#26-50 Flashcards
What is state license reciprocity?
Reciprocity is an agreement between states to accept each other’s licenses as valid.
For example, in the absence of reciprocity, a broker must take a new examination to obtain a real estate license in the state to which he or she moves. With reciprocity, the broker need only present the license previously earned in another state.
When a person becomes licensed as a broker or salesperson, does he or she automatically become a Realtor®?
No. In order to be called a Realtor®, a broker or salesperson must join the National Association of Realtors®, which is a private trade association.
Members must pay dues and subscribe to a code of ethics. Only about 33% of all real estate licensees are Realtors®.
There is no state requirement to become a Realtor®. The only requirement to broker real estate is state licensing.
Is ethics the same as law?
No. Ethics are principles by which one treats colleagues, clients, and the public in a fair, just, and truthful manner.
Adherence to such standards is considered one of the requisites for recognition as a profession; that is, to be called a “profession,” a vocation must (among other requirements) have an established code of behavior that practitioners are required to uphold.
Members of professional organizations who violate the organization’s code of ethics may lose their membership privileges; for example, lawyers may be disbarred.
What are the fees for license application and renewal?
License exams often ask questions about these fees. They vary from state to state and change approximately every two years. Find the latest state Rules and Regulations at your state Real Estate Commission’s website and fill in the schedule below:
Fees in the State of Florida
Broker $36
Salesperson $32
License application $39.37
Gov. Desantis cut fees in half - was $67.75
Annual license fee
Recovery fund fee
How does the real estate sales process proceed?
Typically, a starting point is when a real estate owner decides to sell.
He or she tries to get names of licensed brokers who are experienced and successful in selling the given type of property. The real estate owner interviews brokers (or their agents, who are licensed salespersons), discusses the situation, and offers a listing to one or sometimes more than one broker. The owner becomes a principal. The broker is an agent of the principal.
What happens after a real estate owner has given a listing to a broker?
The broker, often with help from his or her sponsored, licensed salespersons, attempts to find a qualified buyer.
If the broker procures a prospective buyer, typically this prospect makes an offer. The principal may accept the offer, make a counteroffer, or not respond at all. Negotiations may continue until there is a valid sales contract, or until the parties decide to break off negotiations.
The sales contract is called an agreement of sale, contract for sale, or earnest money contract, depending on state custom.
Suppose a principal (the seller)
accepts an offer from a prospective buyer. What happens next?
After there is an offer and an acceptance, a contract exists. The parties make efforts to meet the sales contract as they proceed to a closing or settlement, where money is transferred in exchange for property ownership. This process will entail physical inspections (often including mechanical, electrical, plumbing, and structural soundness and absence of wood-destroying insects), title inspection, and arranging financing. The broker generally accepts a commission when the transaction is complete at the closing, which is also known as the settlement.
What body of law applies to the relationship between a principal and a broker?
The law of agency applies to the legal relationship between a principal and his or her agent arising from a contract in which the principal engages the agent to perform certain acts on the principal’s behalf.
The broker is usually an agent, or fiduciary, of the principal.
What is the meaning of principal?
Principal has several meanings in a real estate context:
• One of the principal or most important parties in a contract: the buyer and seller, the landlord and tenant, the lender and borrower.
• One who contracts for the services of an agent or broker, the broker’s or agent’s client.
O The amount of money raised by a mortgage or other loan, as distinct from
the interest paid on it.
When the word is spelled principle, what does that mean?
A principle is a rule, doctrine, or fundamental truth. However, the word is frequently misspelled or erroneously used interchangeably with principal.
What is a fiduciary?
A fiduciary is someone who acts, in a legal role, in the best interests of his or her principal. The fiduciary is a person in whom the principal places trust.
For example:
• A broker is a fiduciary for the principal (property owner or buyer).
D A banker is a fiduciary for the bank’s depositors.
• An attorney may be a fiduciary for the client.
• A trustee is a fiduciary for the beneficiaries of the trust.
What is a trust?
A trust is a fiduciary contract. Property is transferred by a trustor to a holder, called a trustee, to be administered for the benefit of another person, called the beneficiary.
What is an agent?
The word agent has two meanings:
• Someone who undertakes to transact some buisness or manage some affair for someone else, with the authority of the principal.
D A licensed real estate broker or salesperson. Often the term “real estate agent” is applied to a licensed salesperson, whereas a broker is called a
“broker.” In a sense, the salesperson is an agent of the broker, and the broker is an agent of the property owner or buyer.
What is a commission? Is there a set commission, say 6% or so, that brokers must charge, or that all brokers charge?
A commission is the fee earned from a real estate transaction, usually a percentage of the selling price. This commission is not to be confused with the state Real Estate Commission, which is a government agency.
There is no set commission or commission rate on real estate sales. Fixed commissions would violate antitrust laws, which are intended to encourage competition and consequently prohibit noncompetitive practices such as price fixing.
Must a person be licensed to collect a commission from a real estate transaction?
AbsolucellAcomm sS ion may not be paid to anyone who is unlicersed
In some states a finde r’s tie of a token amount $50 or $100) is accepcable fo a referral
The broker collects the commission but may share it with a salesoer whom the broker sponsors or with a co-broken.