Ch. 3: Broker-Salesperson Relationships Flashcards
Broker
An individual or entity holding either a standard or reciprocal license, that, for another and for a fee, commission or other valuable consideration, does one or more of the following:
Negotiates with or aids a person in locating or obtaining for purchase, lease or acquisition of interest in real estate.
Negotiates the listing, sale, purchase, exchange, lease, time share and similarly designated interests, financing or option for real estate.
Manages real estate.
Represents himself or itself as a real estate consultant, counselor or house finder.
Undertakes to promote the sale, exchange, purchase or rental of real estate. This does not apply to an individual or entity whose main business is that of advertising, promotion, or public relations.
Undertakes to perform a comparative market analysis.
Attempts to perform any one of the actions listed above.
Salesperson
An individual holding either a standard or reciprocal license, who is employed by a broker to do one or more of the following:
Sell or offer to sell real estate, or list real estate for sale.
Buy or offer to buy real estate.
Negotiate the purchase, sale, or exchange of real estate.
Negotiate a loan on real estate.
Lease or rent real estate, or offer to lease or rent real estate or to place real estate for rent.
Collect rent for the use of real estate, or offer or attempt to collect rent for the use of real estate.
Assist a broker in managing property.
Perform a comparative market analysis.
What is the main difference between an employee and an independent contractor?
The main difference between the two is an issue of control, as established by income tax laws.
What are the three common-law categories that determine the level of control an employer has?
Behavioral
Financial
Type of relationship
In addition to withholding income tax, Social Security tax, and Medicare tax from the salesperson’s wages, what else is a broker required to do in Pennsylvania?
Withhold state income tax
Pay unemployment
Pay worker’s compensation
What are the conditions of the IRS safe harbor test?
The person must be a properly licensed real estate agent.
Gross income from all output must be based on production and not on hours worked.
A written agreement must exist between the independent contractor and the broker stating that the contractor will not be treated as an employee for income tax purposes.
List three questions a licensee should ask a prospective broker.
Who pays the expenses?
What training and support is provided?
What is the commission schedule?
What are the start-up costs?
What are the salesperson requirements?
Who answers the phone?
What are miscellaneous benefits?
What provision of an independent contractor agreement allows an agent to enter into agency agreements on behalf of the broker?
The provision that addresses the agent’s authority
What does a provision discussing employee benefits typically state in an independent contractor agreement?
No benefits such as health insurance, retirement, sick days, paid-time off, etc. are provided to the agent.
What are the typical conditions for terminating an independent contractor agreement?
Either party can terminate the agreement at any time with or without cause.
According to Pennsylvania law, for how long must a broker retain most documents and transaction records?
For 3 years
What should a licensee’s written employment agreement contain?
Each person’s responsibilities to the other
The licensee’s compensation program
Who will pay for incidental business expenses
If a transaction doesn’t complete, under what circumstances would the broker still be entitled to a commission?
The broker is still entitled to receive the commission if the transaction does not complete due to the seller’s default.
Jack sells one of his own $225,000 listings for $220,000. The commission is 7%. Jack has an 80% commission split with his broker. What is Jack’s share of the commission? What is his broker’s share?
Commission = $15,400 ($220,000 x .07)
Jack’s share = $12,320 ($15,400 x .80)
Broker’s share = $3,080 ($15,400 - $12.320)
What is it called if a broker shares commissions with an unlicensed person?
A kickback
