Real Estate Chapter 12 14 Study Guide 3 Chapter 12 Real Estate Brokerage and Listing Contracts 11 questions What do brokers do Bring buyers and sellers together In real estate needs Physically Emotionally longest financial decision in life Collect commission for a successful transaction Normally percentage of price Net commission Difference between required price and actual price I want 100k if sold if sold for 105k realtor gets 5k Percent of the commission comes from the Contract Price Expert Knowledge Brokers Can Provide Prices and terms in current market Marketing approaches that work Legal obligations of buyers and sellers contracts Properties in market everyday realtor looks Potential customers and their needs callers Procedures and requirements of transaction Law of Agency and Agents Types of Agents Law of agency Governs relationship between a principal client and someone charged to act on principal s behalf Rights and obligations of agent Rights and obligations of principal Principal owner of property pay agent Agent Works under a broker Universal agent Power to act for principal in all matters General Power of Attorney General agent Power to act within limits of a business or employment relationship employee specific business Special agent Power to act in a specific event or transaction Real Estate Agent specific transaction Duties or Fiduciary Responsibilities Disclosure Being completely open and honest Confidentiality Never betraying confidential information Accounting Keeping principal informed about financial aspects of assignment Obedience Following instructions of the principal fully Loyalty Never subordinating the best interest of principal Skill and care Representing principal as agents would represent themselves Listing Contract Creates an agency relationship special agent A contract for services not for real estate Usually a contract between seller and broker Increasingly between buyer and broker Frequently involves sub agency through multiple listing service MLS Dual agency Representing both buyer and seller The Problem of Dual Agency Natural tendency in brokerage for dual agency Salesperson works closely with buyer but is distant from seller FTC Study 1984 74 2 percent of buyers believed the sales agent worked for them This misunderstanding appears to be unchanged Firm with both seller and buyer agents could represent both sides of transaction Solutions Designated agent Brokerage representing both sides appoints separate agent for each Buyer agent by law Salesperson showing a house becomes buyer agent unless declaring otherwise Transaction broker Not an agent for buyer or seller Single Agent vs Transaction Broker Single Agent Dealing honestly and fairly Loyalty Confidentiality Full disclosure Transaction Broker Dealing honestly and fairly Limited confidentiality Disclosing all known facts affecting value that are not readily observable to buyer Must be licensed to provide real estate transaction services for others buying auctioning renting selling appraising Licensing of Brokers and Salespersons leasing exchanging BAR SALE Two levels of licensure Salesperson Must work for a broker Broker Can operate own brokerage agency Implementation of state real estate license law Airs Admission Insurance Exemptions from licensure Attorneys resident managers government employees trustees executors and those with power of attorney General requirements for licensure Minimum age high school diploma good reputation Minimum experience for broker s license Pre licensing education requirement Pass state licensing exam Industry Certifications or Designations Realtor or Realtor Associate Affiliation through local board with National Association of Realtors CCIM Certified Commercial Investment Member SIOR Society of Industrial and Office Realtors Real Estate Commission brokers and non brokers monitoring and setting rules and regulations in a given state Antidiscrimination Laws Affecting Real Estate Services Title VIII of the Civil Rights Act of 1968 prohibits discrimination by race color religion national origin sex familial status and handicap including Refusing to rent or sell Offering different terms and conditions Selective advertising Blockbusting Sell now minorities are moving in Denying home loans Denying real estate services Coercing intimidating or interfering with exercise of these rights Title VIII exempted owner occupants in 1 4 family residences Supreme Court overrode the exemption regarding racial discrimination Discrimination by familial status allowed for elderly Growth Areas in Real Estate Brokerage Realtor must have a computer website or don t bother Internet Marketing Residential www realtor com www homestore com Commercial www costar com www loopnet com International brokerage Listing Contracts Foreign purchases in the United States U S interests purchasing abroad A broker earns a commission by finding a ready willing and able buyer for the specified price and terms Types of contracts Exclusive right of sale Mark is hired Joe sells it Bill pays Mark and Joe Exclusive agency Agree to use only that agent commission if you sell it yourself no commission Open listing owner says to any realtor you sell ill pay you a commission MLS Multiple Listing System Database only accepts exclusive right of sale Problem when you see 200 flat fee and 1 commission Deriving a Gross Selling Price to Achieve a Target Net Price Commission Splitting Considerations in Selecting a Broker How will the firm market the property Amount and type of advertising Experience of others with the firm General reputation in the community Much like the process of selecting any other professional FACTS FROM STUDY GUIDE Generally the seller s agent splits the commission with any other salesperson and brokers participating in the sale The broker is termed the agent The agency relationship in which the broker is an agent for both a seller and a buyer is termed dual agency The typical agency relationship that exists between the broker buyer and the seller in a home transaction is the broker is a special agent of the seller The buyer is generally not represented by an agent Generally states do not impose a brokerage experience requirement for obtaining a salespersons license In states that license both brokers and salespersons generally each real estate office must have a licensed real estate broker In the listing agreement brokers usually insist on a provision protecting their right to a commission after