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
