Real Estate Exam - Agency, Brokerage & Ethical Considerations: Latest Updated A+ Solution

Brokerage (Ans- the business of bringing buyers and sellers together in the marketplace Broker (Ans- a person who is licensed to assist others in real estate transactions and to receive compensation for those services Principal (Ans- (known as the client) or the party who employed the broker Ready, Willing and Able Buyer (Ans- One who is prepared to buy property on the seller's terms and is ready to take positive steps to consummate the transaction. Customer (Ans- A party to a transaction who is represented by another broker and is not the agent's principal (client). Customers are owed honesty and fair dealing Fiduciary relationship (Ans- trust and confidence of trust and confidence in which an agent is responsible for the money and/or property of others. Law of Agency (Ans- The law that governs the relationship between a principal and his or her agent. Fiduciary (Ans- A licensee is a Fiduciary when the enter into a Fiduciary agreement with a client. Universal Agent (Ans- has authority to represent the principal in all matters that can be delegated. He or she can enter into any contract on behalf of the principal without prior permission. General Agent (Ans- is empowered to represent the principal in a broad range of matters. The general agent may bind the principal to any contracts within the scope of his or her authority. An example of a general agent would be a property manager responsible for running a large building: procuring tenants, collecting rents, and hiring and supervising maintenance personnel, among other duties. Special Agent (Ans- is authorized to represent the principal in one specific capacity only. A real estate broker is traditionally a special agent hired by a buyer or seller to locate a willing seller of a suitable property or a willing buyer. As a special agent, the broker is not authorized to buy or sell the property or to bind the principal to any contract Power of Attorney (Ans- Often one person is authorized to act for someone else in a legally binding capacity. This type of agency is created by a power of attorney, a legal written authorization that stipulates the specific areas of authority in which the agent may act. The agent acting in such a capacity is known as an attorney-in-fact Attorney-in-Fact (Ans- A person given the authority to act on behalf of another under a power of attorney. Express Agency (Ans- Express agency is where the agency relationship is created through an agreement in which the agent and the principal state their intentions to enter into an agency relationship, that the agent will represent the principal. The parties state or express their intentions in writing. Oral agreements establishing an agency relationship is rarely binding