Orientation Plymouth and South Shore Association of REALTORS®2013
Welcome New Members! • The goals of this Orientation session include: • To explain what it means to be a REALTOR® • To introduce you to the three levels of membership, National, State and Local • To review the REALTOR® Code of Ethics • To highlight important aspects of Agency • To create awareness of Government Affairs and the REALTOR® Political Action Campaign (RPAC) • To familiarize you with the key aspects of Anti-Trust and Fair Housing
Agenda 8:30–8:45am Welcome & Introductions 8:45–9:15am What is a REALTOR®? 9:15–11:45am Code of Ethics 11:45–12:30pm Networking Lunch 12:30-1:45pm Agency 1:45-2:30pm Government Affairs & RPAC 2:30-2:45pm Break 2:45-3:45pm Anti-Trust & Fair Housing 3:45-4:30pm Wrap up & Quiz
Over 1 million strong! • National Association of REALTORS® (NAR) www.realtor.org • Code of Ethics • REALTOR® Magazine http://realtormag.realtor.org/ • REALTOR® Designations and Certifications http://tinyurl.com/bmomgxe • REALTOR® Federal Credit Union https://www.realtorsfcu.org/ • Massachusetts Association of REALTORS® (MAR) www.marealtor.com • Bay State REALTOR® publication http://tinyurl.com/acdojtx • Legal Hotline 800-370-5342 • Technology Hotline 866-232-1837 • On-line Continuing Education
YOUR Local Association Plymouth and South Shore Association of REALTORS® (PASS) www.passrealtors.com Leadership http://tinyurl.com/bhujesk Staff http://tinyurl.com/augkcqp PASS Real Estate School #1131 offers local live classes and access to MAR’s on-line education http://tinyurl.com/agtprxx Monthly newsletter – “PASSWord” http://tinyurl.com/bfkhh5m Networking events, Membership meetings and more! http://tinyurl.com/b9zk7y9
Code of Ethics National Association of REALTORS® Code of Ethics http://tinyurl.com/b6yfk9d Required of all REALTORS® in each 4 year “Quadrennial” to maintain Active REALTOR® status. The current Quadrennial is 2012-2015 and this course fulfills your requirement.
Code of Ethics History National Association of Real Estate Exchanges Formed on May 12, 1908 Code of Ethics was created in 1913 MAR was formed in 1927 and adopted the code at that time
Why do we have a Code of Ethics? The “Wild West” Caveat emptor: “Buyer beware” To establish professional standards Binding on all Realtors® It was good for business The Code became the basis for state licensing laws MA started licensing in 1957
The Golden Rule Ethics defined: • ethics (ĕthîks) The rules or standards governing the conduct of the members of a profession. • The American Heritage Dictionary
Code of Ethics Structure The Three Major Sections 1.Duties to Customers and Clients 2. Duties to the Public 3. Duties to Realtors®
Code of Ethics Case Studies
Enforcement Ethics Deals with alleged violations of the Code Arbitration Deals with business disputes The same basic process is used for both types of enforcement.
Enforcement Ethics A. Filing a complaint B. Grievance Committee C. Professional Standards Hearing Panel D. Discipline Discipline A. A fine up to $5,000 B. Suspension or Termination of membership C. Require additional education course(s)
Enforcement (cont.) Arbitration A. Filing a complaint B. Grievance Committee C. Mediation (allows for compromise) D. Professional Standards Hearing Panel E. Payment of award (all or nothing) Appeal A. To the Board of Directors B. Due process C. Decision is final
Networking Lunch Please move upstairs to enjoy lunch with our featured 2013 PASS Sponsors!
Agency Relationships Types of Agency Representation • Sub Agency • Buyer Agency • Facilitation (Non-Agency) • Designated Agency • Dual Agency • For Definitions and Resources visit: • http://tinyurl.com/af7llv2 (Buyer and Seller Handouts are included on this site.)
The Definitions • Agency: The relationship resulting from mutual consent between the principal and his or her agent that the agent will act on the principal’s behalf and be subject to his or her control. • Agency Relationship: Under the common law, this relationship is defined as follows. • Agency is the fiduciary relationship which results from themanifestation of consent by one person to another that the other shall act on his behalf and be subject to his control, and consent by the other so to act. • The one for whom action is taken is the principal. • The one who is to act is the agent. • Agent: A licensee who has agreed to act on behalf of his or her principal and to be subject to that principal’s control. The agent in a common law state is the brokerage represented by the principal or designated broker, also called broker in charge.
Asking the Questions • What is the Foundation of an Agency Relationship? Are you a “Client” or are you a “Customer”?
What is a Client? A client is someone who engages the services of and is represented by an agent in a transaction. The agent for the client will negotiate the best price and terms for that client. A SELLER becomes a client by signing a Listing/Marketing Agreement with a real estate company that clearly establishes the obligations of both parties. As SELLER CLIENT, your interests are protected by the agent’s duties to you including obedience, loyalty, disclosure, confidentiality, accountability and reasonable care.
What is a Subagent? A subagent is an agent of another agent. Both agents represent the CLIENT – who could be either a BUYER or SELLER. The subagent works with a CUSTOMER but for the CLIENT. What is a Customer? What is a Buyer Customer?
What is a Buyer Client? A BUYER can become a client by requesting that the broker be a BUYER’s agent. The agent for the BUYER CLIENT will negotiate the best price and terms for that client. A BUYER becomes a client by signing a Buyer. A BUYER becomes a client by signing a Buyer Representation Agreement with a real estate company that clearly establishes the obligations of both parties. As a BUYER CLIENT, your interests are protected by the agent’s duties to you including obedience, loyalty, disclosure, confidentiality, accountability and reasonable care.
What is a Dual Agent? A dual agent is a real estate broker who represents both the BUYER and the SELLER in the same transaction. Dual agents must have the informed consent of both the BUYER CLIENT and the SELLER CLIENT in order to act as a dual agent.
What is Designated Agency? • A Designated Agent is when one Salesperson|Broker in a brokerage is appointed to represent the Seller, and another Salesperson|Broker within the same brokerage is appointed to represent the Buyer without either salesperson being considered a dual-agent. Brokerages practicing designated agency must: Disclose at the commencement of the relationship the limited relationship with the buyer or seller. Serve as agent only to the party the licensee agreed to represent. Fulfill the duties owed to the respective client, as spelled out in the license law and in the agency agreement. When & if another agent is designated to appoint a client on the other side of the same in-house transaction, the appointing broker becomes a dual agent.
What is a (non-agent) Facilitator? A Facilitator is when a licensee who works as a facilitator assists the Buyer and Seller to find one another and reach an agreement.
Subagency in MA (as of 2005) Subagencyoccurs when one real estate agent (brokerage) “hires” another real estate agent, in a separate firm to help perform his or her duties. Brokers and Salespersons working as subagents treat consumers as customers. Subagency occurs most commonly when listing agents offer compensation to subagents to assist in finding a buyer for their listing. Buyeragents, however, also use subagents to assist them in finding property for their buyer clients. *Effective July 1, 2005, in order to practice subagency in Massachusetts the brokerage firm must obtain written permission from the client before offering compensation to subagents. This written permission must include a disclosure of the risks of vicarious liability. The law in Massachusetts applies equally to both kinds of subagency. Each real estate company must decide individually whether or not to offer compensation to subagents.
The Seller Agent • Liability and Responsibility • Represent the seller on a client basis and treat the buyer as a customer • Agent must carry out all lawful instructions of the seller • Reasonable care – due diligence – agent must act competently, capable of performing duties within scope of license • Vicarious Liability • When one person is liable for the negligent actions of another person, even though the first person was not directly responsible for the action. For instance, a selling broker is liable for a subagent’s words and/or actions, even if they contain misinformation
The Seller Agent (cont.) • Confidentiality • Duty to keep clients requirements, information or discussion confidential, duty survives termination of agency relationship • Seller Agent’s Disclosure to Prospective Buyers • “Seller Disclosure Form” – seller’s consent to disclose information pertaining to the sale of their home
Overview: Duties of a Seller’s Agent In addition to their general fiduciary responsibilities, licensees acting as seller’s agents, including listing agents and subagents, owe the following specific duties to their clients: • To obtain written consent from the seller prior to offering Subagency. Seller consent must include a disclosure that the seller has been advised of the risk of vicarious liability. • To seek an offer to purchase at a price and with terms acceptable to the seller. Unless the seller directs otherwise, the listing agent is not usually obligated to seek additional offers once the property is subject to a contract of sale. • To present all offers forthwith (i.e. in a timely manner). • To obtain written consent before acting as dual agent.
The Buyer Agent • Liability and Responsibility • Represent the buyer on a client basis • Agent must carry out all lawful instructions from the buyer • Disclose all information relevant to the client • Confidentiality of client information or discussion • Compensation • Client pays fee • Offer compensation by listing broker through MLS • Compensation directly from transaction proceedings • Hourly – flat fee - % fee of purchase price
The Buyer Agent (cont.) • Establishment of Agency • Express written or oral contract where agent and client agree to terms • Implied agency by actions or words • Obligation • To work in the best interest of that buyer obtaining them the best terms, conditions and price
Overview: Duties of Buyer’s Agent In addition to their general fiduciary responsibilities, licensees acting as buyer’s agents owe the following specific duties to their clients: • To use reasonable efforts to locate a property at a price and on terms acceptable to the buyer. Unless the buyer directs otherwise, the buyer’s agent is not obligated to continue to show properties to the buyer once the buyer is a party to a contract to purchase. • A licensee does not breach any duty or obligation to the buyer by showing the same property to other buyers, or by acting as an agent or subagent for other buyers. However, it is recommended that this be stated in a buyer agency agreement. • To present each offer or counteroffer to purchase to the listing agent in a timely manner, even if the property is subject to a contract of sale. • To obtain consent before acting as a dual agent.
Termination of an Agency Relationship Expiration of agreement Mutual agreement to terminate Completion of performance Death or insanity Impossibility of performance Incapacity (i.e. mentally incapable) bankruptcy