Real Estate Brokerage - Unit 9
Commission
(Broker's Fees) 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. The important point is for broker and client to agree on a rate before any form of representation is established. most sales commissions are payable when the sale is consummated by delivery and acceptance of the seller's deed
Internet Data Exchange (IDX) policy
Allows all MLS members to have equal rights to display MLS data, while also respecting the rights of the property owner and real estate broker who represents the property owner to market the property as they wish.
Children's Online Privacy Protection Act (COPPA)
COPPA requires the posting of a privacy policy and limits the personal information that can be collected from children younger than 13, even if a website or app is directed toward a general audience.
Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, known as the CAN-SPAM Act
Junk emails (spam) are federally prohibited. Important feature of this law, which applies to commercial electronic mail messages, is that email solicitations must include a means by which the recipient can "unsubscribe" from future messages
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).
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.
Real Estate Broker
A person licensed to arrange for the purchase and sale of real estate for a fee or commission.
Electronic Contracting
A process of integrating information electronically in a real estate transaction between clients, lender, and title and closing agents. Two federal acts govern electronic contracting: the Uniform Electronic Transactions Act (UETA) and the Electronic Signatures in Global and National Commerce Act (E-Sign).
ARELLO
The Association of Real Estate License Law Officials promotes uniform standards and policies related to real estate licensure and education throughout North America
Sales Associate's Compensation
The amount of compensation a sales associate receives is set by mutual agreement between the broker and the sales associate. A broker may agree to pay a fixed salary, but usually the compensation is a share of the commissions from transactions originated by the sales associate. In some cases, the sales associate may draw from an account against earned shares of commissions, providing a minimal level of regular income. Some brokers require sales associates to pay all or part of the expenses of advertising listed properties.
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.
Penalties for violating antitrust laws
Under the federal Sherman Antitrust Act, the penalty for fixing prices or allocating markets is a maximum $1 million fine and 10 years in prison. For corporations, the penalty may be as high as $100 million. An individual who has suffered a loss because of an antitrust violation may sue for treble damages—three times the actual damages sustained. In addition, the injured party may recover the cost of the suit, which includes reasonable attorney fees.
sales associate
a 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. As an agent of the broker, the sales associate has no authority to make contracts with or receive compensation from any other party. The agency relationship also makes the broker liable for the acts of a sales associate that fall within the scope of the employment agreement.
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.
Broker
employing broker-is fully responsible for the actions performed in the course of the real estate business by all persons licensed under the broker, which is why the sales associate can never be an independent contractor for purposes of the licensing law.
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. Allocations may be made on a geographic basis, with real estate brokers agreeing to specific territories within which they will operate exclusively. The division may also occur by markets, such as by price range or category of housing. These agreements result in reduced competition. is illegal under antitrust laws
Broker's Compensation
is specified in the contract with the client. The real estate license law (or statute of frauds) usually will require that there be a written agreement to establish the compensation to be paid.
Managing Broker
may also be called the supervising broker, is responsible for supervision of the real estate professionals who act on behalf of the brokerage.
A licensed brokerage business...
may take many forms, as permitted by state law. It may be a sole proprietorship, a corporation, a limited liability company, or a partnership with another real estate broker.
Group Boycott
occurs when two or more businesses conspire against another business or agree to withhold their patronage to reduce competition. A group boycott is illegal under antitrust laws.
Telephone Consumer Protection Act (TCPA), Junk Fax Prevention Act, and rules of the Federal Communications Commission (FCC)
prohibit most unsolicited fax advertisements
The National Association of Home Builders
provides data on new home construction, building materials costs, and building permits issued.
blanket opt-out provision
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
Tie-in Agreements
(also known as tying agreements) are agreements to sell one product only if the buyer purchases another product as well. The sale of the first (desired) product is tied to the purchase of a second (less desirable) product. In the real estate business, this can occur if, for instance, 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. is illegal under antitrust laws
Once a seller accepts an offer from a ready, willing, and able buyer, the real estate broker is entitled to a commission. 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.
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.
Internet Advertising
In addition to NAR's Internet Data Exchange policy, 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.
Purpose of License Laws
Real estate license laws protect the public by ensuring a standard of competence and professionalism in the real estate industry. The laws achieve this goal 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. Their main objective is to make sure that the rights of purchasers, sellers, tenants, and owners are protected from unscrupulous or negligent practices.
Brokerage
The bringing together of parties interested in making a real estate transaction.
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.
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.
Under the qualified real estate agent category set out in the Internal Revenue Code (26 U.S.C. 3508), 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.
Uniform Electronic Transactions Act (UETA)
The law sets forth basic rules for entering an enforceable contract using electronic means. The primary purpose of UETA is to remove barriers in electronic commerce that would otherwise prevent enforceability of contracts. UETA 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.
Electronic Signatures in Global and National Commerce Act (E-Sign)
The purpose of E-Sign is to make contracts (including signatures) and records legally enforceable, regardless of the medium in which they are created. For example, contracts formed using email or transmitted electronically rather than by paper have the same legal significance as those formed on paper.
Price-fixing
a practice in which competitors agree to set prices or other terms and conditions for products or services rather than letting competition in the open market establish those prices. In real estate, price-fixing occurs when competing brokers agree to set sales commissions, fees, or management rates. Price-fixing is illegal. Real estate brokers must independently determine commission rates or fees for their own firms only. These decisions must be based on a broker's business judgment and revenue requirements. A broker may discuss commissions and fees with real estate professionals who are affiliated with the same brokerage but must not discuss compensation issues with anyone from another real estate firm.
Real Estate Assistant
can be a combination office manager, marketer, organizer, and facilitator who has a fundamental understanding of the real estate industry. 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.
Fee for Service
tasks that can be performed by a real estate professional as a bundle of services. 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