Property II
Zeiner
Fall 2016
Real Estate Brokers
Types of Brokers: Listing Broker
A listing broker is a broker who executes a listing agreement with the seller
The listing agreement authorizes the listing broker to sell the listed real property
Types of Listings
: A listing is exclusive if the seller is limited to one broker
Exclusive Agency Contract
The broker is the only agent representing the seller
The broker receives a commission unless the seller finds his own purchaser
An exclusive agency listing usually has a set termination date
Exclusive Right to Sell
The broker is the only agent representing the seller
The broker receives a commission, even if the seller finds a purchaser on his own or through another broker
Usually, an exclusive right to sell listing has a set termination date
Non-Exclusive or Open
A listing is nonexclusive or open if the seller may use more than one broker
In an open listing, a broker earns a commission only if the broker is the first to procure a suitable buyer at suitable terms
Usually, an open listing does not have a set termination date
: the listing broker markets the property through, inter alia,
Open houses,
Listing with a multiple listing service (a pooling arrangement among local brokers who have access to online listings and who split commissions)
A multiple listing service (MLS) is a cooperative venture among brokers and appraisers that allows its members to share a database (now often electronic) of residential listing information
Each member pays a fee for the privilege of accessing the database
Only brokers and appraisers may list properties on the MLS
A listing on the MLS includes, inter alia,
A photograph of the property
Square footage
Lot size
Number of rooms
Asking price
: the listing broker receives a commission (usually 6%) if, traditionally, the broker secures a buyer who is ready, willing and able to purchase the property at a price acceptable to the seller
*** A selling and listing broker can be the same person, thus broker gets the whole commission
Real Estate Brokers
Types of Brokers: Listing Broker
Definition:
The seller broker is the broker who brings a potential buyer to the listing broker and seller
Usually, a potential buyer initiates the contract with the selling broker in an effort to locate property to purchase
The selling broker does not execute an agreement directly with the seller or with the buyer
Responsibilities:
The selling broker helps the potential buyer to identify suitable and affordable residential real property
The selling broker then shows the targeted properties to the buyer
Compensation: the selling broker shares in the commission paid to the listing broker
Real Estate Brokers
Types of Brokers: Buyer’s Broker
Definition: the buyer’s broker executes an agreement with the buyer
Responsibilities: the buyer’s broker, inter alia,
Researches available listings
Targets the buyer’s search to certain geographic areas and price ranges
Shows properties to the buyer
Provides help in arranging inspections of the property
Prepares offers and counteroffers
Assists the buyer in the escrow process
Compensation: the buyer’s broker is compensated by
Sharing in the listing broker’s commission or
Receiving a fee paid by the buyer
Real Estate Brokers
Types of Brokers: Transaction Broker
Definition: a transaction broker provides a limited form of representation to a buyer or a seller or both
Presumption: in Florida, a broker is presumed to be a transaction broker unless the parties agree otherwise
See Fl. St. §475.278
Responsibilities:
A transaction broker must
Deal honestly and fairly;
Accounting for all funds;
Use skill, care, and diligence in the transaction;
Disclose all known facts that materially affect the value of residential real property and are not readily observable to the buyer; and
Present all offers and counteroffers in a timely manner, unless a party has previously directed otherwise in writing
A transaction broker may otherwise limit his responsibilities
See Fl. St. §475.278
Confidentiality
Confidentiality is limited unless it is waived in writing by a party
Under this limited confidentiality, the transaction broker may not disclose that
The seller will accept a price less than the asking or listed price;
The buyer will pay a price greater than the price submitted in a written offer;
A buyer or seller has a motivation for buying or selling the property;
A seller or buyer will agree to financing terms other than those offered;
The transaction broker also must not disclose any other information requested by the buyer or the seller to remain con
y duty intentionally or negligently.
Contracts Measures Available for Breach of the Broker’s Fiduciary Duty
Expectation
Some jurisdictions use the benefit of the bargain/expectation measure of damages for breach of the broker’s fiduciary duty, measured by difference between the value expected and the value actually received.
Value Expected (–) Value Received
A few jurisdictions (e.g., California) permit recovery of lost profits, plus incidental and out-of-pocket costs.
Lost Profits + Incidental + Out-of-Pocket
Reliance: Other jurisdictions award damages (for the buyer) measured by the difference between the amount paid and the value actually received.
Amount Paid (–) Value Actually Received
Restitution: In some cases (e.g., Licari v. Blackwelder), the court orders the broker to make restitution of profit gained by the broker as a result of the breach.
Licari v. Blackwelder
. A real estate broker, as a fiduciary, owes his principal fidelity and good faith, and may not create a situation where his interests conflict with his client’s interests.
Torts Measure
When the plaintiff’s complaint contains elements of tort or when the broker has acted in bad faith, the court may award tort compensatory damages.
The tort recovery may include pain and suffering and punitive damages in the appropriate case.
Real Estate Brokers
Broker Requirements for Recovery of Commission
When the Commission is Earned (In the Absence of a Breach of Fiduciary Duty)
Traditional Rule (Majority)
Traditionally, a broker is entitled to recover her commission if she produces a buyer who is (1) ready, (2) willing, and (3) able to purchase the property, and (4) the seller and buyer execute a contract of sale.
Generally, the commission is paid at closing from the sale proceeds.
Under the traditional rule, the broker receives her commission even if the sale fails to close.
