Real Estate Brokerage Flashcards
Who regulates activities of RE professionals?
All 50 states, District of Columbia, and all Canadian provinces licence and regulate. Good Info on current laws is Association of Real Estate License Law Officials ARELLO.org
Purpose of license laws
To protect the public by ensuring a standard of competence and professionalism.
Achieved by:
-establishing basic requirements for obtaining license and requiring continuing education.
-defining which activities require license
-describing the acceptable standards of indict and practice
-enforcing those standards through disciplinary system.
Brokerage
The business of bringing parties together. Real estate broker is licensed to buy, sell, exchange or lease real property for other and to charge a fee for those services.
Maintains space and equipment/
hires licensed real estate professionals as well as unlicensed support
Determines compensation
Directing staff
Implementing procedures for licensees to follow In carrying out activities permitted by states laws and regulations.
May be indépendant or part of a regional or national franchise
Real estate salesperson
Is licensed to perform real estate activities on behalf of a licensed real estate broker.
Employing broker
Broker for whom the sales person works for.
Both broker and salesperson will be subject to the terms of the employment agreement even when sales person is an independent contractor.
Managing broker
Aka supervising broker is responsible for supervision of the RE professionals who act on behalf of the brokerage.
Commission
Aka brokers fees
Paid when sale is consummated by delivery and acceptance of the sellers deed.
To receive compensation…
Must be
- a licensed real estate broker
- employed by the buyer or seller under a valid contract, and
- the procuring cause of the sale.
Procuring cause
To be considered the procuring cause of a sale, the broker must have started or caused an uninterrupted chain of events that resulted in the sale.
Ready, willing, and able buyer
One who is prepared to buy on the sellers terms and is ready to take positive steps towards consummation if the transaction.
Broker may still be entitled to commission if the seller:
- has a change of mind and refuses to sell
- has a spouse who refuses to sign the deed
- has a title with Uncorrected defects
- committed fraud with respect to the transaction
- is unable to deliver possession within a reasonable time
- insists on terms not in the listing
- has a mutual agreement with the buyer to cancel the transaction
Feel for service for sellers
- helping the seller prepare the property for sale
- performing a comparative market analysis to assist the seller in pricing the property
- assisting with marketing the property using the MLS and websites
- locating and screening a buyer
- helping fill in the blanks of a sales agreement
- assisting with negotiations
- being available to assist with the closing of the transaction
Fee for service for buyers
- working out the economics of renting vs owning
- helping a buyer with a mortgage preapproval
- consulting on a buyers desired location
- visiting properties with a buyer and checking property info
- helping fill in the blanks of an offer to purchase
- assisting with negotiations
- being available to assist with the closing of the transaction
Antitrust laws
At federal level, the Sherman Antitrust Act provides specific penalties for a number of illegal business activities. Each state has them too. They prohibit monopolies and any contracts, combinations, and conspiracies among competitors that unreasonably restrain trade. Most common ones are price fixing, the group boycott, allocations of costumées or markets, and tie in agreements.
Price fixing
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. In real estate, this occurs when competing brokers agree to set sales commissions, fees, or management rates.
Boycott
This occurs when two or more businesses conspire against another business or agree to withhold their patronage to reduce competition.
Allocation of customers or markets
This involves an agreement between real estate brokers to divide their markets and refrain from competing for each other’s business.
Tie-in agreements
Agreements to sell one product only if the buyer purchases another product as well.
Penalties
The penalties for violating anti-laws or severe. Under the federal Sherman antitrust act, the penalty for fixing prices or allocating market is a maximum $1 million fine and 10 years in prison. For corporations, the penalty maybe as high as $100 million. An individual who has suffered a loss because of an antitrust violation may sue for trouble damages – three times the actual damages sustained.
Internet Data Exchange (IDX) policy
This allows all MLS members to have equal rights to display MLS data, while also respecting the rights of the property owner in the real estate broker who represents a property owner to market the property as they wish.
Blanket opt-out provision
Provides that those MLS participants interested in keeping their listings from competitors websites cannot then display other real estate brokers listings.
National Association of Realtors has search sites available
Realtor.com
Zillow.com
Trulia.com
Home builders have Nahb.org
Internet advertising laws and regulations stipulations
- all electronic communication by a real estate professional must include the professionals name, office address, and broker affiliation.
- Real estate professionals must disclose their license status on each page of the website that contains an advertisement.
- The listing of only a sales associate name without the sponsoring broker’s name in an advertisement is prohibited.
- an advertisement must be a true, current representation of the information it contains and not be misleading.
Electronic contracting
Transactions conducted through email or fax.
Uniform Electronic Transactions Act
Created by The national conference of commissioners on uniform state laws. It has been adopted by all but three states. The law sets forth basic rules for entering an enforceable contract and using electronic means. primary purpose. To remove barriers and electronic commerce that would otherwise prevent enforceability of contracts.
- a contract cannot be denied the legal effect just because an electronic record was used.
- a record or signature cannnor he denied its legal effect just because it’s in an electronic format:
- if a states law requires a signature on a contract, an electronic signature is sufficient.
- if a states law requires a written record, an electronic record is sufficient.
Electronic signatures in global and national commerce act
Passed by congress in 2000. Purpose is to make contracts and records legally enforceable, regardless of the medium in which they are created. Applies to states that haven’t take on UETA
National do not call registry
Managed by the federal trade commission. 2003 do not call legislations was signed and the Do Not Call Improvement Act of 2007. Applies to any plan, programs or campaign to sell goods or services. Does not limit political organizations, charities, collection agencies, or telephone surveyors. Does apply for profit telemarketer.
Telemarketers and sellers are required to search every 31 days and drop registered numbers.
RE PROFESSIONALS may call consumers they have established business with for up to 18 months. Also may call for up to 3 months after consumer makes an inquiry or submits an application. Unless consumer asks not be called.
Other agencies that monitor spam communications
The telephone consumer protections act, junk fax prevention act, and rules of the Federal Communications Commission. -fax
Controlling the assault of non-solicited pornographers and marketing Act of 2003 CAN-SPAM - email spam MUST have an unsubscribe feature
Children’s online privacy protection act (July 1, 2013) this limits the personal info that can be collected from a child younger than 13
Real Estate Broker
Licensed to Buy, sell, exchange, or lease real property for others for a fee and may operate as a sole proprietorship, partnership, corporation, or a limited liability company.
Real estate sales associate
A sales person or broker who is licensed to perform real estate activities only on behalf of a licensed real estate broker. The broker – employer is liable for the actions of the sales associate with in the scope of the employment agreement or is provided by state law.
Independent contractor
And employee who usually receive the commission, with no withholding for Social Security, income tax, and other purposes and has the freedom to set hours and accomplish goals. A real estate broker always has liability in supervisory responsibilities for the real estate related work activities of the sales associate.
Employee
They receive salary in lieu of orin addition to commission; they receive benefits, such as health insurance, profit-sharing, and Worker’s Comp.; and has an employer who is required to withhold Social Security, income taxes, and other applicable federal and state taxes from earnings. The employer set hours, duties, and other specifics of the employees day today work and remains liable for related work activities of the employee.
IRS requirements
For a qualified real estate agent to be treated as a non employee for tax purposes.
A brokers compensations
Can be a commission based on property’s sales price, a flat fee, or an hourly rate.
It is earned when the seller except an offer from a ready, willing, and able buyer prepared to buy on the sellers terms and ready to take the positive steps towards consummation of the transaction.
