Chapter 8Real Estate Brokerage

• The Real Estate Sales Process– Listing agreements (broker/owner relations)– Marketing the property and qualifying

buyers (the willing and able buyer)– Presentation and negotiations – Contracts and closing (transfer of title)

Chapter 8Real Estate Brokerage

• Real Estate Brokers and Salespersons– Licensing of salespeople and brokers• Regulated through state agencies• Transactions on one’s own behalf• Conducting transactions on behalf of others• State license requirements

– Real estate brokerage regulation• Suspension vs. Revocation• Consumer protection

Chapter 8Real Estate Brokerage

• Legal Aspects of the Broker-Client Relationship– Agency law • Principal – employer (seller & principal broker)

• Agent – employee (broker & subagent)

• Fiduciary relationship (principal for agent)

Chapter 8Real Estate Brokerage

• The Role of Real Estate Brokers– Broker representation– Listing broker• Obtains listing of property for sale

– Selling broker• Actually sells the property

– Dual agent• Single broker employed by both seller and buyer

Chapter 8Real Estate Brokerage

• Broker-Seller Relationship (Seller’s Agent)– Open listing (Multiple Brokers & Seller)– Exclusive-agency listing (1 Broker & Seller)– Exclusive-right-to-sell listing (1 Broker)– Multiple listing (Split Comm. - ERTS)– Net listing (Overage Commission - Illegal)• Sales price to seller set by broker who takes any

residual or overage amount

Chapter 8Real Estate Brokerage

• Broker’s Right to a Commission– Paid when broker either• Sells the property, or

• Procures a ready, willing and able buyer

Chapter 8Real Estate Brokerage

• Broker-Buyer Relationship (Buyer’s Agent)– Buyer’s representation – Types of buyer representation agreements• Open (commission with broker assistance only)• Exclusive Right (commission guaranteed)

– Compensating the buyer’s broker• Fee + Percentage• MLS Commission

Chapter 8Real Estate Brokerage

• Duties and Rights Under Agency Relationships– Broker’s duties• Fraud and negligence– False statement with intention to mislead

• Misrepresentation– False statement but with no intention to

mislead

Chapter 8Real Estate Brokerage

• Fair Housing Laws– Prohibit discrimination based on sex, race,

color, religion, national origin, disabilities, or familial status

– Steering• Selectively showing properties to prospective

buyers based on their racial or ethnic background

Chapter 8Real Estate Brokerage

• Methods of Agency Termination– Sale of the listed property

– Time limit expires

– Mutual agreement

– Breach of duties

– Loss of contractual capacity (Death/Illness)

– Improvements are destroyed

– Property is taken by government under power of eminent domain

Chapter 8Real Estate Brokerage

• Types of Brokerage Firms– Franchises (Coldwell Banker, Century 21)• Pay a fee + % of gross transactions to Franchiser

– Desk Fee Arrangements• Paid Employment (pay fee to occupy office)• Office Resources• Shared Commission

– MLS – Provides a networking and marketing advantage

Chapter 8Real Estate Brokerage

• Compensation of Brokers– 6-7% SFR– 3%-5% Commercial– 7- 10% Land– Salesman gets % of Broker Comm.