Unit 2: Real Estate Brokerage

Antitrust Laws

Laws designed to preserve the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Violations generally involve group boycotting, price-fixing, or allocation of customers or markets. Subtle attempts to impose uniform commission rates are a violation. A broker may set the minimum rate acceptable for that broker's firm. The broker and client must agree on a rate BEFORE the agency relationship is established.

The extent to which the assistant can help the real estate broker or real estate salesperson with transactions is often determined by licensing laws.

True

The listing of only a salesperson's name without the sponsoring broker's name in an advertisement is prohibited.

True

The salesperson can carry out only those responsibilities assigned by the employing broker and can receive compensation only from that broker.

True

As a general agent of the broker, the salesperson has no authority to make contracts with or receive compensation from any other party.

True

When the sales or listing agreement specifies no time for the payment of the broker's commission, the commission is usually earned when

A completed sales contract has been executed by a ready, willing, and able buyer Contract has been accepted and executed by seller All parties possess copies of the contract

To be entitled to a sales commission, an individual must be

A licensed real estate broker The procuring cause of the sale Employed by the buyer or the seller under a valid contract.

Multiple Listing Service (MLS)

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

National Do Not Call Registry

A 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.

Tie-in agreements (also known as tying agreements)

Agreements to sell one product only on the condition that the buyer also purchases the product as well.

Personal Assistant

An individual who is employed to perform certain activities to assist real estate licensees in the course of their business. May be licensed or unlicensed; this status determines the scope of the activities that are permitted and whether the broker, associate broker or salesperson is the assistant's employer.

In turn, all of a salesperson's activities must be performed in the name of that broker.

True

Price-fixing

Brokers conspiring to set fixed compensation rates

Allocation of customers or markets

Brokers agreeing to limit their areas of trade or dealing to certain areas or properties

Group Boycotting

Brokers conspiring to avoid working with a competitor for the purpose of reducing competition.

Courts may prevent the real estate broker from receiving a commission if the real estate broker knew the buyer was unable to perform. If the transaction is not consummated, the broker may still be entitled to compensation if the seller

Change of mind and refuses to sell Spouse who refuses to sign the deed Title with uncorrected defects Committed fraud with respect to the transaction Unable to deliver possession within a reasonable time, Insisted on terms not in the listing (ex, the right to restrict the use of the property) Had a mutual agreement with the buyer to cancel the transaction.

Desk fee

Companies charge a monthly service charge to cover the cost of office space, technology, and other services used by the agent. Agents paying a desk fee may be 100% agents or on a split, depending on the office and plan chosen.

For a salesperson to be considered a statutory employee by IRS Code, the Internal Revenue Service requires that gross income must be based on production rather than on the number of hours worked.

False

Federal Trade Commission Act

Fills in loopholes of other laws and allows monetary relief, and permits investigations of such activities.

Ready, willing, and able buyer

One who is prepared to buy property on the seller's terms and is ready to take positive steps to consummate the transaction.

Commission

Payment to a broker for services rendered, usually a percentage of the selling price of the property. Maybe a flat fee, a fee for service, or an hourly rate. The amount of a broker's compensation is negotiable in every case. Most sales commissions are paid when the sale is consummated by delivery of the seller's deed.

Sherman Antitrust Law

Prohibits contracts or conspiracies that create monopolies. Offenses punishable by a maximum $100,000 fine and/or imprisonment up to three years for individuals; fines for corporations are higher. In a civil suit, a person who has suffered a loss because of the antitrust activities may recover triple the value of the actual damages plus attorney's fees and costs.

Clayton Act

Prohibits exclusive tie-in sales, price discriminations and mergers and acquisitions that unfairly restrain trade

The three federal laws form the basis of state antitrust laws

Sherman Antitrust Law Clayton Act Federal Trade Commission Act

Independent Contractor

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. Pays for all expenses, Social Security and income taxes and receives no employee benefits. Most real estate sales associates are independent contractors. Broker can control what the person does but not how.

Employee

Someone who works as a direct employee of an employer and has employee status. The employer is obligated to withhold income taxes and Social Security taxes from the compensation of employees. See also independent contractor.

Brokerage

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

Multiple listing organizations, REALTOR® associations, and other professional organizations may not set fees or commission splits. Nor can they deny membership to a broker based on the broker's compensation schedule.

True

The Antitrust Section in the Attorney General's office enforces the Pennsylvania Unfair Trade Practices and Consumer Protection

True

The broker is fully responsible for the actions performed in the course of the real estate business by all persons licensed under the broker.

True

A licensed assistant can set up and host open houses and assist in all aspects of a real estate transaction.

True

A salesperson is permitted to receive compensation only for those real estate activities done on behalf of the employing broker.

True

All electronic communication by a real estate licensee must include the licensee's name, office address, and broker affiliation.

True

Although brokerage firms vary widely in size, few brokers today perform their duties without the assistance of salespersons. Consequently, much of the business's success hinges on the broker-salesperson relationship.

True

The broker is liable for the acts of the salesperson within the scope of the employment agreement.

True

Although real estate brokers and salespersons may bring buyers and sellers together, and in most states may fill in preprinted blank purchase agreement forms, only an attorney may offer legal advice or prepare legal documents.

True

An assistant may perform duties that include clerical tasks, office management, telemarketing, market strategy development, and limited direct contact with consumers.

True

Procuring Cause

The effort that brings about the desired result. Under an open listing, the broker who is the procuring cause of the sale receives the commission. To be considered the procuring cause of a sale, the broker must have started or caused a chain of events that resulted in the sale. Such as conducting open houses, placing advertisements in the newspaper, and showing the house to the buyer. A broker who causes or completes such an action without a contract or without having been promised payment is then a volunteer and may not legally claim compensation.

The three requirements are needed to establish an independent contractor status

The individual must have a current real estate license. The licensee must have a written contract with the broker that specifies that the licensee will not be treated as an employee for federal tax purposes. At least 90% of the individual's income as a licensee must be based on sales production and not on the number of hours worked.

The broker's compensation is specified in the contract with the consumer.

True