1. © 2013 All rights reserved. Chapter 1 The Broker's Office1 New York Real Estate for Brokers, 5 th e By Marcia Darvin Spada Cengage Learning

2. © 2013 All rights reserved. Chapter 1 The Broker's Office2 Chapter 1 The Broker’s Office: Operation, Management, and Supervision

3. © 2013 All rights reserved. Chapter 1 The Broker's Office3 Chapter 1 Key Terms  Administrative discipline  Apartment information vendor  Apartment sharing agent  Article 12-A  Article 78 proceeding  Associated real estate broker  Blind ad  Breach of Contract  Commingling  Consent decree

4. © 2013 All rights reserved. Chapter 1 The Broker's Office4  Chapter 1 Key Terms (continued)  Earnest money deposit  Escrow account  Federal Trade Commission (FTC)  Group boycott  Home inspector  Independent contractor  Kickback  Market allocation agreement  Misdemeanor  Mortgage banker  Mortgage broker

5. © 2013 All rights reserved. Chapter 1 Key Terms (continued)  Multiple listing service  Net listing  Price fixing  Real estate broker/salesperson  Reciprocity  Sherman and Clayton Antitrust Acts  Sponsor  Tie-in arrangement  Trade name  Uniform irrevocable consent and designation form Chapter 1 The Broker's Office5

6. © 2013 All rights reserved. Chapter 1 The Broker's Office6 Categories of Licensure

7. © 2013 All rights reserved. Chapter 1 The Broker's Office7 Duties that Require Licensure Real estate transactions for others and for compensation, such as:  Listing  Selling  Purchasing  Negotiating  Leasing and renting  Auctioning  Exchanging

8. © 2013 All rights reserved. Chapter 1 The Broker's Office8 Licenses related to Real Estate AApartment information vendor AApartment sharing agent RReal estate appraiser HHome inspector MMortgage broker MMortgage loan originator MMortgage banker

9. © 2013 All rights reserved. NY State Real Estate Appraiser Licensure/Certification  State Licensed Appraiser Assistant  State Licensed Real Estate Appraiser  State Certified Residential Appraiser  State Certified General Appraiser  The appraiser assistant license requires no experience. Chapter 1 The Broker's Office9

10. © 2013 All rights reserved. Home Inspection Licensure Requirements  Complete 100-hours of NYS prescribed coursework  Complete 40-hours of supervised fieldwork  Pass the NYS licensure exam  License fee $250-2 year term Chapter 1 The Broker's Office10

11. © 2013 All rights reserved. What is a Mortgage Broker? An individual or company registered by the NYS Department of Finance Services Finds or sources loan for purchasers Chapter 1 The Broker's Office11

12. © 2013 All rights reserved. NYS Requirements for a Mortgage Broker Registration Requirements Good standing in community 2 years of credit analysis experience Credit Report Fingerprints $99 Fingerprint Fee $1,500 Investigative Fee Surety bond for $10,000 Chapter 1 The Broker's Office12

13. © 2013 All rights reserved. NYS Dept of Financial Services Licenses and Registrations  Mortgage loan originator license for individuals  Mortgage loan servicer registration for companies  Apply online to the NYSDFS through the Nationwide Mortgage Licensing System (NMLS)  Mortgage broker registration for companies  Mortgage banker license for companies  Mortgage loan originators must work under the supervision of a mortgage banker or mortgage broker Chapter 1 The Broker’s Office13

14. © 2013 All rights reserved. Experience for the Mortgage Broker Registration  May use his broker license to become a mortgage broker  Broker license must be current  Salespersons must have actively participated in the residential mortgage business for two years Chapter 1 The Broker's Office14

15. © 2013 All rights reserved. Dual Agency Disclosure under the Banking and NY Real Property Laws  Mortgage brokers who are also real estate brokers representing the seller may be dual agents  Legal with disclosure and informed consent  Article 12-D of NY Banking Law  A mortgage brokers who is also a real estate broker in the same transaction must disclose the dual agency  Real Property Law  Section 443 also requires dual agency disclosure  The real estate agency disclosure form is used for one- to four- unit residential properties Chapter 1 The Broker's Office15

16. © 2013 All rights reserved. New York Mortgage Banker Requirements Requirements Net worth of At least $250K Existing Line Of Credit For $1mil Filing of Surety Bond For $50K Demonstration of good character Background Report Fingerprints, $99 fee, $3k investigative fee Chapter 1 The Broker's Office16

17. © 2013 All rights reserved. Mortgage Brokers vs. Mortgage Bankers  The requirements to become a mortgage banker and a mortgage broker are much different  A mortgage banker may be responsible for collecting the mortgage payments and risk its own credit  The mortgage banker typically sells the loan to a larger lender  A mortgage broker does not lend his company’s money Chapter 1 The Broker's Office17

18. © 2013 All rights reserved. Requirements for Broker Licensure Chapter 1 The Broker's Office18

19. © 2013 All rights reserved. Chapter 1 The Broker's Office19 Licensure Requirements RequirementSalesperson Broker, Associate broker Pocket cardMust carry LicenseKept by broker Education (Total hours) 75120 ExperienceNone2 yr salesperson, 3 yrs equivalent Fee/term of license $50/ 2 years$150/2 years Continuing Ed22.5 hrs every 2 yrs 22.5 hrs every 2 yrs, unless exempt Licensing agencyNY DOS License LawArticle 12-A, Rules and Regs Article 12-A Rules and Regs.

20. © 2013 All rights reserved. Chapter 1 The Broker's Office20 What to Bring to the State Exam  Driver’s license or other government ID-must be photo bearing  $15 exam fee  Two #2 pencils  Calculator (silent and non printing if desired)  You will be thumb printed

21. © 2013 All rights reserved. Registering for the Licensure Exam Register online: www.dos.state.ny.uswww.dos.state.ny.us Schedule exam on the DOS Occupational Licensing Management System, eAccessNY. On eAccessNY, view your scheduled exam details or exam resultseAccessNY User-friendly access with a personal ID and password Exam results are reported as passed or failed and available online as soon as possible after they are received by the Exam Unit and scored. Chapter 1 The Broker's Office21

22. © 2013 All rights reserved. Licensure Exam  You should bring the page you were requested to print when you scheduled your exam on eAccessNYeAccessNY  You must have a grade of at least 70% to pass. Exam time 2.5 hours; all questions: multiple choice  If you fail the exam, you can schedule another exam by utilizing your account in eAccessNYeAccessNY Chapter 1 The Broker's Office22

23. © 2013 All rights reserved. Chapter 1 The Broker's Office23 BROKER APPLICATION Applicant must submit to the DOS:  Hard copy broker application mailed in (broker applications cannot be submitted online)  Exam passed slip  Evidence of broker sponsorship, if applicable  School certification  Check or credit card to the DOS  Experience points

24. © 2013 All rights reserved. Classes of Licensure for Brokers  Individual broker  Associate broker  Trade-name broker  Partnership broker  Corporate broker  Limited Liability Company/Partnership  Franchises Chapter 1 The Broker's Office24

25. © 2013 All rights reserved. Chapter 1 The Broker's Office25 The Broker Point System

26. © 2013 All rights reserved. The Broker Point System Explained Point system to clarify real estate experience Required for the broker license A certain number of points allotted for various types of experience For example, 250 points for the sale of a single family house, a condo, co-op unit, multifamily or a farm (with residence under 100 acres) You must multiply the allotted points in each category by the number of transactions per category and total the points from each category Chapter 1 The Broker's Office26

27. © 2013 All rights reserved. Point System Experience o Experience for a broker license may be obtained through: o one type of experience such as residential sales o a variety of experiences such as residential and commercial sales, property management, and leasing o Three types of experience are: 1. one year as a salesperson and the accumulation of 3,500 points 2. two years’ equivalent experience in general real estate and 5,250 points 3. combined experience including work as a salesperson and general real estate and 5,250 points 1.. Chapter 1 The Broker's Office27

28. © 2013 All rights reserved. Chapter 1 The Broker's Office28 Maintaining the License  All broker’s licenses must be displayed and salesperson’s licenses must be kept by the broker  Branch offices must be supervised by the broker and managed by a broker or associate broker  Professional liability insurance - called errors and omissions

29. © 2013 All rights reserved. Chapter 1 The Broker's Office29 Office Requirements Branch office requirements Termination of Association Dual licensure License renewal Change of address, status, name

30. © 2013 All rights reserved. Chapter 1 The Broker's Office30 Licensure Fees LICENSUREFEE SSalesperson license$ 50 AAssociate broker/broker license$150 EEach broker branch office$150 EExam fee$ 15 CChange of salesperson name$ 50 CChange of broker name or status$150 CChange of address $ 10 TTermination of association$ 10 NNew association $ 10 DDuplicate license/pocket card $ 10

31. © 2013 All rights reserved. Chapter 1 The Broker's Office31 Violations of the License Law Conduct that demonstrates untrustworthiness, incompetence Failure to provide clients with copies of listing agreement or contract of sale Making false promises or misrepresentations Commingling the money or property of others Engaging in net listing agreements Publishing blind ads

32. © 2013 All rights reserved. Chapter 1 The Broker's Office32 Commingling Funds 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

33. © 2013 All rights reserved. Fair Housing Compliance Assist all people including minorities in living in the housing of his choice Chapter 1 The Broker's Office33

34. © 2013 All rights reserved. Chapter 1 The Broker's Office34 Types of Discrimination Steering RedliningBlockbusting Discriminatory advertising

35. © 2013 All rights reserved. Chapter 1 The Broker's Office35 Broker’s Responsibilities Fair Housing Training Record Keeping Display Fair Housing Poster Equal Service

36. © 2013 All rights reserved. Who Can Give Legal Advice?  The New York Judiciary Law prohibits the practice of law by non-attorneys  Attorney review or approval clause  Agents can use a fill-in-the-blanks form approved by a joint committee of the Bar Association and Board of REALTORS®  Contract should clearly and prominently indicate that it is a legally binding document Chapter 1 The Broker's Office36

37. © 2013 All rights reserved. Chapter 1 The Broker's Office37 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.

38. © 2013 All rights reserved. Chapter 1 The Broker's Office38 Penalties for Violation of License Law NYS DOS Revoke license Suspend license Refuse license

39. © 2013 All rights reserved. Chapter 1 The Broker's Office39 The Brokerage Business and Antitrust Laws Federal Antitrust Laws and Agencies Sherman Act (1890)Clayton Act (1914) Federal Trade Commission U.S. Dept. of Justice

40. © 2013 All rights reserved. Chapter 1 The Broker's Office40 Types of Restraints of Trade Price fixing Group boycotts Market allocation agreements Tie-in arrangements

41. © 2013 All rights reserved. Chapter 1 The Broker's Office41 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

42. © 2013 All rights reserved. Chapter 1 The Broker's Office42 Independent Contractor Rules If an independent contractor earns over $600, then the broker and contractor must file a Form 1099 misc. with the IRS Internal Revenue Code Section 3508 (b) (c) To comply with independent contractor status, real estate agents must have a written contract with the broker and be licensed

43. © 2013 All rights reserved. Chapter 1 The Broker's Office43 Broker Compliance with Independent Contractor File yearly tax returns Prepare and file 1099s Broker supervision Maintain records at least 3 yrs

44. © 2013 All rights reserved. Chapter 1 The Broker's Office44 Responsibilities of Sponsoring Brokers Broker responsible for actions of licensee Brokers must supervise licensees Written employment agreement between broker and salesperson Brokerage firm records must be maintained for 3 years

45. © 2013 All rights reserved. Multiple Listing Services Advantages Greater exposure for a listed property Better price range due to a wider market Property information online and updated regularly Disadvantages MLS charges a fee for its service- every broker or agent who accesses the service must pay Courts have challenged MLS for only letting real estate board members become members Listings are sold through a broker from another firm which because of the split reduces the commission Chapter 1 The Broker's Office45

46. © 2013 All rights reserved. Chapter 1 The Broker's Office46 Reciprocity New York has reciprocity with:  Arkansas  Colorado  Connecticut  Georgia  Massachusetts  Mississippi  Oklahoma  Pennsylvania  West Virginia