real estate brokers or real estate sellers (often called real estate agents ) are people who act as intermediaries between sellers & amp; real estate buyers/real property. Their mission is to complete the transaction between the buyer and the seller.
In the United States, the relationship was originally established with reference to English common law law, with brokers having a fiduciary relationship with their clients. A real estate broker usually receives a commission because it matches the seller's real estate with the buyer so sales can be made. This commission may be shared with brokers or other participating real estate agents.
In the UK, a property agent is a person or business entity whose business is marketing real estate on behalf of a client. There is a significant difference between the actions, authorities, obligations, and responsibilities of brokers and estate agents in each country, as different countries have very different approaches to the marketing and selling of real property.
But in the United States, real estate brokers and their sales staff who help owners in marketing, sales, or rental properties are commonly called "list brokers" and "listing agencies". Brokers and agents list to market and sell or lease the highest priced property available under the best available provisions.
Brokers and other agents may focus on representing buyers or tenants. However, the license as a broker or salesperson authorizes the licensee to represent the parties on both sides of the transaction. This business decision is for the licensee to decide.
In the United States, real estate brokers and salesperson are licensed by each state, not by the federal government. Each state has its own laws defining the kind of relationship that can exist between the client and the real estate license holder, and the real estate license assignment for clients and community members. Rules vary substantially from state to state, for example, to subjects covering required documentation, agency relationships, inspections, disclosures, continuing education, and other subjects.
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Buyer Agent
When acting as a buyer's agent, brokers and sellers help buyers by helping them buy the lowest priced property available under the best terms. The real estate broker owes a fiduciary duty to anyone who services the broker as a client. Brokers should make sure to negotiate in the best interests of the client, and at all times keep the client (buyer) aware of any new information that can help make solid decisions.
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Written agreement
It is important to have a clear agreement between the broker and the client, to protect both. This agreement must (and in many US states must) be made in writing. If the parties have oral agreements only, it is more likely to be a dispute over services to be provided by the broker or agent, whether the broker can enforce the parties' compensation agreement, the duration of the relationship, whether the relationship is "exclusive," and other issues. Obligations of verbal agreement, what agreement is required to write, and other important matters vary from one state to another.
Double agent
If a broker helps buyers and sellers, this is referred to as a "double agency". Traditionally, the broker represents the seller, and the fiduciary duty is to the seller. If the broker advises the buyer that he will help the buyer negotiate the best price, the broker is practicing an "unauthorized," unethical and illegal "agent in all states. Under multiple agent transactions, it is imperative that the broker discloses to both the parties he represents as the client and whom he represents as the customer. A real estate broker owes his client's fiduciary obligations, which include care, confidentiality, loyalty, compliance, accounting, and disclosure. To protect its licensors, real estate brokers owe their honest and honest customers and have to ask both parties (sellers and buyers) to sign a double agency agreement.
License
In most jurisdictions in the United States, a person must have a license before they can receive rewards for services provided as real estate brokers. Unlicensed activity is illegal, but buyers and sellers acting as principals in the sale or purchase of real estate usually do not need to be licensed. In some states, lawyers are authorized to handle the sale of real estate for compensation without obtaining a license as an intermediary or agent.
Difference between salesperson and broker
Before Multiple Listing Service (MLS) was introduced in 1967, when brokers (and their licensors) represent merchants only, the term "real estate seller" may be more appropriate than it is today , in various ways brokers and licensees now help buyers through the process rather than just "selling" them a property. By law, however, the term "salespeople" is still used in many countries to describe real estate license holders.
Real estate education
To be licensed, most countries require applicants to take the minimum number of class hours before taking the state licensing exam. Such education is often provided by real estate companies or by educational establishments, who are usually licensed to teach the courses in their respective states. This course is designed to prepare new licensees primarily for legal aspects of real estate practice and to pass state licensure exams.
After being licensed, licensees in most countries were initially designated as salespeople and must work under a brokerage license. Some other countries have recently omitted the salesperson's license and vice versa, all license holders in those countries automatically get their broker license.
A salesperson must place a license under the manager's broker. Usually there may be multiple licensee holders of brokerage licenses within the company but only one broker or company itself, is the principal or management broker and the individual or company that is legally responsible for all licenses held under their licenses.
The term agent does not become confused with the salesperson or broker. Agent is merely a license holder who has entered into an agent relationship with the client. A broker can also be an agent for clients. Usually companies that have an actual legal relationship with clients through one of their sales staff, be it a seller or brokers.
In all states, the real estate licensee must disclose to prospective buyers and sellers the nature of their relationship in the transaction and with the parties. See below for a broker/license holder relationship with the seller and its relationship with the buyer.
In the United States, there are usually two levels of real estate professionals licensed by each state but not by the federal government:
Real estate sellers (or, in some states, Real estate broker)
When a person is first licensed to become a real estate agent, they obtain a real estate seller license (some countries use the term "broker") from the country where he or she will practice. To obtain a real estate license, candidates must take special courses (between 40 and 120 hours) and pass state exams on law and real estate practice. To work, sales staff should be associated with (and act under the authority) of real estate brokers. In Delaware, for example, a licensing course requires a candidate to take 99 hours of class in order to qualify for state and national examinations. In Ohio, a licensed candidate must complete 120 hours of classroom education. Each successive year thereafter, licensees shall participate in continuing education in order to keep abreast of state and national changes.
Many states also have reciprocal agreements with other countries, allowing licensed individuals from countries eligible to take the second state exam without completing the course requirements or, in some cases, taking only state law examinations.
Property broker (or, in some states, a qualifying broker )
After obtaining several years of experience in the sale of real estate, a salesperson may decide to become licensed as a real estate broker (or main broker/qualifier) ​​to own, manage, or operate their own broker. In addition, some countries allow college graduates to apply for a broker license with no years of experience. College graduates fall into this category after they complete the required state courses as well. California allows a licensed attorney to become a broker after passing a broker exam without having to take the required courses from an agent. Generally more courses and state broker exams on real estate law must be passed. After obtaining a broker license, a real estate agent may continue to work for another broker in the same capacity as before (often referred to as an associate broker or associate broker) or take over the broker himself and hire another salesperson (or broker), licensees. Being a branch manager may or may not require a broker license. Some countries allow licensed lawyers to become real estate brokers without taking exams. In some states, there is no "sales force" because all license holders are brokers.
Agency relationships with clients versus non-agency relationships with customers
- Relations: Conventionally, brokers provide a conventional, commission-based broker relationship with a full service under a listing agreement signed with the seller or a "buyer representation" agreement with the buyer, thus creating under general law in most states the relationship agent with fiduciary duty. The seller or buyer is a brokerage client. Some states also have laws that define and control the nature of representation.
Agent relationships in residential real estate transactions involve legal representation by a real estate broker (on behalf of a real estate company) of the principal, whether the person is a buyer or a seller. Brokers and licensed real estate sellers (salesmen or brokers) then become principal agents.
- Non-agent relationship: where there is no written agreement or fiduciary relationship, real estate brokers and sales staff work with a principal known as a brokerage customer. When a buyer who has not signed a Buyer Agent agreement with a broker purchases the property, the broker serves as a broker sub-agent of the seller. When a seller chooses to work with a transaction broker, no agency relationship is created.
Transaction broker
Several states of the Real Estate Commission - primarily Florida after 1992 (and extended in 2003) and Colorado after 1994 (with changes in 2003) - created the option of not having an agency or fiduciary relationship between broker and seller or buyer. Having nothing more than a facilitator relationship, the broker deals with the buyer, the seller, or both during the transaction without representing the interests of one of the parties who are subsequently considered a customer.
As noted by South Broward Board of Realtors, Inc. in a letter to the State of Florida legislative committee:
- "The Transaction Broker makes the transaction by bringing willing buyers and willing sellers and assisting with the closing of details Transaction Brokers are not fiduciary of any party, but must obey the law as well as professional and ethical standards." (such as the NAR Code of Ethics).
The result was that in 2003, Florida created a system in which standard broker relationships have "all licensees... operate as transaction brokers, unless a single agent or no brokerage relationship is established, in writing, with the customer" and required disclosure legislation written from the broker relationship of the transaction to the buyer or customer seller only through July 1, 2008.
In the case of Florida and Colorado, multiple agencies and sub-agents (where sales and sales representatives represent sellers) are no more.
Designated agent
The latest developments in real estate practice are "designated agents" created to permit individual license holders within the same company, designated by the principal broker, to act as agents for individual buyers and sellers in the same transaction. In theory, therefore, the two agents in the same company act in a strict fiduciary role for their respective clients. Some countries have adopted this practice into their state laws and others have decided that this function is inherently problematic, just like a double agency. This practice was created and promoted by large corporations to enable in theory to handle all transactions at home without causing conflicts of interest within the company.
Duplicate or limited agency
Double agents occur when the same broker represents the seller and the buyer under a written agreement. The laws of individual states vary and interpret multiple agents somewhat differently.
Many countries no longer allow double agents. In contrast, "transaction brokers" provide buyers and sellers with a limited representation of forms but no fiduciary obligations (see Florida law). Buyers and sellers are generally advised to consult with a licensed real estate professional for the written definition of the statute of state agencies, and many countries require written disclosure to be signed by all parties that spell out the duties and obligations.
- If country laws permit the same agent to represent buyers and sellers in a single transaction, brokers/agents are usually considered as Dual Agents . Special laws/rules often apply to multiple agents, especially in negotiated pricing.
- In some states, Dual Agents can be practiced in situations where the same broker (but not the agent) represents the buyer and the seller. If one brokerage agent has a registered home and another agent of the broker has a buyer-broker agreement with the buyer wishing to purchase the listed property, the Dual Agent occurs by allowing each agent to be designated an "inter-company" agent. Only the broker itself becomes a Double Agent.
- Some countries allow brokers and one agent to represent both sides of a transaction as a double agent. In such situations, a conflict of interest is more likely to occur, usually resulting in a loss of advocacy for both parties.
Types of services that brokers can provide
Real Estate Services are also called trading services by some jurisdictions. Because the laws of each province and state may differ, it is generally recommended that prospective sellers or buyers consult a licensed real estate professional.
Some examples:
- Comparative Market Analysis (CMA) - the estimated value of the home compared to the others. This is different from the assessment on the property that is currently sold can be considered. (Competition for subject property)
- Total Market Overview - an objective method for determining home values, where CMA is subjective.
- Broker Price Opinion - the approximate value of the property or the potential selling price
- An assessment of real estate - in most states, only if the broker is also licensed as an appraiser.
- Exposure - Marketing real property to potential buyers.
- Facilitate Purchases - guide buyers through the process.
- Facilitate Sales - guide the seller through the sales process.
- FSBO document preparation - preparing necessary documents for sellers "Sold by Owners".
- Home Selling Kits - a guide that tells how to market and sell properties.
- Consulting Hourly for a fee, based on client needs.
- Leasing for a fee or a percentage of gross rental value.
- Property Management
- Exchanging properties.
- Auction properties.
- Prepare contracts and leases. (not in all states)
The service is also changing as various real estate trends change the industry.
Real estate broker and seller
Services provided to sellers as clients
After signing a listing contract with a seller wishing to sell real estate, the broker tries to earn a commission by finding a buyer for the seller's property at the highest possible price with best terms for the seller. In Canada, most provincial laws require real estate agents to forward all written offers to sellers for consideration or review.
To help achieve the purpose of finding a buyer, a real estate agent usually does the following:
- List properties for sale to the public, often on MLS, in addition to other methods.
- Provide the seller with the disclosure of real property conditions (if required by law) and any other necessary forms.
- Setting up the necessary paper describing properties for ads, pamphlets, open houses, etc.
- Placing a "For Sale" sign on a property that shows how to contact an office and real estate agent.
- advertise properties, which may include social media and digital marketing other than paper ads.
- Save open house to show properties.
- Works as an available contact to answer any questions about properties and schedules that show appointments.
- Ensure that buyers are screened and qualify to purchase properties. (Sellers should be aware that the guarantor for a real estate mortgage loan is the last.)
- Negotiate the price on behalf of the seller.
- Act as fiduciary for the seller, which may include setting up a standard real estate purchase contract.
- Keep a real payment check in escrow from the buyer (s) until closing if necessary. In many countries, closing is a meeting between the buyer and the seller in which the property is transferred and the title is submitted by the deed. In other countries, especially those in the West, the closure occurs during the specified escrow period when the buyer and seller each sign a corresponding letter to transfer the title, but not meet each other.
Listing contract
Several types of contract lists exist between the broker and the seller. This can be defined as:
- Exclusive rights to sell
The broker is given an exclusive right to market the property and represent the seller exclusively. This is called a sales agent. However, the broker also offers to cooperate with other brokers and agrees to allow them to show the property to prospective buyers and offer part of the total commission on real estate.
- Exclusive agent
Exclusive agents only allow brokers to sell property, and no compensation offer ever made to another broker. In this case, the property will never be incorporated into MLS. By nature, this limits the exposure of property to only one agency.
- Open the list
This property is available for sale by any real estate professional who can advertise, show or negotiate a sale. The broker/agent who first brings acceptable offers will receive compensation. Real estate companies usually require that written agreements for open lists are signed by the seller to ensure commission payments in the event of a sale.
While there are other ways of doing business, real estate brokers usually earn commissions after real estate brokers and sellers enter into contract listings and meet the agreed terms specified in the contract. Real estate sellers are then listed for sale.
In most of North America, the listing agreement or contract between the broker and the seller should include the following:
- the start and end dates of the agreement;
- the price at which the property will be offered for sale;
- the amount of compensation due to the broker;
- how much, if any, the compensation will be offered to the cooperating broker who can bring the buyer (required for the MLS list).
Netlist: A list of properties at an agreed net price the seller wants to receive with any excess goes to the broker as a commission. In many countries including Georgia, New Jersey and Virginia [18 VAC §135-20-280 (5)] net lists are illegal, other states such as California and Texas state authorities prevent practices and have laws to try and avoid manipulation and unfair transactions [22 TAC Ã,§535 (b)] and (c).
Brokerage Commission
With the consideration of a successful broker finding a buyer for a property, the broker anticipates receiving a commission for services provided by the broker. Usually commission payments for brokers rely on finding a buyer for real estate, successful negotiation of a purchase contract between buyer and seller, or transaction settlement and money exchange between buyer and seller. The median real estate commission charged to the seller by the sales agent (the seller) is 6% of the purchase price. Typically, this commission is evenly distributed between the seller and the buyer, with the buyer's agent generally receiving a commission of 3% of the purchase price of the sold house.
In North America, real estate transaction commissions are negotiable and new services in real estate trends have created ways to negotiate interest rates. Local real estate sales activity usually determines the amount of commission agreed upon. The real estate commission is usually paid by the seller at the closing of the transaction as stated in the listing agreement.
RESPA
A real estate broker working with a lender may not receive any compensation from the lender for referring a residential client to a particular lender. To do so would be a violation of US federal law known as the Real Estate Settlement Procedure Act (RESPA). Commercial transactions are exempt from RESPA. All lenders' compensation to the broker should be disclosed to all parties. Commissions can also be paid during contract negotiations based on the seller and the agent.
Lock-box
With the seller's permission, the lock box is placed in the occupied house, and after arranging an appointment with the homeowner, the agent can show the house to potential buyers. When an empty property, a lock-box will generally be placed at the front door. Broker listings help organize property shows by various real estate agents from all MLS related companies. The lock box contains a key to the property door, and the box can only be opened by a licensed real estate agent.
If the buyer's broker or agent carries the buyer for the property, the buyer's broker will usually be compensated with co-op commissions derived from the total offered to the listing broker, often about half of the full commissions from the seller. If the agent or salesperson working for the buyer's broker brings the buyer to the property, the buyer's broker will usually compensate his agent with a fraction of the co-op commission, again as specified in a separate agreement. The discount broker can offer a commission deduction if no other brokerage company is involved and no paid co-op commissions.
If there is no commission to pay to another broker, the recording broker receives the full amount of the commission minus any other type of expenses.
Real estate brokers and buyers
Service provided to buyers
Buyer as client
With the increasing practice of buyer brokers in the United States, agents (acting under their brokers) have been able to represent buyers in transactions with a "Buyer Agreement Agreement" that is not unlike the "Listing Agreement" for the referred seller above. In this case, the buyer is a brokerage client.
Some brokers represent buyers only and are known as exclusive buyer agents (EBAs). Consumer Reports states, "You can find real buyer agents only in companies that do not accept lists." The advantage of using an Exclusive Buyers Agent is that they avoid conflicts of interest by working for the interests of the buyer and not the seller, avoiding homes and neighborhoods that tend to be badly exposed in the market, ensuring the buyer unconsciously overpaying the property, informing the buyer about the adverse conditions , encouraging buyers to make offers based on their true value rather than list price, and working to save buyers money. A buyer agency company commissioned a study that found the EBA-purchased house 17 times less likely to get into foreclosure.
Real estate brokers try to do the following for real estate buyers only when they represent buyers with some form of written buyer-broker agreement:
- Find real estate according to buyers' needs, specifications and costs.
- Bring buyers and show available properties for sale.
- Pre-screen buyers to make sure they are financially qualified to purchase the displayed property (or use the mortgage professional, the mortgage specialist of the bank or alternatively the Mortgage broker, to do the job).
- Negotiate pricing and terms on behalf of the buyer.
- Prepare a standard real estate purchase contract.
- Act as fiduciary for buyer.
- Discover real estate according to buyer's requirements, specifications, and affordability.
- When deemed appropriate, buyers are previewed to ensure they are financially qualified to purchase the indicated property.
- Help buyers make offers for property.
- Due to the importance of the role of representing the interests of buyers, many brokers who seek to play the role of client advocates are now seeking services from Certified Mortgage Planners, industry experts working with Certified Financial Planners to align financial positions home consumers with their larger financial portfolio.
Buyer as customer
In most states up to the 1990s, buyers working with real estate brokers looking for homes were brokerage customers because brokers represent merchants only.
Today, state laws are different. Buyers and/or sellers may be represented. Typically, a written "Broker Buyer" agreement is required for the buyer to have a representative (regardless of which party pays the commission), although with his actions the agent may create a representative.
Education
A person may attend a pre-licensed course that lasts for 60 hours and is subsequently tested by the state for the license of a real estate agent. Upon passing, new licensees must place their license with an established real estate company, managed by a broker. The requirements vary by country but after some time working as an agent, one can go back to class and test to become a broker. For example, California and Florida require you to have a minimum of two years experience as a full-time licensed agent within the preceding 5 years. While Indiana only takes a year's experience as a seller of real estate and Arizona takes three of the previous five years. Brokers can manage or own a company. Each branch office of a larger real estate company must be managed by a broker.
Declare licensing issues for multi-year periods and require real estate agents and brokers to complete continuing education before renewing their licenses. For example, California licensees must complete 45 hours of continuous education every 4 years in topics such as agencies, trust fund handling, consumer protection, equitable housing, ethics, and risk management. Many countries recognize licenses from other countries and issue licenses to existing agents and companies upon request without additional education or testing, but licenses must be granted before real estate services are provided in the state.
California does not have reciprocal licenses with other countries. An applicant for a license is not, however, necessary to become a resident of California to obtain a license.
Organization
Several important groups exist to promote the real estate industry and to assist members within it.
The National Association of Realtors (NAR) is the largest real estate organization and one of the largest trading groups anywhere. Their membership exceeds one million. NAR also has country chapters as well as thousands of local chapters. After joining the local chapter, new members are automatically registered to national countries and organizations. When company principles are joined, all licensed agents in the company must also be owned. A Realtor is a real estate broker or seller who is also a member of the National Association of Realtors, which is an industry trade association. The word "Realtor" is a registered trademark, protected by US and international law.
The Political Action Committee of Realtor (RPAC) is a separate entity, as well as a NAR lobbyist. In 2005, they were considered the largest PAC in the United States. According to realtor.org, the RPAC is the largest contributor to direct contributions to federal candidates.
The National Association of Exclusive Buyer Agents is a group of agents and brokers working in companies representing buyers only. They help find exclusive buyer agents for home buyers through the www.naeba.org website.
The National Association of Real Estate Brokers (NAREB) was founded in 1947 as an alternative to African-Americans who were excluded from the dominant NAR. Both groups allow members to join without regard to race. However, NAREB has historically been an African-centric American group with a focus on the development of residential resources for the intercity population.
Change industry
Compensation is conventionally based on a percentage of the sale price, divided between the purchase and sale broker, and then between the agent (s) and the real estate agent. While the division by percentage received by the broker is generally normal, in some brokerage agents can pay a monthly fee "desk fee" for office expenses, monthly fees, etc., and then retain 100% of the commission received.
Economist Steven D. Levitt is famous in his book Freakonomics 2005 that real estate brokers have a conflict of interest inherent with the seller they represent because their commissions motivate them to sell faster than motivate them to sell at a higher price. Levitt supports his argument by searching for research brokers who tend to place their own homes on the market longer and receive higher prices for them than when working for their clients. He concludes that brokerage commissions will be reduced in the future. A 2008 study by other economists found that when comparing brokers without a list of services, the broker actually significantly reduced the average selling price.
See also
References
Source of the article : Wikipedia
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