Economics /Real Estate Notes PSI Exam Prep: General Principles of Agency Part 2
Real Estate Notes PSI Exam Prep: General Principles of Agency Part 2
This deck covers key concepts and principles related to agency in real estate, including types of agency agreements, duties owed to clients and third parties, and legal principles such as estoppel and ratification.
Actions of the parties may create this type of agency. It should be avoided
Implied Agency
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Key Terms
Term
Definition
Actions of the parties may create this type of agency. It should be avoided
Implied Agency
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it is acceptance after the fact, either through signing paperwork or through the parties’ actions.
Ratification
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
Estoppel
When does agency is created?
solely through the agency agreement—not through compensation
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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.
net listing
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.
Exclusive agency agreements
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| Term | Definition |
|---|---|
Actions of the parties may create this type of agency. It should be avoided | Implied Agency |
it is acceptance after the fact, either through signing paperwork or through the parties’ actions. | Ratification |
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 | Estoppel |
When does agency is created? | solely through the agency agreement—not through compensation |
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. | net listing |
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. | Exclusive agency agreements |
provides the listing agent with a commission no matter who brings the buyer to the transaction. it includes definite start and end dates. | Exclusive right-to-sell agreements |
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. | Open listing agreements |
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. | Non-exclusive/open buyer representation agreements |
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 | Agency coupled with interest |
What four duties do you owe to other people? (other than your clients) | honesty, integrity, fairness, and accounting. |
what are two major duties you owe to third parties? | cooperating and disclose material facts |
How agency contracts be terminated? | expiration, completion, force of law, through destruction or death, and by mutual agreement. |
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. | single license dual agency |
can principal brokers let anyone use their license even with a POA? | NO!! |
What are the similarities between an open and exclusive agreement? | If the seller finds the buyer, commissions will not be owed to the broker |
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? | Buyer agency |
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? | Yes, because "exclusive right to sell" means Bernie gets paid no matter who finds the buyer. |
Which type of agent is an escrow officer? | An escrow officer works in limited agency capacity. |
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? | Prepare an agency agreement or continue to assist Carly with the purchase. |
Describe the type of agents | Universal Agent: Power, usually appointed by courts; General Agent: Ongoing business, businesswise; Special Agent: Limited to certain role |
You represent the buyer and seller in the same transaction. What type of agency relationship do you have with your clients? | Disclosed limited agency |
Ratification means | “affirming something after the fact” |
Which clause in the listing agreement gives the listing broker the authority and obligates the broker to market the property to other brokers? | Multiple listing clause |
Which of the following is a common element of a buyer representation agreement? | Description of the property being sought |
Which of the following is the most common type of buyer representation agreement? | Exclusive right-to-represent 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? | The doctrine of estoppel prohibits an individual from making an assertion that’s in opposition to actions or to a previous statement. Kennie Mae acted as if she was Buzz’s agent, so she can’t later disavow that behavior. |