Chapter 9 - Real Estate Brokerage Flashcards

1
Q

What is the purpose of License Laws?

A

Real estate license laws PROTECT THE PUBLIC by ensuring a standard of competence and professionalism in the real estate industry.
Each state has a licensing authority - a commission, department, division, board and/or agency for real estate professionals. This authority has the power to ISSUE LICENSES, MAKE REAL ESTATE INFORMATION AVAILABLE TO LICENSEE AND THE PUBLIC AND ENFORCE THE STATUTORY REAL ESTATE LAW

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2
Q

In real estate, the business of bringing parties together is called?

A

BROKERAGE
a REAL ESTATE BROKER is licensed to buy, sell, exchange, or lease real property for others and to charge a fee for those services.

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3
Q

The employment agreement between a broker and sales associate should define what?

A

The nature, obligations, and responsibilities of the relationship.
The broker is responsible for the acts of the sales associates employed by the brokerage. This is true regardless of whether a sales associate is considered an employee or an independent contractor for income tax purposes…

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4
Q

In most businesses, the employer’s relationship with a person who is an ______ ______ is very different.

A

INDEPENDENT CONTRACTOR
As the term implies, an independent contractor operates with more independence than an employee, and the employer may not exercise the same degree of control over an independent contractor’s activities.

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5
Q

Are independent contractors responsible for paying their own income and SS taxes?

A

YES… and they receive nothing from the employer that could be construed as an employee benefit, such as health insurance or paid vacation time.

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6
Q

What are the requirements of being an Independent Contractor?

A
  1. The individual MUST have a current real estate license.
  2. The individual MUST have a written contract with the broker that specifies that the individual will not be treated as an employee for federal tax purposes.
  3. A substantial portion of the individual’s income as a real estate professional MUST be based on sales production or other output and not on the number of hours worked.
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7
Q

The law (or statute of frauds) usually will require that there be a WRITTEN AGREEMENT to establish the compensation to be paid. Compensation can be in the form or a?

A

COMMISSION OR BROKER’S FEE, a FLAT FEE, OR AN HOURLY RATE.

It’s negotiable in every case.

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8
Q

To be entitled to receive compensation from a real estate sales transaction, an individual must be?

A
  1. a licensed real estate broker
  2. employed by the buyer or seller under a valid contract, and
  3. THE PROCURING CAUSE OF THE SALE =
    To be a procuring cause, the broker or the broker’s sales associate MUST HAVE STARTED AN UNINTERRUPTED CHAIN OF EVENTS THAT RESULTED IN A SALE.
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9
Q

The real estate industry is subject to _______laws.

A
ANTITRUST laws.
They are:
1.  Price Fixing
2. The Group Boycott
3. Allocation of Customers
4. Allocation of Markets and
5. Tie-In Agreements
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10
Q

PRICE-FIXING is?

A

A practice in which competitors agree to set prices or other terms and conditions for products or services rather than letting competition in the open market establish those prices.

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11
Q

Can a broker discuss commissions and fees with real estate professionals who are affiliated with the SAME brokerage?

A

YES… but MUST NOT discuss compensation issues with ANYONE FROM ANOTHER REAL ESTATE FIRM.

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12
Q

Trade groups, such as associations of Realtors, multiple listing services, and other professional organizations may NEITHER SET FEES or COMMISSION SPLITS, NOR DENY membership to a real estate broker based on the _______

A

Fees that the broker charges.
In fact, NO discussion of commissions or fees should EVER take place at ANY gathering of two or more real estate professionals from DIFFERENT BROKERAGES.

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13
Q

The penalties for violating antitrust laws are severe. Under the Sherman Antitrust Act, the penalty for FIXING PRICES OR ALLOCATING MARKETS is a maximum_______

A

$1 million fine and 10 years in prison. For corporations, the penalty may be as high as $100 million. An individual who has suffered a loss because of an antitrust violation may sue for treble damages - three times the actual damages sustained. In addition, the injured party may recover the cost of the suit, which includes reasonable attorney fees.

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14
Q

What is the IDX - INTERNET DATA EXCHANGE policy?

A

It allows al MLS members to have equal rights to display MLS data, while also respecting the rights of the property owner and the real estate broker who represents the property owner to market a property as they wish.

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