unit 8: real estate brokerage

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. Unlike an employee, an independent contractor pays for all expenses and Social Security and income taxes and receives no employee benefits. Most real estate sales associates are independent contractors, meeting the Internal Revenue Service definition for a qualified real estate agent.

false

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

boycott

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

false

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

The answer is conduct in compliance with statutory law and regulations. Brokers may dictate behavior as it complies to laws and regulations, but they may not dictate working schedules or attendance at sales meetings.

A broker would have the right to dictate which of the following to an independent contractor?

realtist code of ethics

established by the National Association of Real Estate Brokers

multiple listing service (MLS)

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. Most multiple listing services accept exclusive right-to-sell or exclusive agency listings from their member real estate professionals.

electronic contracting

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

The answer is an employee. Because her earnings were more than half in hourly wages, the IRS would not consider her to be an independent contractor within the definition of a qualified real estate agent, but would treat her as an employee of the broker.

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

disclaimers

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

Electronic Signatures in Global and National Commerce Act (E-sign)

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

NAR

has an established Code of Ethics that REALTORS must subscribe to

GRI

has completed the requirements of the REALTOR institute

The answer is yes, she may be charged with engaging in activities that require a real estate license. Ivy may face a complaint filed with the state real estate Commission, charging that she is engaging unlawfully in activities that require a real estate license.

Is there any problem with Ivy acting so generously on behalf of family and friends?

The answer is no, not charging does not prevent the real estate commission from investigating her conduct. The fact that Ivy volunteers to help others with their real estate purchases does not prevent the real estate Commission from investigating whether her conduct is a violation of the real estate law.

Does it make any difference that Ivy receives no compensation for helping family and friends?

employee

For tax purposes, 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.

false

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

social media

internet tools to facilitate the creation and sharing of information

standards of practice

practical applications of the articles of the REALTOR code of Ethics

tie-in arrangement

providing product or service to customer only if customer buys another product or service as well

true

real estate license laws are intended to protect the public

false

real estate license laws do not include disciplinary systems

Uniform Electronic Transactions Act (UETA)

sets basic rules for entering an enforceable contract using electronic means

electronic contracting

transactions conducted through email or fax

group boycott

two or more businesses conspiring against another business

spam

unsolicited junk email

The answer is yes, her conduct prior to being licensed could still be questioned. It is doubtful that Ivy could obtain a real estate license while being investigated by the real estate Commission for a possible violation of the real estate law. But even if she could obtain a real estate license, her conduct before obtaining the license could still be questioned.

If Ivy later obtains a real estate license, will she still have a problem?

true

Laws cannot guarantee an ethical or moral marketplace.

antitrust laws

Laws designed to preserve the free enterprise of the open marketplace by making illegal certain private conspiracies and combinations formed to minimize competition. Most violations of antitrust laws in the real estate business involve either price-fixing (real estate professionals conspiring to set fixed compensation rates) or allocat

The answer is the broker may, as a matter of office policy, legally set the minimum commission rate acceptable for the firm. Brokers have the right to set commissions within their own firm. This is not an antitrust violation. Sales associates who wish to continue with that broker can be required to comply

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? A)The broker may, as a matter of office policy, legally set the minimum commission rate acceptable for the firm. B)The broker must present the uniform commission policy to the local professional association for approval. C)A homeowner may sue the broker for violating the antitrust law's prohibition against price-fixing. D)The sales associates of the brokerage will not be bound by the requirement and may negotiate any commission rate they choose.

code of ethics

A written system of standards for ethical conduct.

true

ARELLO promotes state licensing standards

true

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

The answer is $6,621.25. Total commission to the firm: $234,500 × 6.5% = $15,242.50. The sales associate's commission is computed in three parts: (1) Use $2,500 of the $15,242.50 for a commission at 30% = $750. (2) Use another $5,000 of the $15,242.50 for commission at 40% = $2,000. So far, the sales associate has received commissions on $7,500: $2,500 + $5,000. The licensee now gets 50 percent commission on the $7,742.50 that is left: $15,242.50 - $7,500 = $7,742.50. (3) The commission on $7,742.50 at 50% = $3,871.25. Total of three parts of the sales associate's commission: $750 + $2,000 + $3,871.25 = $6,621.25.

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?

commission

Payment to a real estate professional for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.

ready, willing, and able buyer

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

Internet Data Exchange (IDX) policy

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

Uniform Electronic Transactions Act (UETA)

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

false

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

brokerage

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

procuring cause

The effort that brings about the desired result. Under an open listing, the real estate professional who is the procuring cause of the sale receives the commission.

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.

managing broker

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.

minimum level of services

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.

The answer is the Uniform Electronic Transactions Act. The Electronic Signatures in Global and National Commerce Act (E-Sign) applies to those states that have not adopted UETA, and some sections of the law also apply to those states that have adopted UETA.

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

The answer is the agreement does not violate antitrust laws. Because both sales associates are in the same firm, their agreement is not an intercompany agreement to allocate markets; it is merely fixing responsibility within one company and is quite proper and not subject to antitrust law.

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? A)The agreement does not violate antitrust laws. B)The agreement constitutes illegal price-fixing. C)The two sales associates have violated the Sherman Antitrust Act and are liable for treble damages. D)The two sales associates are guilty of a group boycott with regard to other sales associates in their firm.

The answer is the client must make an express or implied agreement to pay a commission to the broker. A broker's contract of employment by a client is the listing or buyer representation agreement signed by them both. A valid employment agreement is one of the usual requirements in a suit for a brokerage commission; it is proof of employment.

Which statement BEST explains this sentence: "To recover a commission for brokerage services, a broker must be employed by a client"? A)The broker must work in a real estate office. B)The client must make an express or implied agreement to pay a commission to the broker. C)The broker must have a sales associate employed in the office. D)The broker must express an interest in representing the client.

false

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

true

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

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

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

ethics

a system of moral principles, rules, and conduct

CRS

affiliate designation of NAR specializing in residential property

allocation of customers or markets

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

true

all 50 states regulate the activities of real estate professionals

internet data exchange

allows MLS members equal rights to display MLS data

price-fixing

is a practice in which competitors agree to set prices or other terms and conditions for products or services rather than letting competition in the open market establish those prices. In real estate, price-fixing occurs when competing brokers agree to set sales commissions, fees, or management rates. Price-fixing is illegal. Real estate brokers must independently determine commission rates or fees for their own firms only. These decisions must be based on a broker's business judgment and revenue requirements. 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.; setting commission rate among competitors for services

National Do Not Call Registry

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

REALTOR

member of the National Association of REALTORS

realtist

member of the National Association of Real Estate Brokers