Real Estate Notes: PSI Exam Prep: General Principles of Agency

it is someone who uses or purchases a product or service.

it is someone who’s working with a real estate licensee but who isn’t represented by that licensee (nor owed the full range of agency responsibilities)

it is usually the party to the transaction who is represented

it is someone in a position of trust who owes loyalty to another.

it is someone who acts on behalf of someone else.

he/she has broad authority to act for the principal, such as someone who has power of attorney.

she/he has limited authority to act on a client’s behalf, such as a real estate agent or an escrow officer. This type of agent can’t bind a client to a contract.

she/he is responsible for handling all dealings in a given area for a client, such as a property manager. This type of agent may bind a client to a contract.

it is when a licensee represents one party, either the buyer or the seller, in a transaction. it don’t permit licensees to engage in dual agency, even if the state permits it.

it is the representation of both the buyer and the seller in the same transaction.

it is when a single licensee represents both the buyer and the seller in the same transaction.

it is when two separate licensees from a single firm each represent one party (buyer or seller) in the same transaction.

What are the two duties almost impossible to deliver in a dual agency situation?

a licensee who provides real estate services to a buyer while actually representing the seller in a real estate transaction.

the licensee doesn’t represent the consumer in an agency capacity but instead provides non-agency assistance that doesn’t require the licensee to exercise judgment or discretion

What are other names for non-agency relationship?

What are the 6 fiduciary responsibilities a licensee have? (OLD CAR)

it means following a client’s lawful instructions. Licensees may not obey a client’s illegal or unethical instructions.

it means putting your client’s interests ahead of others, including your own. It also means working in the client’s best interests.

any information that could harm your client’s negotiating position in a transaction. This includes your client’s motivations, time frames, willingness to settle for terms/price other than those offered, and any other information your client deems confidential (unless disclosure is required by law).

it means that you must disclose to your client any facts that are relevant to the transaction (aka material facts; e.g., any information, including agency-related information, that might have an impact on the transaction).

it means proper handling of client property, which includes keys, funds, paperwork, and the property itself. This means no commingling or conversion of the earnest money, among other requirements.

it requires agents to operate within the scope of their expertise and advise clients to seek expert advice on matters that are outside of the agent’s scope of knowledge

What are the two duties that continues even after the agency relationship terminates?

is an agency relationship that’s understood and agreed to by the parties. Spoken or written words create this agency.

Actions of the parties may create this type of agency. It should be avoided

it is acceptance after the fact, either through signing paperwork or through the parties’ actions.

prevents one party from suing another, because the party’s actions or statements implied that he or she agreed with the other party; In other words, so that later on no one can deny you were in an implied agency

When does agency is created?

it is one in which the broker contracts with the seller to receive all net proceeds from a sale above a specified sale price. these listings are illegal in most jurisdictions because they create a conflict of interest and encourage unethical behavior such as trying to sell a property for more than its value.

it allow only one brokerage to market and sell the property. However, if the seller finds her own buyer, she doesn't pay commission to the brokerage.

provides the listing agent with a commission no matter who brings the buyer to the transaction. it includes definite start and end dates.

it allow the seller to work with multiple agents. They don’t always result in a listing agent earning a commission, as only the agent who successfully brings a buyer will be paid.

it allow the buyer to work with many agents during the home search process. If a buyer enters into an exclusive agreement with a broker, any open agreements are terminated.

it means that the agent has some form of ownership of, security interest in, or possession of the principal's property. The agent's compensation depends on continuance of the agency agreement

What four duties do you owe to other people? (other than your clients)

what are two major duties you owe to third parties?

How agency contracts be terminated?

it is a situation where a single licensee represents both the buyer and seller in a given transaction with informed consent in place, the broker's permission, and the state's blessing.

can principal brokers let anyone use their license even with a POA?

What are the similarities between an open and exclusive agreement?

You represent the buyer in one transaction and the seller in a different transaction. What type of agency relationship do you have with the buyer?

Bernie represented Oscar in the sale of Oscar’s home. They signed an exclusive right-to sell-listing agreement. If Oscar were able to find his own buyer, would he owe Bernie a commission?

Which type of agent is an escrow officer?

Leigh Ann is a licensee. Her cousin, Carly, is interested in buying a house. Leigh Ann shows Carly how to look for properties online and runs some CMAs for her. When Carly finds a property she likes and asks Leigh Ann to help her make the offer, Leigh Ann decides she should ratify the agreement with Carly. What are Leigh Ann’s options for accepting an agency relationship after the fact?

Describe the type of agents

You represent the buyer and seller in the same transaction. What type of agency relationship do you have with your clients?

Ratification means

Which clause in the listing agreement gives the listing broker the authority and obligates the broker to market the property to other brokers?

Which of the following is a common element of a buyer representation agreement?

Which of the following is the most common type of buyer representation agreement?

Licensee Kennie Mae's neighbor, Buzz, wants to sell his house but doesn't want to sign an agency agreement. Kennie Mae works with Buzz to list and show the property and negotiate offers. After the property sells, Buzz discovers that Kennie Mae didn't present all offers to him, and he sues Kennie Mae. Kennie Mae claims that because she didn't have an agency agreement with Buzz, she wasn't required to perform all fiduciary duties. What legal principle applies here?