Dan Starr Realtor - The Economic Functions of Real Estate Brokerage

1
Dan Starr Realtor

• The Economic Functions of Real Estate Brokerage

2
Outline

• Brokerage functions
• Agency relationship
• RE sale

3
The economic functions of brokerage

• Bring buyers and sellers together.
• In real estate needs.
• Physically.
• Emotionally.
• Collect commission for a successful transaction.
• Usually, percentage of price.

4
(No Transcript)
5
What a broker can add

• Prices and terms in current market.
• Marketing approaches that work.
• Legal obligations of buyers and sellers.
• Properties in market.
• Potential customers and their needs.
• Procedures and requirements of transaction.

6
Law of agency

• RE brokers and salespersons (agents) operate
  under the law of agency.
• Under the Law of agency
• The agents must look out for the best interests
  of the principal.
• Agents have a fiduciary relationship with their
  principals. Duties disclosure (open and
  honest) confidentiality accounting (keep the
  principals informed) obedience to legal and
  ethical limits loyalty skill and care.
• Principals need to be open, honest, and fair.

7
Brokers vs. salespersons

• RE Broker an agent who can operate his/her own
  brokerage agency.
• RE salesperson an agent who must work for a
  broker. This license is earlier to obtain than
  broker.
• They must be licensed by states to provide RE
  estate transaction services for others buying,
  auctioning, renting, selling, appraising,
  leasing, exchanging.

8
Usual requirements for licensing

• Minimum age (18 for both broker and salesperson
  in VT), high school diploma (not this in VT),
  good reputation.
• Pre-licensing education requirement (40 hours in
  VT from many providers, e.g., Brokers Institute,
  South Burlington).
• Pass state licensing exam.
• Minimum experience (2 years and 8 transactions
  for brokers license).
• The licensing administration authority in VT is
  http//vtprofessionals.org/opr1/real_estate/

9
Listing contract

• An agency relationship is created between a
  seller and a broker (not just with a salesperson)
  when both parties agree to a listing contract.
• A contract for services, not for real estate.
• Frequently involves subagency through a multiple
  listing service (MLS).
• Brokers have access to each others listings in a
  MLS. Thus, all other members are a members
  subagents.

10
Buyer agency agreement

• In a buyer agency agreement, a broker agrees to
  use his/her best efforts to find properties
  meeting the requirements of the buyer.
• Increasingly between buyers and brokers.
• When a buyer agent is a member of MLS and use the
  MLS to identify a property, the agent is also a
  subagent of the listing (seller) agent. This is
  a dual agency in which the buyer agent represents
  both the buyer and the seller. Conflict of
  interests?

11
Commission splitting
Sale of Property 100,000
Commission 6.06,000
Listing Broker Firm 50 of Commission 3,000
Selling Broker Firm 50 of Commission 3,000
Listing Salesperson 50 of Firms Commission
1,500
Selling Salesperson 50 of Firms Commission
1,500
These Percentages can vary from 50 percent to 90
percent depending on such factors as the length
of time the sales person has been with the firm
and whether he or she is an officer of the firm.
12
RE sales 2-step process

• 1. Once the buyer and the seller identify each
  other, they first reach an agreement on the
  contract for sale.
• Contract for sale is the most important document
  in RE sales it specifies the rights and the type
  of deed to be delivered by the seller and, in
  return, the purchase price.
• 2. Sometime later, the 2 parties complete the
  sale at a meeting called the closing.

13
Contract for sale

• Determines price and terms of the transaction.
• Defines property interest being conveyed.
• Determines the grantee.
• Determines other conditions of the transaction
• Financing.
• Date of occupancy.
• Any repairs or other conditions of the sale.

14
Blockchain Network
15
Handling of funds

• Broker normally handles funds for a transaction.
• Broker must put deposits in escrow.
• Escrow account an account holding funds
  dedicated for a particular purpose.
• Must be with insured institution or title
  company.
• At closing, money is disbursed in accordance with
  a closing statement.