© 2012 Cengage Learning

The Principal–Broker Relationship: Employment Chapter 19

© 2012 Cengage Learning In This Chapter You will be introduced to employment relationship between a broker and his principal.

© 2012 Cengage Learning Listing Agreement An employment contract between the owner/seller and the real estate broker.

© 2012 Cengage Learning Brokerage Commission The amount of compensation the owner agrees to pay the broker is negotiated between the parties.

© 2012 Cengage Learning 1. Exclusive Right to Sell 2. Exclusive Agency 3. Open Listing 4. Net Listing Listing Types

© 2012 Cengage Learning Real Estate Considerations Commission Broker protections Owner protections Agency

© 2012 Cengage Learning Exclusive Right to Sell The listing broker is entitled to a commission no matter who sells the property during the listing period. This is the most common type of listing.

© 2012 Cengage Learning

Exclusive Agency Similar to the exclusive right to sell except the owner may sell the property himself during the listing period and not owe a fee to the broker. Broker may be less enthusiastic under this form of listing.

© 2012 Cengage Learning Open Listing There are no exclusive rights. Whoever sells the property will earn the fee. Brokers are reluctant to develop a sales effort.

© 2012 Cengage Learning Net Listing Owner states the price he wants for the property and agrees to pay the broker anything above this amount as commission.

© 2012 Cengage Learning Buyer Representation Exclusive Authority to Purchase – an agreement where the broker works for the client, the buyer! Primary responsibility is to the purchaser. Principal is now the Buyer. Buyer Agency!

© 2012 Cengage Learning

Multiple Listing Service - MLS A service among REALTOR ® members to offer compensation to other member brokers and increasing the market exposure for the listed property.

© 2012 Cengage Learning Electronic Marketing The web now dominates the market for both practitioners and individual buyers and sellers. The web and the Internet have made a huge impact on the way real estate agents handle their business.

© 2012 Cengage Learning Broker Compensation Commission earned when agreed between owner and broker. Usually occurs when a “ready, willing and able buyer” is produced. Procuring cause is the one whose efforts originated the procurement of the sale.

© 2012 Cengage Learning License Act Requirements Must be duly license real estate broker. Must have written agreement. Agreement must be signed by party charged. Requires licensee advise purchaser in writing they should get abstract or title policy.

© 2012 Cengage Learning Procuring Cause The cause originating in a series of events that, without a break in their continuity, results in the accomplishment of the agency objective (closing the transaction).

© 2012 Cengage Learning Terminating the Listing Contract Objective of the contract has been completed Mutual agreement Abandonment Revoking the agency aspect of the listing

© 2012 Cengage Learning Bargain Brokers Flat-fee brokers Discount broker Variable Rate Commissions

© 2012 Cengage Learning Key Terms Exclusive authority to purchase Exclusive right to sell Listing Multiple listing service (MLS) Net listing Ready, willing, and able buyer