© 2013 All rights reserved.Chapter 1 The Broker's Office 1
New York Real Estate for Brokers, 5th e
By Marcia Darvin SpadaCengage Learning
© 2013 All rights reserved.Chapter 1 The Broker's Office 2
Chapter 1
The Broker’s Office: Operation, Management, and Supervision
© 2013 All rights reserved.Chapter 1 The Broker's Office 3
Chapter 1 Key Terms
Administrative
discipline
Apartment
information vendor
Apartment sharing
agent
Article 12-A
Article 78 proceeding
Associated real
estate broker
Blind ad
Breach of Contract
Commingling
Consent decree
© 2013 All rights reserved.Chapter 1 The Broker's Office 4
Chapter 1 Key Terms (continued)
Earnest money deposit
Escrow account
Federal Trade
Commission (FTC)
Group boycott
Home inspector
Independent contractor
Kickback
Market allocation
agreement
Misdemeanor
Mortgage banker
Mortgage broker
© 2013 All rights reserved.
Chapter 1 Key Terms (continued)
Multiple listing service
Net listingPrice fixingReal estate
broker/salespersonReciprocity
Sherman and Clayton Antitrust Acts
Sponsor Tie-in arrangementTrade nameUniform irrevocable
consent and designation form
Chapter 1 The Broker's Office 5
© 2013 All rights reserved.Chapter 1 The Broker's Office 6
Categories of LicensureBroker
Associate brokerSalesperson
© 2013 All rights reserved.Chapter 1 The Broker's Office 7
Duties that Require LicensureReal estate transactions for others and for compensation, such as:
Listing
Selling
Purchasing
Negotiating
Leasing and renting
Auctioning
Exchanging
© 2013 All rights reserved.Chapter 1 The Broker's Office 8
Licenses related to Real Estate Apartment information vendor Apartment sharing agent Real estate appraiser Home inspector Mortgage broker Mortgage loan originator Mortgage banker
© 2013 All rights reserved.
NY State Real Estate Appraiser Licensure/Certification State Licensed
Appraiser Assistant
State Licensed Real
Estate Appraiser
State Certified
Residential Appraiser
State Certified
General Appraiser
The appraiser assistant
license requires no
experience.
Chapter 1 The Broker's Office 9
© 2013 All rights reserved.
Home InspectionLicensure Requirements
Complete 100-hours of NYS prescribed
coursework
Complete 40-hours of supervised fieldwork
Pass the NYS licensure exam
License fee $250-2 year term
Chapter 1 The Broker's Office 10
© 2013 All rights reserved.
What is a Mortgage Broker?
An individual or company registered by the NYS Department of Finance Services
Finds or sources loan for purchasers
Chapter 1 The Broker's Office 11
© 2013 All rights reserved.
NYS Requirements for a Mortgage Broker Registration
Surety bond for $10,000
$1,500 Investigative
Fee
$99 Fingerprint
Fee
Fingerprints
Credit Report
2 years of credit analysis
experience
Good standing
in community
Requirements
Chapter 1 The Broker's Office 12
© 2013 All rights reserved.
NYS Dept of Financial Services Licenses and Registrations
Mortgage loan originator
license for individuals
Mortgage loan servicer registration for companies
Apply online to the NYSDFS through the Nationwide Mortgage Licensing System (NMLS)
Mortgage broker registration for companies
Mortgage banker license for companies
Mortgage loan originators must work under the supervision of a mortgage banker or mortgage broker
Chapter 1 The Broker’s Office 13
© 2013 All rights reserved.
Experience for the Mortgage Broker RegistrationMay use his broker license to become a
mortgage broker
Broker license must be current
Salespersons must have actively participated in the residential mortgage business for two years
Chapter 1 The Broker's Office 14
© 2013 All rights reserved.
Dual Agency Disclosure under the Banking and NY Real Property Laws Mortgage brokers who are also real estate brokers
representing the seller may be dual agents Legal with disclosure and informed consent
Article 12-D of NY Banking Law A mortgage brokers who is also a real estate broker
in the same transaction must disclose the dual agency
Real Property Law Section 443 also requires dual agency disclosure
The real estate agency disclosure form is used for one- to four-unit residential properties
Chapter 1 The Broker's Office 15
© 2013 All rights reserved.
New York Mortgage Banker Requirements
Fingerprints, $99 fee,
$3k investigativefee
BackgroundReport
Demonstrationof good
character
Filing of Surety Bond
For $50K
Existing LineOf CreditFor $1mil
Net worth ofAt least $250K
Requirements
Chapter 1 The Broker's Office 16
© 2013 All rights reserved.
Mortgage Brokers vs. Mortgage BankersThe requirements to
become a mortgage banker and a mortgage broker are much different
A mortgage banker may be responsible for collecting the mortgage payments and risk its own credit
The mortgage banker typically sells the loan to a larger lender
A mortgage broker does not lend his company’s money
Chapter 1 The Broker's Office 17
© 2013 All rights reserved.
Requirements for Broker Licensure
Pass theNYS
exam
Citizenship;legally present
English language
120 hrs ofqualifying education
Two year’s experience as a
salesperson
20 years old
Requirements
Chapter 1 The Broker's Office 18
© 2013 All rights reserved.Chapter 1 The Broker's Office 19
Licensure RequirementsRequirement Salesperson
Broker,Associate broker
Pocket card Must carry Must carry
License Kept by broker Kept by broker
Education(Total hours)
75 120
Experience None 2 yr salesperson,3 yrs equivalent
Fee/term of license
$50/ 2 years $150/2 years
Continuing Ed 22.5 hrs every 2 yrs
22.5 hrs every 2 yrs , unless exempt
Licensing agency
NY DOS NY DOS
License Law Article 12-A, Rules and Regs
Article 12-A Rules and Regs.
© 2013 All rights reserved.Chapter 1 The Broker's Office 20
What to Bring to the State Exam
Driver’s license or other government ID-must be photo bearing
$15 exam fee Two #2 pencils Calculator (silent and non printing if
desired) You will be thumb printed
© 2013 All rights reserved.
Registering for the Licensure Exam
Register online: www.dos.state.ny.us Schedule exam on the DOS Occupational Licensing
Management System, eAccessNY.
On eAccessNY, view your scheduled exam details or exam results
User-friendly access with a personal ID and password
Exam results are reported as passed or failed and available online as soon as possible after they are received by the Exam Unit and scored.
Chapter 1 The Broker's Office 21
© 2013 All rights reserved.
Licensure Exam You should bring the page you were requested to
print when you scheduled your exam on eAccessNY
You must have a grade of at least 70% to pass. Exam
time 2.5 hours; all questions: multiple choice
If you fail the exam, you can schedule another exam
by utilizing your account in eAccessNY
Chapter 1 The Broker's Office 22
© 2013 All rights reserved.Chapter 1 The Broker's Office 23
BROKER APPLICATION
Applicant must submit to the
DOS:
Hard copy broker
application mailed in
(broker applications cannot
be submitted online)
Exam passed slip
Evidence of broker
sponsorship, if
applicable
School certification
Check or credit card
to the DOS Experience points
© 2013 All rights reserved.
Classes of Licensure for BrokersIndividual brokerAssociate brokerTrade-name brokerPartnership brokerCorporate brokerLimited Liability Company/PartnershipFranchises
Chapter 1 The Broker's Office 24
© 2013 All rights reserved.Chapter 1 The Broker's Office 25
The Broker Point System
© 2013 All rights reserved.
The Broker Point System Explained
• Point system to clarify real estate experience• Required for the broker license
• A certain number of points allotted for• various types of experience
• For example, 250 points for the sale of a single• family house, a condo, co-op unit, multifamily or a
farm (with• residence under 100 acres)
• You must multiply the allotted points in each category
• by the number of transactions per category and total the points from each category
Chapter 1 The Broker's Office 26
© 2013 All rights reserved.
Point System Experienceo Experience for a
broker license may be obtained through:
o one type of experience such as residential sales
o a variety of experiences such as residential and commercial sales, property management, and leasing
o Three types of experience are:1. one year as a
salesperson and the accumulation of 3,500 points
2. two years’ equivalent experience in general real estate and 5,250 points
3. combined experience including work as a salesperson and general real estate and 5,250 points
1. .
Chapter 1 The Broker's Office 27
© 2013 All rights reserved.Chapter 1 The Broker's Office 28
Maintaining the LicenseAll broker’s licenses must
be displayed and
salesperson’s licenses
must be kept by the
broker
Branch offices must be
supervised by the broker
and managed by a broker
or associate broker
Professional liability
insurance - called
errors and omissions
© 2013 All rights reserved.Chapter 1 The Broker's Office 29
Office Requirements
Branch office
requirements
Termination ofAssociation
Change of address, status,
name
Dual licensure
Licenserenewal
© 2013 All rights reserved.Chapter 1 The Broker's Office 30
Licensure FeesLICENSURE FEE
Salesperson license $ 50 Associate broker/broker license $150 Each broker branch office $150 Exam fee $ 15 Change of salesperson name $ 50 Change of broker name or status $150 Change of address $ 10 Termination of association $ 10 New association $ 10 Duplicate license/pocket card $ 10
© 2013 All rights reserved.Chapter 1 The Broker's Office 31
Violations of the License Law
Conduct that
demonstrates
untrustworthiness,
incompetence
Failure to provide
clients with copies
of listing
agreement or
contract of sale
Making false promises or misrepresentations
Commingling the money or property of others
Engaging in net listing agreements
Publishing blind ads
© 2013 All rights reserved.Chapter 1 The Broker's Office 32
Commingling FundsCompany dollar
Portion of revenue that
ends up belonging to
the brokerage firm
Commingling
Mixing the funds of
others with the
business of personal
account
Trust or escrow
account
For all monies
received from
clients such as
deposits and down
payments
© 2013 All rights reserved.
Fair Housing ComplianceAssist all people Assist all people including including minorities in minorities in living in the living in the housing of his housing of his choicechoice
Chapter 1 The Broker's Office 33
© 2013 All rights reserved.Chapter 1 The Broker's Office 34
Types of Discrimination
Blockbusting Redlining
SteeringDiscriminatory
advertising
© 2013 All rights reserved.Chapter 1 The Broker's Office 35
Broker’s Responsibilities
Fair Housing Training
Record Keeping
Display FairHousing Poster
Equal Service
© 2013 All rights reserved.
Who Can Give Legal Advice? The New York Judiciary Law prohibits the
practice of law by non-attorneys
Attorney review or approval clause
Agents can use a fill-in-the-blanks form approved by a joint committee of the Bar Association and Board of REALTORS®
Contract should clearly and prominently indicate that it is a legally binding document
Chapter 1 The Broker's Office 36
© 2013 All rights reserved.Chapter 1 The Broker's Office 37
What is wrong with these ads? Ad 12-Family, ½ acrelot$350,000Call (609) 777-1234
Ad 33-story Colonial$450,000Private professional community(201) 767-0234
Ad 2Brownstone$4,000,000Lydia Dupree,Liberty Park Brokerage(201) 777-4567
Ad 42 bedroom apt. for rent in upscale building$1,600/monthNo children or pets(973) 459-9999Lucy Baynes Brokerage, Inc.
© 2013 All rights reserved.Chapter 1 The Broker's Office 38
Penalties for Violation of License Law
NYS DOS
Revoke license
Suspend license
Refuse license
© 2013 All rights reserved.Chapter 1 The Broker's Office 39
The Brokerage Business and Antitrust Laws
Federal Antitrust Laws and Agencies
Sherman Act (1890) Clayton Act (1914)
Federal Trade Commission
U.S. Dept. of Justice
© 2013 All rights reserved.Chapter 1 The Broker's Office 40
Types of Restraints of TradePrice fixing
Group boycotts
Market allocation agreements
Tie-in arrangements
© 2013 All rights reserved.Chapter 1 The Broker's Office 41
Comparison of Employee and Independent Contractor
Employee Independent Contractor
Receives a salary No minimum salary
Broker withholds social security,income and unemployment tax
Salesperson pays taxes
Broker can pay for extras Sets own hours
Pays for most expenses-receives no extra compensation
Enters into contract with broker
© 2013 All rights reserved.Chapter 1 The Broker's Office 42
Independent Contractor RulesIf an independent
contractor earns over $600, then the broker and contractor must file a Form 1099 misc. with the IRS
Internal Revenue Code Section 3508 (b) (c)
To comply with independent contractor status, real estate agents must have a written contract with the broker and be licensed
© 2013 All rights reserved.Chapter 1 The Broker's Office 43
Broker Compliance with Independent Contractor
Maintain records at least 3 yrs
Broker supervision
Prepare and file 1099s
File yearly tax returns
© 2013 All rights reserved.Chapter 1 The Broker's Office 44
Responsibilities of Sponsoring Brokers
Broker responsible
for actions oflicensee
Brokers mustsuperviselicensees
Written employment agreement
between broker and
salesperson
Brokerage firmrecords must be
maintainedfor 3 years
© 2013 All rights reserved.
Multiple Listing ServicesAdvantages
Greater exposure for a listed property
Better price range due to a wider market
Property information online and updated regularly
DisadvantagesMLS charges a fee for
its service- every broker or agent who accesses the service must pay
Courts have challenged MLS for only letting real estate board members become members
Listings are sold through a broker from another firm which because of the split reduces the commission
Chapter 1 The Broker's Office 45
© 2013 All rights reserved.Chapter 1 The Broker's Office 46
ReciprocityNew York has reciprocity with:
Arkansas Colorado Connecticut Georgia Massachusetts Mississippi Oklahoma Pennsylvania West Virginia