Humber Real Estate - Course 2, Module 2, Documenting Relationships with Sellers and Buyers

What 4 things must be specified on both representation and customer service agreements? - Answer-- The effective date and expiry date of the agreement (can only be one expiry date) - The method for calculating commission or other remuneration payable to the brokerage (in the case of a seller, the amount payable) - How the commission or other remuneration will be paid - The services that the brokerage will provide under the agreement If the term of a representation or customer service agreement is more than 6 months, what must be prominently displayed on the first page, and requires an initial by the seller/buyer? - Answer-The expiry date If two sellers sign one representation agreement, is it acceptable to present them with one copy of the signed document, if they sign in person at the same time? - Answer-No. Each seller must receive their own individual copy of the signed listing agreement. Under REBBA, when might specific conditions allow remuneration to be paid without a written agreement? - Answer-- A salesperson has conveyed a written offer that is accepted by the seller - A salesperson shows a property to the buyer, who subsequently purchases the property - The salesperson introduces the seller and the buyer, for the purpose of discussing the acquisition or disposition of an interest in real estate In what situations would the salesperson need to disclose the nature of the relationship to both the buyer and seller? - Answer-- The brokerage is representing both the seller and the buyer in the same transaction (i.e. both the seller and the buyer are clients) - The brokerage is representing the seller as a client and is providing services to the buyer as a customer in the same transaction - The brokerage is representing the buyer as a client and is providing services to the seller as a customer in the same transactionIf a home is locked up properly after an open house, and then is broken into, is the brokerage liable for the damages? - Answer-No. The seller agrees in their representation agreement to indemnify the brokerage in case of damage, theft, vandalism or fire that may occur during the marketing process, providing the brokerage is not behaving negligently in carrying out its duties. If a buyer agrees the brokerage should received a commission of 2.5% of the sale price of any property purchased during the term of their agreement, and the seller is providing 1.5% commission, how much commission will the buyer's brokerage make? - Answer-2.5% as agreed to in the buyer representation agreement. (Seller pays 1.5% and buyer pays the additional 1%) What types of listings are there? - Answer-- Exclusive with one brokerage - Placed on a listing service inviting co-operation from other brokerages - Open listing Define an 'Exclusive Listing' - Answer-The seller gives the sole right to market and sell their property to one brokerage. The brokerage is authorized by the seller to sell their property during the time specified in the agreement and on the terms agreed to. Note: Only the brokerage with whom a seller has signed an exclusive agreement is authorized to show the property to potential buyers, and the property wouldn't be advertised on a listing service. Why would a seller choose an 'Exclusive Listing' with a brokerage? - Answer-Because the seller has given specific instructions regarding the showing of the property that the brokerage must follow. For example, pre-qualifying potential buyers for high-end properties, ensuring privacy and tighter control over who is shown the property (i.e. no nosy neighbours wanted). What is a potential major issue when a seller considers an 'Exclusive Listing'? - Answer-By restricting the authority to sell the property to the listing brokerage, buyers working with other brokerages may not know of the property's availability and miss the opportunity to view and purchase the property. Define a listing via 'Listing Service' - Answer-The most common form of listing; the property is placed on a listing service (i.e. MLS) and the authority to list is granted to only one brokerage, however, the seller permits the listing brokerage to co-operate with other brokerages in the sale of the property.What is a 'Co-Listing' (aka 'Shared Listing')? - Answer-A seller signs a representation agreement with two or more brokerages at the same time. There's only one listing, but two or more brokerages share the responsibilities and the commission. Note: This doesn't happen very often but can happen when multiple owners of the same property want their own representation (i.e. during separation or divorce) Define an 'Open Listing' - Answer-Also known as For Sale By Owner (FSBO), is when a seller does not list their property with any brokerage, however the seller is willing to allow any brokerage to show the property to a buyer. This is often identified by a sign on the property stating 'Brokers Protected', meaning the seller will co-operate with any brokerage and will compensate the brokerage who first acquires a buyer ready, willing and able to meet the terms of the listing or secures the acceptance by the seller of a satisfactory offer. What type of agreement is usually used during an 'Open Listing' if a brokerage brings a buyer? - AnswerAn agreement to pay commission (rather than a representation agreement). The seller is not a client and the brokerage does not owe the seller any fiduciary obligations. What type of properties often use 'Open Listings'? - Answer-Office, retail or industrial properties. What documents can be used by a salesperson to confirm details given by a seller on the seller representation agreement? - Answer-The deed, assessment notice or a municipal tax bill. What is a 'Holdover Provision'? - Answer-A provision stating the brokerage is entitled to commission if a buyer is introduced to, or shown, the property during the listing period and purchases the property during an identified time period following the expiration of the listing. Also known as the 'Holdover Period'. What happens if a listing expires, but during the 'Holdover Period' the seller re-lists with another brokerage, and then a buyer who previously saw the property (before it first expired) then buys it? How is commission handled between the first and second brokerage? - Answer-The original listing brokerage's commission owed is reduced by the amount of commission paid under the new agreement. If the commission in the new listing is equal to or greater than the commission stated in the original listing, then no commission is payable. Example: Brokerage A was originally owed 5% and Brokerage B is now owed 4.5%, so after the sale is completed, Brokerage A received 0.5% and Brokerage B received their full 4.5%.Note: If the commission agreed upon by Brokerage B was equal to or more than the amount promised to Brokerage A originally, no commission would be owed to Brokerage A. The listing agreement identifies that unless otherwise informed, the co-operating brokerage is representing the interests of the buyer. This is known as what? - Answer-Assumed buyer agency What does The Code of Ethics require when explaining Multiple Representation to a client? - Answer-- The fact that the brokerage could enter into multiple representation but that his could only be done is all of the clients represented by the brokerage for that trade consent in writing. Consent is not required to be given. - The nature of the services that the brokerage could provide to each client when working under multiple representation What is the brokerage's obligation under Multiple Representation? - Answer-To remain impartial and to treat all parties equally and fairly. Define 'Notices' in reference to a transaction - Answer-Documents given and received by the seller. True or false? In multiple representation, notices must be given directly to the seller or buyer in a transaction before they can be deemed as received. - Answer-True. Unlike during Single Representation, a brokerage can't receive a notice for a seller or buyer because they represent both parties during multiple representation. Is a seller obligated to refer any inquiries about their property to their listing brokerage? - Answer-Yes. If the seller accepts an offer during the listings period or holdover period without notifying the brokerage, the seller is obligated to pay the commission as stated in the agreement, within 5 days of the brokerage's request. What is a 'Finder's Fee'? - Answer-Any direct or indirect financial benefit received from another person arising from services provided to the client (also called a referral fee). These must be disclosed in writing. Is marketing an implied authority or an actual authority? - Answer-Actual authority