Real Estate Chapter 3.docx - Broker Cooperation Effecting a transaction The core activity of real estate brokerage is the business of procuring a buyer

Real Estate Chapter 3.docx - Broker Cooperation Effecting a...

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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
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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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