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Flashcards in Contracts and Agency Deck (54)
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Buyer Agent/Buyer Broker

A real estate agent or firm who is employed by and works for a buyer
in a real estate transaction. A buyer agent owes fiduciary duties to the buyer.


Listing Agent/Listing Broker

A real estate agent who markets the seller's property and represents the
seller during the sale of the seller's property. Also known as the seller's agent



A licensee who represents a principal through cooperation with and consent of a broker
representing the principal and who is not sponsored by or associated with the principal's broker. If you
do not have an agreement to represent the buyer, you are representing the seller as a subagent.
Anytime you represent the client of another broker other than your sponsoring broker, you act as a
subagent in the transaction.


Creation of Agency and Agency Agreements

Agency is always created at the broker level, never
at the salesperson level. All the salespersons sponsored by the broker owe the same duties as the
broker. The broker-seller relationship is created by the listing agreement and the broker-buyer
relationship is created by the buyer representation agreement. These agreements are employment


Fiduciary Responsibilities

The creation of the agency relationship creates a duty between a licensee and a principal called a fiduciary duty. The fiduciary duty is a relationship of trust and
confidence between principal and agent. The law imposes on the agent duties of obedience,
loyalty, disclosure, confidentiality, accounting, and reasonable care and diligence,
(REMEMBER—“OLD CAR”). A real estate agent owes complete fiduciary duties to the principal and
must act in the best interests of the principal (the client) while also being competent and treat all
parties honestly and fairly (whether the seller or the buyer).



A buyer or seller who forms an agency relationship with a real estate broker; also called
a principal.



A buyer who is assisted by an agent who represents the seller or a seller who is
assisted by an agent who represents the buyer. A buyer who represents him/herself but is
assisted by the seller’s agent (sub-agent).


Termination of Agency

An agency may be terminated by the acts of the parties or by operation of law for any of the following reasons:
- Closing of the sale of the property
- Destruction of the property Expiration of the term of
the agency
- Mutual agreement to terminate the agency (must be written).
- Renunciation by the broker (firing the principal) or revocation by the principal (firing the broker)
- Bankruptcy of the owner if title transferred to receiver
- Death or incapacity of either party (Broker or Principle)


Commission and Fees

The broker’s compensation is specified in the listing agreement and the buyer
representation agreement. The payment is usually a percentage of the selling price of the property or
it may a flat fee. It is earned once the broker has performed the work for which they were hired. It is
paid at closing or upon default of the principals after the commission was earned.


Subagent Commissions

A subagent is a licensee who represents a principal through cooperation with and consent of a broker representing the principal and who is not sponsored by or associated
with the principal’s broker. The subagent is a special agent representing a seller rather than a
buyer. The commission to be paid or not to be paid is specified in one of the agreements either
the Listing Agreement or Buyers Representation Agreement


Referral Fees

Fees can be paid between brokers for business referrals. Such fees can be paid for
broker to broker referrals as well as referrals from relocation companies and financial institutions.


Listing Agreements

The listing agreement is an employment between a broker and a seller. It creates a special agency
relationship between the two. It must be in writing to be enforceable.
- Listing agreements give complete information concerning a tract of land and the authority to offer it for
- All listings are taken in the name of the broker and become his/her personal property.
The amount of commission is by agreement of the parties.
- No matter how many brokers share in a listing or assist in the sales, the seller only pays one commission, which is agreed upon at the time of the listing being signed. - --- The broker that lists the property may share his/her commission with another broker who assist in the sale of the property.
- The listing broker is the one that listed the property for sale and the broker work either for or with
the buyer would be referred to as the selling broker


Maintain a claim for a commission

The broker must:
- Be procuring cause for the sale (listing agent) or produce a purchaser who is ready, willing, and able
to buy (selling agent).
- Have the listing contract in writing.


Open Listing

The owner reserves the right to list with as many brokers as they choose; the one that sells is the one that gets the commission.


Net Listing

An agreed upon price between the owner and the broker, the broker receives any money over that price as the commission. This type of listing is discouraged and requires that the seller be familiar with value, require the net listing, and the agents puts a ceiling on the amount they can earn under the net approach.


Exclusive Agency Listing

The broker is the exclusive agent, and receives the commission unless the owner sells the property themselves.


Exclusive Right-to-Sell Listing

The broker is the exclusive agent, and receives the commission even if the owner sells the property themselves. The most common type of listing that MLS
**Also gives the greatest protection to the broker.


Buyer-Broker Agreements

These agreements, known as Buyer Representation Agreements, establish a special agency relationship between the broker and the buyer for services provided by the broker. The agreement must be signed by the buyer. It sets the period of the agreement, the
market area being considered, the fee being paid by whom, and other agreements between the
broker and the buyer.


Contract for Deed

Under this form of contract, the seller retains legal title until the terms of the contract have been satisfied and the buyer pays the debt in full. The buyer has equitable title during the life of the contract. Also may be referred to as a “land contract”



A form used to change the language in either the listing agreement or the
purchase contract. Not effective until all the parties agree to the change.



A format to add additional terms and conditions to the approved forms, thus
incorporating them into the legal document.


Rescission and Cancellation Agreements

An offer or counteroffer can be withdrawn at any time
before acceptance by the principal making the offer or counteroffer. This is called rescission. Both
the Listing Agreement and the Buyer Representation Agreement may be cancelled by the respective
client with an approved cancellation notice.


Broker/Salesperson Agreements

A real estate salesperson is licensed to perform real estate activities on behalf of a licensed,
sponsoring real estate broker. The broker is responsible for all the occupational acts of the
agents licensed under him/her.


Independent Contractor Agreement (ICA)

Employment agreement between the broker and an agent under his/her brokerage. It specifies that the salesperson is an independent contractor. The independent contractor salesperson operates more freely than an employee. The broker may control what the independent contractor does, but not how it is
done. It also establishes a general agency relationship between the broker and the sponsored agent. The agent will be performing a number of duties such as working with buyers, sellers, tenants, and landlords in the broker’s name.