Podcast
Questions and Answers
What is the primary focus of successful agents in real estate?
What is the primary focus of successful agents in real estate?
- Adhering strictly to legal statutes
- Understanding the nature of agency relationships (correct)
- Maximizing commission rates
- Selling properties quickly
What does the term 'Caveat Emptor' imply in real estate transactions?
What does the term 'Caveat Emptor' imply in real estate transactions?
- Agents are responsible for the accuracy of property listings
- Buyers assume responsibility for their own due diligence (correct)
- Sellers are shielded from any legal consequences of undisclosed issues
- Sellers must disclose hidden defects regardless of buyer actions
What is a key characteristic of fiduciary relationships in a real estate context?
What is a key characteristic of fiduciary relationships in a real estate context?
- The agent prioritizes their own interests
- The agent holds the highest level of trust and confidence (correct)
- The agent has minimal responsibilities to the client
- The relationship is based solely on legal contracts
What is the law of agency primarily derived from?
What is the law of agency primarily derived from?
What component must be present to establish an agency relationship?
What component must be present to establish an agency relationship?
Which is NOT a role of an agent in real estate?
Which is NOT a role of an agent in real estate?
In Pennsylvania, what does the requirement for sellers to provide a written disclosure entail?
In Pennsylvania, what does the requirement for sellers to provide a written disclosure entail?
Which of the following best describes the role of a broker in terms of agency relationships?
Which of the following best describes the role of a broker in terms of agency relationships?
What are the basic components needed to form an agency relationship?
What are the basic components needed to form an agency relationship?
Which of the following methods is NOT a way to form an agency relationship?
Which of the following methods is NOT a way to form an agency relationship?
In the scenario where Krista signed an agreement with Broker Jaselle, who is the principal?
In the scenario where Krista signed an agreement with Broker Jaselle, who is the principal?
What creates the agency relationship when a seller signs a listing agreement?
What creates the agency relationship when a seller signs a listing agreement?
Why is it recommended for licensees to form agency relationships in writing?
Why is it recommended for licensees to form agency relationships in writing?
Which of these activities does NOT typically involve a real estate agent acting as a fiduciary?
Which of these activities does NOT typically involve a real estate agent acting as a fiduciary?
What is implied by establishing a fiduciary obligation in an agency relationship?
What is implied by establishing a fiduciary obligation in an agency relationship?
Which party is NOT involved in the agency relationship defined in the content?
Which party is NOT involved in the agency relationship defined in the content?
What does a buyer-broker agreement provide to the agent?
What does a buyer-broker agreement provide to the agent?
Which statement about agency relationships is true?
Which statement about agency relationships is true?
Flashcards
Common Law of Agency
Common Law of Agency
A body of laws related to the relationship between a principal and an agent, formed through custom and court decisions.
Agent
Agent
A person with authority to represent another in a transaction, like buying or selling real estate.
Agency Relationship
Agency Relationship
A relationship where one party (the agent) acts on behalf of another (the principal) with a high level of trust and responsibility.
Fiduciary
Fiduciary
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Mutual Consent
Mutual Consent
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Principal
Principal
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Caveat Emptor
Caveat Emptor
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Seller Disclosure
Seller Disclosure
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Agency Relationship in Real Estate
Agency Relationship in Real Estate
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Fiduciary Obligation
Fiduciary Obligation
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Buyer-Broker Agreement
Buyer-Broker Agreement
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Listing Agreement
Listing Agreement
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Written Agreement
Written Agreement
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Oral Agreement
Oral Agreement
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Action (Agency Relationship)
Action (Agency Relationship)
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Agency on the Broker Level
Agency on the Broker Level
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Study Notes
Agency Relationships in Real Estate
- Agency is a people-focused business, not just about selling property. Understanding agency relationships is critical for success.
- The common law of agency is based on custom and case law, not just statutory laws. It's a blend of statutory and common law in Pennsylvania.
- Pennsylvania has "caveat emptor" (buyer beware) but limits this by requiring sellers to disclose property conditions and potentially be liable for known or knowable material defects.
- An agent is someone with authority to act on behalf of another (brokers and licensees).
- A fiduciary is an agent with the highest level of trust and confidence, putting client interests first.
Components of Agency Relationships
- Two parties: the agent and the principal (client).
- An agreement: expressed (written or oral) or implied by action.
- Fiduciary obligation: the agent is obligated to act in the best interest of the client.
Creating Agency Relationships
- Agency relationships are created at the broker level.
- A seller signing a listing agreement creates an agency relationship between the seller and the broker sponsoring the licensee.
- Agency relationships need mutual consent—written, oral, or implied through actions and agreed-upon responsibilities.
Types of Agency Activities
- Agency relationships are used in various real estate transactions, including buying/selling homes, offices, condos, and managing buildings. These transactions have financial implications, thus needing a high level of trust.
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