Real Estate Unit 1

Vocabulary flashcards for real estate exam review.

Employee (in real estate)

With this relationship, the broker has control over salespeople and can require adherence to regulations.

Independent Contractor (in real estate)

Self-employed contractor who can set own hours, is not limited to annual salary, and is responsible for business expenses.

Law of Agency

Governs the legal relationship between a real estate agent and client.

Principal (in real estate)

The responsible party in an agency relationship, also called the managing broker or qualifying broker.

Agency (in real estate)

Creation of a relationship between licensees and buyers/sellers/landlords/tenants, etc.

Client

Individual who hires an agent to represent their interests.

Customer

Owed limited duties from the agent such as fair and honest dealings.

Consumer

A member of the general public, not the client.

Express Agency

An agreement directly expressed with spoken or written words.

Implied Agency

Indirect oral or written agreement.

Puffing

Exaggerated comments or opinions; agents must be careful that customers do not accept their puffing as fact.

Universal Agent

Represents the principal in all matters; can do everything with power of attorney.

General Agent

Represents the principal in a specific range of matters, such as a property manager.

Special Agent

Represents the principal in one specific transaction under detailed instructions, such as a real estate agent.

Dual Agency

Representing both parties within the same real estate transaction, requiring written consent.

Undisclosed Dual Agency

Occurs when a real estate licensee does not disclose that they owe a duty to more than one party in the same transaction.

Subagent

A cooperating sales associate from another brokerage who is not the buyer's agent but shows property to a buyer.

Cooperating Agent

Broker from another company who finds the buyer.

Self-dealing

When an agent is acting for themselves.

Latent/Hidden Defect

A problem or flaw in something that you can’t see right away; if revealed after a contract is signed, buyers can possibly rescind their sales contract and receive damages.

Megan’s Law

Agents have no obligation to search state records on which convicted pedophiles registered in your area

Stigmatized Properties

A home that may be displeasing to buyers for reasons besides its physical condition; disclosure may not be mandatory.

Steering

Pushing buyers to look at homes in particular areas based on race, religion, and other protected classes.

Blockbusting

Frightens homeowners into selling their homes.

Redlining

Denying applications for mortgage loans, home improvements, etc, without looking at economic qualifications.

Housing and Urban Development (HUD)

A federal agency responsible for national policy & programs that address America's housing needs and enforces the Fair Housing Act.

Caveat emptor

“Let the buyer beware;” an individual buys at own risk.

Real Estate Broker

Requires a 152-hour course, minimum age of 20, U.S. citizenship, and 22 hours of continuing education.

Real Estate Salesperson

Requires a 77-hour course, minimum age of 18, and legal right to work in the U.S.

Associate Real Estate Broker

Qualified broker who works as a salesperson under a sponsoring broker.

Unlicensed Real Estate Assistant

Assists real estate agents with paperwork.

Kickback

Improperly received or shared compensation.

Blind Ad

Fails to disclose the identity and licensing status of the real estate broker or agent involved.

Net Listing

When a listing agent guarantees to sell your house for a certain set price, and if they sell the house for a higher amount, they pocket the difference as their commission.

Escrow

Holds funds involved in the transaction until all conditions of the sale are met, held in a New York State Bank Account.

Article 12-A

Requires sellers to disclose any known defects or conditions with a Property Condition Disclosure Statement.

Article 78 proceeding

Action of the DOS can be appealed made through Article 78 proceeding in New York State Supreme Court.

Fiduciary Duties

The legal obligation real estate agents have to act in the best interests of their clients.

Obedience (fiduciary duty)

The agent must obey everything the principal asks unless, the instructions are unlawful or unethical

Loyalty (fiduciary duty)

Undivided loyalty to principal, must NEVER take advantage of a chance to profit at the principal’s expense

Disclosure (fiduciary duty)

Must pass all useful, relevant, or material facts they obtain that might impact the principal’s decision.

Confidentiality (fiduciary duty)

An agent may not disclose any confidential information learned from or about the principal, Confidential information must be kept confidential even after the closing date.

Accounting (fiduciary duty)

Must be able to report the status of all funds, deposit funds into escrow, No funds should ever commingle.

Reasonable Care (fiduciary duty)

The licensee is considered the expert through education, testing & job experience and liable to the principal for any loss resulting from the agent’s negligence or carelessness.

Antitrust Laws

Regulations designed to promote fair competition and prevent monopolies or unfair business practices.

Federal Trade Commission

Gave ability to declare that certain trade practices were deemed unfair

Tie-in Arrangement

When a condition needs to be fulfilled in order to complete a transaction.

Market Allocation

Occurs when competing firms agree to split up an area and refrain from doing business in each others territory.

Group Boycott

When a group of businesses band together to drive another company out of business.

Price-Fixing

When competing brokers set commission rates rather than letting competition establish rates in an open marker.

Sherman Act & Clayton Act of 1890

Foundational antitrust law in the U.S.

Civil Rights Act of 1866

Protected Race & Color

Fair Housing Act of 1968

U.S. Case Jones V. Mayer that protected race & color, religion & national origin, sex, familial status & disability.

Fair Housing Act Timeline

Race & Color (1866), Religion and National Origin (1968), Sex (1974), Disability & Familial Status (1988)

Testers

Undercover agents

Affirmative Marketing

Creates marketing materials that are not discriminatory