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Terms in this set (78)Buyer a transferee in a residential real property transaction. This includes a person who executes an offer to purchase residential real property from a seller through an agent, or who has engaged the services of an agent with the object of entering into a residential real property transaction as a transferee. Buyer's agent an agent who contracts to locate residential real property for a buyer or who finds a buyer for a property and presents an offer to purchase to the seller or seller's agent and negotiates on behalf of the buyer. Listing Agent a person who has entered into a listing agreement with a seller or landlord and will act as the agent of the seller or landlord for compensation. Listing Agreement a contract between an owner or owners of residential real property and an agent, by which the agent has been authorized to sell or lease the residential real property or to find or obtain a buyer or lessee for the property. Residential Real Property property improved by a one-to-four family dwelling used or occupied, or intended to be used or occupied, wholly or partly, as the home or residence of one or more persons. Seller the transferor in a residential real property transaction. This includes an owner who lists residential real property for sale with an agent, whether or not a transfer results, or who receives an offer to purchase residential real property. Seller's Agent listing agent who acts alone, acts in cooperation with a listing agent, or acts as a seller's subagent to find or obtain a buyer for residential real property. Dual Agent an agent who is acting as a buyer's agent and a seller's agent or as a tenant's agent and a landlord's agent in the same transaction. Designated Sale's Agent a licensed real estate salesperson or associate broker, working under the supervision of a real estate broker, who has been assigned to represent a client when a different client is also represented by such real estate broker in the same transaction. Tenant A lessee in a residential real property transaction. This includes a person who executes an offer to lease residential real property from a landlord through an agent, or who has engaged the services of an agent with the objective of entering into a residential real property transaction as a lessee. Landlord the lessor in a residential real property transaction. This includes an owner who lists residential real property for lease with an agent, whether or not a lease results, or who receives an offer to lease residential real property. Tenant's Agent an agent who contracts to locate residential real property for a tenant or who finds a tenant for a property and presents an offer to lease to the landlord or landlord's agent and negotiates on behalf of the tenant. Landlord's Agent a listing agent who acts alone, acts in cooperation with a listing agent, or acts as a landlord's subagent to find or obtain a tenant for residential real property. Subagent an "agent of an agent." A broker who brings the buyer to the listing agent is a subagent of the listing broker. Licensees who work for the listing broker or for the selling (cooperating) broker are the subagents of their respective brokers. Single Agent an agent who represents only one person in the transaction, either the buyer or the seller. The other party to the transaction would be the single agent's customer. Seller Agency the most common form of agency relationship and we will talk about it in more detail later in this unit. For now, just know that in seller agency the real estate agent represents the seller only as the principal. The agent will treat any buyers as customers. Subagency the most confusing of all agency relationships. As we said on the previous screen, a subagent is an agent of an agent. In most cases, a subagent is a real estate agent that the listing broker appoints with the seller's permission to perform activities on behalf of the seller. The seller grants this permission in the written listing agreement. A real estate transaction starts when A seller writes a listing agreement with a broker to market his or her property Who creates subagency? Subagency is created by the agreement of the people who are involved in the transaction. It may be created by a written agreement (recall our discussion of express agency in the preceding unit). Or it may be created by words or actions as in our previous discussion of implied agency. Blanket Unilateral Offer The new regulations stipulated that if a seller gave permission to a broker to submit the property to the MLS the seller was authorizing the broker to make a blanket unilateral offer of subagency to all the other members of that MLS. Subagency Relationship If a cooperating broker accepts the offer of subagency, that broker is then working through the listing broker and is the subagent of the seller. As a subagent of the seller, the cooperating broker has the same fiduciary responsibilities to the seller as does the listing broker and his or her affiliated licensees. In other words, the cooperating broker is working for the best interests of the seller, NOT for the best interests of any prospective buyers to whom he or she may show the property. Subagent obligations to the seller the subagent owes the same fiduciary responsibilities to the seller as the listing agent owes to the seller. They must always be working for the seller's best interests and not for the interests of their buyer customers. Subagent obligations to the buyer Even though subagents are working for the seller, they must also deal honestly and ethically with all their buyer customers. In addition, subagents are bound to disclose any pertinent information that may affect the value of the specific property they are showing their buyers. Subagency advantages It is an easy way for the cooperating broker to share in the commission. Subagency disadvantages It can be too easy for the subagent to act like a buyer's agent and run the risk of undisclosed dual agency. We'll discuss the definition of undisclosed dual agency and its consequences a bit later in this unit. Both the seller and the listing broker are liable for the actions of the subagents. The subagent owes fiduciary responsibilities to the listing broker and to a seller the subagent doesn't really know. Problems can come up if a licensee acts as a subagent with a buyer customer and a buyer's agent with another buyer on the same property. What is the definition of a single agent? An agent who represents only one person in the transaction, either the buyer or the seller. How is a subagency created? Subagency is created by the agreement of the people who are involved in the transaction. How does a cooperating broker accept a unilateral blanket offer of subagency? If a unilateral offer of subagency is in place, the cooperating broker accepts it by showing the property to a buyer customer. What obligations does a subagent of the seller owe to the seller and what obligations does the subagent owe to the buyer? The subagent owes the seller the same fiduciary responsibilities he or she would owe to any client. Agency Disclosures State laws require that licensees disclose information to consumers about the kinds of relationships they can form. These disclosures serve to remove any confusion about who the agent is working for and give the consumer a clear understanding of the services that licensees provide to clients and customers. Dual Agency exists when a real estate firm or a real estate licensee represents both the seller and the buyer or the landlord and the tenant in the same transaction. Because the goals of the buyer and the seller (or the landlord and tenant) are different, this type of representation can easily result in a conflict of interest for the broker. How is a dual agency created? arises unintentionally when the actions of a broker or an agent create an implied agency with a buyer. Or the appearance of dual agency can arise in the case of a client becoming a customer. Dual Agency Risks Since the agent represents both parties as clients, he or she owes the same fiduciary duties to both. However, the agent cannot possibly provide full client-level service to both, as we discussed on an earlier screen. Even though the agent owes full disclosure to both parties, he or she cannot tell the seller the highest amount the buyer would be willing to pay, nor could the agent tell the buyer the lowest amount the seller would be willing to accept. Undisclosed dual agency will never arise if both the buyer and seller are happy with the transaction. But if either of the parties becomes unhappy at any point, it can mean at the very least the undoing of the transaction, even several months after the transaction has closed. Dual Agency Types Single licensee dual
agency Single licensee dual agency occurs when real estate licensee tries to represent the seller as a client and the buyer as a client in the same transaction. Broker dual agency occurs when two agents in the broker's firm represent both the seller and the buyer in a single transaction. Even though the parties are represented by two different agents, the broker is a dual agent. In house sales with seller agency When dealing with an in-house sale, even though the agent for the seller may be different from the agent for the buyer, the firm's broker would be a dual agent. Since these firms can and must offer consensual dual agency for sales that take place in-house, it would be a good practice for agents to advise any potential seller of the possibility of a dual agency situation arising and explain to the seller just how that could happen. Designated Agency a broker may designate one or more licensees to act exclusively as the agent of the seller or landlord, and designate one or more licensees to act exclusively as the agent of the buyer or tenant in the same transaction. This arrangement must also be disclosed to both parties and the broker must obtain the written consent of both the buyer and the seller. When serving as a transaction broker a licensee: Must advise the consumer that he or she is not acting as an agent or advocate for the consumer and should not be provided with confidential information Owes the additional duty of limited confidentiality and may not disclose the following information: What is a dual agency? Dual agency is the situation that exists when a real estate firm or a real estate licensee represents both the seller and the buyer or the landlord and the tenant in the same transaction. What is undisclosed dual agency and what happens in this situation? Undisclosed dual agency is a dual agency relationship that is not disclosed and agreed to in writing. If this situation occurs, the agent has breached his or her fiduciary responsibilities to the client. Under what circumstances will most states allow dual agency and what is it called? Dual agency is allowed with disclosure and informed consent. This is known as consensual dual agency. What is designated agency and why is it important? Designated agency means that a broker may designate one or more licensees to act exclusively as the agent of the seller or landlord, and designate one or more licensees to act exclusively as the agent of the buyer or tenant in the same transaction. This arrangement must also be disclosed to both parties and the broker must obtain the written consent of both the buyer and the seller.This is important because it can eliminate the potential conflict involved in a consensual dual agency arrangement. There are four common types of agency relationships that exist: -
Single Agency Single Agency the agent can represent only one party - either the buyer or the seller - in a single transaction, but never both. He or she owes fiduciary duties to one principal and can provide advice to that client. All other parties to the transaction receive services as customers, not clients. In other words, the licensee owes honesty and fair dealing to those customers. A broker can enter into a single agency Seller Seller Agency If the agent enters into an agency agreement with the seller, the agent becomes the seller's agent. The seller is the principal or client. Any buyers who want to view the property
are customers. Landlord A broker can enter into an agency relationship with a landlord. The landlord could employ the broker to: In House Sales When a seller (or a
landlord) lists a property with a broker, that client expects that everyone employed in that firm will do all they can to find a buyer (or tenant) for the property. So not only the listing agent, but also all the other associates will be working for the principal. The broker has two options in this situation: The broker can treat the buyer (or tenant) strictly as a customer, being sure the buyer (or tenant) understands that the firm is employed by the seller (or landlord) and working for the seller's (landlord's) best interests. Handling Cooperative Sales Although several of a broker's properties may be sold in-house, in the majority of cases, a cooperating broker finds the buyer or tenant. For this reason, it is important to clarify early in the transaction whether the cooperating broker is Buyer agency If an agent enters into an agency agreement with a buyer, the agent becomes the buyer's agent. This is also known as buyer brokerage. The buyer is the principal or client. Any sellers whose property is viewed by the buyer are customers. Tenant Agency A broker can enter into an agency relationship with a tenant. The tenant could employ the broker to locate property that will meet his or her specific
needs. Tailored buyer agreement When the buyer and the broker write their agreement, the buyer can have it tailored to meet his or her needs. The buyer can specify the exact type of property he or she is seeking and define the geographic location. The buyer can also define how much he or she is willing to pay in compensation. Retainer Some brokers, more so in commercial than in residential transactions, negotiate their agency agreement to state that they will receive a non-refundable up-front retainer fee. This helps the broker screen out buyers who may not really be serious about buying. In this type of situation, at closing the retainer is credited to the amount of commission the buyer owes and the broker receives the balance. Seller - Paid fee Since as we learned earlier the payment of compensation does not determine the agency relationship, there is no legal reason that the buyer must pay the compensation in the buyer agency relationship. As a matter of fact, the most common compensation arrangement is the traditional commission arrangement between the listing broker and the cooperating broker. In this arrangement the seller pays the commission, which is split between the listing agent and the buyer agent, and the buyer pays nothing. Alternatively, the buyer can agree that his or her buyer's agent will receive a certain percentage of the purchase price or a flat fee. If the commission split from the listing broker is equal to or greater than this agreed upon amount, the buyer pays nothing. If the split is less than the agreed upon amount, the buyer pays the difference at closing. Buyer - Paid Fee In this arrangement, the buyer pays his or her buyer broker directly upon the closing of the property purchase. When this arrangement is in place, the buyer agent will inform the seller and the listing broker that compensation will be direct and the buyer agent will refuse the offer of a commission split for the cooperating sale. Buyer Client If a buyer decides that he or she wants client-level services, the buyer will sign a document known as an exclusive right to represent agreement. This agreement outlines the broker's obligations to the client and also the client's obligations to the broker. Using this document, the buyer and the broker specify the terms under which they will be working. Buyer Customer Even though a real estate firm specializes in buyer brokerage, the firm can still accept listings from sellers. In those cases, the sellers would be the firm's clients. If a buyer expresses interest in one of the firm's listings, the broker must disclose his or her agency status with the seller at which point the buyer can choose to receive customer-level service when dealing
with properties that are listed by that firm. An agency relationship is terminated when one of the following occurs: Performance, which means the licensee has performed the tasks set forth in the agency agreement - that is, helped
the buyer find a home for purchase or helped the seller find a ready, willing, and able buyer to purchase his or her home. Why an agency relationship may terminate Death or incapacity of either party - if the contract does not pass to heirs or assigns What is meant by single agency In a single agency relationship, the agent can represent only one party - either the buyer or the seller - in a single transaction, but never both. Why would a tenant enter into an agency agreement with a broker? A tenant could choose to employ a broker to locate property that will meet his or her specific needs, such as retail or office space. What are three advantages to entering into a buyer agency agreement? The buyer can tailor the agreement to reflect his or her specific needs or wants. List four ways an agency agreement can be involuntarily terminated. Death or incapacity of either party What do you call a licensed real estate salesperson, working under the supervision of a real estate broker, who has been assigned to represent a client when a different client is also represented by such real estate broker in the same transaction? Designated agent Which of the following terminations of an agency relationship could result in legal or financial ramifications? Renunciation by the client Which of the following are common types of agency relationships? Each of these Designated agency means the clients do not have the full level of fiduciary duties available to them that they would have if they were fully involved in seller agency or buyer agency. In this situation, the client gives up the fiduciary duty of undivided what? Loyalty What is the term given to an agent who is acting as a buyer's and seller's agent in the same transaction? Dual Agent In most states, in all residential transactions when must licensees give potential sellers or buyers a written disclosure form? At first substantive contact An agency relationship may be involuntarily terminated by which of the following? By destruction of the property through fire, vandalism or natural disaster Which type of compensation is more likely to be used in a commercial rather than a residential transaction? Retainer Which of the following would be deemed an advantage of a subagency arrangement? Subagency is an easy way for the cooperating broker to share in the commission. What exists when a real estate firm or a real estate licensee represents both the seller and the buyer or the landlord and the tenant in the same transaction? Dual Agency Sally is a subagent working for Seller Pat. What does Sally owe to Buyer Brad? Honesty and Fair dealing When a seller gives permission to a broker to submit the property to the MLS, the seller is authorizing the broker to make a blanket unilateral offer of what to all the other members of that MLS? Subagency Sets found in the same folderUnit 1 - Agency Law101 terms danni_emmert Unit 3 - Contracts - Listing Agreements99 terms danni_emmert Unit 4 - Legal Status of Contracts131 terms danni_emmert Unit 5 - Broker agent relationship95 terms danni_emmert Other sets by this creatorPractice Exam100 terms danni_emmert Unit 9 - National Valuation Exam50 terms danni_emmert Unit 7 - Legal Descriptions20 terms danni_emmert Unit 6- Land Use Control38 terms danni_emmert Recommended textbook solutions Mathematics with Business Applications6th EditionMcGraw-Hill Education 3,760 solutions
Anderson's Business Law and the Legal Environment, Comprehensive Volume23rd EditionDavid Twomey, Marianne Jennings, Stephanie Greene 369 solutions The Cultural Landscape: An Introduction to Human Geography, AP Edition13th EditionJames M. Rubenstein 216 solutions
Fundamentals of Financial Management, Concise Edition10th EditionEugene F. Brigham, Joel Houston 777 solutions Other Quizlet setsPM Exam 118 terms nick_lebbano ISY101 - Fundamentals of Organization and Manageme…25 terms mbuhia99 Patho week 2 -CNS and neuropsych VOCAB58 terms sarahrenee7 HA 3 - Breast and Axillary Region Powerp…33 terms BWHShaydeno What do you call an agent who represents a buyer and a seller?Dual agent – A real estate agent may act as a double agent representing both the buyer and the seller in a real estate transaction but only with both parties' express consent. A dual agent shall be neutral concerning any conflicting interests of the seller and buyer.
What do we call an agent who represents a seller?Seller's Agent: A seller's agent works for the real estate company that lists and markets the property for the sellers and exclusively represents the sellers. A seller's agent may assist the buyer in purchasing the property, but his or her duty of loyalty is only to the seller.
What is an agent in a transaction?Transaction agents assist buyers and sellers in real estate transactions without representing any party's financial interests. They act as neutral third parties in real estate deals but are still bound to act according to the law and industry ethical principles.
Can a person act as an agent for both the seller and the buyer if so when?Yes, that's allowed. The situation you're referring to is called transaction brokerage. Transaction brokerage is a service option when your real estate professional represents a buyer client interested in purchasing the property in which you are the seller client.
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What is an agent called who represents only one person in the transaction either the buyer or the seller quizlet?
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