Real estate broker - Wikipedia, the free encyclopedia

For the Real Estate industry trade association that refers to its members as "Realtors", see National Association of Realtors. Realtors In the United States, the relationship was originally established by reference to the English common law of agency, with the broker having a fiduciary relationship with his clients. Beyond the United States, other countries take markedly different approaches to the marketing and selling of real property. When acting as a buyer's agent with a signed agreement (or, in many cases, verbal agreement, although a broker may not be legally entitled to his commission unless the agreement is in writing), they assist buyers by helping them purchase property for the lowest possible price under the best terms. Without a signed agreement, brokers may assist buyers in the acquisition of property but still represent the seller and the seller's interests. Unlicensed activity is illegal, but buyers and sellers acting as principals in the sale or purchase of real estate are not required to be licensed. In some states, lawyers are allowed to handle real estate sales for compensation without being licensed as brokers or agents. Legally, however, the term "salesperson" is still used in many states to describe a real estate agent. Such education is often provided by real estate brokerages as a means to finding new agents. See below for a broker/agent's relationship to sellers and their relationship to buyers. To obtain a real estate license, the candidate must take specific coursework (of between 40 and 90 hours) and pass a state exam on real estate law and practice. To work, salespersons must be associated with (and act under the authority of) a real estate broker. In addition, some states allow college graduates to apply for a broker license without years of experience. College graduates fall into this category once they have completed the state required courses as well. California allows licensed attorneys to become brokers upon passing the broker exam, without having to take the requisite courses required of agent. Upon obtaining a broker's license, a real estate agent may continue to work for another broker in a similar capacity as before (often referred to as a broker associate or associate broker) or take charge of his/her own brokerage and hire other salespersons (or broker) licensees. Becoming a branch office manager may or may not require a broker's license. Some states such as New York allow licensed attorneys to become real estate brokers without taking any exam. In some states, such as Colorado, there are no "salespeople", as all licensees are brokers. The seller or buyer is then a client of the broker. Some states also have statutes that define and control the nature of the representation. The broker (and his/her licensed real estate agents) then becomes the agent of the principal. When a buyer, who has not entered into a Buyer Agency agreement with the broker, buys a property, then that broker functions as the sub-agent of the seller's broker. When a seller chooses to work with a transaction broker, there is no agency relationship created. Having no more than a facilitator relationship, transaction brokers assists buyers, sellers, or both during the transaction without representing the interests of either party who may then be regarded as customers. The Transaction Broker is not a fiduciary of any party, but must abide by law as well as professional and ethical standards. Individual state laws vary and interpret dual agency rather differently. Instead, "transaction brokerage" provides the buyer and seller with a limited form of representation, but without any fiduciary obligations (see Florida law). Buyers and sellers are generally advised to consult a licensed real estate professional for a written definition of an individual state's laws of agency, and many states require written Disclosures to be signed by all parties outlining the duties and obligations. Special laws/rules often apply to dual agents, especially in negotiating price. If one agent from the brokerage has a home listed and another agent from that brokerage has a buyer-brokerage agreement with a buyer who wishes to buy the listed property, Dual Agency occurs by allowing each agent to be designated as "intra-company" agent. In those situations, conflict of interest is more likely to occur, typically resulting in the loss of advocacy for both parties. This differs from an appraisal in that property currently for sale may be taken into consideration (competition for the subject property). However, although a real estate agent commonly fills out the real estate contract form, agents are typically not given power of attorney to sign the real estate contract or the deed; the principals sign these documents. The respective real estate agents may include their brokerages on the contract as the agents for each principal. However, once a broker is used, the settlement attorney (or party handling closing) will ensure that all parties involved be paid. Lenders typically have other requirements, though, for a loan. Some real estate brokers may be associated with loan officers who may help to finance buyers to make their purchase. In Canada, most provinces' laws require the real estate agent to forward all written offers to the seller for consideration or review. Advertising is often the biggest outside expense in listing a property. The seller's agent acts as a fiduciary for the seller. This may involve preparing a standard real estate purchase contract by filling in the blanks in the contract form. In many states, the closing is the meeting between the buyer and seller where the property is transferred and the title is conveyed by a deed. In other states, especially those in the West, closings take place during a defined escrow period when buyers and sellers each sign the appropriate papers transferring title, but do not meet each other. These may be defined as:Exclusive right to sellIn this type of agreement, the broker is given the exclusive right to market the property and represents the seller exclusively. However, the brokerage also offers to co-operate with other brokers and agrees to allow them to show the property to prospective buyers and offers a share of the total real estate commission. In that case, the property will never be entered into an MLS. Naturally, that limits the exposure of the property to only one agency. Whoever first brings an acceptable offer would receive compensation. Real estate companies will typically require that a written agreement for an open listing be signed by the seller to ensure the payment of a commission if a sale should take place. The seller's real estate is then listed for sale, frequently with property data entered into an MLS in addition to any other ways of advertising or promoting the sale of the property. Without an offer of compensation to a co-operating broker (co-op percentage or flat fee), the property may not be advertised in the MLS system. The median real estate commission charged to the seller by the listing (seller's) agent is 6% of the purchase price. Typically, this commission is split evenly between the seller's and buyer's agents, with the buyer's agent generally receiving a commission of 3% of the purchase price of the home sold. Local real estate sales activity usually dictates the amount of commission agreed to. Real estate commission is typically paid by the seller at the closing of the transaction as detailed in the listing agreement. All lender compensation to a broker must be disclosed to all parties. When a property is vacant or where a seller may be living elsewhere, a lockbox will generally be placed on the front door. The listing broker helps arrange showings of the property by various real estate agents from all companies associated with the MLS. If an agent or salesperson working for the buyer's broker brings the buyer for the property, then the buyer's broker would commonly compensate his agent with a fraction of the co-op commission, again as determined in a separate agreement. In theory, this motivates them to get top dollar for the seller. However, if an agent representing a buyer obtains a lower sales price for their client, then they make a lower commission. Thus, it could be considered to be in the agent's best interest to advise his client to purchase the property at a higher price. Consumer Reports states, "You can find a true buyer's agent only at a firm that does not accept listings. The buyer's agent acts as a fiduciary for the buyer. Typically, a written "Buyer Brokerage" agreement is required for the buyer to have representation (regardless of which party is paying the commission), although by his/her actions, an agent can create representation. The rapid growth of the Internet has made the international market accessible to millions of consumers. For example, they provide value-added services that help overseas relocation employees figure out which inoculations their children need and how to register a car in the United States. Real estate brokers want to keep central to the transaction, protect the best interests of their members and address the unique needs of each multicultural global client by acquiring specialized training and designations. Also at the local level, many other state and local associations are helping other countries achieve the same result. In New Mexico, there are 4500 licensed real estate professionals and only 14 or 15 CIPS designees, out of whom, only six speak a language other than English. Because of cultural and ethical relativism, real estate business that is conducted across national boundaries may discover ethical conflicts. For example, in the NAR-FECEPAC MOU of February 2003, a commitment was set to promote and adopt the respective code of ethics,standards and norms, but there is nothing specific mentioned for complex ethical matters in international transactions. There was surely a commitment to cooperate with a foreign agent to work in local markets different from the foreign agents market. Again, as the IRPF says "Ethical perceptions and international business is highly influenced by cultural differences. Because of cultural and ethical relativism, real estate business that is conducted across national boundaries may discover ethical conflicts". The bilateral agreement between NAR and CSBR also states that both parties agree to enforce their respective codes and advice the other of subsequent modifications to its code of ethics. Upon passing, the new licensee must place their license with an established real estate firm, managed by a broker. Requirements vary by state but after some period of time working as an agent, one may return to the classroom and test to become a broker. Each branch office of a larger real estate firm must be managed by a broker. Many states recognize licenses from other states and issue licenses upon request to existing agents and firms upon request without additional education or testing however the license must be granted before real estate service is provided in the state. An applicant for licensure is not, however, required to be a resident of California to obtain a license. Upon joining a local chapter, a new member is automatically enrolled into the state and national organizations. When the principals of a firm join, all licensed agents in that firm must also belong. An advantage of membership is access to the local MLS (sometimes county-wide, sometimes broader in coverage) which exists for the benefit of members and which provides access following the payment of additional dues to the local system. They assist in locating exclusive buyer agents for home buyers through the Web site www. Both groups allow members to join without regard to race. However, NAREB has historically been an African American-centric group with a focus on developing housing resources for intercity populations. While a split based on the percentage received by the broker is generally normal, in some brokerages agents may pay a monthly "desk fee" for office costs, monthly fee, etc.