Modern Real Estate Practice in Texas, 16th Edition

Chapter 13 Answer Key

1. a The listing agreement is the contract of employment between a broker and a seller creating a special agency relationship. The broker is obligated to aggressively market the property for the owner at the agreed-upon listing price. The owner is not obligated to sell the property even if the broker finds a ready, willing, and able buyer although he or she would generally be responsible for paying the broker’s commission in that situation. TREC does not promulgate forms relating to the agency relationship between brokers and consumers in Texas.

2. c In both types of listings the broker is appointed as the sole agent of the owner. The only distinction is that with exclusive-agency the owner retains the right to sell the property himself or herself without a commission obligation to the broker. Agency is created at the broker level, not the salesperson level.

3. a In both the exclusive-agency listing and the open listing the owner is not obligated to pay a commission to any broker if the seller personally sells the property without the aid of a broker.

4. c The multiple listing is not actually a separate form of listing contract; it is, in effect, an exclusive listing, with only one broker, who has the authority to distribute the listing to other brokers belonging to the same multiple listing service.

5. c Failure to perform during the listing period, death of the broker, or destruction of the property are all reasons agency relationships may terminate. The broker’s right to pursue litigation for non-payment of the commission does not relieve the broker of his or her duties as an agent.

6. b TRELA prohibits a licensee from negotiating or attempting to negotiate directly with any consumer having an outstanding written contract granting exclusive agency to another broker [§1101.652(b)(22)]. In an exclusive-agency listing, however, the owner is not obligated to pay a commission to the listing broker if the seller procures his or her own buyer.

7. b TRELA provides that a license may be suspended or revoked for failure to specify a definite termination date that is not subject to prior notice (except in a lease or property management agreement.) [§1101.652(b)(12)]

8. a Although the broker is obligated to give his or her opinion of value to the client (usually based on a CMA), the broker ultimately has a fiduciary duty to obey the client. Furthermore, TRELA states that a license may be suspended or revoked if the licensee offers to sell the property on terms other than those authorized by the owner (§1101.652(b)(20)).

9. c The commission rate, listing period, and protection period are negotiated terms between the broker and the owner which must be reduced to writing in an enforceable listing contract. The amount of earnest money is strictly a negotiated item between the buyer and the seller.

10. a Under an exclusive-agency listing, by selling the property without the broker’s help, the seller avoids paying the broker a commission.

11. b Under a net listing, the broker’s commission is any amount over and above the seller’s stated net. Although a net listing is legal in Texas, it is not recommended.

12. b A contract is voidable at the option of the buyer if a seller of residential property of not more than one unit fails to deliver the notice on or before the effective date of a contract for the sale of the property. There are a few exceptions, such as new construction. The seller has no duty to disclose death on the property caused by suicide, natural causes, or accidents unrelated to the condition of the property.

13. b The listing agreement is the contract of employment between a broker and a seller. The seller furnishes the real estate broker with the necessary inventory, the listing.

14. c Under the exclusive-right-to-sell listing, the listing broker (Fred) is entitled to a commission regardless of who sells the property as long as it sells while the listing is in effect. In this case, the seller will also be obligated to pay Nathan a commission through their separate written open listing agreement.

15. b The seller employs the broker to find a ready, willing, and able buyer at the Listing Price specified in the listing contract. By definition, the broker has earned the commission once he or she procures such a buyer even if the seller decides not to contract with the buyer.

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