#26-50

Question 1

What is state license reciprocity?

Answer 1

Reciprocity is an agreement between states to accept each other’s licenses as valid.

For example, in the absence of reciprocity, a broker must take a new examination to obtain a real estate license in the state to which he or she moves. With reciprocity, the broker need only present the license previously earned in another state.

Question 2

When a person becomes licensed as a broker or salesperson, does he or she automatically become a Realtor®?

Answer 2

No. In order to be called a Realtor®, a broker or salesperson must join the National Association of Realtors®, which is a private trade association.

Members must pay dues and subscribe to a code of ethics. Only about 33% of all real estate licensees are Realtors®.
There is no state requirement to become a Realtor®. The only requirement to broker real estate is state licensing.

Question 3

Is ethics the same as law?

Answer 3

No. Ethics are principles by which one treats colleagues, clients, and the public in a fair, just, and truthful manner.

Adherence to such standards is considered one of the requisites for recognition as a profession; that is, to be called a “profession,” a vocation must (among other requirements) have an established code of behavior that practitioners are required to uphold.
Members of professional organizations who violate the organization’s code of ethics may lose their membership privileges; for example, lawyers may be disbarred.

Question 4

What are the fees for license application and renewal?

Answer 4

License exams often ask questions about these fees. They vary from state to state and change approximately every two years. Find the latest state Rules and Regulations at your state Real Estate Commission’s website and fill in the schedule below:
Fees in the State of Florida
Broker $36
Salesperson $32
License application $39.37

Gov. Desantis cut fees in half - was $67.75

Annual license fee
Recovery fund fee

Question 5

How does the real estate sales process proceed?

Answer 5

Typically, a starting point is when a real estate owner decides to sell.

He or she tries to get names of licensed brokers who are experienced and successful in selling the given type of property. The real estate owner interviews brokers (or their agents, who are licensed salespersons), discusses the situation, and offers a listing to one or sometimes more than one broker. The owner becomes a principal. The broker is an agent of the principal.

Question 6

What happens after a real estate owner has given a listing to a broker?

Answer 6

The broker, often with help from his or her sponsored, licensed salespersons, attempts to find a qualified buyer.
If the broker procures a prospective buyer, typically this prospect makes an offer. The principal may accept the offer, make a counteroffer, or not respond at all. Negotiations may continue until there is a valid sales contract, or until the parties decide to break off negotiations.
The sales contract is called an agreement of sale, contract for sale, or earnest money contract, depending on state custom.

Question 7

Suppose a principal (the seller)
accepts an offer from a prospective buyer. What happens next?

Answer 7

After there is an offer and an acceptance, a contract exists. The parties make efforts to meet the sales contract as they proceed to a closing or settlement, where money is transferred in exchange for property ownership. This process will entail physical inspections (often including mechanical, electrical, plumbing, and structural soundness and absence of wood-destroying insects), title inspection, and arranging financing. The broker generally accepts a commission when the transaction is complete at the closing, which is also known as the settlement.

Question 8

What body of law applies to the relationship between a principal and a broker?

Answer 8

The law of agency applies to the legal relationship between a principal and his or her agent arising from a contract in which the principal engages the agent to perform certain acts on the principal’s behalf.
The broker is usually an agent, or fiduciary, of the principal.

Question 9

What is the meaning of principal?

Answer 9

Principal has several meanings in a real estate context:
• One of the principal or most important parties in a contract: the buyer and seller, the landlord and tenant, the lender and borrower.
• One who contracts for the services of an agent or broker, the broker’s or agent’s client.
O The amount of money raised by a mortgage or other loan, as distinct from
the interest paid on it.

Question 10

When the word is spelled principle, what does that mean?

Answer 10

A principle is a rule, doctrine, or fundamental truth. However, the word is frequently misspelled or erroneously used interchangeably with principal.

Question 11

What is a fiduciary?

Answer 11

A fiduciary is someone who acts, in a legal role, in the best interests of his or her principal. The fiduciary is a person in whom the principal places trust.
For example:
• A broker is a fiduciary for the principal (property owner or buyer).
D A banker is a fiduciary for the bank’s depositors.
• An attorney may be a fiduciary for the client.
• A trustee is a fiduciary for the beneficiaries of the trust.

Question 12

What is a trust?

Answer 12

A trust is a fiduciary contract. Property is transferred by a trustor to a holder, called a trustee, to be administered for the benefit of another person, called the beneficiary.

Question 13

What is an agent?

Answer 13

The word agent has two meanings:
• Someone who undertakes to transact some buisness or manage some affair for someone else, with the authority of the principal.
D A licensed real estate broker or salesperson. Often the term “real estate agent” is applied to a licensed salesperson, whereas a broker is called a
“broker.” In a sense, the salesperson is an agent of the broker, and the broker is an agent of the property owner or buyer.

Question 14

What is a commission? Is there a set commission, say 6% or so, that brokers must charge, or that all brokers charge?

Answer 14

A commission is the fee earned from a real estate transaction, usually a percentage of the selling price. This commission is not to be confused with the state Real Estate Commission, which is a government agency.
There is no set commission or commission rate on real estate sales. Fixed commissions would violate antitrust laws, which are intended to encourage competition and consequently prohibit noncompetitive practices such as price fixing.

Question 15

Must a person be licensed to collect a commission from a real estate transaction?

Answer 15

AbsolucellAcomm sS ion may not be paid to anyone who is unlicersed
In some states a finde r’s tie of a token amount $50 or $100) is accepcable fo a referral
The broker collects the commission but may share it with a salesoer whom the broker sponsors or with a co-broken.

Question 16

What is a qualified buyer?

Answer 16

A qualified buyer is someone who is in the market (that is, who is willing or seeking to buy), who gives some evidence of being financially able to buy a property within a specific price range.
For example, suppose a real estate broker claims he has earned a commission because he produced a qualified buyer who was ready, willing, and able to buy the property at the listing price. Although the owner/seller withdrew the property from the market without explanation, the owner will probably still owe the broker a commission because the broker brought a qualified buyer, which fulfilled his part of the listing contract.

Question 17

What is a finder’s fee?

Answer 17

finder’s fee is money paid to someone other than a broker for locating suit operty for rental or purchase, or a renter or purchaser for available prope
›st states prohibit finder’s fees, and those that do allow them
Emit them
a token amount; the finder’s fee may not be a commission in disguise. example, an apartment complex owner or manager could offer a inder’s fee to existing tenants for referring a new tenant.

Question 18

What is a discount broker?

Answer 18

A discount broker is a licensed broker who provides limited brokerage services for a lower commission than is typical in the market. Generally the services provided by such brokers are less extensive than those of a full-service broker, or they may be unbundled so that a client can contract for specific services rather than the whole package. Many discount brokers charge a flat fee or fees for specific individual services rather than a percentage of the selling price payable only on a sale.
For example, Henson, a discount broker, offers to list a property for a 3% commission. Henson will refer prospects to the seller and prepare a sales contract if a buyer is found, but the seller will have to show the property and negotiate a contract directly with prospective buyers.

Question 19

Do brokers specialize in different property types?

Answer 19

Yes. Although nearly all states offer just one type of broker license, which can be used for any type of property, most brokers do tend to specialize in either residential or commercial properties in certain geographic areas.
• A residential broker lists and sells houses and condominiums.
Q A commercial broker lists and sells commercial property, which may include shopping centers, office buildings, industrial sites, and apartment projects.
As a general rule, commercial brokerage is more complex and requires more experience and expertise than residential brokerage.

Question 20

What is a listing?

Answer 20

A listing may be any of the following:
• An employment contract between an owner and a broker authorizing the broker to find a buyer or tenant who is willing to buy or lease the property under the terms of the listing.
Q A record of property for sale by a broker who has been authorized by the owner to sell.
• The property so listed.
For example, Abel employs Baker to find a buyer for his home by giving Baker a listing contract. When prospective buyers visit Baker, they will be shown photographs of the listed properties on a computer screen in Baker’s office. If interested, a buyer may wish to visit the listing, which is the house for sale.

Question 21

Must a listing be in writing? Must it have a fixed termination or expiration date?

Answer 21

Check your state law. Some states require that a listing be in writing for the broker to collect a commission, and some require a fixed termination date, but this does vary from state to state.

Question 22

What is the difference between express agency and implied agency?

Answer 22

Express agency is a clear and explicit relationship between an agent and a principal, in the form of either a written contract or an oral understanding.
Implied agency occurs when the words and actions of the parties indicate that there is an agency relationship. It does not depend on an explicit agreement, written or oral, but arises from the nature of the relationship between the parties.
For example, suppose a landowner and a real estate broker are both guests at a cocktail party. The landowner comments, within earshot of the broker, that he has a 50-acre tract at the intersection of Route 18 and Booneville Highway in Winslow County. He’d sure love to unload that property and would be willing to pay a 6% commission to anyone who could find a buyer willing to pay $10,000 an acre for the tract. If the broker took him up on this offer, found a qualified buyer, and then claimed the commission, presumably a court would rule that this was a case of implied agency.

Question 23

What is the listing price of real estate?

Answer 23

The listing price, as the name implies, is the price put on a property when it is listed with a broker or placed on the market. This price is chosen by the seller, usually with advice from the broker. It is the same as the asking price, that is, the price the seller hopes to get. It is generally considered a starting point for negotiations between the seller and a prospective buyer and consequently may be set artificially high.
For example, the listing price of the home was $350,000. Prospective buyers knew that they could purchase it for that amount, or they could try to negotiate a lower price with selling concessions.

Question 24

What are some different types of listings?

Answer 24

Listings are categorized according to the restriction on which broker can receive a commission on the sale. These are:
• Open listing
• Exclusive (or exclusive agency) listing
• Exclusive right-to-sell listing
• Net listing

Question 25

What is a recovery fund?

Answer 25

A recovery fund is a pool of money administered by the state Real Estate Commission that reimburses aggrieved persons who are unable to collect from brokers for their wrongdoings. All licensees are required to contribute to the fund.
A typical state’s recovery fund requires all new licensees to contribute $10 to the fund. Anytime the fund account balance drops below $500,000, all licensees will be assessed an additional amount. Payments from the fund to a single aggrieved person may not exceed $10,000; total payments on behalf of any licensee may not exceed $25,000. The recovery fund pays a claim only when the licensee does not.