5. Real Estate Brokerage

Question 1

ANTITRUST LAWS

Answer 1

Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Most violations of antitrust laws in the real estate business involve either price-fixing (brokers conspiring to set fixed compensation rates) or allocation of customers or markets (brokers agreeing to limit their areas of trade or dealing to certain areas or properties).

Question 2

BROKERAGE

Answer 2

The bringing together of parties interested in making a real estate transaction.

Question 3

COMMISSION

Answer 3

Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.

Question 4

EMPLOYEE

Answer 4

Someone who works as a direct employee of an employer and has employee status. The employer is obligated to withhold income taxes and Social Security taxes from the compensation of employees. See independent contractor.

Question 5

INDEPENDENT CONTRACTOR

Answer 5

Someone who is retained to perform a certain act but who is subject to the control and direction of another only as to the end result and not as to the way in which the act is performed. Unlike an employee, an independent contractor pays for all expenses and Social Security and income taxes and receives no employee benefits. Most real estate salespeople are independent contractors.

Question 6

PROCURING CAUSE

Answer 6

The effort that brings about the desired result. Under an open listing the broker who is the procuring cause of the sale receives the commission.

Question 7

READY, WILLING, AND ABLE BUYER

Answer 7

One who is prepared to buy property on the seller’s terms and is ready to take positive steps to consummate the transaction.

Question 8

TRANSACTIONAL BROKER

Answer 8

Helps both the buyer and seller with paperwork and formalities in transferring ownership of real property, but is not an agent of either party.