Chapter 13: The Brokerage Business

Advertisement Regulations

advertising is an important tool to marketing properties and procuring buyers. It is, however, subject to regulation and restrictions. In general, state laws and regulations require that: - advertising must not be misleading - The broker is responsible for the concept of advertising done by agents - all advertising must reveal the identity of the broker; licensed brokers and agents may not use blind ads that conceal their identities. - Brokers selling their own property to the brokerage must disclose the brokerage identity Sales persons must include the brokers business identity in any advertising; they may not advertise in their own name solely (unless selling their own property through channels other than the agency)

Independent Brokerage

- A brokerage not affiliated with a franchise is an independent agency. Many independent agencies participate in networks on a local, regional, or national basis. - such networks expose the independent broker to a larger market without compromising individual identity.

Business Liabilities

- Business liabilities acquired in a corporate stock sale include short term debt, such as accounts payable, and long-term liabilities, such as mortgages and leases.

Buyer data

- buyer information is usually compiled and maintained, often in formally, by each agent in a brokerage. And agencies base of prospects who are looking for property at any given time is valuable for marketing new listings.

Employee/Broker Relationship

A broker has greater control over the actions of an employee. Specifically: --a broker can impose a sales methodology. In addition, a broker can enforce all office policies, including hours, meeting attendance, and telephone coverage. --a broker must withhold income taxes and pay unemployment compensation tax on behalf of an employee --an employee may receive the benefits enjoyed by the broker's non- selling employees

Accounting

A broker or agent who wants to undertake business brokerage needs basic proficiency in accounting. In particular, one must know how to read and interpret: - income, expenses, and profit on an income statement - assets, liabilities, and net worth on a balance sheet

Corporation for Profit

A corporation is a legal entity owned by stockholders. A corporation for profit consists of one or more persons authorized to conduct business for profit. - A board of directors elected by stockholders oversees the business. Officers (president, vice president, secretary, treasurer) and managers conduct day-to-day affairs. Other distinguishing characteristics are: PERPETUAL EXISTENCE - The corporation survives the death of any of the stockholders, directors, or officers LIABILITY - Shareholders of the corporation or only liable to the extent of the value of one's shares; officers and directors may be held personally liable for the cooperation's actions under the Sarbanes-Oxley Act of 2002 FORMATION - to incorporate, principal parties must complete and file articles of incorporation in accordance with state law; a corporation is domestic if it is headquartered in the state where the articles of incorporation were filed. TAXATION - owners are double taxed on business profits; corporate profits are taxed and after-tax dividends distributed to shareholders are taxed again as personal income

Joint Venture

A joint venture is a partnership form to complete a specific business endeavor, such as a real estate development. Individuals, general and limited partnerships, and corporations may participate. Informing the entity, the partners identify how they will conduct business and share profits. Principal parties in the joint venture share liability, but may not obligate the other co-ventures to agreements outside of the joint venture project. - A joint venture may broker real estate, provided the co-ventures are duly licensed.

Limited Partnership

A limited partnership consists of general partners and limited partners. General partners are wholly responsible for business operations, while limited partners are investors who participate only in business profits. The general partners typically receive compensation for their management responsibilities. LIMITED PARTNERS - A limited partner must make an investment, which subsequently comprises the extent of the partners liability GENERAL PARTNERS - bear sole liability for debts and obligations

Sole Proprietorship

A sole proprietorship is a business owned By a single individual. When the proprietor dies, the business terminates. So proprietorships must follow state licensing and registration laws to conduct business, such as fictitious name loss. Other distinguishing characteristics of sole proprietorships are: LIABILITY - soul proprietors are personally liable for their own debts and actions in those of employees while performing business Duties; proprietors may be sued personally TAXATION - Business profits are taxed once as the proprietors personal income

Commission Schedules

An agents commission schedule is a comprehensive summary of commission splits under various circumstances, including: - listing and selling side - sales person level of sales performance - broker's level of expense reimbursement to agent - The particular policies or organization of the agency - prevailing commission splits in the market

Agent's Scope of Authority

As an agent of a broker, a sales person may offer properties for sale or lease, procure buyers, negotiate transaction terms, and otherwise conduct the business of the brokerage. The agent, however, must act entirely on the brokers behalf. A sales person may not: - bind a client to any contract - receive compensation directly from a client - accept a listing or deposit that is not in the name of the broker

Collusion

Collusion is the illegal practice of two or more businesses joining forces or making joint decisions which have the effect of putting other businesses at a competitive disadvantage. Businesses may not collude to fix prices, allocate markets, create monopolies, or otherwise interfere with free market operations.

Commingling

Commingling is the act of mixing the brokers personal or business funds with escrow funds. A broader definition of commingling includes the failure to deposit earnest money into escrow in a timely manner. In most states, coming in funds constitutes grounds for license suspension or revocation.

Securities Registration

DISCLOSURE AND REGISTRATION - Real estate syndications are subject to strict disclosure requirements imposed by the securities and exchange commission. Disclosure is in the form of a prospectus for the investment program. A prospectus is a comprehensive summary of all facts relating to the investment. The prospect is also expressly warns investors that there are risks and uncertainties associated with the investment - certain syndications must be registered with the SEC. Full scale registration disclosures all aspects of the prospective program. EXEMPTIONS - certain SECO's allow for exemption from securities registration. Generally, there are two forms of exemption, the intrastate exemption, And the private offering exemption.

Sherman Antitrust Act

Enacted in 1890, the Sherman antitrust act prohibits restraint of interstate and foreign trade by conspiracy, monopolistic practices, and certain forms of business combinations, or mergers. The Sherman act empowers the federal government to proceed against anti-trust violators.

Goodwill

Goodwill is a business brokerage time with two meanings. In one sense, goodwill is an intangible asset consisting of any factor that an owner values in the business, apart from any other specific asset. - in the second sentence, which is more familiar to accountants, goodwill is the difference in value between an honest price and the value of all other business assets. - for example, goodwill might include reputation, a long history of success in a market, name recognition, a dominant market share, and an excellent business location.

Sales Agents Duties and Responsibilities

In accepting employment from a broker, a sales person generally makes a commitment to: - work diligently to sell the brokers listings - work diligently to procure new listings - promote the business reputation of the broker - abide by the brokers established policies - fulfill the fiduciary duties owed clients as their sub agent - maintain insurance policies as required by the broker - have transportation for conducting business, as required by the broker - conform to ethical standards imposed by broker and trade organization - uphold all covenants and provisions of the employment agreement

Independent Contractor/Broker Relationship

Independent contractor/Broker relationship. Generally, a broker has limited control over the actions of a contractor. Specifically: - A broker can require performance results, but is limited in demanding have a contractor performs the work. For example, a broker may not prescribe selling methods, meeting attendance, or office hours. - An IC is responsible for income and Social Security taxes; the broker does not withhold taxes - A broker cannot provide an IC with employee benefits such as health insurance or pension plans

Business Brokerage Regulation

LICENSING - A business broker generally must have an active real estate license. In addition, the broker may need to have a valid securities license since a transaction may entail the sale of securities.

Property data

Most brokerages maintain two categories of property data: available properties, and all properties in the market area. In residential brokerage, available property basically consist of the listings in the MLS and for sale by owner properties. Records for all properties in an area are accessible in tax records.

Marketing Steps

MARKETING PLAN - after the broker formalize the listing agreement, the sales agent initiate a marketing plan for the property. - an ideal marketing plan is a cohesive combination of promotional and selling activities directed at potential customers. The best combination is one that aims to have maximum impact on the marketplace in relation to the time and money expended. SELLING THE PROSPECT When marketing activities produce prospects, the agents marketing role becomes more interpersonal. An agent must now: - qualified prospects plans, preferences, and financial capabilities - show properties that meet the customers needs - elicit the buyers reactions to properties - Report material results to the seller or listing agent OBTAINING OFFERS - if a buyer is interested in purchasing a property, an agent obtains the buyers offer of transaction times, including price, down payment, desired closing date, and financing requirements. - an agent must be extremely careful at this point to abide by fiduciary obligations to the client, whoever That party maybe. Discussions of price are particularly delicate: Whether the client is buyer or seller, the agents duty is to uphold the clients best interests.

Market Allocation

Market allocation is the practice of colluding to restrict competitive activity in portions of a market in exchange for a reciprocal restriction from a competitor: " we won't compete against you here if you won't compete against us there."

Listing steps

PROSPECTING - any activity designed to generate listing prospects: parties who intend to sell or lease property and who have not yet committed to a broker - prospecting activities include mailing newsletters and flyers, selling directly and person to person, advertising, and selling indirectly be a community involvement. PRICING - almost always necessary for an agent seeking a listing to suggest a listing price or price range for the property. - it is important to make a careful estimate, because under pricing a property is not in the best interest of the seller, and overpricing often prevents a transaction altogether. - The "appraisal" section describes methods of estimating value. LISTING PRESENTATION - and agents opportunity to meet with a seller and present the merits of the agents marketing plan, personal expertise, and company strengths. - at the same time, an agent can explain the many phrases and details of a real estate transaction and point out how the provisions of the listing agreement and the agent principal relationship work to ensure a smooth transaction NEGOTIATING THE AGREEMENT - ultimately, the agents aim in a presentation meeting is to have the principal execute a listing agreement. - this result will set in motion the process of marketing the property. In practice, it may take an agent many meetings with a prospect before the prospect signs an agreement.

Price Fixing

Price-fixing is the practice of two or more brokers agreeing to charge certain commission rates or fees for their services, regardless of market conditions or competitors. In essence, such pricing avoids and disturbs the dynamics of a free, open market.

Securities Registration

STATE REGULATION - all states have securities licensing and registration laws in addition to federal law's. As a rule, these laws recognize FINRA licensing and self-regulation practices. However, real estate licensee's wishing to engage in syndications should be familiar with applicable securities laws in their state.

Smartphones

Smart phones facilitate the use, not only of email, texting, and social media, but also immediate Internet access, document review, photo and document sharing, data storage, and video conferencing. They offer, in fact, an almost complete mobile office.

Social Media

Social media websites allow rapid exchange of information, documents, photos, messages and data with a select group of contacts. They also represent another form of advertising and so are subject to real estate commission advertising regulations in most states.

CAN-SPAM Act

The CAN-SPAM Act (controlling the assault of non-solicited pornography and marketing act of 2003) supplements the telephone consumer protection act.

Clayton Antitrust Act

The Clayton antitrust act of 1914 reinforces and broadens the provisions of the Sherman act. Among it's prohibitions are certain exclusive contracts, predatory price cutting to illuminate competitors, and inter-related boards of directors and stockholdings between same industry corporations.

Telephone Consumer Protection Act

The TCPA (telephone consumer protection act) addresses the regulation of unsolicited telemarketing phone calls. Rules include the following: - telephone solicitors must identify themselves, on who's behalf they are call me, and how they can be contacted - telemarketers must comply with any do not call request made during the solicitation call - consumers can place their home and wireless phone numbers on the national do not call list which prohibits future solicitations from telemarketers.

Determining a Price

The value of the business is a function of the following: - past, present, and future net profits, and capitalized value of these - amount of risk and certainty associated with realizing future profits - value of all assets as reflected in the books of account - impact of goodwill on the value of the business - prices paid for similar businesses - all other risks associated with the business

Transaction Knowledge

There are generally two types of business sale transaction for a business broker to be aware of: the asset sale and the stock sale - in an asset sale, the purchaser takes possession of some or all of the assets of the business, as well as the real estate, in exchange for the sale price. The purchase usually does not include acquiring the existing business entity or its liabilities. An asset sale is preferred by buyers who want to buy only portions of a business, or to avoid liabilities inherent in a stock purchase.

Market data

Today's clients and customers expect a broker to know the market intimately. It is often the broker or agent with the best market knowledge who dominates the business in the market. - pricing and appreciation trends - demographic patterns and trends - financing rates and terms - construction trends - General economic trends

Income, Expenses, and Profit

- A business is profit is the revenue remaining from gross income after all expenses have been paid. A business broker must elevate and owners income and expenses in order to determine what the business may be worth to a buyer. This often involves interpreting which income and expense items will change after the business is sold

Business Trust and Real Estate Investment Trust

- A business trust is a group of investors who invest in a pooled trust fund managed by the elected trustee. The trustee purchases investment assets and distributes profits and gains to the trustors. A business trust that invest primarily in real estate and meets certain other requirements is a real estate investment trust (REIT) and receives special tax treatment. - A business trust may not broker real estate, but it may buy and sell its own real estate assets

Cooperative Association

- A cooperative Association is a non-prophet, tax exempt alliance of individuals or companies formed to promote common goods or services. - A cooperative association may not broker real estate.

Franchise

- A franchise brokerage is an independently-owned company that enters into a licensing arrangement with a franchisor to participate in various benefits offered in exchange for compensation. Franchisors generally offer local franchisees: - The use of a recognized trade name - National and regional advertising - training programs - standardized operating procedures - A national referral system

General Partnership

- A general partnership is a for profit business consisting of two or more call owners who have agreed to share business profits. Unlike a corporation, the general partnership is not a distinct, legal entity, although a corporation may be a partner in a general partnership. FORMATION - The partnership is formed by a written or formal partnership agreement with or without a financial investment by either partner DISSOLUTION - The partnership may be terminated through mutual agreement, withdrawal or death of a partner, or by legal action LIABILITY - all partners bear full liability for debts and obligations jointly and severally TAXATION - Partners are taxed once on their respective partnership profits; partnerships do not have double taxation.

Non-Profit Organization

- A non-profit organization is a corporate entity which is not legally entitled to generate profit. A board of directors and officers manage operations. Non-profit organizations are not subject to taxation.

Syndicating Real Estate

- A real estate syndication is a form of investment in which two or more investors contribute capital to a pool for the purpose of acquiring, managing, and selling an investment property for a profit. - there are two groups of parties in a syndication: the syndicator and the investors. This indicator is the organizer and usually the party who provides the expertise to undertake the acquisition, management, and sale of the property. The investors role is to provide funds. Investors in a syndication have little or no role in managing the investment.

Commission Splits

- A sales agent irons compensation for procuring listings and for procuring buyers or tenants, whenever a transaction results. In the jargon of brokerage, these are the two "Sides" to a commission: the listing side and the selling side. - an agent who procurers a listing receives a share of the brokers listing side commission, according to the agents commission schedule. - an agent who sells a listing, find the customer, receives a share of the brokers selling side of the commission, according to the commission schedule.

Sales persons employment Status

- A sales agent may be an independent contractor (IC) or an employee. In either case, the broker is responsible and liable for the sales agents actions. - brokers are subject to guidelines of the U.S. equal employment opportunity commission (EEOC), a federal agency that enforces laws against workplace discrimination.

Policy Manual

- A well-managed brokerage relies on a written policy manual to keep the business running smoothly and professionally. - A policy manual sets forth company rules, regulations, and policies.

Agent Compensation

- An agent employee of a broker may receive wages, salaries, additional commissions, expense reimbursements, and benefit plans. And independent contractors compensation is normally a combination of commissions and free office support. - most sales agents work as independent contractors who earn a commission.

Business Brokerage

- Business brokerage is affecting a sale or exchange of an existing business. In most cases, the sale of a business entails The simultaneous transfer of an estate in land, whether a leasehold or a fee. Thus to sell businesses, a broker must generally hold a real estate license. - The process of business brokerage is similar to real estate brokerage: a broker secures a listing, procures a purchaser, and facilitates the closing. - in some states, business brokerage is classified into opportunity brokerage and enterprise brokerage in accordance with the size of the business being sold. - opportunity brokerage concerns a small business, usually a proprietorship or partnership, where the transaction consist of a sale of assets and an assignment of a lease. - Enterprise brokerage concerns a larger company, usually a corporation, where the transaction involves the sale of stock and multiple real estate parcels leased or owned by the seller.

Buyer- and seller-oriented brokerages

- Companies sometimes specialized even further by choosing to represent only one side in a transaction. Thus a brokerage May represent only commercial tenants, or only residential buyers, or some other Limited type of client.

Tie-in Agreements

- In a tie in agreement, the sale of one product or performance of a service is tied to the sale of another, less desirable product or service. For instants, "I will sell you this car, but you have to hire my brother-in-law to drive it." Or, more likely, "I will list and sell your old home if you hire me to find you a new home to purchase." Tie-ins restrict competition and limit the freedom of the consumer. - violations of fair trade and anti-trust laws may be treated as felonies, and penalties can be substantial. Loss of one's license is also at stake. Brokers are well advised to understand and recognize these laws.

Operating a Real Estate Brokerage

- Listings are the traditional sauce have a brokers income. By obtaining a listing, a broker obtaining a share of the commission generated whenever a cooperating broker finds a buyer. It is not so certain that working with a buyer will provide income. - in the absence of an exclusive buyer representation agreement, a buyer may move from one agent to another without making any commitment. Agents can spend considerable time with a buyer and earn nothing. Hence the special value of a listing: it is likely to generate revenue.

Commercial and Residential Brokerage

- Mini brokerages deal primarily with limited types of property: residential, commercial, industrial, undeveloped land, etc. In practice, most residential companies conduct a small amount of commercial brokerage, while commercial brokerage is tend to deal strictly with retail, office, industrial, or land properties. - A large company may handle all types of properties but will probably have a separate organizational division for each property type.

Trade Organizations

- Numerous trade organizations serve the real estate brokerage industry and all of its areas of specialization. The largest is the national Association of realtors (NAR). NAR Is compromised of a national headquarters, a state association in each state, and within each state, local realtor boards. - One should note that the term realtor is a protected trade name of NAR. Only members of the organization may use the term to refer to themselves. - more specifically, there are two identities within NAR: Realtor, and Realtor-Associate.

Agents Scope of Authority

- State real estate license laws provide for two distinct licenses to conduct real estate brokerage: the broker license and the sales person or sales agent license. - A licensed real estate broker is duly authorized to represent clients directly in brokering real estate. A sales agent, on the other hand, is only authorized to represent a broker and carry out such duties as the broker may legitimately delegate. In other words, a sales agent does not directly represent the client in a transaction but is rather the agent of the broker and sub agent of the client. A sales agent is therefore a fiduciary of the employing broker.

Managing Information

- The ability to satisfy the needs of clients and customers is largely dependent on a brokers ability to obtain, organize, and manage information. - information is a cornerstone of the brokers perceived value in the marketplace and a major reason why buyers and sellers seek a broker out.

Bulk Sales Act

- The bulk sales act protects creditors against loss of collateral in an indebted business through the undisclosed sale of the businesses inventory. If a business sales over half of its inventory to a buyer, the act declares that the sale is a bulk sale, and, as such, is potentially an asset sale. - Since a creditor could lose security in such a sale, the seller must disclose the names of creditors to the buyer in a bulk sales affidavit. The buyer must notify the creditors of sale, who made them take appropriate action to secure their loans.

Function and Organization

- The core activity of real estate brokerage is the business of procuring a buyer, seller, tenant, or property on behalf of a client for the purpose of completing a transaction. If successful, the broker receives a commission according to the provisions of a listing agreement. - A brokers compensation for effecting a transaction is usually a negotiated percentage of the purchase price.

Business Brokerage VS Real Property Brokerage

- The critical difference between selling a business and selling real estate is that selling a business includes the transfer of business income, personal property assets, and, possibly, liabilities, in addition to real property. To be competent in this brokerage specialty, a business broker must have specialized skills concerning transactions, accounting, and pricing. - A business broker must also rely on a professional team to complete the transaction. Members of this team would include the clients legal counsel, accountant, and, preferably, a professional appraiser.

Brokerage Vs. Trading

- The distinction between brokerage and trading for one's own account is important for determining whether one must be licensed to perform the real estate activity and question. To be considered brokerage, and agents activity bus generally be conducted on behalf of a person or business entity other than the agent. - buying, selling, and leasing real estate for one's own account or from one's company are generally not considered brokerage.

Securities Licensing

- The federal securities act of 1933 defined precipitation in a limited partnership as a security, since investors expect to make a profit from a common enterprise without direct control over the marketing and managing of the investment. - since the sale of shares in a syndication represents a sale of securities, syndicators and real estate brokers must comply with federal and state securities licensing and registration laws. The primary federal law outlining securities registration and licensing is the federal securities exchange act of 1934, which requires that any person selling securities must be registered, or licensed, with the securities and exchange commission (SEC). - the Maloney Act of 1938 revised the requirement that securities sellers register with the SEC. Instead, it authorized self regulation of the securities industry through any national Association which would itself register with the SPC. This precipitated the formation of the only such association ever to register with the SEC: the national Association of securities dealers, or NASD. NASD later merged with the regulation committee of the New York Stock Exchange to form the financial industry regulatory agency (FINRA) .

Brokers Responsibilities

- The listing broker has the primary responsibility for handling deposit monies and for overseeing the agents pre-closing activities. State license laws required that earnest money deposit be placed in an account which is separate from the brokers operating accounts. - they also require the broker to keep accurate records and follow accepted accounting procedures. These precautions protect the buyer and seller and safeguard the deposited funds. A broker must be careful to avoid two common violations of escrow regulations: commingling and conversation.

Listing Procedures

- The marketing and self promotional efforts of agents generate listings. New agents usually focus on becoming well known in a small geographical area and hope to encounter clients there who are willing to list with them. More experienced and better known agents are able to rely to a greater extent on referrals in obtaining listings. - New or experienced, an agent needs certain skills at each step in the process of obtaining a listing.

Transaction Documents

- The most common transaction documents in business brokerage or a sale contract, and assignment for real estate sale contract, a no compete agreement, and a consulting agreement. - I sale contract sets forth all times and conditions of the agreement, including exactly what is being sold. - an assignment or real estate sale assignment is an agreement for transferring any and all real property involved in the transaction. - A no compete agreement is a sellers covenant, for compensation, not to compete with the buyer under prescribe conditions and time periods. - A consulting agreement is an employment agreement that hires the seller to assist the buyer in taking over business operations.

Determining a Price

- The most difficult task for a business broker is often finding the proper price range for a business. An owner of a smaller business has probably built the business from scratch and tends to overvalue it. - such an owner may have incomplete and disorganized accounting records, making the valuation of assets quite difficult. - Finally, a business is true income may be different for one owner then it would be for another because of variations in management style and ability.

The Broker-Salesperson Relationship

- only a broker with an active brokers license can hire and employ a licensed sales person - A licensed sales person may work only for the employing broker and may not work for or receive direct compensation from any other broker.

Communications & Technology MLS and Websites

- The posting and sharing of property listings and data among broker websites, farm websites, and multiple listing services (MLS) is one of the most effective marketing tools available to today's licensees. Broker cooperation assures sellers of maximum exposure for their properties, just as it assures buyers of seeing the widest possible range of listed properties. - to ensure their use of MLS facilities, the national Association of realtors has developed an Internet data exchange (IDX) policy that enables MLS members to display and use MLS data while respecting the rights of property owners and brokers to market their properties however they want.

Multiple Listing Service (MLS)

- The second prevalent form of broker cooperation is the multiple listing service, or MLS. A multiple-listing service is an organization of brokers who have agreed to cooperate with member brokers in marketing listings. - members of the service also agree to enter all exclusive listings into the listing distribution network so that every member is promptly informed of new listings as they come on the market.

Uniform Commercial Code (UCC)

- The uniform commercial code regulates the sale of personal property on a state-by-state basis, and forms the basis for standardized sale documents. Standard documents include promissory notes, security agreements, and bills of sale.

Who May Legally Broker Real Estate?

- all 50 states (and Canada) impose legal licensing requirements on any person or business entity desiring to broker real estate. To obtain a brokers license, an applicant must complete required education, meet experience requirements as a sales person, and pass a state examination. - there may be additional requirements concerning age, criminal record, and professional background.

Agents Responsibilities

- as dictated by custom and the circumstances of a transaction, an agent has a range of duties and responsibilities during the pre-closing period. - and agents foremost duty acceptance of an offer is to submit the contract and the earnest money to the employee broker without delay. Most states impose deadlines for this requirement, usually within 24 hours from the agents receipt of the deposit. - assisting the buyer in obtaining financing - assisting the seller in clearing title - assisting the seller in completing property repairs - recommending inspectors, appraisers, attorneys, and title companies - assisting in communications between principles - assisting in the exchange of transaction documents

Pre-Closing Activities

- between the execution of the sale contract and the closing of the transaction, the property is "under contract" or "contract pending." During this period, buyer and seller have certain things to do to achieve a successful closing. The buyer often needs to arrange financing and dispose of other property; The seller may need to clear up title encumbrances and make certain property repairs. The sale contract should specify all such required tasks. - The time period between contracting and closing is referred to as the contingency period, Or pre-closing period.

Anti-Trust Laws

- brokerage companies, like other businesses, or subject to anti-trust laws designed to prevent monopolies and unfair trade practices.

Transaction-Specialized Brokerages

- brokerages often organized around a particular type of transaction. Thus, there are companies that specialize in apartment rentals, office rentals, exchanges, business brokerage, and, most commonly, residential sales.

Real Estate Assistance or Personal Assistant

- brokers and sales persons may hire licensed or unlicensed employees to assist them with a variety of tasks. Unlicensed assistance may perform clerical or ministerial X, but nothing requiring a license. Licensed assistance may perform task requiring a license. Unlicensed assistance usually may be compensated directly by the sales associate they work for, but license assistance may be compensated by the employing broker and are subject to that brokers supervision.

E-mail and Texting

- frequent and virtually instantaneous contact between real estate practitioners and consumers as possible via email and texting. As both of these forms of communication fall under the category of advertising, practitioners need to carefully observe the states advertising regulations. In a brief, be truthful, direct, and concise. Provide the information required by law, and do not violate prohibitions against unsolicited emails and messages.

Types of Brokerage Organization

- in addition to being organized as a sole proprietorship, partnership, Corporation or a joint venture, a brokerage may be: - independent or affiliated - specialized in a type of property - specialized in a type of transaction - specialized in a type of client These variations in brokerage organization are usually a response to competitive conditions in the local real estate market.

Brokers Obligations to the Sales Agent

- in employing a sales person, a broker generally makes a commitment to: - make the brokerages listings available - make the brokerages market and property data available - provide whatever training was promised at the time of hiring - provide whatever office support was promised at the time of hiring - uphold the commission structure and expense reimbursement policy - conform to ethical standards imposed by the brokers trade organization - uphold all covenants and provisions of the employment agreement

Broker Cooperation

- in most cases, transactions require the assistance of a cooperating broker from another brokerage company acting as a sub agent. Most listing agreements provide a brokerage cooperation in the multiple listing clause. A transaction involving a cooperating sub agent is called co-brokerage. In a Co-brokered transaction, the listing broker split the commission with the "co-broker," typically on a 50-50 basis. - A broker may cooperate with other brokers on either side of a transaction, either assisting a listing agent to locate a buyer or tenant, or assisting a buyer or tenant representative in locating a seller or landlord.

Tenant data

- in residential and commercial leasing companies, information is compiled and maintained on all tenants in an area, by property type used. Such files contain a tenants lease expiration, property size, and rent.

Client data

- it is important to keep track of both current and former clients. Former clients are likely prospects to become clients again or customers. They are also a source of referrals. Current clients, of course, should be the brokers primary concern.

Range of Business Entities

- some business entities may legally broker real estate, and others may not. The principal types of business Organization and the legal restrictions on their ability to broker real estate are described in the following slides. - note that all business entities may own, buy, and sell their own real estate in varying degrees without violating license laws.

Conversion

Conversion is the act of misappropriating escrow funds for the brokers business or personal use. More serious than mere commingling, conversion is effectively an act of theft: using monies which do not belong to the broker. Conversion carries serious consequences, including license revocation.

Anti-Competitive Behavior

The effect of antitrust legislation is to prohibit trade practice and trade restraints that unfairly disadvantage open competition. Business practices and behaviors which violate anti-trust laws include collusion, Price-fixing, market allocation, bid rigging, restricting market entry, exclusive dealing, and predatory pricing.

Critical Brokerage Skills

To generate business, as well as achieve the transactional objectives of clients, a broker must be proficient in for skill areas: - obtaining a client listing - marketing a listing - facilitating the closing of a transaction - managing market information - A client hires a broker by executing a listing agreement. Once hired, the broker or agent implements a marketing plan to procure the other principal party for the transaction. The broker then plays an important role in pre-closing activities to ensure successful closing of the transaction. - to serve clients and locate customers, a broker must become expert in local real estate market conditions. A fundamental part of maintaining market expertise is organizing and managing an information system.

Brokerage vs. Advisory Services

technically, brokerage is distinct from the practice of rendering real estate advisory services. A licensed broker acting as a consultant for a fee usually is not working to effect a particular transaction. Since the objective is not purely transaction oriented, the activity is not really brokerage. Examples of advisory services include: - providing an estimate of value - performing market analysis - managing property