Real Estate Brokerage Chapter 10

Real Estate Brokerage The Real Estate Sales Process –Listing agreements (broker/owner relations) –Marketing the property and qualifying buyers (the willing and able buyer) –Presentation and negotiations –Contracts and closing (transfer of title)

Real Estate Brokerage Real Estate Brokers and Salespersons –Licensing of salespeople and brokers Regulated through state agencies Transactions on one’s own behalf Conducting transactions on behalf of others State license requirements –Real estate brokerage regulation Suspension vs. Revocation Consumer protection

Real Estate Brokerage Legal Aspects of the Broker-Client Relationship –Agency law Principal – employer (seller & principal broker) Agent – employee (broker & subagent) Fiduciary relationship (agent for principal) –One, such as an agent of a principal or a company director, that stands in a special relation of trust, confidence, or responsibility in certain obligations to others.

Real Estate Brokerage The Role of Real Estate Brokers –Broker representation (Typically Seller) –Listing broker Obtains listing of property for sale –Selling broker Actually sells the property –Dual agent Single broker employed by both seller and buyer

Real Estate Brokerage Broker-Seller Relationship (Seller’s Agent) –Open listing (Multiple Brokers & Seller) –Exclusive-agency listing (1 Broker & Seller) –Exclusive-right-to-sell listing (1 Broker) –Multiple listing (Split Comm. - ERTS) –Net listing (Overage Commission - Illegal) Sales price to seller set by broker who takes any residual or overage amount

Real Estate Brokerage Broker’s Right to a Commission –Paid when broker either Sells the property, or Procures a ready, willing and able buyer

Real Estate Brokerage Broker-Buyer Relationship (Buyer’s Agent) –Buyer’s representation –Types of buyer representation agreements Open (commission with broker assistance only) Exclusive Right (commission guaranteed) –Compensating the buyer’s broker Fee + Percentage MLS Commission

Real Estate Brokerage Duties and Rights Under Agency Relationships –Broker’s duties Fraud and negligence –False statement with intention to mislead Misrepresentation –False statement but with no intention to mislead Selling Broker’s Duties to Buyers –Disclosure of problems with the property –Safeguarding of Earnest Money

Real Estate Brokerage Fair Housing Laws –Prohibit discrimination based on sex, race, color, religion, national origin, disabilities, or familial status –Steering Selectively showing properties to prospective buyers based on their racial or ethnic background –Blockbusting Using prejudice to depress prices in a neighborhood as minorities migrate in.

Real Estate Brokerage Methods of Agency Termination –Sale of the listed property –Time limit expires –Mutual agreement –Breach of duties –Loss of contractual capacity (Death/Illness) –Improvements are destroyed –Property is taken by government under power of eminent domain

Real Estate Brokerage Types of Brokerage Firms –Franchises (Coldwell Banker, Century 21) Pay a fee + % of gross transactions to Franchiser –Desk Fee Arrangements Paid Employment (pay fee to occupy office) Office Resources Shared Commission –MLS – Provides a networking and marketing advantage

Real Estate Brokerage Compensation of Brokers –6-7% SFR –3%-5% Commercial –7- 10% Land –Salesman gets % of Broker Comm.