Question

1. Discuss the purpose of a listing agreement.

2. Briefly discuss the 3 types of listing agreements and identify the listing agreement that is most commonly used.

3. Describe the minimum elements a listing agreement should include.

4. Absent of a specific written agreement between the real estate broker and the seller, can a broker charge the seller for any other expenses (advertising, overhead, sales expenses) the broker incurrs in marketing the property?

5. Discuss the purpose of the safety clause found in most listing agreements.

6. Explain the purpose of the purchase agreement.

7. Would you purchase a property using a land contract?  Explain...

8. A lease (rental agreement) sets out the rights and responsibilities of the landlord and tenant. Briefly describe the elements of a valid lease.

9. What is the purpose of an option agreement?

10. Compare an option agreement and a right of first refusal

Answer 1

1. A listing agreement is an agreement between a real estate broker and the owner of the property to find a buyer for the house. The purpose of a listing agreement is that it authorise the broker to represent the owner in the sale of the property.

2. The three types of listing agreement are as follows :-

a) Open listing - In open listing, the seller can employ any number of broker, but the broker who sells the property gets the commission. The seller does not have any obligation under this agreement and can sell the property independently.

b) Exclusive-agency listing - In this listing, the seller employs one broker to act as his agent. The broker receives commission only if he is involved in selling the property. This listing also provides the liberty to the owner to sell the property independently.

c) Exclusive right to sell listing - In this listing, one broker is employed as the sole agent to represent the property on behalf of the owner. The broker receives a commission no matter whether he is involved in selling or not.

Exclusive right to sell is the most commonly used agreement.

3)The elements which should be included in agreement are:-

a) Description of the property

b) Listing price

c) Brokers duties

d) Seller's duties

e) Broker's compensation

f) Agreement termination date

g) Term of mediation

5) An exclusive right to sell agreement contains a safety clause. The purpose of safety clause is to protect the broker , in the event when the buyer introduced by the broker to the seller buys the property after the expiration of listing. This clause entitles commission to broker even if the listing is expired,

6) A purchase agreement is a document which contains the terms and conditions of sale which are binding on both buyer and seller. A purchase agreement is used for sale of real estate or homes. It is also very common in telecommunication industry.