Unit 7/Class 7

Question 1

Define “brokerage”/”brokering”

Answer 1

The business of bringing people together, whether its buyers/sellers or landlord/tenants

Question 2

A broker works for _________ and with _________

Answer 2

clients

consumers/customers

Question 3

What are the two types of real estate licenses?

Answer 3

Brokers license

sales associate license

Question 4

Who pays the sales associate?

Answer 4

can only be paid by the broker (no taking bonus, etc from clients either)

Question 5

Independent Contractor vs. Employee

Answer 5

Associates may be employees or independent contractors.

A broker can exercise certain controls over employees; brokers do not have the same control over independent contractors.

A broker may control what the independent contractor does, but cannot tell the contractor how to do the work or when to be where for group meetings. The broker cannot tell the independent contractor when to work or attend the sales meeting

Question 6

What are the IRS rules for an associate to be considered an independent contractor?

Answer 6

1. valid license
2. written contract with broker
3. 90% of income comes from real estate activities, not hours worked

Question 7

A ___________ is someone who assists the licensed agent and can normally perform such activities as secretarial duties, clerical duties and setting appointments. Kentucky license law regulates what an unlicensed assistant may or may not do.

Answer 7

An unlicensed assistant

Question 8

To be entitled to any commission, the broker must do what three things?

Answer 8

Be licensed
Employed by the client
be the procuring cause of the sale

Question 9

The __________ Act prohibits monopolies and other acts that may restrict trade or business activities in the marketplace. Violations include: price fixing, group boycotting, allocation of customers, and tie-in agreements

Answer 9

Sherman Anti-Trust Act

Question 10

Earned commission: As a general rule, commision is earned when….

Answer 10

A broker finds a ready, willing and able buyer on the sellers terms

Question 11

In Kentucky, if a deal can’t close because of a title problem, the seller would have to pay the broker still.

Question 12

The amount of commission a sales associate receives is determined by…

Answer 12

mutual agreement with the broker

Question 13

A commission split can be graduated. This occurs when an associate is paid on….

Answer 13

production

Question 14

A __________ broker is one who represents no one in a transaction. They only complete the required paperwork without representing either party.

Answer 14

Transactional broker

Question 15

A listing contract is a…

Answer 15

personal service contract

Question 16

The parties to a listing are the…..

Answer 16

broker and the seller (client)

Question 17

Give the details of an Exclusive Right to Sell listing

Answer 17

• broker’s commission is guaranteed regardless of who sells the property
• if the property is sold during the term of the listing, the broker gets paid
• Broker does NOT have to prove he was the procuring cause of sale
• ONE broker gets the listing
• bilateral contract

Question 18

Give the details for the Exclusive Listing type listing

Answer 18

• Seller retains the right to sell the property
• if the broker or anyone other than the seller sells the property, then the broker under contract gets paid
• If the seller sells, no commission to broker
• bilateral contract

Question 19

Give details on an open listing contract

Answer 19

• can be given to one or more brokers
• seller retains right to sell
• A broker only earns a fee if HE sells the property
• Oral listing agreements are treated as open listings
• Unilateral contract

Question 20

Give details for an Open Listing agreement

Answer 20

• NOT a personal service contract

- brokers “pool” their listings and agree to cooperate with each other and share commissions (MLS system)

Question 21

What is a net listing?

Answer 21

A listing without a specified list price or commission. The broker includes a clause in listing that states that the seller will receive $X and anything over that will go to the agent as commission

Question 22

What are ways that a contract can be termianted

Answer 22

expiration
abandonment
breach
death of broker
agreement
destruction 
performance 

• A seller who withdrawals a listing without justification may still be liable for the broker’s expenses

Question 23

What is included in a listing

Answer 23

type of listing
terms of sale
names of parties
property description
expiration date
commission 
signatures of all parties who may have an interest in the property

Question 24

NOTE: kentucky requires an expiration date in listing contracts.

Question 25

NOTE: In Kentucky, exclusive listings cannot contain an automatic extension clause

Question 26

Also known as a broker's protection clause, a ___________ allows the broker to collect a commission if anyone he introduced to the property buys the property from the seller after the listing expires

Answer 26

Carry-over clause

Question 27

Other things that must be included in a listing agreement: (1) A broker's authority should also be listed in a contract (2) if personal property is staying (3) when the seller will give physical possession to the buyer

Question 28

Possession comes with __________

Answer 28

title

Question 29

Types of buyer agency agreements:

Answer 29

Exclusive buyer agency Exclusive agency Open buyer agency

Question 30

Explain exclusive buyer agency agreement

Answer 30

The broker is entitle to his fee if the buyer purchases a property as described in the contract during the term of the contract.

Question 31

Explain exclusive agency agreement

Answer 31

Broker is entitled to his commission only if the buyer purchases the property located by the broker. The buyer may purchase a property without the services of the broker and will owe no commission

Question 32

As a general rule, an unlicensed assistant may NOT...

Answer 32

attend a closing in place of an agent

Question 33

Broker "D" has listed a property under the following terms: "The seller will accept $150,000 cash for his property." One month later, the broker brings the seller a cash offer for $150,000. At what point did the broker earn his commission?

Answer 33

When the offer was presented to the seller

Question 34

A transactional broker can be best defined as a broker who:

Answer 34

Prepares paperwork for customers

Question 35

An effort by a broker that brings about the desired result in a real estate transaction that may allow the broker to claim a commission is called:

Answer 35

Procuring cause

Question 36

It can be said that an exclusive right to sell and an exclusive listing agreement are similar because:

Answer 36

Both types of listings are given to one broker only

Question 37

As a general rule, a listing contract would not have to contain what?

Answer 37

The signature of the sales associate

Question 38

One or more of the parties to a listing contract could expect contractual liability if a listing were terminated by...

Answer 38

withdrawal