Law of Agency - Chapter 7: Intermediary Brokerage Flashcards

Law of Agency - Chapter 7: Intermediary Brokerage Flashcards

Intermediary Relationships- In Texas, we must use Intermediary instead of dual agency- intermediary is the process that makes it possible to bring client buyers and seller together while at the same time representing their best interests- in order to practice intermediary, the broker must have the written consent of both parties Broker Steve, having no agents, is a solo practitioner. He has a client buyer that wants to purchase one of his

listings. The process that Broker Steve must use is:

(a) intermediary without appointments(b) transaction brokerage(c) intermediary with appointments(d) dual agency *** Intermediary without appointmentsOccurs when an agent sells his or her own listing, but cannot give advice or negotiate for either party- under intermediary rules, Agent Sue can go ahead and complete the transaction, but cannot give advice and opinion to either party.- much like the broker, Sue cannot negotiate for one client to the detriment of the other client. When the intermediary process begins, the intermediary relationship notice must be filled out. In this case, there will be no appointments because there is only one agent in the transaction When does the Intermediary process begin? - if the buyer wishes to make an offer on one of the firm's listings, we are moving into an intermediary relationship- the intermediary process begins when the buyer is ready to make an offer- at this point, the intermediary relationship notice is completed and appointments made, if needed Real World Scenario- Intermediary BrokerageBroker Bradley currently sponsors one agent, Ryan, at his firm, XYZ realty. Ryan has been at XYZ realty for two months and has listed 3 properties in Bradley's name. Ryan was an agent in California where dual agency is one of the statutory positions of an agent and has not worked an intermediary transaction as of yet. He, like many new agents, is still a little confused as to how the process works. Monica is a buyer who contacted XYZ realty to show her all of the homes for sale in a large neighborhood near XYZ realty. Assume that at this stage of the process, Monica is merely an unrepresented buyer-customer

• what should Agent Ryan do before showing Monica any

of the listings in the area?(a) have her sign a Buyer's representation agreement with him(b) tell her that she should contact the seller directly(c) wait until the seller reject all previous offers on the properties(d) explain that some of the listings are in Broker Bradley's name and that he is forbidden by law to show those listings to her2. If Monica becomes a client and wants to purchase one of XYZ Realty listings, what CANNOT happen?(a) the firm can sell the listings through intermediary without appointments(b) Broker Bradley can choose intermediary with appointments and work as the listing agent in the transaction(c) Broker Bradley can hire another agent and choose to proceed with the transaction as Intermediary with appointments(d) none of these answers are actions that Broker Bradley can take3. If XYZ Realty, with Monica as the client, proceeds with the transaction using Intermediary

without Appointments, which one of the following liability issues could he be facing?(a) a party to the transaction, either Monica or the seller, may later claim that he or she was not treated equally, and that he or she paid too much or received too little in his or her transaction(b) a party to the transaction may later claim he or she was forced to complete the sale and were under duress(c) Agent Ryan may file suit because he is only able to receive compensation as the listing agent even after having to work with both parties(d) Broker Bradley could face penalties from TREC for acting as an undisclosed dual agent in a real estate transaction In-house SaleA transaction in which a broker is on both the listing and selling side The ______ notifies the parties that both the seller and buyer are clients of the broker (a) intermediary relationship notice(b) IABS(c) Dual Agency Notice(d) Buyers' representation agreement

Section 1101.560. Associated License Holder acting as intermediary (b) A license holder may be appointed under this section

only if:(1) the written consent of the parties under Section

1101.559authorizes the broker to make the appointment; and(2) the broker provides written notice of the appointment toall parties involved in the real estate transaction *** Intermediary with appointmentsOccurs when a broker appoints associates within a brokerage firm to represent the listing and selling side of a transaction- the appointed associates will give advice and opinions (which means negotiate) to their respective parties Which of the following is true regarding Intermediary rules for a transaction?(a) the transaction must be an in-house sale(b) both sides of the transaction must be clients of the broker(c) the broker must have written consent from both parties(d) all of these are correct Questions and answers regrading disclosure of agency and intermediary practice

• What are the duties and obligations of an

intermediary?A. The representation Provisions require the intermediary to obtain written consent from both parties to act as an intermediary[The intermediary is also required to treat the parties fairly and honestly and to comply with TRELA]Q. Can Salespeople act as intermediaries?A. Only a broker can contract with the parties to act as an intermediary between themQ. Can there be two intermediaries in the same transaction?A. No Sec. 1101.559. Broker Acting as Intermediary (a) A broker may act as an intermediary between parties to

a real estate transaction if:(1) the broker obtains written

consent from each party for thebroker to act as an intermediary in the transaction; and(2) the written consent of the parties states the source of anyexpected compensation to the broker(b) a written listing agreement to represent a seller or landlord or a written agreement to represent a buyer or tenant that authorizes a broker to act as an intermediary in a real estate transaction is sufficient to establish written consent of the party to the transaction if the written agreement specifies in conspicuous bold or underlined print the conduct that is prohibited under Section 1101.651(d) Specialized Intermediary Applications- Residential Transactions actually represent the most clear-cut examples of intermediary practice.- Special issues

arise in various non-residential transactions including:*

farm and ranch* commercial sales* commercial leasing* syndicates* development project s Dual AgencyThe practice that allows a real estate firm to represent both the buyer and seller with their written permission[must be disclosed to parties that broker working in dual capacity]

TAR Intermediary Relationship NoticeThe notice should be completed and signed by the parties when it is apparent that an in-house transaction between clients is about to occur.Paragraph B. notifies the parties that both the seller and the prospective buyer are clients of the brokerParagraph C. reminds both the seller and the prospective buyer that they each previously authorized intermediaryParagraph D. addresses appointments. If appointments are to be made, check the appropriate box and fill in the names. If no appointments are to be made, check the appropriate box and fill in no names Intentional Versus Unintended Dual Representation A persistent problem in this area is the agent who fails to understand the importance of timely disclosure. Two

problematic areas:- a license holder who fails to disclose

representation to a potential buyer at first contact may imply that he or she is representing the buyer. License holders must disclose representation at first contact- a license holder who fails to disclose representation to a potential seller at first contact may imply that he or she is representing the seller. This most often happens when a license holder is representing a buyer and approaches a for sale by owner with the possibility of showing it to the buyerAdditionally, the behavior of a license holder can create a false sense of representation. Agents working with customer buyers are eager to "hold on" to the buyer with

encouraging comments such as:"I am sure that we can find

a home for you at the right price""I believe that the seller will accept $20,000 less than the list price""Most sellers will take a bit less than asking price. Let's write up an offer""I can handle all of the details for you""I have great contacts with favorable financing""The best way to get the right price is to point out the negative features, even if they do not matter to you"All of the above can cause many problems

for the license holder:- the buyer now believes that he or

she is being represented, and that may be the case- the license holder has violated his fiduciary duty to the seller by providing representative services to the buyer Intermediary without Appointments - Liability Issues- Some brokers feel that Intermediary without appointments carries with it a level of liability that is unacceptable- to appoint or not is at the discretion of the broker Senate Bill 489the legislation that gave the industry the intermediary process, along with some new requirements for disclosure- in 1995, the Texas Legislature passed several amendments to the Texas Real Estate License Act in Senate Bill No.489- in 2005 the License Act was amended to require that dual representation only be provided under