Chapter 15 Real Estate Brokerage

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  1. Brokerage
    • Business of bringing 2 entities together
    • May be a sole proprietorship , a corporations, or a partnership with another real estate broker
    • Office may be independent or part of a regional or national franchise.
    • May be a singe office or multiple branches.
    • May be located in high rises, suburban shopping center or their homes
    • May specialize in one kind of transaction or service or it may offer a variety of services
  2. Multiple Listing ervice MLS
    • Coop of 2 brokers selling one property
    • Expedite sales by increasing a single property's exposure to more buyers
    • Both brokers represented the seller's interst
  3. Broker-Salesperson Relationship
    • Licensed to preform real estate activities on behalf of the broker
    • Broker is still responsible for all transactions performed by the licensee
  4. Broker's Compensation
    • Must be specified in the contract with the consumer
    • May be in the form of a commission or the broker's fee(computed as a percentage of the total sale price), a flat fee for service or an hourly rate
    • THE BROKER AND THE CLIENT MUST AGREE ON A RATE BEFORE THE AGENCY RELATIONSHIP IS ESTABLISHED
    • Payable when the sale is consummated by the delivery of the seller's deed.
  5. No Specific Time for the payment of the Broker's commission, the commission is usually earned when:
    • A completed sales contract has been executed by a ready, willing and able buyer
    • The contract has been accepted and executed by the seller and
    • Copies of the contract of in possession of all parties
  6. Requirements for Sales Commission Elegibility
    • Individual
    • Must be a licensed real estate broker
    • The procuring cause of the sale and 
    • employed by the buyer or seller under a valid contract
  7. Procuring Cause (responsible for the sale)
    The broker must have started or caused an unbroken chain of events that ultimately resulted in the sale.
  8. Ready, Willing and Able Buyer
    • Buyer who is:
    • prepared to buy on the seller's terms and ready to take positive steps toward consummation of the transaction
  9. Reason's the Broker May Still be Compensated if the Transaction is NOT Commsumated
    • If the seller:
    • had a change of mind and refuses to sell
    • has a spouse that refuses to sign the deed
    • had a title with uncorrected defects
    • committed fraud with respect to the transaction
    • was unable to deliver possession within a reasonable time
    • insisted on terms no in the listing, (ex. the right ti restrict the use of the property or
    • had a mutual agreement with the buyer to cancel the transaction
  10. Broker May Share Fees
    • A broker my share fees with a salesperson licensed with the broker
    • another licensed, or a consumer represented by the broker
  11. Broker May Not Share Fees
    A broker may not pay fees, commissions or other compensations to unlicensed persons for services for which the real estate licensure is required
  12. Forms of Compensation
    Personal property such as a new TV or premiums such as vacations and the like and money
  13. Referral Fees
    • Are legal fees paid between brokers for business
    • Individuals must be licensed brokers
  14. Real Estate Salesperson's Commission
    • Amount of compensation a sales person receives is set by mutual agreement between the broker and the sales person
    • Broker may pay a fixed salary or a share of the commissions from transactions originated by a sales person
    • A salesperson may also pay all or part of the expenses of the advertising listed properties
  15. Commission Types
    • 100% commission in which salespersons pay a monthly service charge to their brokers to cover the costs of oiffice space. telephones and supervision in return for keeping 100% of the commissions for the sales they negotiate
    • 100% commissioned sales people pay all of their related business expenses

    Graduated commission splits are based on a sales person achieving specified production goals

    ONLY THE EMPLOYING BROKER CAN PAY THE COMMISSION.  THE COMMISSION MUST BE RECEIVED BY THE EMPLOYING BROKER AND THEN PAID TO THE SUPERVISOR
  16. Fee for Services
    • Buyers may use all or one of the broker's services
    • Licensees my either chage an hourly rate or a flat fee for a particular service with the permission of the broker
  17. FSBO
    For sale by owner
  18. Anti Trust Laws
    Both federal and state laws
  19. Sherman Antitrust Law
    Prohibits contracts or conspiracies that create monopolies
  20. Clayton Act
    • Prohibits exclusive tie-in sales, price discriminations and mergers and acquisitions that unfairly restrain trade
    • Allows parties to be awarded up to three times the amount of damages sustained, attorney fees and other litigation costs
  21. Federal Trade Commission Act
    • Fills in loopholes of other laws and allows monetary relief and permits investigations of such activities
    • FTC can issues cease and desist orders to top violators from antitrust practices.
  22. Most Common Anti Trust Violations
    • Price fixing
    • Group boycotting
    • Allocation of customers or markets
    • Tie-In agreements
  23. Antitrust Division of the US Department of Justice or the Federal Trade Commission
    Enforce federal laws
  24. Attorney General Office
    • Enforces PA Unfair Trade Practices and Consumer Protections Law
    • Watch dog to maintain a free and open marketplace
  25. Price-Fixing
    • Setting prices for products or services rather than letting the competition in the open market establish those prices
    • Occurs when competing brokers agree to set uniform sales commissions, fees or management rates
    • ILLEGAL
    • Brokers must independently determine commission rates for their firms only.
  26. Group Boycotting
    Occurs when 2 or more business conspire against other businesses or agree to withhold their patronage to reduce competition.
  27. Allocation of Consumers or Markets
    Allows buyers or sellers to go where they would like to go for services
  28. Tie-In Agreements (Tying Agreements)
    • Agreements to sell one product on the condition that the buyer also purchases product as well
    • The sale of the first (desirable) product is ties to the purchase of a second (less desirable product
    • Illegal to require that buyers or sells use more than one of the broker's services
  29. Penalties
    • Before 2004, violators of the Sherman Act may be fined up to $350,000 and/or sentenced to no more than three years of imprisonment. Corporations my be fined up to $1 million 
    • After 2004-Individuals may face up to $1 million and/or up to 10 years of imprisonment-corporations may be fined up to $100 million
  30. Legal Consideration and Techology
    • Internet Web Sites
    • Social Networking Sites
    • E-Mail
    • Internet Advertising-common laws include the following-use include the licensee's name, office address and broker affiliation-status of sales person or broker must be disclosed on each page of a website that contains an advertisement
    • AN ADVERTISEMENT MUST BE A TRUE REPRESENTATION AND NOT BE MISLEADING MUST BE HONEST AND TRUTHFUL
    • National Do Not Call Registry-managed by FTC
    • CAN-SPAM Act of 2003 (Controlling the Assault of Non-Solicited Pornography and Marketing Act)
    • Junk Fax Prevention Act of 2005
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315500
Card Set
Chapter 15 Real Estate Brokerage
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Chapter 15 Real Estate Brokerage
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