GREC REnews, Vol. 6, Issue 5 (May 2010)

May/June 2010 Volume 6 Issue 5

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Calendar
GREC Brokerage Course & Trust Accounts Class Dates:
June 22 & 23, 2010 www.cowetarealtors.com
July 14 &15, 2010 Tift Area Board (229) 388-1111
August 25 & 26, 2010 Gordon Association (404) 845-4082
Common Violations Class Dates:
June 15, 2010 @ Rabun County Board
June 16, 2010 @ 400 North Board
June 17, 2010 @ Greater Rome Board
June, 25, 2010 @ NE Georgia Board
Georgia Instructor Training Workshop Dates: July 22-23, 2010
GIT Macon http://www.grec-git.com/
Click here to see GREC Disciplinary Sanctions
Georgia Real Estate Commission
Suite 1000 International Tower 229 Peachtree Street NE Atlanta, GA 30303-1605 Phone 404-656-3916

This Issue: Creative Business Models P.1-2
Focus on Terminology P. 2

Creative Business Models in Real Estate Brokerage

A dynamic business environment requires any industry to react to the changing economy and marketplace. The real estate brokerage industry is adapting by creating new business models and implementing new marketing techniques. Some of these techniques could affect the traditional management role of the broker such as the following: Annuity brokerage models
The broker must be careful to remain closely involved in the hiring of agents.
Discount brokerage Firms Some Discount brokerage arrangements offer a la carte service to clients and limited broker management.
Business models that simplify and encourage the creation of single independent brokerage units must still be under broker supervision.
Often the real estate licensee is someone who desires a career where he/she can work independently and is not tied to a classic 9 to 5 workday, 5day workweek. These characteristics allow the flexibility for the invention of new business models. Knowing that

these ideas are attractive, it is important to review some critical license laws that must be considered when implementing a non-traditional business model for real estate brokerage. Most importantly, the broker must
remember that he/she is ultimately responsible for the licensees under his/her license. That ultimate responsibility cannot be delegated. Because the Internet and technology allow the creation of virtual offices so easily, there may be a tendency to have less inperson contact among the broker and his/her licensees and with clients as well. Some business models encourage licensees to work from home and be more independent, and as a result the broker may risk losing touch with the activities of their licensees. The broker must have policies and procedures in place to maintain regular contact with his/her licensees and should document the subject of those meetings and the training that takes place with the broker.
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GREC RENews May/June 2010, Volume 6 Issue 5

Creative Business Models...

...continued from page 1

One business model, annuity

brokerage,

is

becoming

increasingly popular and is

designed similar to a multi-level

marketing program where agents

have the potential to benefit

financially from bringing in other

licensees to the brokerage firm.

The broker should be cautious in

encouraging rapid growth in such

programs. Although a higher

volume of agents may increase the

potential for more income, it also

saddles the broker with more

responsibility in managing those

licensees.

Even

though

discount brokerage

firms may offer

varying commission

splits for licensees,

Whatever the model, the broker is ultimately responsible.

they still require

broker management and the broker is still responsible for the licensees. In an industry where market exposure is crucial to selfpromotion, the Salesperson or Associate Broker must be careful to abide by the license laws, especially related to advertising, and be mindful that the licensee must still work under the

supervision of the broker. Any advertisements by the licensee involving property must: o be in the name of the
brokerage firm that is licensed with the Georgia Real Estate Commission o must include the phone number of that firm o be approved in writing by the broker

An entrepreneurial Associate Broker or Salesperson may find it beneficial to use a licensed or unlicensed assistant, but there must be a written agreement of duties and the broker must be involved in approving the use of any assistants.
Whether it is an annuitytype program or a discount firm or a firm of virtual offices, the broker must be careful to maintain the level of supervision required by
the license law.

To review the License

Laws

regarding

broker

supervision visit 43-40-18

Management of firm and licensed

affiliates which may be accessed

from the GREC website.

Focus on Terminology: "Associate Broker"

Georgia Real Estate Commission
Suite 1000 International Tower 229 Peachtree Street NE Atlanta, GA 30303-1605 Phone 404-656-3916

In order to obtain an Associate Broker license, not only must the licensee meet the education, exam and application requirements, but he/she must have at least 3 years of the last 5 years experience in brokerage transactions and the experience must be within 5 years prior to applying for the license. Rule 520-1-.04 (2)
Although Brokers may enlist the help of an Associate Broker or a Salesperson to assist them in the management of the firm, it is important to remember that only the Broker is ultimately responsible for the firm and the licensees affiliated with it. An Associate Broker has no more authority than a Salesperson, but an Associate Broker may become a Broker and open his/her firm when needed.
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