National Brokerage

Employee / broker relationship.

A broker has greater control over the actions of an employee. Specifically: --a broker can impose a sales methodology. In addition, a broker can enforce all office policies, including hours, meeting attendance, and telephone coverage. --a broker must withhold income taxes and pay unemployment compensation tax on behalf of an employee --an employee may receive the benefits enjoyed by the broker's non- selling employees

Corporation for profit.

A corporation is a legal entity owned by stockholders. A corporation for profit consists of one or more persons authorized to conduct business for profit. A board of directors elected by stockholders oversees the business. Officers (president, vice president, secretary, treasurer) and managers conduct day-to-day affairs

Estoppel

A legal doctrine by which a person is prevented from asserting rights or facts that are inconsistent with a previous position or representation made by act, conduct or silence

Accuracy

A licensee should be sure of the statements made to a customer. For example, if a customer wants to know the size of a lot the best answer would be, "It says in the MLS that the lot size is 100 X 200, but it would be best to have a survey to determine the exact dimensions. Should we write that into your offer and make the purchase contingent upon the lot size being 100 X 200?"

Non-profit corporation.

A non-profit corporation is a corporate entity which is not legally entitled to generate profit. A board of directors and officers manage operations. Non-profit organizations are not subject to taxation

co-brokerage

A transaction involving a cooperating subagent. In a co- brokered transaction, the listing broker splits the commission with the "co-broker," typically on a 50-50 basis. A broker may cooperate with other brokers on either side of a transaction, either assisting a listing agent to locate a buyer or tenant, or assisting a buyer or tenant representative in locating a seller or landlord

Independent brokerage

--A brokerage that is not affiliated with a franchise is an independent agency. --Many independent agencies participate in networks on a local, regional, or national basis. Such networks expose the independent broker to a larger market without compromising individual identity

Cooperative association

--A cooperative association is a non-profit, tax-exempt alliance of individuals or companies formed to promote common goods or services. --A cooperative association may not broker real estate

Franchise.

--A franchised brokerage is an independently-owned company that enters into a licensing arrangement with a franchisor to participate in various benefits offered in exchange for compensation. --Franchisors generally offer local franchisees: -the use of a recognized trade name -national and regional advertising -training programs -standardized operating procedures -a national referral system -In exchange, a franchisee pays the franchisor start-up fees and a portion of gross income

General partnership

--A general partnership is a for-profit business consisting of two or more co-owners who have agreed to share business profits. **Unlike a corporation, the general partnership is not a distinct, legal entity, although a corporation may be a partner in a general partnership

Commission splits.

--A sales agent earns compensation for procuring listings and for procuring buyers or tenants, whenever a transaction results. In the jargon of brokerage, these are the two "sides" to a commission: the listing side and the selling side

Buyer data.

--Buyer information is usually compiled and maintained, often informally, by each agent in a brokerage. An agency's base of prospects who are looking for property at any given time is valuable for marketing new listings

Buyer- and seller-oriented brokerages

--Companies sometimes specialize even further by choosing to represent only one side in a transaction. Thus a brokerage may represent only commercial tenants, or only residential buyers, or some other limited type of client

Limited partnership

--Consists of general partners and limited partners. --General partners are wholly responsible for business operations, while limited partners are investors who participate only in business profits. --The general partners typically receive compensation for their management

Universal Agent

--Handles all delegated business of principal. The Universal Agent has Power of Attorney which is sometimes called an Attorney-in-Fact. --An example would be a person who is hired or appointed by an estate to handle the real estate affairs of a deceased individual

Client data

--It is important to keep track of both current and former clients. Former clients are likely prospects to become clients again or customers. They are also a source of referrals. Current clients, of course, should be the broker's primary concern

Commercial and residential brokerages

--Many brokerages deal primarily with limited types of property: -residential, -commercial, -industrial, -undeveloped land, etc. --In practice, most residential companies conduct a small amount of commercial brokerage, while commercial brokerages tend to deal strictly with retail, office, industrial, or land properties. --A large company may handle all types of properties but will probably have a separate organizational division for each property type

Market allocation

--Market allocation is the practice of colluding to restrict competitive activity in portions of a market in exchange for a reciprocal restriction from a competitor: "we won't compete against you here if you won't compete against us there."

Brokerage vs. trading

--The distinction between brokerage and trading for one's own account is important for determining whether one must be licensed to perform the real estate activity in question. --To be considered brokerage, an agent's activity must generally be conducted on behalf of a person or business entity other than the agent. **Buying, selling, and leasing real estate for one's own account or for one's company are generally not considered brokerage

Listing procedures.

--The marketing and self-promotional efforts of agents generate listings. New agents usually focus on becoming well known in a small geographical area and hope to encounter clients there who are willing to list with them. More experienced and better-known agents are able to rely to a greater extent on referrals in obtaining listings

Multiple listing service (MLS)

--The second prevalent form of broker cooperation is the multiple listing service, or MLS. --organization of brokers who have agreed to cooperate with member brokers in marketing listings. Members of the service also agree to enter all exclusive listings into the listing distribution network so that every member is promptly informed of new listings as they come on the market. --all the duties and responsibilities inherent in the laws of agency as the client's fiduciary agent. The listing agreement sets forth specific duties

Agency Coupled with an Interest

--When the real estate licensee is a partner in the ownership of the property. This type of agency does not allow for cancellation of listings as other types do. --Example: I own 50 acres of ground that I will sell to a builder with the understanding that I will list his/her properties for sale until they are all sold. I cannot be fired, and if I die my estate will be entitled to any fees earned from the remaining sales. --In most States, listing agreements must have a definite beginning and ending date. In this case, the listing would have to be for the time period estimated to sell all the properties

Advertisement regulations

--advertising must not be misleading --the broker is responsible for the content of advertising done by agents --all advertising must reveal the identity of the broker; licensed brokers and agents may not use blind ads that conceal their identities --brokers selling their own property through the brokerage must disclose the brokerage identity --salespersons must include the broker's business identity in any advertising; they may not advertise in their own name solely (unless selling their own property through channels other than the agency)

More agent Responsibilities

--assisting the buyer in obtaining financing --assisting the seller in clearing title --assisting the seller in completing property repairs --recommending inspectors, appraisers, attorneys, and title companies --assisting in communications between principals --assisting in the exchange of transaction documents

Difference in selling a business

--business income, personal property assets, and, possibly, liabilities

Enterprise Brokerage

--concerns a larger company, usually a corporation, where the transaction involves the sale of stock and multiple real estate parcels leased or owned by the seller

Broker's responsibilities

--handling deposit monies and for overseeing the agent's pre-closing activities. --State license laws require that earnest money deposits be placed in an account which is separate from the broker's operating accounts. --They also require the broker to keep accurate records and follow accepted accounting procedures. --These precautions protect the buyer and seller and safeguard the deposited funds Avoid: --commingling- failure to deposit money and -conversion- personal act of theft more serious

Property data

--properties, and all properties in the market area. In residential brokerage, available property basically consists of the listings in the MLS and for-sale-by-owner properties. Records for all properties in an area are accessible in tax records. Commercial brokerages usually keep track of available and occupied commercial properties in a proprietary database

Implied

-A contract under which the agreement of the parties is demonstrated by their acts and conduct. -Example: "I'll help you buy a house so don't work with anyone else because I will be your agent. Let's go look at some houses today."

Ratification

-A method of creating an agency relationship in which the principal (seller or buyer) accepts the conduct of someone who acted without prior authorization as the principal's agent. --Example: A licensee who shows a property without the owner's prior approval, and then the owner agrees to work with the agent to sell the property

Ostensible Agency

-An actual agency relationship that arises by the actions of the parties rather than by express agreement. --For example, the owner of a property knows a broker is showing the owner's vacant lot to prospective buyers without authority to do so. Unless the owner takes steps to stop such unauthorized showings, the law considers that third parties have a just cause to believe the broker to be the "owner's broker." --This situation is called an ostensible agency because on the surface an agency appears to exist. Once this type of agency is created, the owner is prevented by estoppel* from denying its existence.

Good Agent

-Chooses who he/she wishes to represent. -Communicates the decision to all parties. -Conducts business in a manner that is consistent with the choices made and communicated

A salesperson may not

-bind a client to any contract -receive compensation directly from a client -accept a listing or deposit that is not in the name of the broker

Sole proprietorship

-business owned by a single individual. When the proprietor dies, the business terminates. Sole proprietorships must follow state licensing and registration laws to conduct business, such as fictitious name laws.

brokerage may be

-independent or affiliated -specialized in a type of property -specialized in a type of transaction -specialized in a type of client

Joint venture

-partnership formed to complete a specific business endeavor, such as a real estate development. Individuals, general and limited partnerships, and corporations may participate. In forming the entity, the partners identify how they will conduct business and share profits. --Principal parties in the joint venture share liability --may broker real estate, provided the co-venturers are duly licensed

Commission schedules

An agent's commission schedule is a comprehensive summary of commission splits under various circumstances, including: --listing and selling side --salesperson's level of sales performance --broker's level of expense reimbursement to agent --the particular policies or organization of the agency --prevailing commission splits in the market

Transaction-specialized brokerages

Brokerages often organize around a particular type of transaction. Thus, there are companies that specialize in apartment rentals, office rentals, exchanges, business brokerage, and, most commonly, residential sales

Types of transactions and properties brokered.

Brokers and salespeople are licensed to broker all types of real property for clients in any form of transaction. In practice, it is common for brokers and agents to specialize in a type of property, a type of transaction, or a geographical area

What does an agent owe his/her principal? (C O A L N)

Care Obedience Counseling Accounting Loyalty Notice

Collusion.

Collusion is the illegal practice of two or more businesses joining forces or making joint decisions which have the effect of putting another business at a competitive disadvantage. Businesses may not collude to fix prices, allocate markets, create monopolies, or otherwise interfere with free market operations

Sherman Antitrust Act.

Enacted in 1890, the Sherman Antitrust Act prohibits restraint of interstate and foreign trade by conspiracy, monopolistic practice, and certain forms of business combinations, or mergers. The Sherman Act empowers the federal government to proceed against antitrust violators

Independent contractor / broker relationship

Generally, a broker has limited control over the actions of a contractor. Specifically: --a broker can require performance results, but is limited in demanding how a contractor performs the work. --For example, a broker may not prescribe selling methods, meeting attendance, or office hours. --an IC is responsible for income and social security taxes; the broker does not withhold taxes --a broker cannot provide an IC with employee benefits such as health insurance or pension plans

General Agent

Handles multiple transactions of a client. The best example in real estate would be property management

Special Agent

Handles one transaction for one seller of one property. The best example would be a licensee who is hired to sell one property for a client.

Accounting

Handling money (including escrows) with care and closing statement figures

Sales agent's duties and responsibilities.

In accepting employment from a broker, a salesperson generally makes a commitment to: --work diligently to sell the broker's listings --work diligently to procure new listings --promote the business reputation of the broker --abide by the broker's established policies --fulfill the fiduciary duties owed clients as their subagent --maintain insurance policies as required by the broker --have transportation for conducting business, as required by the broker --conform to ethical standards imposed by broker and trade organization --uphold all covenants and provisions of the employment agreement

Broker's obligations to the sales agent.

In employing a salesperson, a broker generally makes a commitment to: --make the brokerage's listings available --make the brokerage's market and property data available --provide whatever training was promised at the time of hiring --provide whatever office support was promised at the time of hiring --uphold the commission structure and expense reimbursement policy --conform to ethical standards imposed by the broker's trade organization --uphold all covenants and provisions of the employment agreement

Broker cooperation

In most cases, transactions require the assistance of a cooperating broker from another brokerage company acting as a subagent. Most listing agreements provide for brokerage cooperation in the multiple listing clause

Tenant data.

In residential and commercial leasing companies, information is compiled and maintained on all tenants in an area, by property type used. Such files contain a tenant's lease expiration, property size, and rent

Property Type broker spec.

Land State undeveloped government developed religious Agricultural Recreational

National Association of Realtors

Largest trade org. --NAR is comprised of a national headquarters, a state association in each state, and within each state, local Realtor® boards --Only members of the organization may use the term to refer to themselves.

Obtaining offers.

Last step If a buyer is interested in purchasing a property, an agent obtains the buyer's offer of transaction terms, including price, down payment, desired closing date, and financing requirements

Obedience

Lawful instructions of the Principal are followed

Marketing Listings

Market Plan Selling the Prospect Obtaining offers

Notice

Material facts disclosed as well as relationships, important business facts for the principal to make decisions upon.

Written or expressed

One way agency is created An oral or written contract in which the parties state the contract's terms and express their intentions in words. We agree orally the terms of our agency relationship wherein you will hire me to market your property or represent you as a buyer's agent. In most states it is required that these agreements are committed to writing to prevent misunderstandings. Some States do not require written agreements

Price fixing

Price fixing is the practice of two or more brokers agreeing to charge certain commission rates or fees for their services, regardless of market conditions or competitors. In essence, such pricing avoids and disturbs the dynamics of a free, open market

agency relationship

Principal and the agent is called a Fiduciary. relationship between the two

Loyalty

Putting the principal first, confidentiality, and avoidance of dual agency unless agreed to by all parties

Property type broker spec.

Residential: Commercial single family retail condominiums office cooperatives industrial mobile homes apartments

Agent's scope of authority.

State real estate license laws provide for two distinct licenses to conduct real estate brokerage: the broker license and the salesperson or sales agent license

Prospecting.

Step 1. --any activity designed to generate listing prospects: --parties who intend to sell or lease property and who have not yet committed to a broker. --Prospecting activities include --mailing newsletters and flyers, selling directly and person-to-person, advertising, and selling indirectly via community involvement **GOAL: reach a potential seller or landlord, make that person aware of the agent's and brokerage's services, and obtain permission to discuss the benefits of listing, often in the form of a formal selling presentation

Selling the prospect.

Step 2 When marketing activities produce prospects, the agent's marketing role becomes more interpersonal. An agent must now: --qualify prospects' plans, preferences, and financial capabilities --show properties that meet the customer's needs --elicit the buyer's reactions to properties --report material results to the seller or listing agent

Pricing.

Step 2. --almost always necessary for an agent seeking a listing to suggest a listing price or price range for the property. It is important to make a careful estimate, because underpricing a property is not in the best interests of the seller, and overpricing it often prevents a transaction altogether

Listing presentation and negotiation of agreement

Steps 3 and 4 --A listing presentation is an agent's opportunity to meet with a seller and present the merits of the agent's marketing plan, personal expertise, and company strengths. --At the same time, an agent can explain the many phases and details of a real estate transaction and point out how the provisions of the listing agreement and the agent-principal relationship work to ensure a smooth transaction

Care

Taking due care of that which is entrusted to the agent, including writing a contract in such a manner so that the interests of the Principal are protected

Clayton Antitrust Act.

The Clayton Antitrust Act of 1914 reinforces and broadens the provisions of the Sherman Act. Among its prohibitions are certain exclusive contracts, predatory price cutting to eliminate competitors, and inter-related boards of directors and stock holdings between same-industry corporations. The Clayton Act also legalizes certain labor strikes, picketing, and boycotts

Effecting a transaction

The core activity of real estate brokerage is the business of procuring a buyer, seller, tenant, or property on behalf of a client for the purpose of completing a transaction. If successful, the broker receives a commission according to the provisions of a listing agreement

Anti-competitive behavior.

The effect of antitrust legislation is to prohibit trade practice and trade restraints that unfairly disadvantage open competition. Business practices and behaviors which violate antitrust laws include collusion, price fixing, market allocation, bid rigging, restricting market entry, exclusive dealing, and predatory pricing.

Contingency period, or pre-closing period

The time period between contracting and closing

critical brokerage skills

To generate business, as well as achieve the transactional objectives of clients, a broker must be proficient in four skill areas: -obtaining a client listing -marketing a listing -facilitating the closing of a transaction -managing market information

Critical brokerage skills

To generate business, as well as achieve the transactional objectives of clients, a broker must be proficient in four skill areas: -obtaining a client listing -marketing a listing -facilitating the closing of a transaction -managing market information - - -

Market data.

Today's clients and customers expect a broker to know the market intimately. It is often the broker or agent with the best market knowledge who dominates business in the market. Knowing a market includes keeping up to date on: --pricing and appreciation trends --financing rates and terms --demographic patterns and trends --construction trends --general economic trends

CLIENT

When an agent works FOR a principal that person is a CLIENT EX: The seller of a property who has signed a listing agreement has agreed to be your client

CUSTOMER

When an agent works WITH a person that individual --You are holding an open house on your listed property, and a buyer walks in who is interested in purchasing the property. You must disclose to the buyer that you represent the seller and explain customer relationships. In some States you could be a Dual agent or a Transactional Broker (Salesperson).

Honesty

While a licensee does not owe a "customer" a fiduciary duty we do have an obligation to be honest. If we know of a latent defect or a problem with a property it must be disclosed to the purchaser (customer).

domestic of Corp

a corporation is domestic if it is headquartered in the state where the articles of incorporation were filed Otherwise it is a foreign corporation

limited partners

a limited partner must make an investment, which subsequently comprises the extent of the partner's liability. Limited partners are taxed once, on profits distributed by the partnership

Agent

a person who is empowered by contract to represent the interest of someone called a Principal

liability of Gen. Partnership

all partners bear full liability for debts and obligations jointly and severally

general partners

bear sole liability for debts and obligations

taxation of Sole proprietorship

business profits are taxed once as the proprietor's personal income

Opportunity Brokerage

concerns a small business, usually a proprietorship or partnership, where the transaction consists of a sale of assets and an assignment of a lease

Types of sale

generally two types of business sale transaction for a business broker to be aware of: the asset sale and the stock sale

Business trust and real estate investment trust.

group of investors who invest in a pooled trust fund managed by their elected trustee. The trustee purchases investment assets and distributes profits and gains to the trustors. --A business trust that invests primarily in real estate and meets certain other requirements is a real estate investment trust (REIT) and receives special tax treatment --may not broker real estate, but it may buy and sell its own real estate assets

Realtor®

is a member broker

Realtor-Associate

is a member sales agent

taxation of Corp

owners are double-taxed on business profits; corporate profits are taxed and after-tax dividends distributed to shareholders are taxed again as personal income

taxation of Gen. Partnership

partners are taxed once on their respective partnership profits; partnerships do not have double-taxation

Transaction type broker spec

sales exchanges rentals subleases assignments options

Sarbanes-Oxley Act of 2002

shareholders of the corporation are only liable to the extent of the value of one's shares; officers and directors may be held personally liable for the corporation's actions

Liability of Sole proprietorship

sole proprietors are personally liable for their own debts and actions and those of employees while performing business duties; proprietors may be sued personally

Marketing plan

step 1 of listings --After the broker formalizes the listing agreement, the sales agent initiates a marketing plan for the property. An ideal marketing plan is a cohesive combination of promotional and selling activities directed at potential customers. The best combination is one that aims to have maximum impact on the marketplace in relation to the time and money expended

Agent's responsibilities

the contract and the earnest money to the employing broker without delay. Most states impose deadlines for this requirement, usually within twenty-four hours from the agent's receipt of the deposit.

"perpetual" existence

the corporation survives the death of any of the stockholders, directors, or officers

Brokerage vs. advisory services.

the objective is not purely transaction-oriented, the activity is not really brokerage. Examples of advisory services include: -providing an estimate of value -performing market analysis -managing property -Even though fee consulting is not brokerage in the strict sense, real estate consultants who offer advisory services to the public must have a real estate license in most states

Formation of Gen. Partnership

the partnership is formed by a written or oral partnership agreement with or without a financial investment by either partner

dissolution of gen. Partnership

the partnership may be terminated through mutual agreement, withdrawal or death of a partner, or by legal action

"Fiduciary Relationship,"

utmost trust. When one person is empowered by another to represent him in any type transaction, it is called an agency relationship. Money is not the issue, but rather the relationship of the parties.