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In: Operations Management

A property owner wished to sell a small apartment building that she owned. She consulted a...

A property owner wished to sell a small apartment building that she owned. She consulted a local real estate agent and listed her property. Because she was about to leave on her lengthy winter vacation, she provided the agent with authority to sell the property on her behalf if the terms of any offer received met the terms set out in the listing agreement. A prospective buyer inspected the property during the period of time that the property was listed for sale, but did not make an offer to purchase. Before the property owner returned from her vacation, but after the agency agreement had expired, the prospective buyer returned and made an offer to purchase the property that corresponded with the terms of the listing agreement. The agent accepted the offer on behalf of the property owner. After the purchase agreement was signed, the buyer discovered that the agency agreement had expired. He then began a legal action against the agent. Explain the nature of the buyer’s action and indicate how the case may be decided. Could the property owner ratify the agreement? What factors would affect the ratification?

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Expert Solution

Marry needs to do a cost benefit analysis before taking any decision. If she hires the real estate agent she will not have to worry about documentation, showing the property to the buyer and other worries. This way she can save a lot of time and use those hours on her work or any other job to earn money. If for marry, the value of those opportunities and leisure is higher than she should definitely go for hiring the real estate agent. If she gets a lot of free time and is not doing a regular job, she can go for sale by owner and can save the brokerage expenses.

keosha answered 2 years ago
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