Knowledge is Power
The Bass Point Realty Primer
Whether you are working with us at Bass Point Realty or another broker, here is the basic information everyone should know before stepping into any real estate office for the first time.
Who’s Who in an Agency?
- The Principal Broker of an agency holds the state license. The buck stops here.
- The Managing Broker (often the same as the Principal Broker) manages the day to day operations of the agency
- An Equity Owner owns all or part of the business. This person is traditionally the Principal Broker or the Managing Broker, but can sometimes be distant, silent or corporate.
- A Broker Associate is typically an independent contractor associated with an office but can be an employee.
- A Licensed Sales Associate must work under the supervision of the Principal Broker. This person is also typically independent contractor associated with an office, but can be an employee.
- An Agent is either a sales associate, or broker associate and all are agents of the Principal Broker
How Do Brokers Get Paid?
- The Listing Agency is paid a commission - a percentage of the sale price - at closing. The Commissions is paid to the Agency at large. How the commission is distributed between agents and brokers differs from agency to agency.
- The Listing Broker (with seller approval) indicates the percentage of the sale they will pay to a Buyer Broker in the local multiple listing service. This percentage is negotiable between the Seller and the Listing Broker.
- A Buyer Broker will specify their expectations as part of any written offer submitted for a Seller's consideration. Often, a Buyer Broker will accept whatever the Listing Broker indicates in the Multiple Listing Service.
- Sometimes a Buyer Broker agreement might specify a minimum commission which the Buyer agrees to pay in the event that a Listing Broker is offering less.
Why Are Disclosures So Important?
Massachusetts Law requires that all brokers review and disclose proposed agency relationships at the first face to face meeting where a specific property is discussed and to request consumer acknowledgement. This is intended to assist consumers understand how the Broker proposes to represent the consumer under the law. This is a moment where the focus in generally elsewhere and few take the time to look at the small print. Don’t just sign it and forget it. Ask about commissions. Ask about dual agency.
A real estate agent may act as a dual agent representing both seller and buyer in a transaction but only with the expressed informed consent of both the seller and the buyer. Such an arrangement absolves that broker from the fiduciary responsibilities otherwise established by law (read here). In the event of a sale, that Listing Broker will not have to share the commission with a Buyer Broker. This curious arrangement has flourished in some markets, Nantucket among them.
What is an “Exclusive Listing”?
- “Exclusive Listing” is a frequently misunderstood and misleading term. It is in fact a holdover stemming from contract language between an owner and a listing broker - language which guarantees that the listing broker will be paid by the seller if the property is sold during the listing period. Such language encourages the listing broker to promote the property, secure in knowing that they will be paid, even if (during the term of the listing period) the seller deals directly with others.
- The rise of the multiple listing service through the digital age make virtually all listed properties (whether co - exclusively, exclusively, or, openly listed) available through any licensed agents who subscribes to the service.
- In advertising property, the term "Exclusive Listing" may seem confusing or misleading. What often goes unsaid is that the listing agreement provides that a portion of the commission paid to the listing broker by the seller be made available to compensate a buyer’s broker.
- Buyers may assume that the exclusive listing arrangement makes the property less accessible, or, more costly through a buyer broker, or, that a buyer has some obligation to work directly with the exclusive listing agent. Such buyers will likely find themselves asked to approve a dual agency arrangement.