Exam Review CH 4 Flashcards

Exam Review CH 4 Flashcards Advertising, telephone charges, and other expenses in a broker's office may be paid by which of the following?The licensed associate(s) or sales agentsThe brokerSome brokers pay for all office expenses and most promotional expenses, while some make licensed associates (sales agents) pay for advertising and other promotional expenses of listed properties.Are real estate fees and commissions negotiable? Yes, a broker's commission is negotiable, although a broker has no obligation to negotiate.When a seller, on the advice of the listing agent, reduces the price of the home, are potential buyers entitled to know why?No, the listing agent is not obligated to volunteer why there has been a price reduction.When the Texas IABS is delivered, the sales agent or the broker should ask for a verbal or confirming email that the consumer has received it.A response is not required, but brokers and sales agents should attempt to confirm the IABS has been received and make a note of its delivery in the work file.Whose responsibility is it to disclose how long a property has been listed?Buyer's agent If a sponsoring broker suggests that an independent contractor violate rules - such as altering or backdating a property disclosure form - who is liable?Both the sponsoring broker and the independent contractor would be held liable for the infraction.When advertising that a roof is "new," how "new" does it have to be?There is no specific definition.Advertised statements that a roof is "new" can be considered misleading. To avoid conflict, it would be best to state that the roof is "new" and add the year it was put on.The purpose of antitrust laws isto prevent a company or companies from joining together block competitors from entering the market while simultaneously agreeing how much to charge consumers.A property manager would be what kind of agent? General Brokers will often provide time for license holders to work "desk duty," a period in which the desk person fields incoming calls to the brokerage and may work with callers who are not otherwise affiliated with other sales agents.May brokers assign (order) sales agents to work specific hours of desk duty?Brokers may assign desk duty hours to employees, but may negotiate contracts with independent contractors that include desk duty expectations.Suicide on the property requires disclosure by a seller under which scenario?Death on the property by natural causes, suicide, or accident unrelated to property condition does not require disclosure. Stigmatized property (property that has been the scene of a crime or other undesirable event) needs to be disclosed.The practice of unfairly excluding brokers from real estate professional associations or withholding patronage from other businesses is known as boycotting the competition.

Are the principals allowed to know how license holders divide the various commissions, splits, and fees between themselves?-Yes, in full disclosure, listing agents and buyer representatives may divulge all the fees and how they are divided.-No, there is no obligation by the sales representatives to share compensation arrangements with the sellers or the buyers.-It is up to the sponsoring broker or brokers to decide what information they want to impart to clients and customers.In the supervising broker relationship with an independent contractor sales agent, who is responsible for setting aside funds for income tax purposes?The independent contractor sales agentAs an IC, the sales agent should consider himself to be the head of a one-person business who is responsible for all bookkeeping and making sure bills are paid.Which duty owed to the agent by the principal consists of furnishing accurate information when requested by the broker?Information Is a license holder entitled to stop a transaction (refuse to close) if he or she believes either the seller or buyer will be unable to fulfill the compensation clause in the contract?No, the license holders must permit the transaction to close and litigate compensation after the fact.A broker who acts as a subagent represents the seller.Which statement does NOT accurately reflect the broker-sales agent relationship?If a broker permits a sponsored sales agent to conduct activities beyond the authorized scope, the broker is not responsible for those unauthorized activities.Recovery under the DTPA for an act committed knowingly is limited to economic plus mental anguish damages.The DTPA permits the recovery of court costs and attorney's fees if a lawsuit is ruled frivolous or harassing. Recovery under the DTPA is limited to economic damages. However, if the defendant is found to have committed the act knowingly, then damages for mental anguish may also be awarded. Additionally, if the defendant is found to have committed the act intentionally, then the economic and mental anguish damages may be tripled.If an independent contractor announces her "farm" will henceforth be the country club crowd, can the sponsoring broker redirect her if someone else in the office already is working the country club scene?No, the broker may discuss the difficulties of breaking into the other agent's farm but could not otherwise order the agent to work elsewhere.A listing agreement between the seller and the broker creates an express agency.Under Texas law, a sales agent who has secured a listing (for the broker) must make that relationship clear to the seller and who else?Any buyers who inquire about the propertyIn this instance, buyers must be made to understand that the sales agent's fiduciary duty lies with the seller and no confidential information will be divulged.Under the Fraud in Real Estate and Stock Transactions statute, any person who stands to gain financially from a transaction and has knowledge of a misrepresentation and fails to reveal it may be liable.The Deceptive Trade Practices Act (DTPA) does NOT apply to the actions of real estate agents when an agent makes an exaggerated or unsubstantiated statement of value given as advice, judgment, or opinion when selling

real estate.The DTPA applies to real estate agents when the misrepresentation or action cannot be characterized as advice, judgment, or opinion. The practice of making exaggerated or unsubstantiated statements of value is called puffing. Although permissible under agency law and the DTPA, statements of opinion and puffing still should be avoided to steer clear of claims under the DTPA that the statements misled the consumer.

That people buy at their own risk and should examine the property before they buy is expressed by the concept of caveat emptor.At one time, real estate transactions were governed solely by the maxim caveat emptor. Through this principle, the courts charged the buyer with the responsibilities of inspecting the property and searching the public records to ascertain interests of other persons, including the rights of parties in possession. Because of growing concern about consumer protection in the United States, the courts have modified the caveat emptor principle by placing more responsibility on the seller.Can a buyer broker accept both a portion of a commission split from the listing broker and a fee from the buyer client?Yes, if the buyer agent agreement calls for a fee to be paid, and the listing agreement also calls for a commission split, the buyer broker may collect from both sides of the transaction.Is a real estate consumer, a seller, for instance, allowed to withhold the payment of a commission if the home "sells too quickly," suggesting "the agent priced it too low"?No, listing agents do not "set the price" on a home, but only consult with sellers who make the final decision.If a sales agent hopes to buy a property listed by another brokerage, is that agent obligated to inform the seller that he is also a license holder?Yes, in Texas, real estate license holders must always disclose their backgrounds when buying property on their own behalf.Texas law forbids brokers or sales agents to buy or sell property for themselves; a parent, child, or spouse; a business entity in which the license holder is more than a 10% owner; or a trust for which the license holder is a trustee or of which the license holder's spouse parent or child is a beneficiary without first notifying the sellers that the agent is a license holder acting in such capacity.When a property is listed for sale, an agency relationship is created between the listing sales agent's broker and the seller.Agency with a principal is at the broker level. A real estate sales agent is merely licensed to perform real estate activities on behalf of a licensed real estate broker, and the broker is responsible for the authorized acts of the sales agent.Clients who have signed listing agreements may "fire" their broker. Is a broker permitted to fire a client?Yes, a broker may fire a client.Why is understanding and being able to explain "agency" an important element in a license holder's professional life?Because unhappy real estate clients and customers often contend they did not understand the legal relationship between themselves and "their agent" If the largest brokerage in a community decides to offer different competitors varying levels of commission splits or fees, is that considered boycotting or price-fixing?No, brokers are entitled and encouraged to make business decisions regarding how they will compensate various competitors.Large brokerages, however, must avoid being seen as anti-competitive in their commission offerings and must set compensation independently. They also should be prepared for other brokerages to take their own competitive actions.A real estate agent tells a seller during a listing presentation that the firm's commission is in line with those