Unit 7/Class 7 Flashcards
Define “brokerage”/”brokering”
The business of bringing people together, whether its buyers/sellers or landlord/tenants
A broker works for _________ and with _________
clients
consumers/customers
What are the two types of real estate licenses?
Brokers license
sales associate license
Who pays the sales associate?
can only be paid by the broker (no taking bonus, etc from clients either)
Independent Contractor vs. Employee
Associates may be employees or independent contractors.
A broker can exercise certain controls over employees; brokers do not have the same control over independent contractors.
A broker may control what the independent contractor does, but cannot tell the contractor how to do the work or when to be where for group meetings. The broker cannot tell the independent contractor when to work or attend the sales meeting
What are the IRS rules for an associate to be considered an independent contractor?
- valid license
- written contract with broker
- 90% of income comes from real estate activities, not hours worked
A ___________ is someone who assists the licensed agent and can normally perform such activities as secretarial duties, clerical duties and setting appointments. Kentucky license law regulates what an unlicensed assistant may or may not do.
An unlicensed assistant
To be entitled to any commission, the broker must do what three things?
Be licensed
Employed by the client
be the procuring cause of the sale
The __________ Act prohibits monopolies and other acts that may restrict trade or business activities in the marketplace. Violations include: price fixing, group boycotting, allocation of customers, and tie-in agreements
Sherman Anti-Trust Act
Earned commission: As a general rule, commision is earned when….
A broker finds a ready, willing and able buyer on the sellers terms
In Kentucky, if a deal can’t close because of a title problem, the seller would have to pay the broker still.
The amount of commission a sales associate receives is determined by…
mutual agreement with the broker
A commission split can be graduated. This occurs when an associate is paid on….
production
A __________ broker is one who represents no one in a transaction. They only complete the required paperwork without representing either party.
Transactional broker
A listing contract is a…
personal service contract
The parties to a listing are the…..
broker and the seller (client)
Give the details of an Exclusive Right to Sell listing
- broker’s commission is guaranteed regardless of who sells the property
- if the property is sold during the term of the listing, the broker gets paid
- Broker does NOT have to prove he was the procuring cause of sale
- ONE broker gets the listing
- bilateral contract
Give the details for the Exclusive Listing type listing
- Seller retains the right to sell the property
- if the broker or anyone other than the seller sells the property, then the broker under contract gets paid
- If the seller sells, no commission to broker
- bilateral contract
Give details on an open listing contract
- can be given to one or more brokers
- seller retains right to sell
- A broker only earns a fee if HE sells the property
- Oral listing agreements are treated as open listings
- Unilateral contract
Give details for an Open Listing agreement
- NOT a personal service contract
- brokers “pool” their listings and agree to cooperate with each other and share commissions (MLS system)
What is a net listing?
A listing without a specified list price or commission. The broker includes a clause in listing that states that the seller will receive $X and anything over that will go to the agent as commission
What are ways that a contract can be termianted
expiration abandonment breach death of broker agreement destruction performance
- A seller who withdrawals a listing without justification may still be liable for the broker’s expenses
What is included in a listing
type of listing terms of sale names of parties property description expiration date commission signatures of all parties who may have an interest in the property
NOTE: kentucky requires an expiration date in listing contracts.
NOTE: In Kentucky, exclusive listings cannot contain an automatic extension clause
Also known as a broker’s protection clause, a ___________ allows the broker to collect a commission if anyone he introduced to the property buys the property from the seller after the listing expires
Carry-over clause
Other things that must be included in a listing agreement:
(1) A broker’s authority should also be listed in a contract
(2) if personal property is staying
(3) when the seller will give physical possession to the buyer
Possession comes with __________
title
Types of buyer agency agreements:
Exclusive buyer agency
Exclusive agency
Open buyer agency
Explain exclusive buyer agency agreement
The broker is entitle to his fee if the buyer purchases a property as described in the contract during the term of the contract.
Explain exclusive agency agreement
Broker is entitled to his commission only if the buyer purchases the property located by the broker.
The buyer may purchase a property without the services of the broker and will owe no commission
As a general rule, an unlicensed assistant may NOT…
attend a closing in place of an agent
Broker “D” has listed a property under the following terms: “The seller will accept $150,000 cash for his property.” One month later, the broker brings the seller a cash offer for $150,000. At what point did the broker earn his commission?
When the offer was presented to the seller
A transactional broker can be best defined as a broker who:
Prepares paperwork for customers
An effort by a broker that brings about the desired result in a real estate transaction that may allow the broker to claim a commission is called:
Procuring cause
It can be said that an exclusive right to sell and an exclusive listing agreement are similar because:
Both types of listings are given to one broker only
As a general rule, a listing contract would not have to contain what?
The signature of the sales associate
One or more of the parties to a listing contract could expect contractual liability if a listing were terminated by…
withdrawal
