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3 Elements to create agency
mutual consent of principal and agent
Agent acts ON BEHALF of principal
Princpal has RIGHT to CONTROL the agent
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Express Authority of Agency
Authority expressly given to agent by principal
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Implied Agency
Agency is implied form conduct of parties, custom of trade, or act incidential to carrying out the agent's duties
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Apparent Agency
Principal leads 3rd party into believeing the agent has authority
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By Ratification Agency
Agent commits acts outside the scope of his authority, but thereafter is authorized by principal
ex. finds home outside desired school district. Principal loves homes and waives the act
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What is a RE broker
- 1. Employed as agent for real estate dealings
- 2. Listings in Broker's name
- 3. Employs and supervises salesperson
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What is salesperson
- 1. RE agent licensed by the state
- 2. Required to work for licensed RE broker
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What is a Listing Agreement and its 4 requirements
Contract where owner employes agent to sell his property
- 1. IN Writing (oral agreements are unenforceable)
- 2. State Price and Terms
- 3. state duration of listing agreement
- 4.Amount and structure of comission
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Types of RE Agency Relationship
Listing: Works for seller
Buyer
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Dual Agency? Requirments. Penalities
One Agent represents both buyer and sellers.
Both parites must be AWARE and SIGN off
Punishment: Lose or pay back commission
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Designated Agency
One firm represents both buyer and seller in transaction
Broker designates one person to represent seller and another to represent buyer
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Cooperating Broker
intrascation involving MLS, buyers agent is the Cooperating broker
entitled to commission
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Non-agent broker
Do not represent either seller or buyer as agent
Assists and facilitates CLOSING the transaction
NO FIDUCIARY duties to the parties
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Four Types of Listings
- Open
- Exclusive Agency
- Exclusive Right to Sell
- Net Listings
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Open Listing Agreement
1. Seller can list property with MORE THAN ONE broker
2. First agent to sell gets comission
3. Seller Retains right to sell property themselves and owes not commission
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Exclusive Listing
Seller pays commission to broker if broker sells property
Seller can self sell property, and NO commission is paid
If a 2nd broker is hired, original broker gets a commission NO MATTER WHAT. (aka seller may have to pay two commissions)
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Exclusive Right to Sell
Broker entitled to commission regardless of who produces buyer (even if sale by owner)
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MLS?
Network of RIGHT-TO-SELL listings
1. members list and show properties to other members
2. if sale is made, commission is paid to members
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In most states, when is commission owed
When broker brings READY, WILLING, and ABLE buyer at the listing price
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Procuring Clause
borker must bring seller and buyer together (need not actually close to the deal to receive commission)
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Net Listing Agreement
Seller sets predetermined amount of money they wish to receive from the sale after expenses
Broker receives anything paid above seller determined amount
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Requirements to be Sales person
- 1. Must work for broker
- 2.
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Broker Requirments
- 1. 2 years as salesperson or two year RE experience
- 2. Pass Exam
- 3. 18 yrs old
- 4. No Felonies
- 5. Pay Fees
- 6. Honesty Requirement
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Exemptions from Licensing
- 1. Selling own home
- 2 . LIcensed attorneys
- 3. Finders
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Unlicensed activity
- 1. Act as salesperson or broker without license
- 2. Contract between unlicensed broker and seller is void
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Duties of a Brokers
- 1. Act in best interest of princapl
- 2. not lead seller to unsound transactions
- 3.disclose all known material information
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Duty of Care
Broker Must:
- 1. Due diligence and pricing
- 2. Communicate and present all offers
- 3. Evaluate offers and inform of strengths and weakness
- 4. Explain customs and practices of RE industry
- 5. NO supply legal advice
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Brokers cannot do what to limite their liability?
Cannot limit duty of care responsibilities through contract clauses
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Duty of Loyalty
- Broker must not:
- '1. Act as dual agent w/o consent
- 2. Make Secret Profit (full disclosure of related interests wher eborker may profit at expense of principal)
- 3. Disclose confidential information
- 4. withhold material facts
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Broker's Duties to 3rd Parties?
Typically have no duties except:
- 1. Mispresentation
- 2. Sales puffing
- 3. Disclosure
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Intentional Misrepresentation
broker knows of material fact and either:
1. intentionall misstates to 3rd party
or
2. knowingly fails to disclose to 3rd party
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Negligent Misrepresentations
broker states a Material FAct w/o reasonable knowledge of its truthfulness
3rd party relies on that statement
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Sales Puffing
1. Opinon describing greatest of a property
- 2. Misrepresentation when:
- Statements inflate value and desirability of property without being "marketing"
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Intentional Nondisclosure
Broker knows of material problems or defects UNLIKELY to be discovered and fails to disclose them to potential buyers
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As-Is Clause
Buyer accepts property w/ all existing defects and no promise of repair
Still must know:
- latent defects
- Broker can stil be liability for intentional misrepresentation
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Duties of Principal to Broker
- 1. Compensation
- 2. reimburse costs incurred
- 3. indemnify: when principal fails to disclose a material fact and broker is sued for that fact
* Principal owes no fiduciary duties to broker
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Reasons RE License can by suspended or revoced
- commingling of funds
- discrimiantion
- felony convictions
- split commissions w/unlicensed party
- failure to deliever documnets
- failure to submit all offers to seller
- breach of fiduciary duties/unethical conduct
- unauthorized practice of the law
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Fair Housing ACt
Equal Opprotunity to buy, rent and live in properties
Prohibits discrimination
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Fair Housing Exceptions
When Owner sells his own home
No agent
No discriminatory advertising allowed
Unit contains four or fewer units
Owner resides in residential dwelling
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Blockbustin and racial steerin g
blockbusting: telling people to move because a particular race, religion, etc. is moving in
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