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ROCKWELL: WASHINGTON REAL ESTATE PRACTICES
Managing Broker - Answers - Person who performs real estate brokerage services on behalf of a real estate firm, under the supervision of a designated broker. Is a managing broker allowed to supervise other licensees? - Answers - Only with authorization from the designated broker. What are the requirements to be a managing broker? - Answers - Licensed as a broker for 3 of the last 5 years. Takes additional courses. Takes managing broker exam. Does every branch need to have a designated broker? - Answers - No. They do a branch manager who will be supervised by the designated broker. What license must a branch manager have? - Answers - A managing broker's license because they will be supervising other licensees. What are the three characteristics of real estate agents as independent contractors (that is recognized by the IRS)? - Answers - You set your own hours. You're paid by commission. You only get worker's compensation insurance. What are the 4 planning items you must have before starting your real estate business?
- Answers - Business plan. Budget. Cash reserves plan. Start-up expenses. Agent - Answers - A person who acts or does business for another. Principal - Answers - The person that an agent is authorized to represent. AKA Client. Client - Answers - The person that the agent is authorized to represent. AKA Principal. Customer - Answers - The third party with whom the principal goes into business with. Non-agency - Answers - The licensee does not represent either party in the transaction.
What are the two categories of real estate agent duties? - Answers - Duties owed to principal and duties owed to any party. What are the 7 duties an agent owes to any party? - Answers - - Reasonable care and skill.
- Honesty and good faith.
- Present all written communications.
- Accounting.
- Disclose all material facts.
- Provide pamphlet on agency law.
- Agency disclosure. Group of people with care bear logos on their stomach. Halos over their heads. Sheets of paper for wings. One hand full of money. The other hand holding a hammer. Flying over a big ol brochure of the law Do you owe any duties to parties when acting as a non-agent? - Answers - Yes, you still owe the 7 duties owed to any party. If an agent's negligence causes one of the parties financial loss, will they be required to pay compensation? - Answers - Yes, because of the duty of reasonable care and skill. What is best practice if you don't know the facts to something? - Answers - To admit that you don't know or remain silent to avoid misrepresentation. If the buyers ask for information that an agent is not legally required to disclose (ex: previous crime in the property), are they required to disclose it upon inquiry? - Answers
- Yes, by duty of good faith. If you know a client has clinical depression and needs a lot of sunlight, are you required to tell her that the lakefront property may not be good for her because the windows fog up? - Answers - Yes, by duty of good faith. Are you required to give the seller new offers after they had already accepted one? Even if it's lower? - Answers - Yes. ALL offers are to be delivered asap. Material Facts - Answers - Information that may have substantial negative impact on the value of the property or on a party's ability to perform, or that impairs or defeats the purpose of the transaction. Latent Defect - Answers - A hidden structural defect that would not be discovered by ordinary inspection.
What does the Real Estate Brokerage Relationships Act change about buyer agency relationships? - Answers - It presumes that the licensee working the buyer is the buyer's agent unless there is a written agreement to the contrary (such as a listing agreement). Cooperating Agents - Answers - All agents involved in a transaction. Someone who has been authorized by a person to represent that person in dealings with third parties is a(n): - Answers - Agent. A person who authorizes an agent to represent them is a(n): - Answers - Principal. A person who performs brokerage services on behalf of a real estate firm under someone else's supervision is a(n): - Answers - Broker. Dual Agency - Answers - Representing both parties to a transaction. This is unethical unless both parties agree to it, and it is illegal in many states, but not Washington. A licensee who can assume supervisory duties for a real estate firm, though a designated broker retains ultimate authority, is called a(n): - Answers - Managing broker. This Washington statute incorporated some of the common law of agency but also changed many aspects of an agent's duties. - Answers - Real Estate Brokerage Relationships Act. Statutory Duties vs Fiduciary Duties - Answers - Statutory duties clearly define the duties required from an agent, while fiduciary duties come from common law and are subject to a different interpretation by the legal system. The duty to operate with the same standard of competence expected of any real estate licensee is the duty of: - Answers - reasonable care and skill. The duty to avoid inaccurate or misleading statements during a real estate transaction is the duty of: - Answers - honesty and good faith. Even if an offer is ridiculously low, you are bound to present it to a seller under the duty to: - Answers - present written communications. Any information that affects a property's physical condition or title must be disclosed to all parties under the duty to: - Answers - disclose material facts. An agent must report to parties about the status of funds held in trust under the duty of:
The duty to explain in writing which party you represent is the duty of: - Answers - agency disclosure. Problems which would not be apparent in an ordinary inspection must be disclosed; these are known as: - Answers - latent defects. What are the additional 5 duties that an agent owes to their principal? - Answers - - Loyalty.
- Disclose conflicts of interest.
- Confidentiality.
- Expert advice.
- Good faith and continuous effort. The principal has a dog That barks at other people. But in silence. Has a collar full of tags of names. and an infinity pattern on it's back. Can you encourage a seller to accept a particular offer in sole effort to get your commission sooner? - Answers - No, that violates the duty of loyalty. If you are viewing a property owned by your relative with a client, are you required to disclose that conflict of interest? - Answers - Yes, by duty of disclosing conflicts of interest. If you are viewing a property with a client owned by a corporation in which you own shares, are you required to disclose that conflict of interest? - Answers - Yes, by duty of disclosing conflicts of interest. Under what 5 criteria does Washington law define confidential information? - Answers
- Information concerning a principal that:
- Was acquired by the licensee during the course of an agency relationship.
- The principal reasonably expects to be kept confidential.
- The principal has not disclosed or authorized to be disclosed to third parties.
- Would, if disclosed operate to the detriment of the principal.
- The principal personally would not be obligated to disclose to the other party. Can you disclose information about the principal after the agency terminates? - Answers - No, you still owe the duty of confidentiality and accounting after the agency terminates.
first deal. True or false? - Answers - False. The duty of continuous effort ends as soon as they have selected a deal. A real estate license is working as a property manager. He signs a contract with a company for some roof repair services. If this was within the scope of the licensee's agency authority, the property owner is bound by this contract. True or false? - Answers - True. A principal is bound to their agent's actions. When was the Washington Brokerage Relationships Act formed and why? - Answers - It was formed in 1997 because there was a lot of confusion as to who represented who, which caused inadvertent dual-agency, and what duties are owed by the agent. How are buyer agencies created under Washington Real Estate Agency Law? - Answers - Express agreement (in writing) By law (implied by providing real estate services) unless there's a written agreement to the contrary. What are the two types of agency termination? - Answers - Termination by action of parties or by operation of law. What are the three ways an agency can terminate by action of parties? - Answers - Mutual agreement. Revocation by principal. Renunciation by agent. Can an agency just be terminated between parties orally? - Answers - Yes, but if it was made in writing, it is advised to be terminated in writing. What are the four ways agency can be terminated by operation of law? - Answers - Expiration. Fulfillment of purpose. Death or incapacity. Extinction of subject matter. Does the agency disclosure need to be signed? - Answers - Yes. It must be signed before any parties sign any other documents. What happens if the purchase and sale that is used doesn't include an agency disclosure? - Answers - You will need to include a Form 42: Agency Disclosure and have it signed. How do you prove that you've given the agency law pamphlet? - Answers - By having the parties sign on the agency disclosure that they have received it.
Selling Agent vs Listing Agent - Answers - Selling agent: The one who procures the a buyer for the property, but doesn't necessarily have the listing. Listing agent: The agent that markets the home for sale. What are the 6 sanctions that the DOL can impose if you fail to act in accordance with your agency disclosure? - Answers - - Suspension or revocation of license.
- Restriction or monitoring of your real estate activities.
- Fine of up to $5000 per violation.
- Probation.
- Completion of a relevant real estate course.
- Censure or reprimand. A big book (education) with a penis (probation) and a camera (monitoring) comes up to you to rip up your license (suspension) and tape your mouth with a $5 bill (fine), then yells at you (censure). When selling/buying a property for yourself as an agent, what are the 3 things you have to disclose to the other party? - Answers - That you are an agent. That you're buying/selling for your own benefit. That you intend to make a profit on the transaction. If you buying/selling a property yourself, can you represent the other party? - Answers
- No. Ask your managing broker to review the contracts or ask them to get representation. Under common law, an agency relationship may be created through express agreement, ratification, estoppel, or implication. True or false? - Answers - True. An agency is formed by estoppel when a principal approves of acts that have already been performed by someone without agency authority. True or false? - Answers - False, this is agency by ratification. Estoppel is when the principal benefits from the actions of the agent but doesn't explicitly agree to agency. The agency disclosure must always be a separate signed and notarized document. True or false? - Answers - False. It can be within the purchase and sale agreement, so long as it is in its own paragraph. If you are selling your own house, you must disclose to a potential buyer that you are a licensed real estate agent in the state of Washington. True or false? - Answers - True. You must also disclose that you are buying/selling for your own benefit, and plan to make a profit.
If a buyer chooses to terminate agency in writing prior to agreed date, do they have any further obligations? - Answers - No. If you haven't found her any properties and she hasn't written any offers, she can terminate it and owe you nothing. But if there's a pending offer or purchase agreement, she might still owe you compensation. Commission Split - Answers - A method of sharing commission between brokerage and agent. What does paragraph 8c of the Purchase and Sale agreement stipulate about accepting compensation from the other party? - Answers - You must disclose the compensation to your principal before preparing their offer. Hourly Fee - Answers - You are paid a set amount agreed upon by the buyer. Percentage Fee - Answers - Commission is based on a percentage of the sales price of the home you find for the buyer. Flat Fee - Answers - A specified amount that is payable if the buyer purchases any property you find for him. What does paragraph 8c of the Purchase and Sale agreement stipulate about retainers? - Answers - That the amount of a commission split will be credited toward the retainer that the buyer gave you. What should a buyer's agent do to protect themselves from a buyer who ends up buying off market? - Answers - Have your buyer agency agreements provide that the buyer will pay an agreed fee if they purchase off market. Does a VA loan allow the buyer to pay commission? - Answers - No. Distressed Home Conveyance - Answers - When a buyer purchases a property that is in danger of foreclosure and allows them to stay a few weeks past the closing date with the promise to convey it back or give a portion of the proceeds back. If an agent is to represent a buyer in a distressed home conveyance, what would they have to do? - Answers - Have an attorney draft the agreement in writing. A seller's agent may disclose information about the property and neighborhood to a buyer without violating her duties to the seller. True or False? - Answers - True. Gil is a seller's agent hosting an open house. A couple loves the house and wants to make an offer on the spot, so he explains the offer process and assists them with filling
out a purchase offer form. He has violated his duties to the seller. True or false? - Answers - False. He SHOULD be helping everyone put in an offer. The usual method of compensation for a seller's agent is for the listing agreement to specify a certain percentage of the sales price to be paid as a commission by the seller. True or false? - Answers - True. You help the McLaughlin family sell their house at a fabulous profit. Through their buyer's agent, they become interested in purchasing another home that you have listed. Even though you are working in the seller's best interest, you may not share information about the McLaughlins' great financial condition with the seller. True or false? - Answers - True. Your duty of confidentiality continues for former clients that you no longer represent. The seller's agent owes both the seller and the prospective buyers the duty of confidentiality. True or false? - Answers - False. The seller's agent only owes the seller the duty of confidentiality. A significant advantage to using a buyer's agent is help with negotiations. True or false?
- Answers - True, because the buyer is obligated to have their best interest. A buyer's agent cannot advise a buyer regarding the pros and cons of buying a particular house. True or false? - Answers - False. It's their duty. A buyer's agent may insist on receiving a nonrefundable retainer before agreeing to help find a property. True or false? - Answers - True. A buyer's agent is typically compensated with a flat fee, paid directly by the buyer. True or false? - Answers - False, they're typically paid a commission by the seller. In what transaction does a dual agency typically happen in? - Answers - When the selling agent and buyer's agent work for the same firm. Split Agency - Answers - A transaction with the same brokerage but different agents representing each party. Where is dual agency disclosures made? - Answers - In the listing and buyer's agency agreements. Someone who takes on the role of disinterested intermediary or facilitator is known as a dual agent. True or false? - Answers - False. They're known as a non-agent. A non-agent owes general duties to both parties but no special duties to either of them. True or false? - Answers - True.
a) the seller sells the property and the buyer doesn't back out before closing, or b) the firm procures a ready, willing, able buyer. Under this type of listing, you must be the procuring cause of the sale in order to receive a commission. - Answers - Open This type of listing is disfavored by brokerages since no commission is owed if the seller finds a buyer, or if an agent from another firm finds a buyer. - Answers - Open This type of listing requires the seller to pay a commission if any agent finds a buyer for the home, but not if the seller finds a buyer on her own. - Answers - Exclusive agency. This is the most commonly used type of listing agreement in residential transactions. - Answers - Exclusive Right to Sell This is the only type of listing agreement that allows a seller to list the property with more than one agent at the same time. - Answers - Open Under this type of listing, the listing firm is entitled to a commission if the property is sold, regardless of whether its own agent, an agent from another firm, or the seller found the buyer. - Answers - Exclusive Right to Sell What are the 7 requirements for a valid listing agreement? - Answers - - Competent parties.
- Offer and acceptance.
- Consideration.
- Legal purpose.
- Property description.
- Brokerage authority and compensation.
- In writing and signed by seller. Is just a street address enough for a valid listing agreement? - Answers - No. It needs to e a full legal description What should you do if you don't have a proper legal description handy when you're taking the listing? - Answers - You must put something to the effect of "legal description to be provided at a later date" in the area for legal description, then obtain it as soon as possible. Where are three reliable sources to obtain a legal description? - Answers - The MLS, title company or county recorder's website. What 2 criteria constitutes a ready and willing buyer? - Answers - Someone who makes an offer on the seller's terms and has the financials to do so.
Should you legally pursue a selling client that can't close due to unforeseen circumstances? - Answers - No, you don't need the reputation and going to court wouldn't make sense. Net Listing - Answers - Allows for the seller to define how much they need to make from a sale, and allows the broker to take profit of anything that is over that. Are net listing illegal? - Answers - They are not, but they are frowned upon. Is a formal listing contract required to establish seller agency? - Answers - No. You could write it on a napkin, so long as it properly describes the property and has the seller's signature. The most common form of compensation for real estate agents is a commission expressed as a specific dollar amount. True or false? - Answers - False. It's usually expressed as a percentage of the sales price. An agent who finds a ready, willing, and able buyer is entitled to compensation regardless of whether the sale closes. True or false? - Answers - True. Under most listing agreements, the brokerage firm is entitled to compensation once a ready, willing, and able buyer has been found. (If the transaction never closes, however, the firm might decide not to sue to collect the commission.) What is the typical listing period for a median-priced home? - Answers - 90 days. What are the 4 ways a seller's listing can be terminated? - Answers - - Property is sold.
- Mutual agreement between parties.
- One of the parties decides to terminate.
- Brokerage firm goes out of business/licensed revoked. If a listing agreement is to be terminated, can a broker agree to the termination? - Answers - No. It has to be done by a designated broker/managing broker. Can you imply to the seller that you will be charging a "standard" commission rate? - Answers - No. That would be implying price-fixing which is illegal. What does an extender clause stipulate? - Answers - If a seller sells within 6 month of the listing ending by result of your marketing, a commission is due to you. How do you make sure to hold a seller to an extender clause? - Answers - By keeping a list of all prospects to check against.
Who pays the excise tax? Why? - Answers - The seller, because they are selling the property. How much of the escrow costs is the seller required to pay in a conventional sale? - Answers - Half. What does the "closing" portion of the listing agreement stipulate about foreign sellers?
- Answers - That if they are not FIRPTA exempt, they must acknowledge that a portion of the sale may be withheld from them for taxes. Is a listing agent liable for any stolen or damaged property? - Answers - No, paragraph 10 of the listing agreement protects the agent. What should you recommend sellers do to protect their assets while their home is open to showings? - Answers - To make sure their insurance coverage is adequate, whether it is furnished or vacant. What are the conditions to show the property during the listing period? - Answers - The selling agent is allowed to show at all reasonable times. If the seller makes it difficult to do so, then they may be liable to pay the full commission. Are you required to submit offers to lease or option the property? - Answers - No, the listing agreement only stipulates that you are required to present offers to buy. How soon does the seller need to return the seller disclosure? - Answers - By five days after a purchase and sale agreement is signed. It is better to have it as soon as possible so you can go over any existing issues before buyers submit offers. How is the agent compensated if the buyer breaches contract? - Answers - If the seller keeps the earnest, then any costs incurred by the agent on behalf of the seller is reimbursed, and the remainder is split between the agent and seller. If an owner is married and insists that their spouse doesn't have interest in the subject property, are they required to sign the listing agreement? - Answers - They're not required but it is best practice to include both just in case. If there is a power of attorney to be listed on the listing agreement, what due diligence should the agent do? - Answers - Ask to see the power of attorney document to confirm that it is the correct person and that they do indeed have power of attorney. If a seller is a corporation, who needs to sign? - Answers - The corporation is listed as the seller and the authorized person signs on its behalf.
If a corporation is the seller of the property, what due diligence should the agent do? - Answers - Ask to see a copy of the resolution to make sure that the authorized agent is actually authorized by the board to sell the property. On a listing agreement, what signatures are necessary for a partnership? - Answers - Any general partner will do, but it is best practice to collect signatures from all partners. When are you required to give the seller a copy of the listing agreement? - Answers - Right as soon as you sign it. The multiple listing service is always a party to any listing agreement. True or false? - Answers - False. It simply distributes information. If the seller interferes with the brokerage's ability to market the property, he can become liable for a commission regardless of whether a sale occurs. True or false? - Answers - True. Any officer of a corporation may sign a listing agreement on behalf of that corporation. True or false? - Answers - False. Only an officer of a corporation who has been expressly authorized by the corporation's board of directors to sell the property may sign a listing agreement. If a seller's property is stolen during an open house, the listing agent is not liable for any loss. True or false? - Answers - True. Input Sheet - Answers - Portion of the listing agreement that provides specific information about the property, used by agents. Map Book (re: subdivisons) - Answers - An index layer to indicate where a parcel of property is on a subdivided lot. ASF - Answers - Approximate square footage. What can you do if you need to give relevant information that doesn't have a checkbox in the input sheet? - Answers - Check "See Remarks" and then put it in the remarks section. What do you put in the "Marketing Remarks" portion of the input sheet? - Answers - What you want to include on the MLS advertising and related marketing materials. When does the seller need to have a copy of the input sheet? - Answers - Right after they complete and initial it, along with the listing agreement.
Gifts to family members. Can a buyer waive the right to receiving a seller disclosure statement? - Answers - Yes. Except if there are 'Yes' answers to any environmental disclosures, the buyer isn't allowed to waive that section. How long does a buyer have to rescind a purchase and sale agreement after receiving the disclosure statement? - Answers - 3 days. If the buyer decides to rescind a purchase and sale after receiving the seller disclosure, who is entitled to the earnest money? - Answers - The buyer. If is now after the 3 day seller disclosure grace period, and something happens to make the seller disclosure inaccurate, what are the seller's options? - Answers - a) To amend the disclosure and reactivate the 3 day rescission period. b) Make the necessary repairs that will make the disclosure accurate again, at least 3 days before closing date (otherwise closing will be pushed back to allow for new rescission period). If circumstances change or new information comes to light after closing, is the seller obligated to amend a disclosure statement? - Answers - No. If an agent observes a material defect that is not listed on the seller disclosure form, are they obligated to disclose this? - Answers - Yes. Can agents change any of the wording on a seller disclosure form? - Answers - No because it is a statutory form. Are agents allowed to help fill out any part of the seller disclosure form? - Answers - No. Are agents allowed to help the sellers answer questions on the seller disclosure form? - Answers - No. You could be held liable for inaccuracies. Is it legal to offer a larger portion of property for sale the plat has been recorded? - Answers - Generally, but in King and Snohomish county, you can get away with just an approved preliminary plat map. A seller disclosure statement must be used in "for sale by owner" transactions. True or false? - Answers - True. Even if no real estate agent is involved, a seller must complete a seller disclosure statement and give it to the buyer (unless the transaction is exempt for some other reason).
A buyer who decides to rescind the purchase and sale agreement after receiving a seller disclosure statement must do so within five business days after receiving the statement. True or false? - Answers - False. It's 3 days. The seller disclosure statement is supposed to be filled out by the listing agent after a visual inspection of the property. True or false? - Answers - False. The seller disclosure statement is supposed to be filled out by the seller. An agent should not fill out the form or help the seller answer the questions. The seller must give the seller disclosure form to the buyer within five days after the purchase and sale agreement is signed. True or false? - Answers - True. Any known material defect must be disclosed on the seller disclosure statement form, even if the form does not have a specific question about that particular type of defect. True or false? - Answers - True. If a home was built after 1978, the seller must complete the lead-based paint portion of the seller disclosure statement. True or false? - Answers - False. The lead-based paint disclosure requirements apply to houses built before (not after)
After reviewing the seller disclosure statement, the buyer can rescind the purchase and sale agreement on what condition? - Answers - Anything really. They do not need to provide explanation. The buyer breached the purchase and sale agreement and forfeited the earnest money deposit. Assuming that a typical listing agreement was used and no special expenses were incurred on the seller's behalf, what will happen to the earnest money deposit? - Answers - The deposit will be split evenly between the listing brokerage and the seller. If it's necessary to change information included in the listing agreement or on the listing input sheet, who must provide written consent? - Answers - Seller and listing brokerage. Under which type of listing will the seller owe a commission to the listing agent regardless of who is the procuring cause of the sale? - Answers - Exclusive right to sell. The seller doesn't know the property's legal description, so the listing broker writes "Legal description to be obtained by agent" on the listing agreement form. What is now required of the broker to make it valid? - Answers - The listing agreement will be valid if the broker obtains the legal description, has the seller initial and date it, and attaches it to the agreement
