Unit 8: Real Estate Brokerage

Affiliate designation of NAR specializing in residential property

CRS

An independent contractor and a broker can agree upon which of the following?

Compensation the contractor would receive

Which group of people is protected the MOST by real estate license laws?

Consumers

Has completed the requirements of the REALTOR Institute

GRI

Two or more businesses conspiring against another business

Group boycott

After license laws are enacted by the legislature, who is responsible for adopting administrative regulations?

Licensing authority (division, Commission, etc.)

Has an established Code of Ethics that REALTORS must subscribe to

NAR

A list of phone numbers from consumers who want to limit telemarketing calls

National Do Not Call Registry

Member of the National Association of Realtors

REALTOR

Which of the following is allowed under antitrust laws?

Real estate companies agreeing not to cooperate with a broker because of the fees that the broker charges

Sales associate A and sales associate B work for the same firm. They agree to divide their region into an eastern half and a western half; sales associate A will handle listings in the east, and sales associate B will handle listings in the west. Which statement is TRUE?

The agreement does not violate antitrust laws

Two sales associates who work for the same firm agree to divide their town into a northern region and a southern region; one sales associate will handle listings in the north, and the other will handle listings in the south. Which statement is TRUE?

The agreement does not violate antitrust laws

A real estate company has adopted a 100% commission plan. The monthly desk rent required of sales associates is $1,500, payable on the last day of the month. In August, a sales associate closed a transaction that earned a commission of $11,370 and a second transaction that earned a commission of $6,875. The sales associate's additional expenses for the month were $2,170. How much of the total monthly income did the sales associate keep?

$14,575

Two real estate professionals were found guilty of conspiring with each other to allocate real estate brokerage markets. A seller suffered an estimated $90,000 loss because of their activities. If the seller brings a civil suit against the two real estate professionals, what can the seller expect to recover?

$270,000 plus attorney's fees and costs

Assuming that the listing broker and selling broker split their commission from a transaction equally, what was the sales price of a rural property if the commission rate was 6.5% and the listing broker received $12,593.50?

$387,492 2 × $12,593.50 = $25,187 $25,187 ÷ 0.065 = $387,492

On the sale of any property, a sales associate's compensation is based on the total commission paid to the broker. The sales associate receives 30% of the first $2,500, 40% of the next amount between $2,500 and $7,500, and 50% of any remaining amount exceeding $7,500. If a property sells for $234,500 and the broker's commission rate is 6.5%, what is the sales associate's total compensation?

$6,621.25

Providing product or service to customer only if customers buys another product or service as well

Tie-in arrangement

A real estate broker is licensed to buy, sell, exchange, or lease real property for others and to charge a fee for those services.

True

ARELLO promotes state licensing standards.

True

All 50 states regulate the activities of real estate professionals.

True

Group boycotting, allocation of customers or markets, and tie-in agreements are all prohibited acts under the Sherman Antitrust Act.

True

Laws cannot guarantee an ethical or moral marketplace.

True

Many trade organizations serve the real estate business. The largest is the National Association of REALTORS® (NAR).

True

Real estate license laws are intended to protect the public.

True

The purpose of the Electronic Signatures in Global and National Commerce Act (E-Sign) is to make contracts (including signatures) and records legally enforceable, regardless of the medium in which they are created.

True

What is the practice called when a consumer selects specific services to use and only pays the real estate professional for those services?

Unbundling services

Sets basic rules for entering an enforceable contract using electronic means

Uniform Electronics Transactions Act

Real estate professionals should do which of the following when using text messages to communicate with clients?

Use clear and concise language and follow any state laws regarding text messaging

All of these are violations of federal antitrust law EXCEPT

commission splitting

4 A recent important change to real estate brokerage practice is

digital communication in all its forms

The Uniform Electronic Transactions Act encourages the use of

electronic signatures

An important purpose of the E-Sign Act is to

give contracts created using email the same legal standing as those on paper

The National Association of REALTORS® has adopted a code of ethics for

its members

National Association of Real Estate Brokers (NAREB)

members are known as Realtists

A real estate sales associate has a licensed personal assistant who usually must be

paid by the sales associate's employing broker

Regarding the collection of information from visitors to an internet site, brokers should

post a privacy policy and limit the personal information that can be collected from children younger than 13

Do-not-call registries and laws such as the Telephone Consumer Protection Act, Junk Fax Prevention Act, and rules of the Federal Communications Commission dictate

prohibited communications

The primary purpose of the Uniform Electronic Transactions Act (UETA) is to

remove barriers in electronic commerce that would otherwise prevent enforceability of contracts

The moral principles of a profession include

standards for integrity as well as a code of conduct

The National Association of REALTORS® is composed of

state, regional, and local associations

Even if a consumer has requested placement on the National Do Not Call Registry, a real estate professional may call the consumer up to how many months after the consumer's last purchase, delivery, or payment?

18 months

Sales associates who are paid in a lump sum and who are personally responsible for paying their own taxes are probably treated for tax purposes as

independent contractors

A broker was accused of violating antitrust laws. Of the following, the broker was MOST likely accused of

price-fixing

A real estate broker was responsible for a chain of events that resulted in the sale of a client's property. This is called

procuring cause

When communicating with clients or consumers via email, all of these are examples of professional email etiquette EXCEPT

responding to emails within one week

Setting commission rate among competitors for services

Price-Fixing

A real estate assistant would never be required to have a real estate license.

False

A sales associate can carry out all the same activities as a real estate broker.

False

A sales associate's compensation is determined by the client.

False

If a state licensing authority's regulations conflict with statutory law, the regulations will prevail.

False

Price-fixing, which is the practice of setting prices for products or services rather than letting competition in the open market establish those prices, is legal.

False

Real estate license laws do not include disciplinary systems.

False

States' licensing rules and regulations do NOT have the same force and effect as statutory law.

False

The Institute of Real Estate Management (IREM) is affiliated with the National Association of Real Estate Brokers (NAREB).

False

When information is taken from the internet, it is always accurate.

False

When using email to communicate with clients, real estate professionals should

- perform a spelling check before sending - use a subject line that indicates what the message is about - respond in a timely manner to customer and client messages

Commissions are negotiable

- unless representing a buyer, when the listing broker offers a co-op - unless the exclusive agency listing is used, because the seller can compete with the broker -when using an exclusive listing agreement, but not an open listing

Many organizations seek to ensure a high standard of conduct in their members by developing and requiring adherence to a

code of ethics

Transactions conducted through email or fax

Electronic contracting

A system of moral principles, rules, and conduct

Ethics

allows mls members equal rights to display MLS data

Internet Data Exchange

Member of the National Association of Real Estate Brokers

Realist

Established by the National Association of Real Estate Brokers

Realist Code of Ethics

Internet tools to facilitate the creation and sharing of information

Social Media

Unsolicited junk email

Spam

Practical applications of the articles of the REALTOR Code of Ethics

Standards of Practice

Practical applications of the articles of the REALTORS® Code of Ethics are known as

Standards of Practice

Members of professional associations are expected to comply with the

code of ethics as set forth by each organization

A broker has established the following office policy: "All listings taken by any sales associate of this real estate brokerage must include compensation based on a 7% commission. No lower commission rate is acceptable." If the broker attempts to impose this uniform commission requirement, which statement is TRUE?

The broker may, as a matter of office policy, legally set the minimum commission rate acceptable for the firm

Which statement BEST explains this sentence: "To recover a commission for brokerage services, a broker must be employed by a client"?

The client must make an express or implied agreement to pay a commission to the broker

A broker asks a neighbor who is thinking of selling the family home if the broker can present an offer from a prospective buyer, and the neighbor agrees. At this point, which statement is TRUE?

The neighbor is not obligated to pay the broker a commission

A state has recently updated its Rules and Regulations for the Real Estate Profession. Which statement is most likely TRUE regarding this update?

The rules and regulations have the same force and effect as the license law itself

The broker may still be entitled to a commission in which of these situations where a pending property sale did NOT close?

The seller decided not to sell

A REALTOR® is BEST described as an individual who is

a real estate licensee and a member of the National Association of REALTORS® (NAR)

An arrangement to sell one product only if the buyer purchases another product as well is called

a tie-in agreement

Hinting to prospective clients that there is a "going rate" of commission or a "normal" fee implies that rates are, in fact, standardized and is

a violation of antitrust laws

If a sales associate hints to prospective clients that the commission rate matches the "going rate," this action is

a violation of antitrust laws

A sales associate's contract with her broker states that she is not an employee. In the past year, less than half her income was commission, with the rest an hourly wage paid by the broker. The IRS would classify her as

an employee

A real estate licensee has a written contract with a broker specifying that the licensee will not be treated as an employee. The licensee's entire income is from sales commissions rather than an hourly wage. Based on these facts, the licensee is considered

an independent contractor

In order for a broker to be paid on an open listing, the broker must

be the procuring cause of the sale

The National Do Not Call Registry is managed by

the Federal Trade Commission (FTC)

The name for the current policy of the National Association of REALTORS® that allows all multiple listing service (MLS) members equal rights to display MLS data is

the Internet Data Exchange

Many trade organizations serve the real estate business. The largest is

the National Association of REALTORS® (NAR)

The organization which arose out of the early days of the civil rights movement as an association of racial minority real estate brokers in response to the conditions and abuses that eventually gave rise to fair housing laws is

the National Association of Real Estate Brokers (NAREB)

Activities such as price-fixing, group boycotting, allocation of customers or markets, and tie-in agreements are violations of

the Sherman Antitrust Act.

Price-fixing is punishable by up to a $1 million fine and 10 years in prison under

the Sherman Antitrust Act.

The use of electronic signatures makes routine paperwork more efficient and has been encouraged by adoption by most states of

the Uniform Electronic Transactions Act

Group boycotting is illegal and occurs when

two or more businesses conspire against another business or agree to withhold their patronage to reduce competition

Under the Sherman Antitrust Act, market allocation is punishable by

up to a $1 million fine and 10 years in prison

Agreement between real estate professionals to divide market and not compete with each other's business

Allocation of customers or markets

5 A qualified buyer makes a written offer on a property on March 6 by filling out and signing a purchase offer. Later that day, the seller accepts and signs the offer, keeping one copy. The broker gives a copy of the signed agreement to the buyer on March 8. The seller's deed is delivered on May 1. The deed is recorded on May 7, and the buyer takes possession on May 15. When is the broker's commission payable if this is a usual transaction?

May 1

The Counselors of Real Estate (CRE), Commercial Investment Real Estate Institute (CIREI), and Institute of Real Estate Management (IREM) are affiliated institutes of

National Association of REALTORS® (NAR)

A real estate broker's compensation is specified in the contract with the client.

True

Many states have modified the traditional terms broker and salesperson to stress that all licensees must be knowledgeable of and comply with the law. The person who performs licensed activities under the authority of a broker is frequently called

a junior broker

A real estate sales associate, classified by the IRS as an independent contractor, receives

a negotiated share of commissions on transactions

The services performed by a licensed real estate professional

can be customized to the needs of the client or customer