Ch 8 Real Estate Brokerage

Outline I. Real Estate Brokers vs. Sales Associates II. The Real Estate Sales Process III. Real Estate Regulation IV. Legal Aspects of Agency Relationship V. Other Real Estate Brokerage Related Issues

I. Real Estate Brokers vs. Sales Associates A real estate broker is an who brings together , assists in negotiating agreements between them, executes their orders, and receives a in compensation for services rendered. Brokers vs. Agents: Real estate brokers are individuals licensed by state governments to arrange real estate sale or lease transactions. Real estate sales associates (or salespersons) are also individuals licensed by state governments to arrange real estate sale or lease transactions but .

II. The Real Estate Sales Process 1. Listing presentation 2. Listing agreement 3. Marketing the property and qualifying buyers 4. Presentation of offers and negotiations 5. Contract 6. Services (surveys, inspections, etc.) 7. Settlement or closing

II. The Real Estate Sales Process 1. Listing presentation - goal: to get the listing agreement signed - usually done in 2 meetings - use listing (or seller’s) package 2. Listing agreement (4 different types): i. open listing: the “selling” (buyer’s) broker earns the commission ii. exclusive brokerage (or agency) listing: the “listing” (seller’s) broker earns the commission, but the seller reserves the right to sell the property iii. exclusive-right-to-sell listing the “listing” (seller’s) broker earns the commission, even if the seller sells the property iv. net listing the seller is guaranteed a “net” sales price v. limited service listing the broker provides some services for a fee

II. The Real Estate Sales Process 3. Marketing the property and qualifying buyers - marketing strategy is very important to create interest - qualifying buyers eliminates waste of time 4. Presentation of offers and negotiations - use the sales contract (buyer’s) package 5. Contract - the FL real estate sales contract is very complicated - hire a real estate attorney 6. Services - surveys, inspections, repairs, appraisals, insurance, etc. 7. Settlement or closing - title converts to new owner(s) - all funds are exchanged

III. Regulation of the Real Estate Profession Anyone wishing to provide real estate services to others for compensation must be licensed by The intent of licensing laws is to In Florida, Chapter 475 of the Florida Statues provides regulatory authority regarding the real estate industry to the Florida Real Estate Commission (FREC). Department of Business and Professional Regulation (DBPR), Division of Real Estate, provides investigative and administrative services to FREC. Link to Florida statutes: http://www.flsenate.gov/statutes/index.cfm

When is a Real Estate license necessary in Florida? Advertising real estate services Representing buyers Representing sellers Arranging rentals (leases) or providing rental (leasing) information Auctioning Exchange

When is a license not required in Florida? Property owners buying, selling or leasing for themselves Employees of owners who are paid a salary (only) Court appointed representatives Cemetery lot sales Rentals in a mobile home park Lodging facility operations Selling time-shares that are registered as securities with the SEC

Florida Sales Associate License Requirements Pay application fee & finger prints ($200) 18 years or older High school diploma or equivalent 63 hours course (FREC I) & pass with 70%+ ($245) Pass state exam with grade of 75%+ 45 hour post-license course before first renewal ($125) 14 hours of continuing education every renewal ($20) Pay renewal fees every 2 years ($100)

Florida Broker License Requirements Active as salesperson for 24+ months Pay application fee & finger prints ($200) 72 hour course with grade of 70%+ ($345) Pass state exam with grade of 75%+ 60 hour post-license course before first renewal ($290) 14 hours of continuing education every renewal ($20) Pay renewal fees every 2 years

Other Florida Licensing Laws License Categories: Active vs. inactive status (voluntarily / involuntarily inactive) Reciprocity: In general, there is no reciprocity with other states. However, some states recognize experience of FL licensees. Residency: is not a requirement for a FL real estate license

IV. Legal Aspects of Agency- Relationship “Agency relationship”: the authorizes the to act on his or her behalf and best interest. 3 different agency relationships in real estate: 1) owner ↔ broker (single agency) 2) broker ↔ buyer (single agency) 3) broker ↔ sales associate A fiduciary is in a relationship of trust and confidence with the principal. Note: A transaction brokerage relationship is not an agency relationship.

Single Agent’s Duties to Principal in Florida Loyalty (protect client at all times) Full Confidentiality Obedience Dealing honestly and fairly Obtain best price and terms Recommend action on offers Full disclosure of material facts AND rumors of facts Accurate accounting for all funds Skill, care, and diligence Present all offers Not a duty for a transaction broker

Fraud vs. Misrepresentation Fraud: a fiduciary makes a false statement material to a transaction that is justifiably relied on by the client, , resulting in injury to the client. Misrepresentation: the same as fraud except .

Termination of Agency Relationships when a transaction occurs when the agreement expires when the parties agree to terminate when one party breaches the agreement when one party becomes contractually incapacitated the listing property is destroyed the listing property is condemned

V. Other Brokerage Issues Franchises Desk Fee Arrangements Broker and Sales Associate Compensation usually calculated as a percentage of the transaction amount: residential %, commercial % lots % broker and sales associate often have an agreed upon “split” between themselves a commission is earned when a ready, willing and able buyer is procured The Multiple-Listing Service (MLS)

National Association of Realtors Not all real estate licensees are Realtors! Membership in the NAR (and its state and local organizations) requires payment of dues and a pledge to adhere to . Membership in the NAR is a requirement for access to the MLS.