Unit 9: Real Estate Brokerage

penalty for fixing prices or allocating markets is a maximum

$1 million fine and 10 years in prison

Other services can be directed toward buyers. For example, a real estate professional may offer a buyer the following services, as permitted by state law:

-Working out the economics of renting versus owning -Helping a buyer with a mortgage preapproval -Consulting on a buyer's desired location -Visiting properties with a buyer and checking property information -Helping fill in the blanks of an offer to purchase -Assisting with negotiations -Being available to assist with the closing of the transaction

most common antitrust violations are

-price fixing -group boycott -allocation of customers or markets -tie-in agreements

Sets forth rules for entering into an enforceable contract using electronic means.

Uniform Electronic Transactions Act (UETA)

Policy that allows all multiple listing service (MLS) members to restrict internet access to MLS property listings.

Internet Data Exchange (IDX) Policy

in real estate tie in agreements can occur if

a broker will agree to list a seller's home for sale only if the seller agrees to be represented by the broker in the purchase of a new home.

compensation can be in the form of

a commission or brokers fee, flat fee or an hourly rate

n real estate, price-fixing occurs when

competing brokers agree to set sales commissions, fees, or management rates

IDX policy allows all mls memebers to have

equal rights to display MLS data, while also respecting the rights of the property owner and the real estate broker who represents the property owner to market a property as they wish

the amount of a brokers commission is

negotiable in every case

one who is prepared to buy on the seller's terms and is ready to take positive steps toward consummation of the transaction

ready, willing and able buyer

all 50 states regulate the activites of

real estate professionals

a commission may be shared by many people like:

- the broker and sales associate working for the seller -as well as the broker and sales associate working for the buyer

Once a seller accepts an offer from a ready, willing, and able buyer, the real estate broker is entitled

a commission

100% commission plan in which each sales associate pays

a monthly service charge to the broker to cover the cost of office space, telephone and supervision in return for keeping 100% commissions from the sales

The agency relationship also makes the broker liable for the acts of

a sales associate that fall within the scope of the employment agreement.

the real estate license law will always make the broker liable for

acts of the sales associate performed in the course of business

a broker may be an

agent or a client

a real estate broker is liensed to

buy, sell, exchange, or lease real property for others and to charge a fee for those services

most sales commissions are payable when the sale is

cosummated by delivery and acceptance of the sellers deed

learning objectives

describe the fundamentals of real estate brokerage and licensing laws; -describe the purpose and basic elements of antitrust laws including price fixing, boycotts, and allocation of markets; and -explain how real estate professionals should use technology in real estate practice to comply with laws and ethical standards.

A blanket opt-out provision provides that those MLS participants interested in keeping their listings from competitors' websites cannot then

display other real estate brokers' listings

A process of integrating information electronically in a real estate transaction between clients, lender, and title and closing agents.

electronic contracting

many real estate profesionals use what to things to collect commission

hourly rate or flat fee

price fixing is

illegal

a group boycott is

illegal under antitrust laws

a brokers compensation is specified in what

in the contract with the client

the employer is obligateed to withhold

income taxes, and social security taxes

Someone who is retained to perform a certain act but who is subject to the control and direction of another only as to the end result and not as to the way in which the act is performed.

independent contractor

sales associate can never be an

independent contractor for purposes of the licensing law.

a sales associates compsenation is

not determined by the cliet

Real estate professionals conspiring to set fixed compensation rates.

price fixing

real estate license laws are intended to

protect the public

provides specific penalties for a number of illegal business activities

the Sherman Antitrust Act

Real estate brokers must independently determine commission rates or fees fo

their own firms only

individual who has suffered a loss because of an antitrust violation may sue for

treble damages—three times the actual damages sustained---the injured party may recover the cost of the suit, which includes reasonable attorney fees.

true or false: laws cannot guarantee an ethica or moral marketplace?

true

group boycott occurs when

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

the employer is required to pay

unemployment compenstation taxes on wages paid to one or more employees

license laws main objective

was to make sure that the rights of purchasers, sellers, tenants and owners are protected from unscrupulous or negligent practices

do Real estate license laws include disciplinary systems

yes

do sate licensings rules and regulations have the same force and effects as statutory law?

yes

The the real estate professional who is responsible for supervision of the real estate professionals who act on behalf of the brokerage; may also be called a supervising broker.

Managing broker

the following three requirements must be met for a sales associate to establish a nonemployee status with the employing broker for tax purposes:

-The individual must have a current real estate license. -The individual must have a written contract with the broker that specifies that the individual will not be treated as an employee for federal tax purposes. -A substantial portion of the individual's income as a real estate professional must be based on sales production or other output and not on the number of hours worked.

most violations of antitrust laws in real estate involve

either price-fixing (real estate professionals conspiring to set fixed compensation rates) or allocation of customers or markets (real estate professionals agreeing to limit their areas of trade or dealing to certain areas or properties).

For tax purposes, someone who works as a direct employee of an employer and has

employee status

The broker for whom the salesperson works is called

employing broker

Real estate brokers who opt out of displaying their listings on competitors' websites can, at the direction of a seller, make an

exception and display the seller's property on the MLS website.

do-not-call legisation is found at

federal and state levels

can create marketing opportunities for specific services, such as preparing a property for sale, but can also lead to recognition by the consumer of the value of the real estate professionsals knowledfe and expertise

fee-for-servic

Allocations may be made on

geographic basis, with real estate brokers agreeing to specific territories within which they will operate exclusively

To be considered the procuring cause of a sale, the broker must

have started or caused an uninterrupted chain of events that resulted in the sale

what two federal acts govern electronic contracting?

he Uniform Electronic Transactions Act (UETA) and the Electronic Signatures in Global and National Commerce Act (E-Sign).

employees might receive benefirs such as

health insuranc, profit-sharing plans, and workers compensation

The services that real estate professionals must provide to clients, as prescribed differently by certain states; for example, assisting clients in negotiation and answering questions from clients about offers, counteroffers, and contingencies.

minimum level of services

antitrust laws prohibit

monopolies and any contracts, combinations, and conspiracies among competitors that unreasonably restrain trade—that is, behaviors that interfere with the free flow of goods and services in a competitive marketplace

The amount of compensation a sales associate receives is set by

mutual agreement between the broker and the sales associate

State law may require that all communications by real estate professionals include their

name, address, license number, and (for a sales associate) the name of the employing broker.

can a sales associate catty out all the same activities as a real estate broker?

nope

No matter how the sales associate's compensation is structured, as a rule only the employing real estate broker can

pay it

the method and amount of the compensation received by the sales associate also does not affect the brokers

responsibility for the conduct of the sales associate

tie-in agreements (also known as tying agreements) are agreements to

sell one product only if the buyer purchases another product as well.

rade groups, such as associations of REALTORS®, multiple listing services, and other professional organizations, may neither

set fees or commission splits, nor deny membership to a real estate broker based on the fees that the broker charges

Group boycotting, allocation of customers or markets, and tie-in agreements are all prohibited acts under

sherman antitrust act

ARELLO promotes

state licensing standards

In communicating with clients or consumers via email, the best practice is to use

subject line in a useful and helpful manner, avoid spelling errors, respond promptly to all email messages, be specific and brief, and pay attention to the size of any file attachments. Never send unsolicited email messages.

the real estate license law ususally will require that there be a writtten agreement to establish

the compenstation to be paid

National do not call registry is managed by

the federal trade commission

A court may prevent the real estate broker from receiving a commission if

the real estate broker knew the buyer was unable to perform

if a state licensing authoritys regularions conflict with staturory law what will happen?

the regulations will not prevail

A commission is considered earned when

the work for which the real estate broker was hired has been accomplished

could a real estate assistant be required to have a license

yest

you can not legally claim compensation for a procuring cause unless

you have an contract

a real estate brokers compensation is specified in

the contract with the client

internet advertising laws and regulations frequently include the following stipulations:

All electronic communication by a real estate professional must include the professional's name, office address, and broker affiliation. Real estate professionals must disclose their license status on each page of a website that contains an advertisement. The listing of only a sales associate's name without the sponsoring broker's name in an advertisement is prohibited. An advertisement must be a true, current representation of the information it contains and not be misleading.

A statement indicating no legal responsibility for information; no warranties or representations have been made.

Diclaimer

An act that makes contracts (including signatures) and records legally enforceable regardless of the medium in which they are created.

Electronic Signatures In Global And National Commerce Act (E-Sign)

UETA's four key provisions are the following:

-A contract cannot be denied its legal effect just because an electronic record was used. -A record or signature cannot be denied its legal effect just because it is in an electronic format. -If a state's law requires a signature on a contract, an electronic signature is sufficient. -If a state's law requires a written record, an electronic record is sufficient.

For example, a real estate professional may want to offer a seller the following services, as permitted by state law:

-Helping the seller prepare the property for sale -Performing a comparative market analysis (CMA) to assist the seller in pricing the property -Assisting with marketing the property using the MLS and websites -Locating and screening a buyer -Helping fill in the blanks of a sales agreement -Assisting with negotiations -Being available to assist with the closing of the transaction

To be entitled to receive compensation from a real estate sales transaction, an individual must be

-a licensed real estate broker, -employed by the buyer or seller under a valid contract, and -the procuring cause of the sale

procuring cause may include activities such as

-conducting an open house -placing an advertisement in the local real estate advertising magazine -making the property listing available on the internet -showing the house to the buyer

a standard of competence and professionalism in the real estate industry were achieved by:

-establishing basic requirements for obtaining a real estate license and, in most cases, requiring continuing education to keep a license; -defining which activities require licensing; -describing the acceptable standards of conduct and practice for licensees; and -enforcing those standards through a disciplinary system.

. If the transaction is not consummated, the real estate broker may still be entitled to a commission if the seller

-has a change of mind and refuses to sell -has a spouse who refuses to sign the deed -has a title with uncorrected defects -committed fraud with respect to the transaction -is unable to deliver possession within a reasonable time, insists on terms not in the listing (e.g., the right to restrict the use of the property), or -has a mutual agreement with the buyer to cancel the transaction.-

A marketing organization composed of member real estate professionals who agree to share their listing agreements with one another in the hope of procuring ready, willing, and able buyers for their properties more quickly than they could on their own.

Multiple Listing Service (MLS)

national registry, managed by the Federal Trade Commission, which lists the phone numbers of consumers who have indicated their preference to limit the telemarketing calls they receive.

National do not call registry

Real estate license laws protect the public by ensuring

a standard of competence and professionalism in the real estate industry

Allocation of customers or markets involves an

agreement between real estate brokers to divide their markets and refrain from competing for each other's business

unlike an employee an independednt contractor pays for

all expenses and social seecurtiy and income taxes while receving no employee benefits

The managing broker cannot delegate office supervision of sales associates to

an unlicensed person

Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition.

antitrust laws

A broker may discuss commissions and fees with real estate professionals who are affiliated with the same brokerage but must not discuss compensation issues with

anyone from another real estate firm

penalty for fixing prices or allocating markets for corporations is

as high as 100 million

graduated commision spilts

based on a sales associate's achieving specified production goals. For instance, a broker might agree to split commissions 50/50 up to a $25,000 sales associate's share, 60/40 for shares from $25,000 to $30,000, and so on. Commission splits could go up to 80/20 or 90/10, particularly for high producers.

When individuals or businesses withhold their patronage to a business as a protest or to reduce competition.

boycott

limited-service listing agreements

broker may offer no services other than that of listing a property in the MLS. When sellers enter into this kind of agreement, they are essentially representing themselves, accepting communications from prospective buyers, showing the property, and perhaps hiring an attorney to assist with completing a transaction

The bringing together of parties interested in making a real estate transaction.

brokerage

a real estate broker is licensed to

buy sell, excahgne, or lease real property for others and to charge a fee for those services

licensing authority has the power to

issue licenses, make real estate information available to licensees and the public, and enforce the statutory real estate law.

As an agent of the broker, the sales associate has no authority to

make contracts with or receive compensation from any other party

The sales associate must always be supervised by a

managing broker