define the general term brokerage and the specific term real estate brokerage. explain how the...

• Define the general term brokerage and the specific term real estate brokerage.

• Explain how the broker's and the salesperson's compensations are determined and the forms that such compensations may take.

• Enumerate the reasons for antitrust laws, how they relate to real estate brokerage practices and the penalties for violating them.

• Explain the forms that the broker-salesperson relationship may take.

Real Estate Brokerage

LEARNING OBJECTIVES:


LECTURE OUTLINE:

History of Brokerage

A. Practice changed significantly in recent years. 1. Formerly, one-office, family- run operations. 2. Common law dictates caveat emptor was the rule. 3. MLS became widely used industry service. 4. Buyers began to question and demand

representation.

Real Estate License Laws

A. Purpose 1. Establish basic and continuing education requirements 2. Define activities requiring licensing 3. Describing acceptable standards of conduct and practice 4. Enforce standards through disciplinary system


LECTURE OUTLINE:

Real Estate License Laws

B. Each state has licensing authority 1. Issues licenses, enforces statutory real estate law 2. Adopts administrative rules and regulations to define law

Real Estate BrokerageA. Broker - one who is licensed to buy, sell, exchange or lease real

property for others and charge a fee for services.

B. Business forms 1. Sole proprietorship 2. Corporation 3. Partnership 4. Independent 5. Franchise


LECTURE OUTLINE:


C. Operation 1. Management of business 2. Set effective office policies 3. Maintain space and equipment 4. Direct staff and sales activities 5. Mastering of real estate transactions

D. Legal rights and obligations 1. Brokers should seek legal counsel to protect themselves

and their salespeople. 2. Real estate licensees cannot give legal advice to any party

to a transaction; they should recommend that the party consult an attorney.


LECTURE OUTLINE:


E. Real Estate assistants and technologies 1. Assistant

a. Combination office manager, marketer, organizer, facilitatorb. May/may not be licensed (state law requirements)

2. Technologiesa. Computers and related systemsb. Multi-listing and mortgage information “online” service.c. Portable Fax, beepers, cellular phones, computers and printers

F. Broker-salesperson relationship 1. The employing broker is directly responsible for supervising all salespersons' real estate activities. 2. The salesperson is responsible only to his or her employing broker. All activities must be performed in the name of the employing broker. 3. Cannot receive compensation from anyone other than own broker.


LECTURE OUTLINE:


G. Independent contractor versus employee status—broker controls employee; may specify what an independent contractor does but not how or require specific actions (See Figure 5.1) 1. IRS has three requirements to be met for independent contractor status as a "qualified real estate agent".

a.The individual must have a current real estate license. b. He or she must have a written contract with the broker stating hat "The salesperson will not be treated as an employee for

federal tax purposes." c. Minimum 90 percent of the salesperson's income must be based on sales production and not on the number of hours worked. 2. In Practice: Broker should have standardized employment agreement drafted by attorney


LECTURE OUTLINE:


H. Broker's compensation 1. Must be negotiated between the principal and the agent 2. Usually a percentage of the total amount of money involved (sales price or

rent) May be a fixed dollar amount. 3. The agent is entitled to a commission when he or she a. was licensed when the event occurred. b. was employed with a (written) contract by the principal. c. was the procuring cause of the transaction—the one who

started a chain of events resulting in a sale—in many cases, even if the transaction is not consummated

I. Salesperson's compensation 1. Must be contained in an agreement between the broker and the salesperson 2. May be fixed salary, a share of the broker's commission, a draw on future commissions, or graduated commission splits 3. May be incorporated into a 100 percent commission program 4. Math Concept: Sharing Commissions


LECTURE OUTLINE:


J. Transactional Brokerage 1. Also referred to as non-agent, facilitator, coordinator or contract broker.

2. Equally responsible to both parties, but may not negotiate on behalf of either, must not disclose confidential information but must disclose known defects.

K. Antitrust laws 1. Brokers must not conspire to "fix prices"—rates must be independently determined by broker for his or her firm based on the broker's business judgment and revenue requirements; must avoid even the impression that rates are standard. 2. Business must not conspire against other businesses or agree to withhold their patronage—known as group boycotting. 3. Brokers must not divide their markets by allocating customers. 4. May not “tie” the sale of first product to purchase of a second.


LECTURE OUTLINE:


5. Penalties are a. A maximum $100,000 fine and three years in prison b. Corporations subjected to up to $1 million in penalties c. In a successful lawsuit, triple damages, plus attorney's fees and

court costs

define the general term brokerage and the specific term real estate brokerage. explain how the...

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