chapter 12: Real Estate Brokerage and Listing Contracts Flashcards
what do brokers do
bring buyers and seller together
collect commission for a successful transaction
net commission
difference between required price and actual price
commissions are usually paid by
sellers
net listing
the seller is assured a certain fixed net price for the property and the broker is allowed to retain any amount of the actual sales price above that figure
law of agency
gives a broker or salesperson the right to act for a principal in trying to buy or sell a property
a real estate broker can be paid by
anybody
a real estate sales person can be paid by
only their broker
principal
the person giving authority to an agent
universal agent
power to act for principal in all matters
general agent
power to act within limits of a business or employment relationship
-property manager
special agent
power to act in a specific event or transaction
-brokers
fiduciary relationship
the special duties and obligations to a principal required of an agent including:
- confidientiality
- obedience
- accounting
- loyalty
- disclosure
- skill and care
example of principal and agent
principal= rider agent = horse
duties of principal
open
honest
fair
listing contract
-creates an agency relationship (special agent)
- a contract for services not for real estate
-usually between seller and broker
-increasingly between buyer and broker
-frequently involves subagency through multiple listing service
-
dual agency
representing both buyer and seller
- must be disclosed to all parties
- both principals must give written consent
buyer agency agreement
broker receives compensation for successfully locating a property for the buyer to purchase
multiple listing service
sharing of property sales listings by a number of real estate brokers with an agreement as to how costs and commissions are to be shared
subagency
the agency role of a broker is extended to one or more additional brokers, who also become fiduciary of the principal and are empowered to act on his or her behalf. the subagent shares any commission with the original broker. this agency chain can extend through multiple agents in the case of MLS
problem of dual agency
-works closer with one than the other
designated agent
brokerage representing both sides appoints seperate agent for each
buyer agent by law
salesperson showing a house becomes buyer agent unless declaring otherwise
transaction broker
not an agent for buyer or seller
-also called facilitating or intermediary broker
types of brokerage relationships
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slide 15
most common problem in real estate brokerage relationships is
unintended dual agency
licensing laws
state laws that authorize persons who meet specified qualifications to engage in a business or profession
broker license
can operate own brokerage agency
- most complete license
- responsible for completion of documents used in sales and leases, for handling money held in trusts for clients, and for the actions of their employees
salesperson license
must work for a broker
-usually an independent contractor of the brokerage firm
real estate commission
appointed commission responsible for overseeing the implementation and administration of a state’s real estate license law. it is usually empowered to grant, revoke, or suspend licenses and otherwise discipline real estate brokers operating in the state
industry certifications
- realtor
- CCIM: certified commercial investment member
- SIOR: society of industrial and office realtors
- IREM: certified property manager of the institute of real estate management
general requirements to obtain a RE license
- 18+ 21 for broker
- high school education
- 70 classroom hours
recovery fund
reserve of funds collected from real estate license fees to pay for losses to clients legally judged to have been caused by a licensed salesperson or broker. the existence of such funds varies from state to state
errors and omission insurace
some states require licensees to purchase to cover damages arising from professional mistakes
license law infractions
mishandling trust money improper handling of fees failure to provide required information misrepresentation and fraud improper business practices
anti-discrimination laws
title 8 of the civil rights act of 1968 prohibits discrimination by race, color, religion, national origin, sex, familial status and handicap including:
- refusal to rent or sell
- offering different terms and conditions
- selective advertising
- blockbusting
- denying home loans
- denying real estate services
- coercing, intimidating or interfering with exercise of these rights
innovations in brokerage
- buyer brokerage
- advertising, document preparation, administration of transactions
- discount brokerage
- electronic marketing
listing contracts
- an agreement between the owner of real estate and a real estate broker or brokerage firm that allows the broker to attempt to sell the property.
- a broker earns a commission by finding a ready, willing and able buyer for the specified price and terms
open listing
a contract between a property owner and a broker that gives the broker the right to market the property
-lack of exclusivity
exclusive agency listing
requires the sellers to pay a commission to the broker if the property is sold by anyone other than the owners
exclusive right of sale listing
the sellers list their property with one broker and agree to pay that broker a commission if the property is sold within a specified time or if not specified, within a reasonable time
- the broker will be owed a commission if any other broker or even the owner sells the property during the contract period
deriving a gross selling price to achieve a target net price
slide 25
considerations in selecting a broker
- how will the firm market the property
- amount and type of advertising
- experience with the firm?
- general reputation in the community?
