1. Chapter 15 Business Management Practices1 New Jersey Real Estate for Salespersons and Brokers By Marcia Darvin Spada Thomson/South-Western Copyright, 2006

2. Chapter 15 Business Management Practices2 Chapter 15 Business Management Practices

3. Chapter 15 Business Management Practices3 Chapter 15 Key Terms  Accrual method  Broker of record  Cash method  Commingling  Company dollar  Employing broker  Errors and omissions insurance  Independent contractor  Journal/Ledger  Negotiable instrument  Short-term rentals

4. Chapter 15 Business Management Practices4 Brokerage Firm Business Organizations Individual broker (sole proprietor) Limited partnership Partnership Corporation Limited liability company All business names must be submitted in writing for approval to the REC

5. Chapter 15 Business Management Practices5 NJ Brokerage Office Requirements  All broker’s and salesperson’s licenses must be displayed  Branch offices must be supervised by a broker or broker-salesperson  Professional liability insurance - called errors and omissions

6. Chapter 15 Business Management Practices6 Accounting Practices for the Brokerage Firm Company dollar Portion of revenue that ends up belonging to the brokerage firm Commingling Mixing the funds of others with the business of personal account Trust or escrow account For all monies received from clients such as deposits and down payments

7. Chapter 15 Business Management Practices7 Employment Practices and Licensee Supervision Broker responsible for actions of licensee Brokers must supervise licensees Written employment agreement between broker and salesperson Brokerage firm records must be maintained for 6 years

8. Chapter 15 Business Management Practices8 What is wrong with these ads? Ad 1 2-Family, ½ acre lot $350,000 Call (609) 777-1234 Ad 3 3-story Colonial $450,000 Private professional community (201) 767-0234 Ad 2 Brownstone $4,000,000 Lydia Dupree, Liberty Park Brokerage (201) 777-4567 Ad 4 2 bedroom apt. for rent in upscale building $1,600/month No children or pets (973) 459-9999 Lucy Baynes Brokerage, Inc.

9. Chapter 15 Business Management Practices9 Comparison of Employee and Independent Contractor EmployeeIndependent Contractor Receives a salaryNo minimum salary Broker withholds social security, income and unemployment tax Salesperson pays taxes Broker can pay for extrasSets own hours Pays for most expenses- receives no extra compensation Enters into contract with broker