Questions and Answers
As a special agent in a transaction, what is a real estate salesperson permitted to do on behalf of the client?
Show the property
According to the duties a principal owes to the agent, what is the principal required to do?
Compensate the agent for a successful transaction
Who acts as a middleman in a transaction?
Broker
What is the status of a broker who is a franchisee of a national brokerage?
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In a typical agency structure, a real estate salesperson is a sub-agent to whom?
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Which section of the New York State Real Property Law states that the broker may be liable for the salesperson's actions?
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According to Section 442-C of the NYS Real Property Law, who may be held liable for a salesperson's actions?
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What other means of compensation may Sandy and Jim agree upon besides a flat fee?
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As a general rule of thumb, compensation in New York State is set at what percentage of the sales price?
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An exclusive agreement of employment of a broker to the exclusion of all other brokers is known as?
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How much did Mr. Smith pay in commissions at the closing of the property if the house was sold for $365,000 with a 5% commission?
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How much did Ely pay in commissions at the closing of the property if the house was sold for $215,000 with a 6% commission?
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What is the amount of commission paid to the buyer's broker if a property sold for $845,000 with a 6% commission split 50/50?
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What is an actual agency created by written or oral agreement between the principal and the broker known as?
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If the buyer's broker's agent was responsible for a sale with a commission split of 65/35, how much commission does the agent receive for a $200,000 sale with 6% commission?
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Justin obtained informed consent from the client before offering a referral fee. What policy does this illustrate?
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If brokers in New York agree to only accept commissions of 9% or higher, what may they be held liable for?
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If brokerage firms conspire not to do business with another firm, what may they be liable for?
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What may Jason and Marcus be liable for if they conspire to prevent other brokers from showing a property?
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What may Town Realty and City Realty be guilty of if they create an alliance to prevent competition?
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What is the legal duty of a fiduciary to act in the best interests of the beneficiary known as?
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What is an agent's duty to place the client's interest above all others known as?
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What is making an intentionally false statement to induce someone to contract known as?
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Study Notes
Real Estate Agency Basics
- A real estate salesperson can show properties as a special agent on behalf of clients.
- The principal is obligated to compensate the agent for successful transactions.
Roles and Relationships
- Brokers act as middlemen in real estate transactions.
- A broker, as a franchisee of a national brokerage, functions as a sub-agent.
- In the agency structure, real estate salespeople are sub-agents to brokers.
Legal Responsibilities
- New York State Real Property Law Section 442-C holds brokers liable for their salesperson's actions.
- Liability for the salesperson's actions falls on the broker, per Section 442-C.
Compensation Models
- Alternative compensation options for agents may include a percentage of the sale price, commonly 6% in New York.
- Exclusive Agency agreements grant a broker sole rights to represent sellers.
Commission Calculations
- Commissions are calculated as a percentage of the final sale price.
- Example: Mr. Smith pays $18,250 in commission for selling his home at $365,000 with a 5% commission rate.
- Example: Ely's home sold for $215,000 at a 6% commission, resulting in a $12,900 commission.
- For a property sold at $845,000, a 6% commission yields $25,350 for the buyer’s broker when split evenly with the listing broker.
Types of Agency Agreements
- An agency can be formed through oral or written consent, termed Expressed Agency.
Commission Splits
- If a buyer's broker’s agent receives a 65/35 split from their broker, their commission can be calculated based on the total commission divided among parties.
Ethical Standards
- Full disclosure is essential, as shown when offering referral fees only after obtaining client consent.
- Engaging in price fixing, such as agreeing on commission rates above typical rates, is illegal.
- Group boycotting occurs when brokerage firms conspire to exclude a competitor.
Fiduciary Duties
- Fiduciary duty requires agents to act in the best interest of their clients.
- An agent's loyalty mandates placing the client's interests above all others.
Misrepresentation
- Making intentional false statements to induce contracts is known as misrepresentation.
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Description
Test your knowledge of key concepts from Chapter 2 of Real Estate Principles. This flashcard set covers the roles and responsibilities of real estate agents and clients. Perfect for aspiring real estate professionals looking to enhance their understanding of transaction processes.
