For a buyer’s broker to have the ability to negotiate their fee, the buyer’s broker needs to enter into an employment agreement with their buyer, called a(n):
Question & Answer
Review the question and all answer choices
buyer’s listing.
affiliated business arrangement.
An affiliated business arrangement (ABA) is a disclosure and arrangement under RESPA (the Real Estate Settlement Procedures Act) in which a settlement service provider refers business to a related entity in which they have an ownership interest, such as a broker referring clients to an affiliated title company; it has nothing to do with establishing a buyer-broker employment relationship.
cooperating broker arrangement.
A cooperating broker arrangement refers to the relationship between a listing broker and a buyer's broker who works cooperatively through the MLS system, typically involving the listing broker offering a cooperative compensation split; it is not the employment agreement between the buyer and their own broker.
controlled business arrangement.
A controlled business arrangement is an older term used interchangeably with affiliated business arrangement under RESPA, describing referral relationships between affiliated settlement service providers; it is not a buyer-broker employment agreement and does not establish the broker's right to negotiate a fee with the buyer.
Why is this correct?
A buyer's listing agreement — also called a buyer representation agreement or buyer-broker agreement — is the employment contract between a buyer and their broker that grants the broker the authority to represent the buyer and establishes the negotiated compensation terms. This agreement is the legal instrument through which the broker's fee is defined and made enforceable, giving the broker the contractual standing to negotiate their compensation directly with the buyer rather than relying on the listing broker's cooperative fee offer.
Continue Learning
Explore this topic in different formats
More laws-of-agency-fiduciary-duties Videos
Continue learning with related video lessons
Before soliciting business for a brokerage office operating under a fictitious business name, the broker is not required to:
2:55 • 0 views
A disclosure which warns a buyer they may be liable for additional tax obligations after the close of escrow is the:
2:47 • 0 views
The seller states they will accept the buyer’s offer if the broker lowers their 6% commission by 25%. If the broker accepts, they will receive:
3:05 • 0 views
A broker who fails to promptly disclose their dual agency status is subject to:
3:04 • 0 views
A prospective buyer gave their broker a personal check for $1,000 payable to the seller along with an offer to buy the property. The buyer told the broker the check was not to be cashed until the end of the month. Which of the following is correct?
2:39 • 0 views
Ready to Ace Your Real Estate Exam?
Access 2,000+ free video lessons covering all 11 exam topics.