Real Estate Principles, 10Th Edition

Illinois Real Estate Broker Post-Licensing

Interactive

Case Study 3: Agency Disclosure

Agent Tom receives a call on his new listing. The potential buyer, who is a personal friend, asks about the size of the lot and then asks when it can be viewed. Tom makes an appointment for 5 pm the same day.

Questions to consider:

1.What is Tom’s agency relationship with the potential buyer?Will it change?When?

2.Regarding agency, what are some of Tom’s options? What is your company policy?

3.What would youdo in this situation?Why?What is your company policy?

4.To complicate matters, Tom has a second buyer interested in the same property and both wish to write offers. What does Tom do now?

Tom represents a commercial client who is searching for an office space to lease. Tom knows of a past client who has a perfect spot available. The space has a sign in the window that reads, “For Rent by Owner—5,000 sq. ft.—Call for Details.”

Tom calls the owner to find out the details.

Questions to consider:

5.When Tom calls the past client/owner, what should be discussed?

6.Should Tom tell his current client about the past relationship?

7.Should Tom discuss compensation issues with the client/tenant?When?

8.Is Tom free to ask the past client/owner to pay his fee?Should the amount be approved by the client/tenant?

9.Would the above situation be any different if Tom’s client werea homebuyer and the seller a new-home builder? Why or why not?

Mary is a leasing agent with Student Rentals. Her company represents investors who own large apartment complexes near a college campus. A student comes in and wishes to view apartment A,which is advertised in the college newspaper for $500 per month.

Questions to consider:

10.Who is Mary’s client in this situation?What is her relationship with the other party?

11.Is any type of disclosure required?

Mary shows the student several apartments that her company has available. Another property management company has some apartments in the same building for lease that Mary knows are less expensive.

12.Should Mary tell the student about the other apartments?Why or why not?

After placing a phone call to another property manager, Mary decides to show the student the other apartments.

Questions to consider:

13.Are there possible ramifications?

14.Are there ever situations where tenants are represented by real estate agents?

15.Why would it be a good idea for the tenant to be represented?

16.How does this affect agency disclosures?