Question

In: Operations Management

Discuss hypothetical situation described based on information from Chapter 4 and 5. There are different kinds of listing agreements brokers may offer clients.

Discuss hypothetical situation described based on information from Chapter 4 and 5. There are different kinds of listing agreements brokers may offer clients. Subagency is a way of having a cooperating broker assist a client. MLS is a service which allows listed property to be marketed by any participating licensee to maximize exposure of listed property.

     1. Chris wants to list his house for sale and wants to use an open listing. What would the advantages be to Chris of selecting an exclusive right to sell listing instead?

     2. After examining the proposed listing agreement Chris notices that it allows the broker to list his property in MLS. How would the broker explain MLS and its advantages to sellers?

     3. Kirk from another real estate firm has a potential buyer for Chris's home. What factors should Chris's agent consider in offering subagency to Kirk?

     4. Kirk is offered subagency and brings a potential buyer to the property. He has never met the seller and he has spent a great deal of time with the potential buyer. What are some risks for Kirk in the transaction? What are some risks for Chris's broker?

     5. LaTisha is a buyer's broker with a client touring Chris's property. How will Chris's broker's interactions with LaTasha differ from the interactions with Kirk?

6. What steps should LaTisha take to seek payment of her fee by the seller? Is it ethical for her to do so?

Solutions

Expert Solution

1. Chris wants to list his house for sale and wants to use an open listing. What would the advantages be to Chris of selecting an exclusive right to sell listing instead?

  • The advantages for Chris of selecting an "exclusive right to sell" listing are:
    • The agent will be more responsible and there are more chances that he will bring a potential buyer rather than someone to the table.
    • Efficient Marketing will take place for the sale of property and also at higher price.
    • Since the commmission is guaranteed, he / she will priortise your sale
    • He don't want to negotiate
    • He don't want to deal with multiple agents.

2. After examining the proposed listing agreement Chris notices that it allows the broker to list his property in MLS. How would the broker explain MLS and its advantages to sellers?

  • The advanatage for sellers to list the sale in MLS are:
    • It reduces the commission charges to one half compared with "exclusvie right to sell"
    • It opens the competition between the agents to sell the property at earliest
    • More agents will work for selling the property there by chances for executing the deal in short span will be high
    • There is no obligation to you, the sale can happen as you like and if you find out a buyer then no need to pay commission.

3. Kirk from another real estate firm has a potential buyer for Chris's home. What factors should Chris's agent consider in offering subagency to Kirk?

  • The factors that Chris agent consider in offiering subagency to Kirk are:
    • He should be reliable
    • He should not bypass him and contact Chris directly
    • "%" of Commission paid to Kirk
    • Time duration for Kirk to execute this Sale, so that Chris can get benefit from Kirk's work

4. Kirk is offered subagency and brings a potential buyer to the property. He has never met the seller and he has spent a great deal of time with the potential buyer. What are some risks for Kirk in the transaction? What are some risks for Chris's broker?

  • Since Kirk and Chris are broker but representing Buyers and Sellers side respectively. The potential risk for both of them are same. Some of the risks are listed below:
    • Disclosure: Does the seller disclose everything about the property for sale
    • Accounting: Proper accounting of all money and valuables that are entrusted to you by your client.
    • Obedience: You Can't do any thing illegal.
    • Loyalty: You much act solely in the best interest of your client.

5. LaTisha is a buyer's broker with a client touring Chris's property. How will Chris's broker's interactions with LaTisha differ from the interactions with Kirk?

  • Generally speaking, Chris's broker interaction with LaTisha will be far better than interactions with Kirk because, Kirk is Chirs worker and LaTisha is Chris's customer. There is a difference in approach with anyone when comes to one's worker and one's customer.

6. What steps should LaTisha take to seek payment of her fee by the seller? Is it ethical for her to do so?

  • LaTisha can approach Chris and convience him for paying her fee, since she only brought the person to buy the property and say the advantage in that deal, i.e., commercial profit. But it is unethical for her to do so, since as per deal, only Chris's agent is liable for commission from Chris and not Buyer's agent.

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