2 Outline I. Real Estate Brokers vs. Sales Associates II. The Real Estate Sales ProcessIII. Real Estate RegulationIV. Legal Aspects of Agency RelationshipV. Other Real Estate Brokerage Related Issues
3 I. Real Estate Brokers vs. Sales Associates A real estate broker is an who brings together , assists in negotiating agreements between them, executes their orders, and receives a in compensation for services rendered.Brokers vs. Agents: Real estate brokers are individuals licensed by state governments to arrange real estate sale or lease transactions. Real estate sales associates (or salespersons) are also individuals licensed by state governments to arrange real estate sale or lease transactions but.
4 II. The Real Estate Sales Process 1. Listing presentation2. Listing agreement3. Marketing the property and qualifying buyers4. Presentation of offers and negotiations5. Contract6. Services (surveys, inspections, etc.)7. Settlement or closing
5 II. The Real Estate Sales Process 1. Listing presentation - goal: to get the listing agreement signed- usually done in 2 meetings- use listing (or seller’s) package2. Listing agreement (4 different types): i. open listing:the “selling” (buyer’s) broker earns the commissionii. exclusive brokerage (or agency) listing:the “listing” (seller’s) broker earns the commission, but theseller reserves the right to sell the propertyiii. exclusive-right-to-sell listingthe “listing” (seller’s) broker earns the commission, even if the seller sells the propertyiv. net listingthe seller is guaranteed a “net” sales pricev. limited service listingthe broker provides some services for a fee
6 II. The Real Estate Sales Process 3. Marketing the property and qualifying buyers- marketing strategy is very important to create interest- qualifying buyers eliminates waste of time4. Presentation of offers and negotiations- use the sales contract (buyer’s) package5. Contract- the FL real estate sales contract is very complicated- hire a real estate attorney6. Services- surveys, inspections, repairs, appraisals, insurance, etc.7. Settlement or closing- title converts to new owner(s)- all funds are exchanged
7 III. Regulation of the Real Estate Profession Anyone wishing to provide real estate services to others for compensation must be licensed byThe intent of licensing laws is toIn Florida, Chapter 475 of the Florida Statues provides regulatory authority regarding the real estate industry to the Florida Real Estate Commission (FREC).Department of Business and Professional Regulation (DBPR), Division of Real Estate, provides investigative and administrative services to FREC.Link to Florida statutes:
8 When is a Real Estate license necessary in Florida? Advertising real estate servicesRepresenting buyersRepresenting sellersArranging rentals (leases) or providing rental (leasing) informationAuctioningExchange
9 When is a license not required in Florida? Property owners buying, selling or leasing for themselvesEmployees of owners who are paid a salary (only)Court appointed representativesCemetery lot salesRentals in a mobile home parkLodging facility operationsSelling time-shares that are registered as securities with the SEC
10 Florida Sales Associate License Requirements Pay application fee & finger prints ($200)18 years or olderHigh school diploma or equivalent63 hours course (FREC I) & pass with 70%+ ($245)Pass state exam with grade of 75%+45 hour post-license course before first renewal ($125)14 hours of continuing education every renewal ($20)Pay renewal fees every 2 years ($100)
11 Florida Broker License Requirements Active as salesperson for 24+ monthsPay application fee & finger prints ($200)72 hour course with grade of 70%+ ($345)Pass state exam with grade of 75%+60 hour post-license course before first renewal ($290)14 hours of continuing education every renewal ($20)Pay renewal fees every 2 years
12 Other Florida Licensing Laws License Categories:Active vs. inactive status (voluntarily / involuntarily inactive)Reciprocity: In general, there is no reciprocity with other states. However, some states recognize experience of FL licensees.Residency: is not a requirement for a FL real estate license
13 IV. Legal Aspects of Agency- Relationship “Agency relationship”: the authorizes the to act on his or her behalf and best interest.3 different agency relationships in real estate:1) owner ↔ broker (single agency)2) broker ↔ buyer (single agency)3) broker ↔ sales associateA fiduciary is in a relationship of trust and confidence with the principal.Note: A transaction brokerage relationship is not an agency relationship.
14 Single Agent’s Duties to Principal in Florida Loyalty (protect client at all times)Full ConfidentialityObedienceDealing honestly and fairlyObtain best price and termsRecommend action on offersFull disclosure of material facts AND rumors of factsAccurate accounting for all fundsSkill, care, and diligencePresent all offersNot a duty for a transaction broker
15 Fraud vs. Misrepresentation Fraud: a fiduciary makes a false statement material to a transaction that is justifiably relied on by the client, , resulting in injury to the client.Misrepresentation: the same as fraud except
16 Termination of Agency Relationships when a transaction occurswhen the agreement expireswhen the parties agree to terminatewhen one party breaches the agreementwhen one party becomes contractually incapacitatedthe listing property is destroyedthe listing property is condemned
17 V. Other Brokerage Issues FranchisesDesk Fee ArrangementsBroker and Sales Associate Compensationusually calculated as a percentage of the transaction amount: residential %,commercial %lots %broker and sales associate often have an agreed upon “split” between themselvesa commission is earned when a ready, willing and able buyer is procuredThe Multiple-Listing Service (MLS)
18 National Association of Realtors Not all real estate licensees are Realtors!Membership in the NAR (and its state and local organizations) requires payment of dues and a pledge to adhere toMembership in the NAR is a requirement for access to the MLS.