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Real Estate Office Administration Real Estate Brokers Program Barbara Grodaes.

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1 Real Estate Office Administration Real Estate Brokers Program Barbara Grodaes

2 What to do to Start a Brokerage? Plan a Real Estate Brokerage Establish an office Plan Administrative Systems Market and Promote the Real Estate Brokerage Plan for your Financial Records Do all this and you have Office Administration at work!

3 Your Personal Goals Why do you want to start up a brokerage? Will developing and managing a brokerage meet your personal and professional needs? Do you have the necessary skills to attract, manage, train and motivate others? Do you have the necessary finances to start and maintain a brokerage?

4 Identify you! Personal Strengths? Personal Weaknesses? Determine what you want to achieve. Are business and personal goals compatible? Where are you on your career path? When do you hope to retire? How will a brokerage help you fulfill your retirement plans?

5 Business Plan Blueprint for planning and building. Set clear goals and objectives. Success is based on planning and organization. Share your goals with your agents and employees. Plan includes every essential detail that is necessary to consider. Put the plan on paper.

6 Make your plan concrete This plan determines whom you hire, your budget, sources of working capital, the legal structure of your brokerage, office set-up, equipment, financial record system, and marketing plan. Recording this plan in one document helps you focus and starts you on your way to success.

7 Categories to address Business Profile Financing Needs Business Financial Statements Personal Financial Statement Market Research Brokerage Specialization Brokerage Style Ownership Decisions

8 Brokerage Specialization Residential Real Estate Rural Real Estate Commercial Real Estate Property Management Real Estate Seller Brokerage Buyer Brokerage Alberta trend is toward increased specialization. Best strategy is to limit to your area of experience.

9 Brokerage Style Styles can be adapted to suit your particular needs. Different styles will have different concerns. Franchise vs. independent brokerage have various pros and cons for each. Do a cost/benefit analysis when considering the several different styles.

10 Ownership Decisions Sole Proprietorship Partnership Corporation Start New Brokerage or Buy an Existing One There are advantages and disadvantages for each form of ownership and you need to consider all perspectives.

11 Evaluate Compensation Packages Effective packages accomplish 3 things: Attract qualified applicants resulting in increased productivity. Retain good employees. Motivate employees to perform at higher levels of production or sales.

12 Examples of Compensation Straight Salary Straight Commission Combination Salary and Commission Bonuses Commission Plans Related to sales volume Sliding commission Shared commission Monthly Fee Transaction Fee

13 Choose a Visual Identity There are many benefits of brand- name awareness. Choose special colours, a logo, mascot, and slogan. Adopt a visual identity to represent your brokerage in the community. Carefully choose this identity and be consistent to attract attention over the long term to become linked with your brokerage in the public eye.

14 Assessing Success Your brokerages goals are the benchmarks by which you can measure your success. Choose goals that can be measured. Underlying goals may direct the day- to-day activities of the brokerage. Adapt to changing circumstances. Create a Plan B. Review goals regularly.

15 Mission Statement A concise declaration of the brokerages overall purpose and direction. Should embody and promote the corporate values of the organization. Provides a central reference point for the development of specific operating objectives. Should show what your goals are and how you plan to achieve them.

16 Recruiting Agents Each brokerage has something unique to provide agents with the edge to compete successfully. Current trend is one-stop shopping. Brokerages are distinguished from each other in 4 ways: Physical environment Management Image and marketing tools Compensation.

17 Recruiting, Recruiting Each brokerage develops its own personality based on its plan. The business plan helps define your hiring criteria. Hire the right people from the beginning for your reputation. Do what is necessary to keep them. Agents will stay with a brokerage with respect, recognition and compensation.

18 On-going Recruitment Assume that 10 to 20% of people will leave every year. Plan to recruit on an ongoing basis and allocate a monthly budget for it. Recruiting is as important to a broker as prospecting is to an agent. Achieve a balance between how many agents are needed to maintain the budget and how many the brokerage can afford to carry.

19 Financial Projections Face-to-face research with bankers, loans officers, financial planners, and accountants. Set up a good accounting system from the beginning. Use proper budgeting and forecasting techniques yearly with a review every 6 months. Compare budget to actual every month for control/correctives.

20 Contingency Plans Minimize negative cash flow by cutting expenses, increasing revenue or both. Plan for what to do if things do not work out the way you intend. This will lessen stress resulting from unforeseen problems. Prepare for unforeseen financial crises.

21 Financial Reporting Systems Success depends on accurate and timely accounting and management. Choose an accountant and an ongoing financial reporting system that is most useful to you. Legislation requires some reporting. You may choose other reports suited to your needs and interests. Do monthly reports, quarterly reports and annual reports.

22 Sources of Working Capital Sources of funding include: Personal financial resources Institutional financing Outside sources such as partners, investors, family shares, co-operatives and syndicates. Any outside sources of funds will involve personal guarantees and caveats.

23 Relationships The greatest asset to your relationship with a financial institution is trust. Get to know what credit rating and financial information the institution prefers and structure your business plan around that. Put full disclosure of financial status and credit in your business plan. Plan ahead.

24 Lending Options Research as many as 5 financial institutions and pursue further detail with 3 (detailed investigations). The strength of your business plan and your credit rating have a major impact on the decisions of financial institutions. Some institutions are lenient, some may have seasonal quotas, some specific lending ratios – find out!

25 Establish a Brokerage Office Understand how the Real Estate Act, administered by RECA, determines the legal requirements of a brokerage (provides framework). Location, location, location! Determine the equipment and furniture needs of your brokerage. Should you lease or own? Periodic review for continuance.

26 Location, Location, Location Most applicable when choosing the location of your office. Type of business and cost factors govern the location best suited. Costs vary with location and type of structure. Consider the amount of space you will need. Consider the ease of access and parking.

27 Office Space Review all your options before you decide whether to lease or to own. There are many issues to consider for either owning or leasing. Whatever you decide, you will likely have to make improvements to the space for the right look and feel. You will need equipment and furniture.

28 Need to Haves Desks, chairs, filing cabinets, round table Photocopier Fax machine(s) Computer equipment and software Telephone system Paging system Compare your options of cost for owning vs. leasing equipment.

29 Financial Records Accounting and financial management are among the most important areas because they form the foundation on which the business structure stands. Set up: Assess the needs of the system. Research available systems/methods. Select/implement a system. Spend time considering your needs.

30 Accounting Records Reasons for Accounting Records: Government compliance Internal monitoring Requirements of the Real Estate Act Getting started: Decide what form the business will be. Set a year-end (unincorporated 12/31). Assess software packages. Register the business. Find Accountant that is good match.

31 Elements of a Good System Be simple. Provides accurate information. Is timely. Provides a proper audit trail. Meets regulatory requirements. Provides for retention of records. Get a good accounting system, set it up properly and run and maintain it.

32 Basic Accounting Cycle After chart of accounts established: 1.Source documents (originals) 2.Entered into journals (posting) 3.Journal totals transferred to G/Ledger Accounts (final posting) 4.Trial Balance (listing of final accounts – starting point for accountants work) 5.Financial Statements

33 Financial Statements 3 basic statements: Income Statement – shows all revenues and expenses for a specific time period (profit/loss). Balance Sheet – photograph of assets and liabilities at a specific date (Assets=Liabilities+Equity). Cash Flow Statement – reports cash received and spent – statement reconciles the Income Statement. The idea is to obtain timely and accurate information that is useful in managing the business.

34 Other Accounting Topics Income Tax – reporting income for tax purposes. GST – a flow through tax for business. Real Estate Trust Accounting – brokerage MUST have at least 2 accounts (Trust/General). Brokerage assumes great responsibility to handle trust monies.

35 Trust Deposits/Disbursements All money received in trust MUST be deposited within 2 banking days. Funds can be disbursed ONLY in accordance with the terms of the trust. 4 possible permissions: Amount of Commission Disbursement to sellers lawyer Return of the Deposit to the Buyers Payments to other brokerages. Withdrawals made by cheque or bank transfers under signature.

36 Trust Accounts The trust control account and subsidiary trust accounts MUST always balance. Bank Reconciliation statement MUST be prepared within 30 days of the prior months bank statement and MUST be signed and dated. Postings are made to trust control account and also to an individual (subsidiary) ledger sheet.

37 Real Estate General Account The general bank account reflects ALL banking activities of the brokerage EXCEPT those in trust. General account uses cash receipt journal and the cash disbursement journal. These two journals record ALL activities of the account. Monthly reconciliation is imperative.

38 Trade Record Sheet Every trade MUST have a fully completed trade record sheet. Trade record sheet MUST be completed AS SOON AS a purchase contract is accepted / deposit made. Provides the following source info: Commissions Trust account – details re deposit Buyers brokerage – details of how much should be collected/received.

39 Monitoring Accounting System Monthly basis, monitor: Bank Reconciliations noting outstanding deposits and outstanding cheques Internally generated financials Detailed listings of receivables and payables Current budget vs. actual figures. An effective and efficient system is VITAL. Continually review!

40 Noted Definitions Current Asset – something you sell and get money for it. Fixed Asset – something required to make your operation happen. Fixed Expenses – happens every month regardless of a sale. Variable Expenses – changes based on productivity.

41 NEED TO KNOW DRCR ASSETSLIABILITIES EXPENSEREVENUE B/S I/S

42 COOL THING TO KNOW E.G. – BREAK EVEN FORMULA PROFIT-$ 60,000 FIXED-$ 50,00014% $110,000 VARIABLE -16% of gross income 14% x gross income = $110,000 70/30

43 Administrative Systems Develop office operations manual. Develop office policy and procedures manual. These ensure each agent is aware of the policies required to remain active within the brokerage. Implementing effective policies will help the office maintain and stay consistent.

44 Common Sections for Inclusion Welcome, Mission Statement Real Estate Act and the Rules Code of Ethics, Code of Conduct Brokerage Policies & Procedures Office Facilities Administrative Support Office Meetings and/or Training Working with Principals Advertising and Marketing material

45 Common Sections, continued… Expenses Professional Conduct Commissions, Remuneration, etc. Confidentiality Insurance Policies, including Keys and Lock Box, Legal Action & Representation, Office Co-operation and Referrals, Personal Selling and/or Buying

46 Common Sections, continued… Transaction Documents Trust Account Deposits Policies Unlicensed Assistants Awards and Contests Vacation Time Resignations / Terminations NOTE: Property Management Office Operations Manual contains a few others, see page 66

47 Performance Appraisals Schedule regular ongoing performance appraisals to ensure policies and procedures are followed ethically and that agents and staff meet their productivity requirements. Regularly schedule appraisals to help improve weaknesses and develop strengths. Agent/Associate Broker appraisals to ensure compliance with legislated standards and office policies.

48 Labour Law You must comply with relevant labour law affecting agents and support staff. Labour laws do not affect anyone deemed to be an independent contractor (usually agent). You must always comply with current regulations.

49 Commissions paid to Corporation The following must be kept in agent personnel file: A current GST number A letter stating to which company the agent wishes to be paid A copy of the Certificate of Incorporation The documents of incorporation, especially the shareholders and the percentage of the company that they own (at least 50%).

50 Criteria for Support Staff Labour laws do not affect contract labour when: Less than 80% of income comes from the company. Provides own equipment on which to work. Chooses own work hours instead of the company dictating. All other employees must be paid as either salaries or paid-hourly and CPP, EI and income tax is deducted.

51 Review of Trading Activities Maintain good records and do prompt continuous review of all trading activities. Document EVERYTHING. Use Memos, Telephone Logs, Time Planners, Filing Systems, Agents Records, Employee Records, Listing Records, Transaction Records, Management Agreements, etc. Document EVERYTHING.

52 Importance of Communication Institute internal and external communication links for maximum service to all for smooth operation. Schedule regular meetings. Post Minutes of Meetings. Produce internal newsletters. Establish messaging systems. Provide market information. Setup mail slots for agents.

53 Monitor Administrative System Monitor all your systems regularly and update them as required. Policies and procedures must be adapted and modified as the industry and your office changes. Think of continually improving. Note what is working and what needs improving. Review regularly and modify as necessary.

54 Promotion and Marketing Develop a Marketing program. Focus on the needs of potential clients. Choose a target market, identify a marketing mix and promotional mix and design it to meet the needs of that market. Develop a communication message and establish an advertising program for your brokerage.

55 Develop Marketing/Advertising Plans Marketing Strategies Segment the market into groups of similar needs. Choose one or more target markets and focus on the needs of each. Choose from 3 basic strategies: Undifferentiated marketing. Differentiated marketing. Concentrated (niche) marketing.

56 Undifferentiated Marketing Use a single marketing program to market one service to all potential customers. Dont try to satisfy everyone or you will continually face threats from brokerages that pick a segment of the market. An example of this is a brokerage attempting to cater to the entire residential market.

57 Differentiated Marketing Offer numerous but similar products and/or services to cater to different markets using different programs. Try to satisfy the needs of a large part of a total market. Design a number of separate products with specific appeals to satisfy different target markets. To do this, you must have a number of departments servicing each.

58 Concentrated (Niche) Marketing Select a relatively small target market and focus your entire effort on satisfying the needs of that market. This is appropriate for smaller brokerages or individual agents with limited resources. Agents have been successful concentrating on a market segment and expertly meeting the needs.

59 Market Research This focuses on niche marketing, but the same strategies can be expanded if a brokerage chooses to meet needs of more than one target. Choose a Target Market by analyzing potential segments before selecting one and develop a program for that target. Research is crucial to succeed. Time spent on this is time well spent.

60 Factors to Consider To Choose Target Brokerage Resources Target Markets Potential Competition Match between target and brokerage Can target market be reached profitably?

61 Identify Needs of Target Create marketing program based on needs of the target and various ways to satisfy those needs. Client needs fall in 2 categories: Needs of buyers. Needs of sellers. Beyond basic need for shelter, home buyers may also need comfort, status, prestige, investment, inflation hedge and security, etc.

62 3 Basic Needs Services Satisfy Information Educate the client by supplying information. Skills Offer skills clients need to buy and sell properties (e.g. create binding contract). Trust and confidentiality Build trust relationships with clients as a client MUST feel that his/her agent will keep confidentiality.

63 Marketing Mix Once a target market is chosen and their needs identified, develop the marketing mix to satisfy those needs. Product or service (or combination) Place Price Promotion The 4Ps are dependent on each other and must be integrated to form the marketing mix.

64 Product Brokerages provide an intangible service. The product the brokerage offers to clients is the agent who performs the service on their behalf. As a product, each agent offers a unique combination of personality characteristics, experience and knowledge. A client chooses the agent with whom he/she feels comfortable.

65 Service Consumers talk to friends and gather evidence of performance. Consumers use information to decide, such as: How the agent answered questions? How prepared is the agent? How did the agent meet commitments? Consumers generally choose an agent based on referrals, reputation or previous dealings.

66 Product Mix Product Mix is the total group of products and services that a brokerage offers. Key to success is to be clearly focused and to commit resources to a specific target market. Dont try to service too broad a market than your brokerage can effectively handle. Balance resources, skills and expertise, the market environment, and customer needs.

67 Place, Promotion, Price Place - refers to the ways a product or service reaches a target market. Promotion – To be successful, a brokerage must communicate with its target market by choosing an appropriate mix of activities. Price – refers to the fees charged for the service. An agent is also involved in helping the client set the sale price or lease rate.

68 Managing the Marketing Mix Since the marketing mix is designed to satisfy the needs of the target market, the best place to start is to determine the goods or services that will meet these needs. After that, decide on the price, marketing channels (place), and promotional activities. Create trust by being honest, knowledgeable and meeting your commitments.

69 Develop a Promotional Plan Promotional or communications mix is made up of 5 elements: Personal selling Advertising Public relations Publicity Sales promotion It is VERY important to develop a clearly focused, long term, integrated promotional program.

70 Managing the Promotional Mix Manage the promotional mix to satisfy the needs of the market targeted and accomplish the desired promotional objectives: Establish objectives to be measurable. Identify the target audience. Develop relevant/effective messages. Select appropriate means for delivery. Determine the necessary costs and revenues to select a productive program.

71 Establish Promotional Budget The objective of promotional activities is to obtain financial return on the monies invested and maximize this return. Marginal analysis maximizes results from the money spent promoting. It is difficult to match promotional expenditures with resulting sales. Evaluate objectives by cost and choose the most productive (logical).

72 Develop a communication message: 1.Determine the receivers of message. 2.Envision how audience will respond. 3.Choose message (AIDA) – Attention, Interest, Desire, lead to Action. 4.Develop message content (rational appeal or emotional appeal). How will audience benefit by responding? 5.Choose the media – personal or non- personal communications (cost?). 6.Develop feedback system. Communication Process

73 Communication Noise and Filtering Messages are distorted by all kinds of disturbances, or noise. Overcome noise by repeating the message frequently. Develop advertising that features the same appeals but uses a different context. Filters are psychological barriers: Selective Attention Selective Perception Selective Appeal

74 Effective Messages Source – credibility of the message source can have a profound impact (formal/informal). Medium – Medium MUST fit the message (passive/active). Message – the thought, idea, attitude, or image that the sender wishes to convey. Effective messages start with an appeal to the audience and end with an appeal relevant to the sender.

75 Advertising Defined as any form of purchased non-personal communication used to communicate an informational or persuasive message. Advertising is a major concern because it costs often consume a large portion of the operating budget. The objectives of advertising are major considerations. Improve your effectiveness!

76 Objectives of Advertising Create awareness. Provide information. Change attitudes. Differentiate your product/service. Stimulate demand. Attract agents. Extreme care should be given in setting your objectives.

77 Develop Advertising Theme An advertising theme is the fundamental message to convey. Each element must support and reinforce the central theme. Catch attention – trigger basic need. Use rational or emotional appeal but keep it simple – one main idea. Use a lot of thought and a clear understanding of product/service. Glean ideas wherever you can.

78 Measure Effectiveness of Advertising Set up a system to keep track of responses – valuable information to use when making future decisions. Analyze this information to determine what is most effective. Evaluate results of public relations and publicity. Good public relations and publicity will make the public more open to your advertising and selling efforts.

79 Competition Act A federal statute designed to eliminate private agreements that attempt to restrain or lessen competition, and to prevent misleading advertising and similar deceptive business practices. Applies to all facets of the real estate business. Failure to comply results in damage to the agent, broker, brokerage, and the industry.

80 Know the Act ! No individual or corporation shall, for the purpose of promoting any business interest, by any means WHATEVER, make a presentation to the public that is false or misleading. The purpose is to prevent any advertising or sales promotion that involves lying to or misleading the public.

81 Human Resources Extremely important for the success of brokerage to hire agents and associate brokers who reflect values and goals identified in business plan. Primarily, these are the people that represent the brokerage to public. Support staff must also understand and support the vision and goals.

82 Hiring/Managing Support Staff Job Descriptions – all positions should have descriptions developed: basis for hiring and evaluating employees helps staff understand position/requirement. As well as Title, the description includes: what the job seeks to accomplish or produce duties and responsibilities what equipment is used/operated skills, abilities, knowledge, education, and experience required to successfully perform the job.

83 Policies and Procedures Staff must also understand office policies and procedures and help the broker and agents with them. Sections relating specifically to staff include: Office hours, reception services, office equipment, supplies and stationery, procedures for long distance, lock up, availability to agents, hours of work and limitations of duties if they are unlicensed.

84 Recruitment Recruitment is the process of attracting applicants. Types of recruitment include: Support Staff Recruitment Internal Recruitment External Recruitment such as Employee Referrals, Walk-ins, Advertising and/or Employment Agencies. Choose the method on their abilities to get qualified applicants and on the time and money they require.

85 Effective Interviews Guidelines Have 2 interviewers conduct meeting. Prepare questions prior to meeting. Ensure questions based on the job analysis and relate to the job. Make sure meeting is uninterrupted. Establish rapport. Use similar questions with each applicant and avoid being hasty. Ask about past work experience and behaviour.

86 Rate each Applicant First impressions Communication Skills Personality Experience Reasons for leaving last job Career aspirations Consistently evaluate all applicants and provide a basis for comparing.

87 Federal/Provincial Requirements MUST ensure policies/procedures regarding human resources reflect the legal context in which it operates. Human rights legislation is to prevent unlawful discrimination. Also provides standards to protect employee welfare. This deals with payment of wages, hours of work, overtime pay, vacations and vacation pay, general holidays, minimum wage rate, etc.

88 Employment Standards Code Get familiar with Employment Standards Code (ESC). www.gov.ab.ca/lab/index.html www.gov.ab.ca/lab/index.html You are bound by the legislation whether or not the employment agreement you sign refers to it. Access the province-wide information line toll-free 310-0000 then request (780) 427-3731.

89 Notice of Termination Up to 3 months no notice necessary 1 weeks notice after 3 months 2 weeks notice after 2 years 4 weeks notice after 4 years 5 weeks notice after 6 years 6 weeks notice after 8 years 8 weeks notice after 10 years

90 Statement of Earnings Employees MUST receive a detailed written statement of earnings and deductions for EACH pay period: Regular and overtime hours worked Regular and overtime wage rates Wages and overtime paid Time off in place of overtime provided and time taken Vacation and general holiday pay Money paid in place of termination notice Amount and purpose of all deductions The period of employment covered.

91 Deductions You MAY deduct: Amounts permitted by the ESC, federally legislated statutory deductions, a judgement order of a court, and amounts personally authorized in writing by an employee. You MAY NOT deduct: For faulty workmanship, for cash shortages, for loss of property if more than one employee has access to the cash or property.

92 NOT dealt with in ESC Self-employed persons No distinction among full time, part time, casual, permanent or temps Bereavement leave Sick leave Benefit packages It is VERY important for the brokerage to know the ESC! (Employment Standards Code)

93 Performance Reviews Schedule ongoing staff performance appraisals regularly. Benefits include: Monitoring how well employees are following policies and procedures. Monitoring how well they are performing their jobs and meeting performance standards. Avoids problems that arise later. Good way to get feedback as well.

94 Recruiting Agents & Associate Brokers Recruit agents who are a good match with your values and market niche. Attract trustworthy, responsible, & professional agents. Be prepared for the interview. If hiring new agents, you will have to explain obligations. If hiring current agents, find out why they want to change brokerage. Ask LOTS of questions.

95 Federal/Provincial Requirements Any one considered independent contractor (nothing deducted at source) is not affected by labour law. Members GST number MUST be kept on file. Industry members associated with your brokerage USUALLY do not have any deductions taken at source, excepting split commissions and GST, when applicable.

96 Planning Recruitment Expect to have agents regularly leave. Consider activity as ongoing and reflect this in monthly budget. Keep a personnel inventory to identify the skills of existing agents and the skill you would like to recruit for your brokerage.

97 Performance Standards Goal setting is an important part of setting performance standards and evaluating agents ability to meet. Share the goals (broker/agent). Periodically review and adjust to adapt changing circumstances. Establish relationships with agents based on mutual trust and respect. Counsel your agents regularly.

98 Managing Agents & Associate Brokers Conduct regular performance appraisals. If faced with lack of motivation or inability with skills or personal issues, make your decisions incongruence with your plans. Always maintain good relationships with your agents. Encourage or recommend particular training, if necessary.

99 Risk Management 2 Important areas for understanding risk issues are: 1.Past Claims (provide valuable information). 2.4 critical issues that play a key role: 1.Misrepresentation 2.Negligence 3.Mistake 4.Agents and/or associate brokers breach of fiduciary duties.

100 Misrepresentation Members are responsible for the information they communicate, either verbally, in writing, or through conduct that may create a misleading impression. The extent of damages awarded is often tied directly to the material nature statement that is key in the decision-making process. Look for signs of hidden material defects.

101 Misrepresentation continued… Members MUST disclose all material information regardless of who they represent. Be aware of fraudulent or negligent misrepresentation. All representation you make MUST be able to be verified by reference to original supporting documentation or expert opinion. Members MUST follow duty of care and duty to warn.

102 Fraudulent vs. Negligent Fraudulent Misrepresentation (not covered by E&O Insurance) is where the person making the statement knows it to be false. Negligent Misrepresentation is where the person making the statement should be aware of the facts. There are several necessary elements such as member holds him/herself as having expertise, provides information knowing it will be relied on, the receiver relies on it and acts and there are damages that result.

103 Negligence Negligence is a broader source of liability than misrepresentation. Liability for negligence will only arise if there is a duty in circumstances to exercise a standard of care. Standard of care means what a reasonably prudent industry member would do in the circumstances. An error in taking measurements or poorly drafted conditions are examples of negligence.

104 Mistake You may be held liable for a factual mistake, even if you believed you were correct. Confusion regarding notice periods, lack of clear intention of the parties, and lack of specificity in identifying attached and unattached goods included or excluded may give rise to claims for mistake.

105 Agents Breach of Fiduciary Duties Agents owe RANCOLD to clients. The court will take any breach of duties into consideration in a suit for negligence or misrepresentation. With the practice of dual agency or buyer agency, buyers are more aware of the duties owed to them, which may result in an increase in the number of claims in this area.

106 Risks in Support Staff/Assistant Brokerages that employ unlicensed assistants MUST ensure the work assigned does NOT contravene Act. Clearly outline duties and CLOSELY supervise their activities. AREIX E&O Insurance does NOT cover unlicensed persons. Know/Follow published guidelines written by Alf Kaszuba for September 1997 edition of The Regulator.

107 Risks Associated with Brokerage Prudent management is key. Broker responsible for actions of ALL agents and associate brokers registered, including action of which the broker may NOT be aware. Brokers MUST ensure their agents comply with legislation. Effective risk management begins with training.

108 Accounting Records Brokerages MUST keep records of each trade including: Nature of the trade Description of property involved in sufficient detail to identify True consideration for the trade Names of the parties to the trade The amount of deposit received and a record of the disbursement of it The amount of commission, a record of the disbursement, and name of payer.

109 Advertising Brokers, associate brokers, agents MUST trade ONLY in the name that appears on their licenses and in the name of the brokerage they belong. The class of membership (broker, associate broker, agent) MUST appear ONLY on business cards. Advertising MUST indicate who is doing the advertising. Broker MUST ensure advertising complies with legislation.

110 Advertising continued … Keep initialled copies of proofs. You MUST be a member of CREA to use the term REALTOR. Members MUST ensure marketing materials have correct information. All statements should be objective, not subjective. CHECK advertising and marketing materials distributed for accuracy.

111 Disclosure ALL members MUST understand responsibilities regarding disclosure. Disclosure of Interest is extremely important when industry member has an interest of any kind. Disclosure of Referral Fees – ALL referral fees must be disclosed, in writing, to the person being referred, the nature of the referral and the amount of the referral fee (form).

112 Listing Agreements and Offers Broker MUST review all listing agreements, purchase contracts, etc. OR DELEGATE this to a qualified person. Delegation of Duty MUST be in writing and all MUST be informed. All MUST understand that the person to whom the task is delegated to has the responsibility and authority to act on the brokers behalf.

113 Recovery of Commission Legal action for payment of unpaid commission can ONLY be brought against a person, if: The brokerage agreement is in writing and signed by the party to be charged (or authorized agent); or The person being charged has, as a result of the services of an industry member employed by that person, effected a sale, executed all necessary paperwork and delivered same to buyer.

114 Recovery of Commission, cont… ONLY the member who is entitled to the commission according to the brokerage agreement can sue for recovery of unpaid commission. Buyers agents need to ensure all parties are informed as to how they will be compensated. ONLY the brokerage is entitled to register a caveat to secure the unpaid commission or assign it to the buyers brokerage.

115 Minimizing Risk Through Insurance Real Estate Assurance Fund (Guarantee Fund) – administered by RECA, used to pay unsatisfied judgements to the public when member has been found to have committed fraud or breach of trust with respect to trust accounts on a real estate trade. Protects public from unscrupulous practitioners.

116 Assurance Fund, continued … The claimants gives notice of the commencement of action to RECA. RECA refers to legal counsel. For the claimant to make a claim against the Assurance Fund, the claimant MUST obtain an unsatisfied judgement against member. After 30 days that it becomes final, the claimant applies to RECA for compensation from the fund.

117 AREIX Alberta Real Estate Insurance Exchange provides a mandatory E&O insurance to members (10/01/91). Based on agreement to create a pool of funds to satisfy claims. Broker MUST have a copy for all its members to review. All members MUST participate (required by legislation).

118 Other Insurance Coverage Business Property Insurance Personal Fidelity Insurance Health-related Insurance Professional Automobile Insurance Liability Insurance Key Person Insurance AREIX Errors and Omissions Insurance

119 AREIX Insurance Policy duties What you MUST do: Notice (as soon are your are aware) Cooperation Recoveries (do everything needed). What you MUST NOT do: Admissions Recoveries (do nothing which will prejudice AREIXs rights of recovery).

120 Minimizing Risk by Monitoring Records Maintain accurate and detailed transaction files (crucial to reducing risk – develop a checklist and use it). The importance of this can NEVER by over-emphasized. Review ALL listing and purchase contracts from the brokerage. Be aware of the more contentious areas of contracts and monitor closely.

121 Monitoring Policies and Procedures Have EVERYONE acknowledge in writing that they have read, understand and agree to abide by the brokerage policies and procedures. Establish security and backup. Establish a professional network. Impress on EVERYONE that they share responsibility with you in managing risk.

122 Leadership Leadership: is the process of influencing others to achieve goals. Raises awareness, shows direction, creates results, demonstrates to others how to reach goals, achieves progress that benefits others. translates into profit and the ability to remain competitive.

123 As Leadership Pertains to Management Management (special kind of leadership) is working with and through individuals and groups to accomplish organization goals. Real estate management role relates primarily to planning, organizing, directing and controlling. Outline strategies, organize financial, human, and material resources to all work together, get people involved working to a common end and monitor your progress regularly.

124 Sources of Leaders Power Legitimate Power – obvious because of position in the organization. Reward Power – acknowledge and recognize in the form of reward. Coercive Power – using power through using punishment or threats. Expert Power – expertise or knowledge in specific area. Referent Power – gains respect and admiration of others.

125 Real Estate Industry Leadership Traits Good with people, communicates well, monitors progress and results, hard-working, knows the field, thorough; handles details, can work under pressure, solves problems, leadership skills, technical skills, human skill, conceptual skill, to name a few.

126 Leadership Styles Task-related leader Relationship-related leader (Extremely effective if leader can perform both of these) Directive Leadership Supportive Leadership Achievement-oriented Leader Participative Leader No best style – effective leader adapts to meet needs.

127 Common Roles of a Leader Coaching Terminating Conflict resolution Conflict Resolution Techniques Remain neutral Listen Take time The above behaviours need process.

128 Conflict Management Process Investigate Communicate Paraphrase Identify common ground Brainstorm solutions Collaborate to find a solution Summarize and look ahead Conflict should be viewed normal and dealt with promptly to everyones satisfaction.

129 Leadership Development Once you have your brokers licence, your obligation is to continue your own personal development. Continue to develop your management and leadership skills. Make your own professional development a personal goal each year by planning to take leadership- related training.

130 Promote Professionalism Be proactive and adapt your style to meet the needs of who you lead. Set a professional example in your brokerage and expect the same from the people. Since your reputation and that of everyone in your brokerage is crucial to your success, it is worthwhile to ensure EVERYONE is knowledgeable about the Code of Conduct. Strive to communicate effectively!


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