One reason why real estate agent licensing should be made more stringent is so agents, and their brokers, and their clients, don’t end up in court. Another reason is that laws vary from state to state — so if you think you know it all in your state and decide to move to another state, you may be setting yourself up (and your client) for a major screwing.
Any professional who favors lower licensing standards, or heaven forbid, no licensing at all for real estate agents (the P.T. Barnum school of marketing) is a dumbass …. legally speaking.
Here’s a little quiz I stumbled upon. Test your knowledge. (Consumers may want to use this test on that fellow parading around with all those designations to make sure he wasn’t sleeping during class. )
1. A broker purchases a house listed with his company and, without the seller’s knowledge, immediately resells it for a profit. This is an example of:
a. undisclosed dual agency
b. breach of fiduciary duty
c. lack of reasonable care and diligence
d. free commerce
2. Seller financing question. Seller thought she held a first mortgage on the house you sold for her. Turns out she was holding a second mortgage (not a first, which was with the buyer’s bank). The buyer defaults in his payments and there is a foreclosure sale. The foreclosure sale proceeds are enough to pay the first mortgage but are insufficient to pay the seller’s second mortgage. Under these facts:
a. you may be liable for failing to advise the seller that her financing did not have priority
b . you are not liable because the loss was due to the buyer’s default
c. you are not liable for the seller’s mistake
d. you are not liable under both b and c.
3. Buyer claims that you, as the selling agent, failed to disclose that the septic system was undersized for her family, which you knew had 10 people in it (was this in Utah?). Under these facts:
a. you may be liable to the buyer for not recommending a septic test, knowing the size of the buyer’s family.
b. you are not liable for the seller’s failure to disclose the septic system capacity
c. you are not liable because the buyer did not ask you about the septic system
d. you are not liable because you don’t know what a septic system is– you just moved from a state that only has sewer systems
4. Name 2 ways an agency relationship may be created
a. express or executory
b. executory or implied contract
c. express or implied contract
d. by a straw man argument or fallacy ad hominem
5. When you listed a house, you suspected defects in the heating and a/c unit. However, the seller said there were no problems with the unit. When asked by the buyer you answer “the unit works fine and has no problems”. If it turns out there was a defect and the buyer sues, who is liable?
a. only the seller for not disclosing the material defect
b. only you for passing on wrong information
c. the seller for failing to disclose a material defect and you for misrepresentation
d. neither you nor the seller are liable because it was an innocent mistake.
6. A buyer wants to see a specific house she saw on Zillow (it was listed for sale by a mortgage guy who saw the yard sign and decided to put his contact info on the home, which had not been claimed by the elderly owner, who did not even own a computer). Despite the ridiculously low zestimate, you believe the house is substantially more than the buyer can finance. Under these facts:
a. advise the buyer she does not qualify for the home based on her prequalification work sheet, and document your file
b. do not show the Zillow listing. Instead, provide a listing of other homes you think are within the buyer’s price range
c. show the buyer the house, go through the prequalification work sheet with her again, and document your file.
d. tell her Zillow is bunk but since they let anyone list a house for sale, even if it is not their listing & the owner objects, this is free marketing for agents. And since free marketing is a good thing, Zillow is a fine company (heck, you might invite them to your next seminar)
7. You get a listing for a house in a flood prone area. The seller assures you the house has never had a flooding related problem. Under these facts, you should
a. say nothing and your ass is covered
b. tell buyers there has been some flood problems in the area but this house has not had any
c. independently verify if the house is in a flood zone. If it is, tell buyers the house is in a flood zone
d. you think flood zones are a conspiracy by the government to reduce the sale of homes in those areas, increase the cost of homes in non-flood zones, and only mental midgets should fear a little water in the basement. (you should also ask for a non-refundable retainer to list any house in a flood zone.)
8. A notice concerning lead based paint hazards is required for
a. any structure built prior to 1978
b. any residence built prior to 1978
c. any commercial structure or residence built before 1978
d. lead based paint hazard notices are another government intrusion into the business affairs of real estate agents. So what if a few unsupervised kids eat paint chips, the government has no right to give us this extra paper work. NAR must be behind this.
Good luck— and no cheating off your neighbor. The answers to this quiz (and the folks who dreamed it up) will be given sometime next week.
Related Posts:
Lightbulbs and Licensing: A Dim Bulbs Guide to Consumer Protection
Real Estate Agent Licensing is No Laughing Matter (a Selltoon post)
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