MRE_Unit9
The Uniform Electronic Transactions Act encourages the use of A) electronic signatures. B) all of these. C) virtual brokerages. D) licensed assistants.
A) The answer is electronic signatures. This makes making routine paperwork more efficient.
Administrative regulations that administer real estate license laws A) have the same force and effect as statutory law. B) can be modified, if necessary, to insure compliance by large real estate firms. C) can only be changed by the legislature. D) are optional for licensees, though their adherence is always recommended.
A) The answer is have the same force and effect as statutory law. Administrative regulations are created to enforce statutory law and must be complied with by all licensees. They are created by the licensing authority and can be changed by the licensing authority.
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.
Illegal Business Activities: Two or more businesses conspiring against another business
Group boycott
Internet Data Exchange (IDX) policy
Policy that allows all multiple listing service (MLS) members to restrict internet access to MLS property listings. Allows all MLS members 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.
Illegal Business Activities: Setting commission rate among competitors for services
Price-fixing
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. 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
real estate assistant (personal assistant or professional assistant)
combination office manager, marketer, organizer, and facilitator who has a fundamental understanding of the real estate industry. Often works for a specific sales associate. Might be required to have a real estate license, depending on the tasks performed. Extend of assistance to the real estate broker or sales associate with transactions is determined by the state licensing law and regulations. Both the sales associate and licensed personal assistant are under the supervision of the employing broker. Can incur liability under the state licensing law, especially if that person conducts activities that require a real estate license. Tasks: - An unlicensed assistant generally may perform duties that include clerical tasks, office management, website development and maintenance, and production of marketing pieces, but with little direct contact with consumers. Working for a sales associate can be paid by the sales associate. - A licensed assistant, on the other hand, can also set up and host open houses and assist in all aspects of a real estate transaction, including day-to-day contact with consumers. Wworking for a sales associate must be paid by the employing broker. - OR depending on state laws/requirements
Understanding Brokerage: A form of compensation computed as a percentage of the total sales price of a property
commission
Understanding Brokerage: An analysis performed to assist a seller in pricing a property
comparative market analysis (CMA)
Broker
employing broker. Fully responsible for the actions performed in the course of the real estate business by all persons licensed under 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.
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.
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. The registry does not limit calls by political organizations, charities, collection agencies, or telephone surveyors.The law does apply to a for-profit telemarketer, even if the telemarketer is working for a nonprofit organization. May only contact per an established business relationship for up to 18 months after the consumer's last transaction even if on registry.
electronic contracting
A process of integrating information electronically in a real estate transaction between clients, lender, and title and closing agents.
A real estate sales associate, classified by the IRS as an independent contractor, receives A) a negotiated share of commissions on transactions. B) company-provided health insurance. C) a monthly salary or hourly wage. D) a company-provided automobile.
A) The answer is a negotiated share of commissions on transactions. An independent contractor may not receive any employee benefits and must not be treated as an employee for federal tax purposes. An independent contractor may negotiate with the broker for commissions on transactions.
An independent contractor and a broker can agree upon which of the following? A) Compensation the contractor would receive B) Number of hours the contractor would have to work C) Sales meetings the contractor would need to attend D) Work schedule the contractor would have to follow
A) The answer is compensation the contractor would receive. Brokers may agree upon the compensation that their independent contractors will receive for work not yet done, but they may not dictate working schedules or attendance at sales meetings.
Real estate license laws exist primarily to protect A) consumers. B) licensees from unlicensed individuals. C) real estate firms. D) government agencies.
A) The answer is consumers. The main objective of real estate license laws is to make sure that the rights of purchasers, sellers, tenants, and owners are protected from unscrupulous or negligent practices.
The primary reason real estate license laws exist is to protect A) consumers. B) real estate firms. C) licensees from unlicensed individuals. D) government agencies.
A) The answer is consumers. The main objective of real estate license laws is to make sure that the rights of purchasers, sellers, tenants, and owners are protected from unscrupulous or negligent practices.
When using email to communicate with clients, real estate professionals should A) do all of these. B) use a subject line that indicates what the message is about. C) perform a spelling check before sending. D) respond in a timely manner to customer and client messages.
A) The answer is do all of these. In communicating with clients or consumers via email, best practices include using the subject line in a useful and helpful manner, avoiding spelling errors, responding promptly to all email messages, being specific and brief, and paying attention to the size of any file attachments. Real estate professionals should never send unsolicited email messages.
price-fixing
Antitrust Laws - ILLEGAL. An illegal agreement between competitors to set prices. 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.
A broker was accused of violating antitrust laws. Of the following, the broker was MOST likely accused of A) undisclosed dual agency. B) price-fixing. C) not having an equal housing opportunity sign in the office window. D) dealing in unlicensed exchange services.
B) The answer is price-fixing. Antitrust laws prohibit group boycotting, allocation of customers and markets, tie-in agreements, and price-fixing. Price-fixing is when competing brokers set a standard commission rate.
Antitrust laws do NOT prohibit real estate A) companies agreeing on fees charged to sellers. B) salespersons within the same office agreeing on a standard commission rate. C) companies allocating markets based on the location of commercial buildings. D) brokers allocating markets based on the value of homes.
B) The answer is salespersons within the same office agreeing on a standard commission rate. Commission-setting agreements and allocation of markets on any basis between and among different companies violate antitrust law. However, commission-setting within a company is not a violation.
The compensation received by a sales associate of the real estate broker is A) subject to state regulations regarding the method and amount of compensation. B) subject to negotiation between broker and sales associate. C) no more than the statutory commission rate. D) decided upon by the real estate broker, who has authority over the sales associate.
B) The answer is subject to negotiation between broker and sales associate. There are no state laws or regulations regarding the method or amount of compensation that the sales associate can be paid.
Understanding Brokerage: Laws that prohibit price fixing and tie-in agreements
antitrust laws
employment agreement
between a broker and sales associate should define the nature, obligations, and responsibilities of the relationship
Understanding Brokerage: The business of bringing parties together
brokerage
Real estate broker
licensed to buy, sell, exchange, or lease real property for others and to charge a fee for those services. A broker may be an agent for a client, or broker and client may decide on a different form of representation, if allowed by state law
for sale by owners (FSBOs)
people who decide to sell their own home
Understanding Brokerage: The broker who starts an uninterrupted chain of events that results in the sale of a property
procuring cause
Understanding Brokerage: A person who is licensed only to perform real estate activities on behalf of a broker
sales associate
graduated commission splits
sales associate's compensation for achieving specified production goals
comparative market analysis (CMA)
to assist the seller in pricing the property
tie-in agreements (tying agreements)
Antitrust Laws - ILLEGAL. Agreements to sell one product only if the buyer purchases another product as well. 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.
A sales associate took a listing on a house that sold for $329,985. The commission rate was 5%. A sales associate employed by another broker found the buyer. The seller's broker received 60% of the commission on the sale; the buyer's broker received 40%. If the seller's broker kept 30% and paid the seller's sales associate the remainder, how much did the seller's sales associate earn on this sale? A) $8,249.00 B) $6,929.68 C) $4,346.85 D) $5,774.74
"B) $329,985 x 5% = $16,499.25 total commission $16,499.25 x seller's broker 60% = $9,899.55 $9,899.55 x 30% broker = $2,969.865 $9,899.55 - $2,969.865 = $6,929.685 seller's sales associate remainder The answer is $6,929.68. Amount the listing salesperson's broker received: $329,985 × 5% × 60% = $9,899.55 Amount the listing broker kept: $9,899.55 × 30% = $2969.87 (rounded to the nearest cent). The salesperson's earnings: $9,899.55 - $2,969.87 = $6,929.68.
The sale of a single-family house produced a total commission of $45,825. The sales associate who was responsible for bringing the buyer to the transaction has a 60/40 commission split arrangement with her employing broker, with the sales associate receiving the 60 percent. If the total commission was split between the listing and selling firms, what is the commission that the buyer's sales associate will receive? A) $9,165 B) $13,747.50 C) $8,784.25 D) $27,495
"B) $45,825\2 split commission with buyer/seller Buyer total commission: $22912.50 $13,747.50*.6 = $13747.50 The answer is $13,747.50. Fifty percent of $45,825 is $22,912.50, and 60 percent of that amount is $13,747.50, which is the buyer's sales associate's compensation for the transaction.
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? A) $5,847.00 B) $7,621.25 C) $6,871.25 D) $6,621.25
"D) $234,500 x 6.5% = $15,242.5 total commission $15,242.5 - $7,500 = $7,742.5 x 50% = $3,871.25 $7,500 - $2,500 = $5,000 x 40% = $2,000 $2,500 x 30% = $750 $3,871.25+$2,000+$750 = $6,621.25 The answer is $6,621.25. Total commission to the firm: $234,500 × 6.5% = $15,242.50. The salesperson'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 salesperson has received commissions on $7,500: $2,500 + $5,000. The agent 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 salesperson's commission: $750 + $2,000 + $3,871.25 = $6,621.25.
disclaimers
A statement indicating no legal responsibility for information; no warranties or representations have been made.
Assuming that the listing broker and selling broker split their commission from a transaction equally, what was the sales price of the property if the commission rate was 6.5% and the listing broker received $12,593.50? A) $387,492 B) $139,900 C) $256,200 D) $193,746
A) $12,593.50 x 2 = $25,187 total commission $25,187 / 6.5% = 387,492.31 The answer is $387,492. The problem can be solved using these two steps: (1) Find the entire commission by doubling the listing broker's half: 2 × $12,593.50 = $25,187. (2) Find the sales price by dividing the entire commission by the brokerage rate: $25,187 ÷ 0.065 = $387,492.
The use of electronic signatures makes routine paperwork more efficient and has been encouraged by adoption by most states of the A) Uniform Electronic Transactions Act. B) Uniform Brokerage Transactions Act. C) real estate licensing laws. D) Real Estate Transactions Act.
A) The answer is 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.
A licensed real estate salesperson has a written contract with his broker specifying that he will not be treated as an employee. The salesperson's entire income is from sales commissions rather than an hourly wage. Based on these facts, the salesperson is considered a(n) A) independent contractor. B) real estate assistant. C) subagent. D) employee.
A) The answer is independent contractor. The salesperson meets the IRS's three requirements to be treated as a self-employed independent contractor: the individual (1) is a real estate licensee, (2) has an agreement with the broker that the licensee will not be treated as an employee for federal tax purposes, and (3) earns the majority of income from the firm in commissions, not wages.
Many states have modified the traditional terms broker and salesperson to stress that all licensees must be knowledgeable of and comply with the law. The person who performs licensed activities under the authority of a broker is frequently called a A) sales associate. B) junior broker. C) managing broker. D) junior licensee.
A) The answer is sales associate. Some states require all real estate licensees to have a broker's license, but a managing broker is always distinguished from those employed by the brokerage as sales associates.
Which statement BEST explains this sentence: ""To recover a commission for brokerage services, a broker must be employed as the agent of the client""? A) The client must make an express or implied agreement to pay a commission to the broker. B) The broker must have a salesperson employed in the office. C) The broker must express an interest in representing the client. D) The broker must work in a real estate office.
A) 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.
Under the Sherman Antitrust Act, market allocation is punishable by A) up to a $1 million fine and 10 years in prison. B) a minimum $10 million fine and 5 years in prison. C) a minimum $1 million fine and 5 years in prison. D) up to a $3 million fine and 10 years in prison.
A) The answer is up to a $1 million fine and 10 years in prison. Price-fixing or market allocation is a violation of the Sherman Antitrust Act and, a penalty can be up to a maximum $1 million find and 10 years in prison. For corporations, the penalty may be as high as $100 billion.
Allocation of Customers or Market
Antitrust Laws - ILLEGAL. Agreement between real estate brokers to divide their markets and refrain from competing for each other's business. Allocations may be made on a geographic basis (specific territories within which they will operate exclusively) or occur by markets, such as by price range or category of housing
Illegal Business Activities: Agreement between real estate professionals to divide market and not compete with each other's business
Allocation of customers or markets
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. One of two federal acts governing electronic contracting. same legal significance as those formed on paper.
Two real estate professionals were found guilty of conspiring with each other to allocate real estate brokerage markets. A seller suffered a $90,000 loss because of their activities. If the seller brings a civil suit against the two real estate professionals, what can the seller expect to recover? A) Actual damages plus attorney's fees and costs B) $270,000 plus attorney's fees and costs C) Nothing, because a civil suit cannot be brought for damages resulting from antitrust activities D) Only $90,000—the amount of actual damages the seller suffered
B) The answer is $270,000 plus attorney's fees and costs. Under federal law, victims of such activities in restraint of trade (antitrust activities) are entitled to treble (triple) damages plus attorney's fees and costs if the alleged perpetrators are found guilty.
Terry is the personal assistant of a real estate sales associate. Terry must be paid by the broker who employs the sales associate. This means that A) the sales associate doesn't make very much money. B) Terry has a real estate license. C) Terry is a part-time employee. D) ultimate responsibility for Terry's conduct in the performance of work-related activities lies with the sales associate.
B) The answer is Terry has a real estate license. Most states have very specific rules about what a licensed assistant and an unlicensed assistant may do and how they can be compensated. Usually, an unlicensed personal assistant working for a sales associate can be paid by the sales associate, but a licensed personal assistant working for a sales associate must be paid by the employing broker.
Under the Sherman Antitrust Act, the penalty for a person found guilty of fixing prices or allocating markets is A) a maximum of $100 million. B) a maximum $1 million fine and 10 years in prison. C) $50,000 per transaction up to a maximum of $500,000. D) a minimum of $100,000.
B) The answer is a maximum $1 million fine and 10 years in prison. For corporations, the penalty may be as high as $100 billion.
In order for a broker to be paid on an open listing, the broker must A) notify all other listing brokers if they have an offer. B) be the procuring cause of the sale. C) put the property in MLS and offer other brokers a co-op. D) split the commission with any other broker that listed the property.
B) The answer is be the procuring cause of the sale. In an open listing, the seller will only pay the broker who procures (brings) the buyer.
A broker can agree upon which of the following with an independent contractor? A) Work schedule the person would have to follow B) Compensation the person would receive C) Number of hours the person would have to work D) Sales meetings the person would need to attend
B) The answer is compensation the person would receive. Brokers may agree upon the compensation that their independent contractors will receive for work not yet done, but they may not dictate working schedules or attendance at sales meetings.
Sales associate A and sales associate B work for the same firm. They agree to divide their region into an eastern half and a western half; sales associate A will handle listings in the east, and sales associate B will handle listings in the west. Which statement is TRUE? A) The two sales associates are guilty of a group boycott with regard to other sales associates in their firm. B) The agreement does not violate antitrust laws. C) The two sales associates have violated the Sherman Antitrust Act and are liable for treble damages. D) The agreement constitutes illegal price-fixing.
B) 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.
Group boycotting is illegal and occurs when A) agents of one real estate organization refuse to socialize with another. B) two or more businesses conspire against another business or agree to withhold their patronage to reduce competition. C) a group of neighbors decide to boycott the services of a particular agent. D) agents refuse to provide services to a certain class of individuals.
B) The answer is two or more businesses conspire against another business or agree to withhold their patronage to reduce competition. Group boycotting occurs when two or more businesses conspire against another business or agree to withhold their patronage to reduce competition. Group boycotting is illegal under the antitrust laws.
Activities such as price-fixing, group boycotting, allocation of customers or markets, and tie-in agreements are violations of the A) Stassen Antitrust Act. B) Schumacher Antitrust Act. C) Sherman Antitrust Act. D) Sheridan Antitrust Act.
C) The answer is Sherman Antitrust Act. The real estate industry is subject to antitrust laws. At the federal level, the Sherman Antitrust Act provides specific penalties for a number of illegal business activities.
Hinting to prospective clients that there is a "going rate" of commission or a "normal" fee implies that rates are, in fact, standardized and is A) not a violation of antitrust laws. B) recommended by the National Association of REALTORS® to insure fair competition in maintaining fair fees. C) a violation of antitrust laws. D) a common practice allowed in most states.
C) The answer is a violation of antitrust laws. The challenge for real estate brokers and sales associates is to avoid even the impression of price-fixing. Hinting to prospective clients that there is a "going rate" of commission or a "normal" fee implies that rates are, in fact, standardized. The broker must make it clear to clients that the rate stated is only what that broker's firm charges.
Commissions are negotiable A) unless representing a buyer, when the listing broker offers a co-op. B) when using an exclusive listing agreement, but not an open listing. C) in all cases. D) unless the exclusive agency listing is used, because the seller can compete with the broker.
C) The answer is in all cases. Commissions are always negotiable.
Sales associates who are paid in a lump sum and who are personally responsible for paying their own taxes are probably treated for tax purposes as A) buyer's agents. B) transactional brokers. C) independent contractors. D) employees.
C) The answer is independent contractors. Most real estate sales associates (whether licensed as brokers or salespersons) are said to be independent contractors. They receive gross earnings—paid as though they were self-employed—with no withholding of income taxes or employer contributions to Social Security or Medicare, workers' compensation, and unemployment insurance.
The amount of commission paid to a sales associate is determined by A) state law. B) mutual agreement with the client. C) mutual agreement with the broker. D) the local real estate board.
C) The answer is mutual agreement with the broker. All commissions must be paid through the broker, and the amount the sales associate receives is set by mutual agreement between these two parties.
A state has recently updated its Rules and Regulations for the Real Estate Profession. Assuming this state is like all others, which statement is TRUE regarding this publication? A) The rules and regulations are not enforceable against real estate professionals. B) The rules and regulations do not have the same force and effect as the statutory license law. C) The rules and regulations have the same force and effect as the license law itself. D) The rules and regulations are state laws enacted by the legislature.
C) The answer is the rules and regulations have the same force and effect as the license law itself. Each state has a licensing authority with power to issue licenses and create regulations that enforce the statutes of the real estate law.
When acting as an employee rather than an independent contractor, a sales associate may be obligated to A) accept a commission from another broker. B) advertise property on his or her own behalf. C) work set hours. D) list properties in his or her own name.
C) The answer is work set hours. An employee not only accepts the actual duties assigned by the employer but also agrees to the manner in which the employer wants them performed.
All of the following are required of a broker who is seeking to collect a commission for brokering the sale of a property EXCEPT. A) having a valid real estate broker's license. B) having had a contract of employment—an agency representation agreement. C) having been the procuring cause in the transaction or having an exclusive-right-to-sell agreement. D) complying with a commission rate set by a trade organization.
D) The answer is complying with a commission rate set by a trade organization. Professional organizations may not set fees or commissions splits.
Which group of people is protected the MOST by real estate license laws? A) Licensees B) Real estate firms C) Government employees D) Consumers
D) The answer is consumers. The main objective of real estate license laws is to make sure that the rights of purchasers, sellers, tenants, and owners are protected from unscrupulous or negligent practices.
Regarding internet advertising, brokers should A) disregard policies and laws that regulate this type of advertising. B) follow NAR's internet data exchange policy only. C) develop websites without taking into consideration laws and regulations for internet advertising. D) follow NAR's internet data exchange policy and any state laws regarding such advertising.
D) The answer is follow NAR's internet data exchange policy and any state laws regarding such advertising. State laws vary regarding internet advertising. Brokers should check their own state's laws before engaging in advertising or marketing on the internet.
A real estate broker was responsible for a chain of events that resulted in the sale of a client's property. This is called A) private offering. B) proffered offer. C) pro forma. D) procuring cause.
D) The answer is procuring cause. A broker who starts a chain of events that results in a sale and does so without abandoning the transaction, may be considered the procuring cause of sale.
Do-not-call registries and laws such as the Telephone Consumer Protection Act, Junk Fax Prevention Act, and rules of the Federal communications Commission dictate A) how many direct mail solicitations can be sent to a single address. B) communications that are permitted. C) how often a business person can contact a customer. D) prohibited communications.
D) The answer is prohibited communications. Telephone calls, faxes, and emails are all subject to such prohibitions.
To be entitled to receive compensation from a real estate sales transaction, an individual must be all of the following EXCEPT A) the procuring cause of the sale. B) employed by the buyer or the seller under a valid contract. C) a licensed real estate broker. D) unrelated to either the buyer or the seller.
D) The answer is unrelated to either the buyer or the seller. All parties should be notified of the broker's relationship to either buyer or seller.
True or False: Price-fixing, which is the practice of setting prices for products or services rather than letting competition in the open market establish those prices, is legal.
FALSE
True or False: States' licensing rules and regulations do NOT have the same force and effect as statutory law.
FALSE
True or False: When information is taken from the internet, it is always accurate.
FALSE
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 allocation of customers or markets (real estate professionals agreeing to limit their areas of trade or dealing to certain areas or properties). federal level, the Sherman Antitrust Act provides specific penalties for a number of illegal business activities. prohibit monopolies and any contracts, combinations, and conspiracies among competitors that unreasonably restrain trade.The most common antitrust violations are price-fixing, the group boycott, allocation of customers or markets, and tie-in agreements.
fee-for-service (limited-service listing agreements)
Many real estate professionals use either an hourly rate or a flat fee for particular services.
broker's compensation
Negotiable compensation can be in the form of a commission or broker's fee (computed as a percentage of the total sales price), a flat fee, or an hourly rate. Broker and client to agree on a rate before any form of representation is established. Compensation affected by the participation in the transaction. Most sales commissions are payable when the sale is consummated by delivery and acceptance of the seller's deed. This provision is generally included in the agreement between seller and broker. A court may prevent the real estate broker from receiving a commission if the real estate broker knew the buyer was unable to perform.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. The entire commission is received by the broker representing the party who pays the commission, and the agreed-upon share of the commission is paid to the cooperating broker. Each broker then pays any employed sales associate who took part in the transaction the amount due to that person.
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.
Federal Sherman Antitrust Act
Penalty for fixing prices or allocating markets is a maximum $1 million fine and 10 years in prison. Corporations, the penalty may be as high as $100 million. Individual who has suffered a loss may sue for treble damages—3x actual damages sustained.
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.
Uniform Electronic Transactions Act (UETA)
Sets forth rules for entering into an enforceable contract using electronic means. One of two federal acts governing electronic contracting. The primary purpose is to remove barriers in electronic commerce that would otherwise prevent enforceability of contracts. Validates and effectuates electronic records and signatures in a procedural manner and is intended to complement a state's digital signature statute, but it does not in any way require parties to use electronic means. 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.
True or False: Group boycotting, allocation of customers or markets, and tie-in agreements are all prohibited acts under the Sherman Antitrust Act.
TRUE
True or False: Laws cannot guarantee an ethical or moral marketplace.
TRUE
True or False: 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.
TRUE
independent contractor
The broker-licensee relationship where at least 75% of the compensation is based on commissions earned and the broker does not withhold payroll taxes. Independent contractors are responsible for paying their own income and Social Security taxes and receive nothing from the employer that could be construed as an employee benefit, such as health insurance or paid vacation time. 3 Requirements: 1) The individual must have a current real estate license. 2) The individual must have a written contract with the broker that specifies that the individual will not be treated 3) 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.
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. The broker must have started or caused an uninterrupted chain of events that resulted in the sale. 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, and showing the house to the buyer.
brokerage
The occupation or business of a real estate broker in Georgia. The business of bringing parties together.
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.
managing broker
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.
Illegal Business Activities: Providing product or service to customer only if customer buys another product or service as well
Tie-in arrangement
boycott
When individuals or businesses withhold their patronage to a business as a protest or to reduce competition. Antitrust Laws - ILLEGAL: two or more businesses conspire against another business or agree to withhold their patronage to reduce competition
Understanding Brokerage: A sales associate working under a written contract who receives most of her income from production rather than hours worked
independent contractor
Understanding Brokerage: An individual who is licensed to buy, sell, exchange, or lease property for others, and to charge a fee for those services
real estate broker
salesperson
sales associate, agent, licensed individual employed by a broker. Can carry out only those responsibilities delegated by the employing broker and can receive compensation only from that broker. Has no authority to make contracts with or receive compensation from any other party
Sales Associate's Compensation
set by mutual agreement between the broker and the sales associate, as a rule only the employing real estate broker can pay it. May be a fixed salary, but usually the compensation is a share of the commissions from transactions originated by the sales associate. 100% commission plan: - pays a monthly service charge to the broker to cover the cost of office space, telephone, and supervision. - pay all of their individual business expenses, such as the salary of a personal assistant or the costs associated with development and maintenance of the sales associate's website.
real estate license law (or statute of frauds)
usually will require that there be a written agreement to establish the compensation to be paid
