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Unit 5: Buyer Agency
Terms in this set (41)
Is a buyer's agent held to the same standard of skill and care in dealing with the buyer as a subagent of the seller?
No, the buyer's agent is held to a higher standard.
Jeff paid a retainer fee to Elena, who agreed to serve as his buyer's broker. According to TREC rules, what must Elena do with the retainer fee?
The answer is deposit the money in a trust account. Under TREC Rule Section 535.146, unearned fees are considered trust money, and trust money must be deposited in a trust account. Once Elena earns the fees, she can remove the earned fees from the trust account and provide an accounting to Jeff.
Is subagency allowed in buyer representation?
The answer is yes, an agent can be a subagent of a buyer's agent. The buyer's broker can, with proper authority, appoint subagents to help in the search for the right property. This is especially useful in long-distance transactions. Brokers will generally pay the subagent a finder's fee or will share a portion of the commission after it is earned and received.
Who is the primary agent of the buyer in a buyer/agent relationship?
How is buyer agency created?
By implication, operation of law, or express agreement
When is a license holder required to tell an unrepresented party whom the license holder represents?
At the first contact
A nonexclusive single agency broker is meeting with a prospective buyer to discuss whether the broker's services would be a good "fit" for the consumer. Why should the broker show all the firm's listings to a consumer before agreeing to represent that buyer as a client?
To avoid a potential conflict of interest if the buyer wants to purchase an in-house listing
Is the buyer's agent's fiduciary duty to a buyer different from a seller's agent's fiduciary duties?
The fiduciaries duties are the same
Why does a buyer representation agreement contain a definition termination date?
Because TREC can take disciplinary action against a license holder for failing to include one
Which of the following is a TRUE statement regarding the Information About Brokerage Services Notice?
The notice must be provided at the first substantive discussion about a specific property.
Buyers may hear that the TREC-promulgated contract forms for residential sales contain some buyer compromises and want their buyer's agent to help them prepare an addendum to the contract. Which of the following guidelines should a license holder follow in this situation?
You are not an attorney and must avoid the unauthorized practice of law.
Which of the following sellers is required to provide the Seller's Disclosure Notice?
The answer is a relocation company. A relocation company's sale of real estate is not among the listed exceptions in which the Seller's Disclosure Notice need not be provided to a buyer. The sellers in the remaining three answers are among the list of exceptions.
If a buyer is purchasing a property that will be financed by a Department of Veterans Affairs (VA) loan,
a buyer's broker fee cannot be included in the loan amount.
Exclusive buyer's brokers do not
Ace Realty has a policy of charging a retainer or advance fee when representing buyers under a buyer representation agreement. What is Ace required to do with the retainer fee?
It must be held in the broker's trust account.
Which of the following agency relationships is NOT available between a license holder and a buyer in a typical buyer/tenant representation agreement?
James is a sales agent who is sponsored by Best Realty, and he is a member of the A-1 Team. What must be done to ensure that James can use the team name in advertising?
James's broker must register the name with TREC.
Dewey has entered into a buyer agency relationship with Acme Realty. Dewey has just been released from prison after serving 18 years for real estate fraud, manslaughter, and embezzlement of his previous employer's funds. Dewey asks Acme to negotiate on his behalf for the cash purchase of a condo listed for $680,000 in Pike's Landing. Acme Realty will be paid by Dewey and also expects to be paid by the seller. Which information about Dewey must Acme Realty disclose to the seller?
That Acme Realty expects to be paid by Dewey, as well as the seller
The TAR Residential Buyer/Tenant Representation Agreement is a very good example of a buyer representation contract. Standard features of the TAR contract include
a broker protection period.
What are three benefits of a buyer/agency relationship to the buyer?
Tailored buyer representation agreement, access to larger marketplace, and stronger negotiating strategy
Must a listing broker provide a copy of a previous inspection report to a buyer?
No, but if the inspection report discloses a material defect on the property, the listing agent must disclose the defect.
When a buyer forms an agency relationship with a broker, the buyer can expect that the broker will
provide data relating to market values for properties that the buyer may be interested in purchasing.
Allisa, a licensed sales associate, transfers sponsorship of her license from Bay Area Realty to Crystal City Realty. What is TRUE regarding the buyer agency agreement Allisa signed with George while still with Bay Realty?
George remains a client of Bay Area Realty.
Which of the following is the best practice for license holders to establish a buyer/agency relationship?
A written agreement signed and dated by all the parties to the agreement
Is an agency relationship required to work with a buyer in acquiring real estate in Texas?
No, an agency relationship is not required.
When determining whether to require a retainer fee, a broker should
establish a consistent fee policy for all clients.
Jared represents the buyer but failed to get a written buyer representation agreement signed by the buyer. Jared is not worried because he assumes that the TREC contract broker information about the fee split between brokers is sufficient to establish his right to payment. Can Jared rely on this statement to file an action against the buyer for his share of the commission?
No, because the statement in the TREC contracts regarding the fee to be shared between the listing broker and the other broker is merely information for the buyer and the seller.
When is a buyer's commission earned under a typical buyer representation agreement?
When the buyer and seller execute a contract to purchase
In which of the following situations might a license holder representing a buyer use a registration agreement?
The answer is when the buyer wants to purchase an FSBO. If the owner of the property the buyer/client is interested in is unrepresented, such as a for sale by owner (FSBO), the situation could be handled with a registration agreement with the seller in conjunction with a buyer representation agreement. In a registration agreement with the seller, the license holder registers the buyer with the unrepresented seller. This secures the ability to collect a commission should the transaction close.
Under the TREC-promulgated Information About Brokerage Services Notice, there are blank spaces on the last page that are used for what purpose?
For the person receiving the notice to acknowledge receipt of the notice
Which of the following is TRUE regarding the statement in the TREC contracts regarding the fee to be shared between the listing broker and the other broker?
It is merely information provided for the benefit of the buyer and seller.
Must a buyer's agent disclose his relationship with a buyer to an owner who is selling a property on her own?
Yes, at first contact
Which of the following is TRUE regarding anonymity of a buyer principal?
Maintaining the anonymity of a famous buyer may keep the seller from increasing the asking price.
Broker Bob has a buyer-representation contract with buyer Jay Sterling. Do the license holders who work in Bob's office have any relationship with Sterling?
Yes, they automatically represent Sterling.
George, a new sales agent sponsored by Best Realty, does not obtain a written buyer representation agreement with Samuel although George has agreed to act as Samuel's agent in his purchase of a new home. Samuel prefers to use a handshake instead of a written agreement. Under which of the following options does George have the best chance of prevailing if Samuel refuses to pay him for his services after the sale has closed?
The answer is none of these. Unless George has a written agreement with the party agreeing to pay his commission, the Real Estate License Act precludes George from filing an action unless the agreement to pay is in writing. "A person may not maintain an action in this state to recover a commission for the sale or purchase of real estate unless the promise or agreement on which the action is based, or a memorandum, is in writing and signed by the party against whom the action is brought or by a person authorized by that party to sign the document." (TRELA § 1101.806)
A license holder is required to disclose that the license holder is a broker or sales agent in all of the following real estate transactions, EXCEPT when acting on behalf of
The answer is the license holder's sibling. License holders must disclose in writing that they are broker or sales agent each of the listed cases, except when buying or selling property on behalf of a sister or a brother. The disclosure must be in writing in any contract of sale or rental agreement or in any other writing given before entering into any contract of sale or rental agreement.
Ruth, a buyer's broker, asked the listing broker if she is willing to split the commission on a transaction. The listing broker would not agree to the split. What should Ruth do?
Explain the situation to the buyer.
License holders do NOT need to disclose to buyers that they are license holders if the license holders are selling a property on
The answer is behalf of the license holder's best friend. In each of the other situations, plus in the case of a license holder selling a property on behalf of her parent or for a business entity of which the license holder is more than a 10% owner, the license holder must disclose in writing her status as a license holder to buyers.
The role of the license holder in an exclusive buyer agency agreement is to
assist the buyer in making a purchase.
A Broker is NOT required to provide a broker price opinion to which of the following?
What is the name of the form that MOST sellers must use to disclose that a property meets Texas Property Code?
Seller's Disclosure Notice
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