false about the law of agency as it applies to a broker EXCEPT: The commission must always be based on the listing price The principal and client are the same person The broker must always charge a commission and it must be in the listing agreement The broker may sue for his/her commission even thought they had a suspended license |
A: The principal and client are the same person The principal and client are the same person as per definition defined in the law of real estate agency |
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A defect that is described as latent is: An old defect A breach of contract by the seller A defect that a prudent buyer can see A defect that is hidden from view |
A: A defect that is hidden from view A defect that is hidden from view is considered a latent defect |
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The listing contract that provides the least protection for the broker is: exclusive agency open listing exclusive right-to-sell net listing |
A: open listing An Open Listing provides no exclusivity to the listing agent. It means any broker can sell the property and collect the commission. |
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An agency relationship may be involuntarily terminated for which of the following reasons? Death Mutual consent Full performance Renewal of broker’s licensee |
A: Death The agency relationship can be terminated by the acts of the parties and by operation of law. |
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The brokerage fee or commission usually: becomes a lien if not paid is paid from the seller’s proceeds is paid from the buyer’s proceeds must be a set rate for every broker |
A: is paid from the seller’s proceeds The brokerage or commission fee is usually paid out of the seller's proceeds unless otherwise agreed upon. |
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Listing agreements must include: An appraisal of the property A property inspection form A definite termination date A standard approved commission |
A: A definite termination date Listing agreement must have a termination date |
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What is a CMA? Competitive market advice Certified market accountant Competitive market analysis A realtor designation |
A: Competitive market analysis CMA stands for competitive market analysis. It is used by real estate brokers to determine a suggested selling price for a property. It is sometimes also referred to as a comparative market analysis or CMA. |
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A listing contract under which the broker's commission is contingent upon his producing a ready, willing, and able buyer before the property is sold by the seller or another broker is known as: an exclusive listing a net listing an exclusive right-to-sell listing an open listing |
A: an open listing In an open listing, the broker only earns a commission if he provides a ready, willing, and able buyer before anyone else does. It allows the listing to be OPEN to many brokers |
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The fiduciary has specific responsibilities to the principal: care, obedience, accounting, loyalty, and disclosure concern, obedience, allocation, loyalty, dishonest fairness and honesty account for monies, use skill and care |
A: care, obedience, accounting, loyalty, and disclosure A fiduciary responsibility to the principal includes COALD. A fiduciary relationship is created when a principal signs a listing or buyer's agency agreement with a Listing Agent or Buyers Agent. Note: a Transaction Broker as a neutral party is not a fiduciary relationship (the T broker ownes no loyalty, only Care, Obedience, Accounting and Disclosure of non-confidential items and material facts). In real estate transactions, only the Sellers or Buyer's agency relationships are fiduciary relationships. This relationship implies a position of trust or confidence, wherein one person is usually entrusted to hold or manage property or money for another. In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts. |
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A fiduciary is: a trustee named in a will a real estate broker who acts as an agent for another a person who holds a general power of attorney for another all of the above |
A: all of the above All are examples of a fiduciary; someone put in trust of others affairs. A fiduciary relationship is created when a principal signs a listing or buyer's agency agreement with a Listing Agent or Buyers Agent. Note: a Transaction Broker as a neutral party is not a fiduciary relationship (the T broker owes no loyalty, only Care, Obedience, Accounting and Disclosure of non-confidential items and material facts). In real estate transactions, only the Sellers or Buyer's agency relationships are fiduciary relationships. This relationship implies a position of trust or confidence, wherein one person is usually entrusted to hold or manage property or money for another. In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts. |
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A material fact must be disclosed: in all cases only if it would benefit the client only if it will not hurt the sale never |
A: in all cases Material facts must be disclosed even if it kills a deal. A material fact in real estate is defined as a fact that, if known, might have caused a buyer or seller of real estate to make a different decision with regards to remaining in a contract or to the price paid or received. The question is - when is a fact a material fact that must be disclosed? The seller’s broker must disclose to the buyer any adverse material facts known by the broker. This requirement does not include facts that should have been known by the broker, as is the law in some other states. In other words, while a broker in some states should, arguably, check on why there’s a water stain on the hardwood floor (perhaps a sign of leakage?) a broker in Colorado might not need to investigate any further. “Adverse material facts” may include facts pertaining to the property’s title, physical condition, and material defects, and any environmental hazards affecting the property. Psychological impacts to the property are not, however, considered material defects. (C.R.S. § 12-61-804.) Examples of psychological impacts might include crimes committed on the property or a rumor that the property is haunted. Neither Seller or Buyer's Agents may disclose psychological impacts which may stigmatize a property. In any State, the Buyer or Seller's agent's opinion as to whether a neighborhood is "good" or "bad" because of crime is not considered to be a material fact which should be disclosed. In fact, it is illegal for an agent to make such a disclosure as that would be considered "steering". |
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Obedience as a fiduciary means doing exactly as the principal instructs: even if it involves discriminating so long as it doesn’t hurt anyone regardless if it is illegal or not unless such instructions condone an illegal act |
A: unless such instructions condone an illegal act You must obey the principal so long as they do not instruct you to do something illegal, such as discriminating. A fiduciary relationship is created when a principal signs a listing or buyer's agency agreement with a Listing Agent or Buyers Agent. Note: a Transaction Broker as a neutral party is not a fiduciary relationship (the T broker owes no loyalty, only Care, Obedience, Accounting and Disclosure of non-confidential items and material facts). In real estate transactions, only the Sellers or Buyer's agency relationships are fiduciary relationships. This relationship implies a position of trust or confidence, wherein one person is usually entrusted to hold or manage property or money for another. In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts. |
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Commingling of funds in real estate means: putting all your money in one savings account that a broker mixes trust accounts with his personal funds buying property with your brother or other family member using your commission as part of the down payment |
A: that a broker mixes trust accounts with his personal funds Commingling of Funds is Prohibited The most serious accounting violation when administering a trust account is the commingling of owner and broker/manager funds. Owner funds contained in a trust account cannot be commingled with any other funds. Commingling is strictly prohibited by law and is grounds for revocation or suspension of the license of a real estate professional. Commingling occurs when: 1. Personal or company funds are deposited into a trust account. This is typically a violation of the law even if separate records are kept. 2. Trust funds are deposited into the licensee’s general or personal bank account rather than into the trust account. This is also grounds for suspension or revocation of a realtor’s license. |
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Misrepresentation by a party to a contract differs from fraud as to the: consideration voidability of the agreement requirement of competency requirement of intent |
A: requirement of intent Fraud is deceitful practice or material misstatement of a material fact, known to be false, and done with the intent to deceive. Misrepresentation…. actions or words that may convey a false message, may be unintentional. |
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An agency agreement requires all of the following except: consideration competency of the principal agreement of the agent agreement of the principal |
A: consideration A broker may be a gratuitous agent meaning the broker receives no compensation. |
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The amount of commission is determined by: local custom the MLS the Real Estate Commission negotiation |
A: negotiation There are no set commission rates; they are always negotiable. |
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A power of attorney requires: consideration written authority the agent to use an attorney-at-law a safety clause |
A: written authority A power of attorney must be in writing. |
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An owner’s broker is showing a buyer an apartment building. The buyer notices water stains on the ceiling and informs the broker. The broker’s best course of action is to: immediately contract to paint the ceiling immediately contract to repair the roof suggest the buyer not offer full price inform the seller |
A: inform the seller The Colorado listing agreement states, Broker will not obtain or order any other products or services unless seller agrees in writing to pay for them promptly when due. |
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A seller instructs the broker to only market the property to families on the south side of town. The broker refuses to comply. In this case: the broker has violated fiduciary duty the broker has not violated fiduciary duty the broker is liable for breach of contract the broker should do what the seller asks |
A: the broker has not violated fiduciary duty This would be a case of discrimination if the broker where to obey the seller's instructions. |
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The broker’s fiduciary obligation to his or her principal resembles that of: an attorney to his or her client a brother to his sister a mother to her son a store owner to his or her customer |
A: an attorney to his or her client The term fiduciary describes the faithful relationship owed by an attorney to a client or by a broker to a principal. A fiduciary relationship is created when a principal signs a listing or buyer's agency agreement with a Listing Agent or Buyers Agent. Note: a Transaction Broker as a neutral party is not a fiduciary relationship (the T broker owes no loyalty, only Care, Obedience, Accounting and Disclosure of non-confidential items and material facts). In real estate transactions, only the Sellers or Buyer's agency relationships are fiduciary relationships. This relationship implies a position of trust or confidence, wherein one person is usually entrusted to hold or manage property or money for another. In a fiduciary relationship, one person, in a position of vulnerability, justifiably vests confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires the fiduciary to act at all times for the sole benefit and interest of the one who trusts. |
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The effort that brings about the desired result in a real estate sale is known as: procuring cause principal procuring broker REALTOR |
A: procuring cause Procuring cause of sale is the effort that brings about the desired result - in this instance, a ready, willing, and able buyer. |
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A non-licensed owner wishes to sell his home without the use of a real estate broker. He has not sold any other real property in the last ten years. He wishes to limit certain races from buying in his neighborhood. May he discriminate under these circumstances? No, because this is prohibited under the 1866 Civil Rights Act. No, because this is prohibited under local municipal law Yes, because discrimination under the fair housing laws applies only to real estate brokers. Yes, because this is an exception under the 1968 Civil Rights Act. |
A: No, because this is prohibited under the 1866 Civil Rights Act. No, because this is prohibited under the 1866 Civil Rights Act which outlawed slavery. |
