Chapter 8 Real Estate Brokerage The real estate sales process, agency theory, licensing, types of brokerage firms and compensation.

The Real Estate Process: Listing agreements Marketing the property and qualifying the buyers Presentation and negotiations Contracts and closing

Real Estate Brokers and Salespersons: Licensing of salespeople and brokers: Transactions on one’s own behalf Conducting transactions on behalf of others State license requirements Real estate brokerage regulation Consumer protection

Legal Aspects of the Broker-Client Relationship: Agency Law Principal Agent Subagent

The Role of Real Estate Brokers: Broker Representation Listing Broker Selling Broker Buyer’s Agent Dual Agent Transaction Broker

The Creation of Agency Relationships: Broker-Seller Relationship (Seller’s Agent) Open Listing Exclusive-Agency Listing Exclusive-Right-To-Sell Listing Net Listing Broker’s Right to a Commission Broker-Buyer Relationship (Buyer’s Agent) Buyer’s Representation Types of Buyer Representation Agreements Compensating the Buyer’s Broker

Duties and Rights Under Agency Relationships: Broker’s Duties: Fraud and Negligence Misrepresentation Seller’s Agent’s duties to the seller Fair Housing Laws Steering Blockbusting Buyer’s Agent’s duties to buyers Buyer’s Agent’s duties to seller’s Disclosure of agency relationship

Termination of Agency Relationships: Methods of Agency Termination: Sale of the listed property Time limit expires Mutual agreement Breach of duties Loss of contractual capacity Improvements are destroyed Property is taken by government under power of eminent domain

Types of Brokerage Firms: The one-office firm Property type specialization Franchises Desk fee arrangements Multiple Listing Services (MLS)

Broker and Salesperson Compensation: Percentage Commissions Anti-Trust Violations Compensation for Salespersons

TYPICAL COMMISSION SPLIT Sale of Property $100,000 Commission 6.0% $6,000 Listing Broker Firm 50% of Commission $3,000 Selling Broker Firm 50% of Commission $3,000 Listing Salesperson 50% of Firm’s Commission* $1,500 Selling Salesperson 50% of Firm’s Commission* $1,500 *This percentage can vary from 50 percent to 90 percent depending on such factors as length of time the salesperson has been with the firm and whether he or she is an officer of the firm.