A real estate broker performs a variety of functions to facilitate the consummation of a real estate sales transaction between a buyer and a seller. A real estate broker usually works for the seller, not the buyer. Perhaps the most important among her functions is to locate a potential buyer for the seller and solicit that buyer to make an offer to buy the property. A real estate broker does not "make an offer" to sell the property on behalf of the seller and is not entitled to enter into real estate sales contracts with a buyer as the seller's agent. Real estate brokers earn commissions by introducing potential buyers to sellers of real estate. If the buyer makes a purchase offer, the real estate broker earns a commission whether or not the seller accepts the offer.
There are two contracts typically used in real estate sales transactions - the contract between the seller and the real estate broker setting forth the terms on which the broker will earn a commission (the "listing agreement"), and the contract between the seller and the buyer for the sale of the real estate.
Real estate brokers are subject to a number of legal obligations:
(1) They may not discriminate against protected classes of people (minorities, for example) in providing services or in advertising, they may not attempt to direct potential buyers to particular areas based on their race, and they may not attempt to trigger "panic sales" by spreading rumors in a particular neighborhood that people of the "wrong" color are moving in. Federal and state civil rights statutes govern these obligations.
(2) They may not practice law (unless they are licensed attorneys). Statutes prohibiting the unauthorized practice of law govern here. Generally, that means they may not draft contracts, mortgages, deeds, etc. In many states, however, they may fill out standard legal forms that are related to their services. Traditionally, the presence of a licensed attorney was required at every real estate closing, but now some states are allowing closings to be performed without the presence of a lawyer.
(3) They may not engage in price fixing or other anti-competitive behavior that violates antitrust law.
DISCLAIMER: The following is intended for reference purposes only and not as legal advice.
Real Estate Law in Plain English explains real estate law without the legalese.
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