Broker Cooperation
Effecting a transaction.
The core activity of real estate brokerage is the business of procuring a
buyer, seller, tenant, or property on behalf of a client for the purpose
of completing a transaction. If successful, the broker receives a
commission according to the provisions of a listing agreement. A
broker's compensation for effecting a transaction is usually a
negotiated percentage of the purchase price.
Broker cooperation.
In most cases, transactions require the assistance of a cooperating
broker from another brokerage company acting as a subagent. Most
listing agreements provide for brokerage cooperation in the multiple
listing clause. A transaction involving a cooperating subagent is called
co-brokerage
. In a co-brokered transaction, the listing broker splits
the commission with the "co-broker," typically on a 50-50 basis. A
broker may cooperate with other brokers on either side of a
transaction, either assisting a listing agent to locate a buyer or tenant,
or assisting a buyer or tenant representative in locating a seller or
landlord.
In the most common form of broker cooperation, an outside broker
locates a buyer for the listing broker's seller. In such cases, the listing
broker shares the commission with the cooperating "selling" broker on
a pre-determined basis.
Multiple listing service (MLS).
The second prevalent form of broker cooperation is the multiple listing
service, or MLS. A multiple listing service is an organization of brokers
who have agreed to cooperate with member brokers in marketing
listings. Members of the service also agree to enter all exclusive
listings into the listing distribution network so that every member is
promptly informed of new listings as they come on the market.
To generate business, as well as achieve the transactional objectives of
clients, a broker must be proficient in four skill areas:
obtaining a client listing
marketing a listing
facilitating the closing of a transaction
managing market information
Real estate license laws.
All fifty states (and Canada) impose legal licensing requirements on
any person or business entity desiring to broker real estate. To obtain
a broker's license, an applicant must complete required education,
meet experience requirements as a salesperson, and pass a state
examination. There may be additional requirements concerning age,
criminal record, and professional background. Practicing real estate
brokerage without a valid license is illegal. Anyone who plans to obtain
a real estate license should become familiar with the real estate
license law of the relevant state.
Range of business entities.
Some business entities may legally
broker real estate, and others may not. The principal types of business
organization and the legal restrictions on their ability to broker real
estate are described below. Note that all the business entities may
own, buy, and sell
their own
real estate in varying degrees without
violating license laws.
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