Mississippi Real Estate Unit 10: Client Representation agreements

Mississippi Real Estate Unit 10: Client Representation agreements

Flashcards A seller listed a residence with a broker. The broker brought an offer at full price and terms of the listing agreement from a buyer who is ready, willing, and able to pay cash for the property, but the seller rejected the buyer's offer. In this situation, the sellerA)must sell the property.B)owes a commission to the broker.C)is liable to the buyer for compensatory damages.D)is liable to the buyer for specific performance.The answer is owes a commission to the broker. The broker has fulfilled all the requirements. Even though no contract is signed with the willing buyer, the broker is due a full commission. The seller does not have to sell, just pay the commission.Before making a listing presentation to a prospective property seller, a real estate sales associate shouldA)prepare a comparative market analysis.B)consider the seller's purchase price of the property and the rate of inflation.C)consider the seller's needs to determine what a likely asking price for the property should be.D)appraise the property.The answer is prepare a comparative market analysis. The comparative market analysis, also called a competitive market analysis, will review MLS data for the asking prices of properties currently available, as well as the sales prices of properties that have sold recently and the asking prices of listings that have expired without a sale having occurred.While the sales associate should be sensitive to the seller's purchase price and financial needs, it is the market that is the best indicator of the property's current value.The final decision on a property's asking price should be made byA)the appraised value.B)the seller.C)the seller's broker.D)the seller's attorney.The answer is the seller. Although a listing agent, an appraiser, and an attorney voice their opinions, the seller finally sets the listing (offering) price for a property.Which of the following is a similarity between an exclusive agency listing and an exclusive right-to-sell listing?A)Under each, the seller retains the right to sell the real estate without the broker's help and without paying the broker a commission.B)Under each, the seller authorizes only one particular sales associate to show the property.C)Both types of listings give the responsibility of representing the seller to one broker only.D)Both types of listings are open listings.The answer is both types of listings give the responsibility of representing the seller to one broker only. Each listing is exclusive, meaning it is granted to one broker exclusively.While the exclusive agency listing would allow the seller to find a buyer without paying a commission, the exclusive right-to-sell listing would require a commission to be paid even if the seller alone procured the buyer. Open listings impose no limit on the number of additional brokers that might be hired by the seller.Information that a real estate sales associate should obtain from a prospective property seller to make sure that all contingencies are covered in the listing agreement includesA)the seller's credit rating.B)the status of all existing loans on the property.C)information on all present occupants of the property.D)the date the seller purchased the property, and the purchase price.The answer is the status of all existing loans on the property. Current liens on the property, especially if they total more than the property's likely selling price, will affect a sale. Information must be obtained from the current owners of the property.An example of personal property that a seller may take away from the property and, therefore, MUST be identified on the listing agreement isA)the door key.B)stacked firewood.C)a ceiling light fixture.D)a built-in dishwasher.The answer is stacked firewood. Firewood is not attached to the real property and is therefore considered personal property. All the other items, even the door key, are normally considered to be part of the real property.

A real estate broker working with a seller shouldA)select only the best offers to present to the seller.B)decide which offer the seller should accept.C)transmit all offers to the seller.D)not waste the seller's time with obviously frivolous offers.The answer is transmit all offers to the seller. It is not up to the broker to decide which offers are worthy of transmitting to the seller. The broker (or sales associate) should be available to consult with the seller about the seller's response to an offer (acceptance, counteroffer, rejection).By executing a listing agreement with a seller, a real estate broker becomesA)the agent of the seller.B)responsible for sharing the commission.C)obligated to open a special trust account.D)a procuring cause.The answer is the agent of the seller. As agent, the broker represents the seller with whom the broker executed the listing agreement.An agreement for a brokerage to list real estate for sale must be signed byA)all sales associates in the brokerage office who may be involved in marketing the property.B)all individuals who have a legal interest in the property.C)the holder(s) of any lien on the property.D)current occupants of the property, whether or not they have an ownership interest in it.The answer is all individuals who have a legal interest in the property. The current occupants of the property will not necessarily have an ownership interest in it.Who are the parties to a listing agreement?A)Seller and sales associateB)Buyer and sales associateC)Seller and brokerD)Buyer and seller The answer is seller and broker. The seller and broker are parties to the listing agreement. Listings remain the property of the broker even if the sales associate leaves the company.The form of listing that insures that the listing broker will earn a commission regardless of who sells the property isA)the exclusive agency listing.B)the open listing.C)the net listing.D)the exclusive right-to-sell listing.The answer is the exclusive-right-to sell listing. This is the only form of listing agreement that provides for compensation to the broker if the property is sold during the term of the listing agreement, regardless of who sells the property-the listing broker, another broker, or the property owner.All of the following are typically found in a listing agreement EXCEPTA)the responsibilities of the broker.B)the date the real estate professional will schedule an open house.C)the commission rate to be paid to the listing broker.D)the price the seller is asking for the property.The answer is the date the real estate professional will schedule an open house. All listing contracts tend to

require similar information: type of listing agreement, real

estate professional's authority and responsibilities, names of all parties to the contract, brokerage firm, list price, real and personal property, description of property, commission, termination of the contract, and so on, but not the dates of open houses An exclusive agreement to list property for sale should include all of the following EXCEPTA)automatic extension clause.B)multiple listing clause.C)broker protection clause.D)expiration of listing period.The answer is automatic extension clause. All exclusive listings should specify a definite period during which the broker is to be employed. Automatic extension clauses are illegal in some states, and an exclusive listing agreement with such a clause may be interpreted by a court as actually creating an open listing rather than an exclusive agency agreement.A broker sold a property that was owned by a bank that had acquired it through foreclosure, and the broker received a 6.5% commission. The broker gave the listing sales associate $3,575, which was 30% of the firm's

commission. What was the selling price of the property?A)$95,775B)$152,580C)$55,000D)$183,333

The answer is $183,333. Two steps are involved: (1) Find

the firm's full commission. (2) Find the selling price using the full commission and the rate. (1) $3,575 amount to salesperson = 30% × Full commission; $3,575 amount to

salesperson ÷ 30% = $11,916.67 full commission (rounded to the nearest cent). (2) $11,916.67 full commission ÷ 6.5% brokerage rate = $183,333.38 sales price (rounded to the nearest cent). The closest answer is $183,333.Personal property included in a sale of real estate may includeA)a built-in microwave range.B)attached patio covers.C)fireplace equipment.D)a detached garage.The answer is fireplace equipment. Personal property may include fireplace equipment What is prepared by a sales associate by a review of MLS data for the asking prices of properties currently available, as well as the sales prices of properties that have sold recently and the asking prices of listings that have expired without a sale having occurred?A)Purchase contractB)Comparative market analysisC)Disclosure statementD)Listing presentation The answer is comparative market analysis. The sales associate preparing a comparative market analysis, also called a competitive market analysis, will review MLS data for the asking prices of properties currently available, as well as the sales prices of properties that have sold recently and the asking prices of listings that have expired without a sale having occurred. While the sales associate should be sensitive to the seller's purchase price and financial needs, the market is the best indicator of the property's current value A sales associate who was working on a listing died. What is the present status of the listing?A)The listing has terminated.B)The seller has the right to terminate.C)The listing is still in effect.D)The broker has the right to terminate.The answer is the listing is still in effect. The death of the seller or the broker would terminate the listing. Because the contract did not belong to the sales associate, the sales associate's death has no effect on the listing.Which of the following is a similarity between an open listing and an exclusive agency listing?A)Under each, the seller avoids paying the broker a commission if the seller sells the property to someone the broker did not procure.B)Under each, the broker earns a commission regardless of who sells the property, as long as it is sold within the listing period.C)Each grants the exclusive right to sell to whatever broker produces a buyer for the seller's property.D)Each grants a commission to any broker who procures a buyer for the seller's property.The answer is under each, the seller avoids paying the broker a commission if the seller sells the property to someone the broker did not procure. Both open and exclusive agency listings allow owners to sell without broker aid and thus avoid paying a commission.Under a brokerage agreement with a property owner, the broker is entitled to sell the property for any price, as long as the seller receives $85,000. The broker may keep any amount over $85,000 as a commission. This type of listing might be illegal and is calledA)an exclusive right-to-sell listing.B)an exclusive agency listing.C)a net listing.D)an open listing.The answer is a net listing. Whether an open, an exclusive agency, or an exclusive right-to-sell, any listing that allows the broker to keep all of the selling price over the net amount that the seller requires is a net listing. Net listings are illegal in many states A seller signed an exclusive right-to-sell agreement with a brokerage firm. If the seller finds a suitable buyer with no assistance, the firm is entitled toA)full compensation from the seller.B)no compensation from the seller.C)partial compensation from the seller.D)full compensation from the buyer.The answer is full compensation from the seller. If a seller signs an exclusive right-to-sell listing with a broker, the seller owes the broker a commission, regardless of who sells the property.