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REP
Section 2: Real Estate Brokerage
| Question | Answer |
|---|---|
| Who is responsible for supervising a licensee? | Broker |
| Who is responsible for developing a licensee's business? | Licensee |
| Who is responsible for supervising a personal assistant? | Both Broker and Licensee |
| Who is responsible for a licensee's actions? | Both Broker and Licensee |
| Employee or Independent Contractor: Paid for time worked on salary | Employee |
| Employee or Independent Contractor: Paid for results, not time worked | Independent Contractor |
| Employee or Independent Contractor: Broker withholds income and Social Security taxes | Employee |
| Employee or Independent Contractor: Broker doesn't withhold income or Social Security taxes | Independent Contractor |
| Employee or Independent Contractor: I’ll set your work hours for you, and you’ll be compensated for hours worked. | Employee |
| Employee or Independent Contractor: You’re compensated based on performance. Close a sale, and you’ll earn a commission. You’ll set your own hours and how you’ll work, but I’ll provide instructions, training, and supervision to help you. | Independent Contractor |
| Employee or Independent Contractor: I’ll pay federal and state unemployment taxes, and withhold appropriate income taxes from your paycheck. | Employee |
| True or False? Consumers compensate brokers for their services, generally in the form of a percentage of the sales price of the property involved in the transaction. | True |
| True or False? A salesperson's compensation comes directly from the client or customer. | False |
| True or False? The industry has a “standard” compensation fee. | False |
| True or False? Brokerage compensation options include a flat fee, fee for service, or percentage of sale. | True |
| True or False? The amount a salesperson is compensated is dependent upon the agreement with the broker. | True |
| True or False? If a licensee is the procuring cause for a sale, that licensee may still earn compensation. | True |
| True or False? A procedure regulates and controls actions. | False |
| True or False? A procedure tells the “who, how, and when” something is done to implement that policy. | True |
| True or False? Establishing policies and procedures sets expectations for how the company will conduct business and meet consumer needs. | True |
| True or False? Providing guidelines for employees and independent contractors will clarify direction, reduce confusion, and provide specific parameters for everyone to follow reduces risk. | True |
| T/F? When all are trained to follow policies/procedures & broker shows commitment to enforcing them, this can provide evidence of broker’s care for consumer protection & shifts liability to those who may rebel & act unethically w/out broker’s knowledge. | True |
| True or False? E&O insurance is mandated as a condition of licensing in many states. | True |
| True or False? Your E&O policy provides coverage in many situations, but not in all. | True |
| True or False? All E&O policies cover regulatory complaints. | False |
| True or False? E&O policies will always cover property damage and/or bodily injury claims. | False |
| True or False? Effective training is both relevant and ongoing. | True |
| True or False? Training should focus on real estate law, practice, and areas where most complaints occur. | True |
| True or False? Have an attorney review your firm’s practices and policies. | True |
| True or False? Minimize risk by only meeting with your attorney when a problem arises. | False |
| True or False? The government makes laws to safeguard the welfare of its citizens. | True |
| True or False? Ethics are dependent on a person’s conscience and values. | True |
| True or False? Ethics are legally enforced. | False |
| True or False? Laws are legally enforced. | True |
| True or False? Laws are legally enforced. | True |
| True or False? Because morality differs from person to person, laws are made with generally accepted ethics as their guiding principle. | True |
| Laws, ethics, or morality? Varies from person to person (religious or cultural beliefs) | Morality |
| Laws, ethics, or morality? Basis for laws | Ethics |
| Laws, ethics, or morality? Specify accepted ethical behaviors to safeguard citizens | Laws |
| Laws or ethic/moral? Mary stops at a red light. | Laws |
| Laws or ethic/moral? Mary goes to church every week because she feels it's the right thing to do. | Ethics/morals |
| Laws or ethic/moral? Mary believes it's wrong to eat meat. | Ethics/morals |
| Laws or ethic/moral? Mary must obtain a license to practice real estate. | Laws |
| True or False? The “right thing” is always ethical. | True |
| True or False? As a licensee, the Golden Rule can help you behave ethically no matter the situation. | True |
| True or False? A licensee’s personal ethical standards interact with laws and morals every day. | True |
| True or False? The easiest course of action isn’t always the most ethical. | True |
| True or False? Personal ethics have no impact on professional behavior. | False |
| Ethical or Unethical? You promote your own interests ahead of the client’s. | Not ethical |
| Ethical or Unethical? You treat all parties honestly, even customers. | Ethical |
| Ethical or Unethical? You modify the suggested listing price of a property above market value in an effort to win the listing. | Not ethical |
| Ethical or Unethical? You offer advice on the condition of a property’s roof. | Not ethical |
| Ethical or Unethical? When listing a property, you cooperate with the buyer’s agents. | Ethical |
| Ethical or Unethical? You're the listing agent on your parents' property, but you keep this fact confidential from prospective buyers. | Not ethical |
| What are three of the reasons that it's important for brokerage firms to have a code of ethics? | 1) To decrease legal liability and avoid costly penalties 2) To help foster a collaborative and professional working environment 3) To create a standard of behavior and practices that will establish and reinforce the firm’s reputation within its market |
| What are five things brokerages can do to integrate the code of ethics into the organization? | 1) Commit it to writing 2) Spread the word 3) Walk the walk 4) Enforce it 5) Reinforce it |
| Do/don't? Use existing forms an attorney has reviewed. | Do |
| Do/don't? Create your own real estate forms. | Don't |
| Do/don't? Interpret legal consequences of specific actions. | Don't |
| Do/don't? Explain clauses to your clients. | Do |
| Do/don't? Charge a fee for preparing transaction documents. | Don't |
| Do/don't? Know your state's definition of unauthorized practice of law. | Do |
| Do/don't? Freely make changes to existing forms by striking provisions and writing new provisions. | Don't |
| Do/don't? Encourage clients to have an attorney draft non-standard forms. | Do |
| Within/outside expertise of real estate licensee? Perform appraisals to determine the value of a home. | Outside expertise |
| Within/outside expertise of real estate licensee? Perform a market analysis to determine a market value range for a property. | Within expertise |
| Within/outside expertise of real estate licensee? Give advice on how to finance a home purchase. | Outside expertise |
| Within/outside expertise of real estate licensee? Search for properties on the MLS. | Within expertise |
| Within/outside expertise of real estate licensee? Perform property inspections. | Outside expertise |
| Within/outside expertise of real estate licensee? Market listings through flyers. | Within expertise |
| The Sherman Act | An 1890 act to protect the public from monopolies or combinations that restrain trade |
| The Clayton Act | Enacted in 1914 as a supplement to the Sherman Act, with the same general purpose, designed to cover restraints on interstate trade or commerce not covered by the Sherman Act |
| The Federal Trade Commission Act | A federal body formed through an act of Congress in 1914 with the power to declare trade practices unfair that conflict with basic policies of antitrust legislation |
| Which three parties are involved in the enforcement of antitrust law? | 1) Federal Trade Commission 2) Department of Justice 3) State Attorney General |
| Federal antitrust violation? Price fixing | Violation |
| Federal antitrust violation? Individual boycotts | Not a violation |
| Federal antitrust violation? Group boycotts | Violation |
| Federal antitrust violation? Market allocation agreements | Violation |
| Federal antitrust violation? Tie-in arrangements | Violation |
| Per se | Guilt is established on the face of the circumstances. |
| Group Boycotting | An illegal agreement between parties to not do business with a particular person or company |
| Tie-in Arrangement | An antitrust violation in which the provider of a service requires the customer or client to purchase another service |
| Is This a Tie-In Arrangement? An agent tells a prospective buyer that she'll only negotiate on her behalf if she signs an agency agreement to be a client. | Not a tie-in arrangement |
| Is This a Tie-In Arrangement? An agent tells a buyer that his commission rate is 2%, but the buyer won't have to pay this out of pocket if the seller's agent pays a commission to cooperating agents. | Not a tie-in arrangement |
| Is This a Tie-In Arrangement? An agent tells a client that if the client chooses to finance his mortgage through Alamo Bank & Trust, she will take 1% off of her commission rate. | Tie-in arrangement |
| Is This a Tie-In Arrangement? An agent agrees to work with a client, but only if the client agrees to not do business with Peak Mortgage. | Tie-in arrangement |
| Is This a Tie-In Arrangement? You and your licensees are having issues with BuyNow Mortgage, so you decided you'd no longer accept pre-approvals from this company. | Not a tie-in arrangement |
| Price fixing | The illegal agreement between competitors to fix services or products at a specific price |
| Is This Price Fixing? Yankee Group and Met Realty both charge commissions of 5%. | Not price fixing |
| Is This Price Fixing? Met Realty and Sox Properties agree to charge commissions of 6%. | Price fixing |
| Is This Price Fixing? All agents with MaxRealty charge a 4% commission split evenly with the cooperating agent. | Not price fixing |
| Is This Price Fixing? Maize Realty offers most cooperating agents a commission of 2.5%. However, they only offer a commission of 2% to Scarlet Agents. | Not price fixing |
| Is This Price Fixing? While networking at a real estate industry event, agents from several firms agree to start writing listing contracts for terms of three months. | Price fixing |
| Market Allocation | The illegal process of dividing up a market by geography, price point, etc., to limit competition |
| Is This Market Allocation? Instead of competing in each other's territories, agents in two brokerage firms agree to segment the marketplace and refer clients to one another who are outside of their assigned market area. | Market allocation |
| Is This Market Allocation? An agent has a client who would like to purchase a home in a neighboring county. Unfamiliar with the area, the agent refers the buyer to another agent with the firm who is more knowledgeable. | Not market allocation |
| Is This Market Allocation? A local realty firm is seeking to bring on an agent who will focus only on properties priced above one million dollars. | Not market allocation |
| Policies and Procedures Manual | Outlines a brokerage's guidelines for employees and independent contractors that clarify direction, reduce confusion, and provide specific parameters for everyone to follow |
| Employee | A worker whose employer controls the details of the worker's performance |
| Independent contractor | A person whose work is not directly controlled by a supervisor or manager |
| Referral fee | A fee paid to someone who receives a client or customer for service to the person referring the client or customer |
| Real Estate Settlement Procedures Act (RESPA) | An act which protects borrowers from overcharges by requiring disclosure and prohibiting kickbacks |
| Procuring cause | The initiator in a chain of events that leads to a real estate sale |
| Code of ethics | A system of rules and norms established by a group of professionals who agree to adhere to them to maintain the standards of their profession |
| Antitrust law | Laws relating to the suppression of competition in the marketplace |
| Who is responsible for reviewing transactional paperwork and advertising? | Broker |
Created by:
StaRacer94
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