A client wishes to sell a large industrial building. He is willing to let you li

Question

A client wishes to sell a large industrial building. He is willing to let you list the property but is unwilling to you the exclusive right of sale listing (just in case he sells it himself). He is willing to give you an exclusive agency listing. a. What should you do? Should you accept such a listing from this client? b. What provisions, if any, would you include in the listing contract to give yourself some protection?

2. Explain why there occurred numerous experimental or innovative approaches to residential real estate brokerage in the United States in the years following 2000.

3. Explain one insight from the article, “The Costs of Free Entry: An Empirical Study of Real Estate Agents in Greater Boston,” which can be found in the articles folder.

4. How would real estate change if a flat fee was charged for each deal as opposed to the current percentage commissions?

Explanation / Answer

A client wishes to sell a large industrial building. He is willing to let you list the property but is unwilling to you the exclusive right of sale listing (just in case he sells it himself). He is willing to give you an exclusive agency listing.

What should you do? Should you accept such a listing from this client? b. What provisions, if any, would you include in the listing contract to give yourself some protection?

Yes, we would accept such a listing from the client as long as w have the time and energy to manage the same as it is a potential business opportunity and if we have the necessary resources (People, material resources etc), then there is no point in not trying the engagement. It could turn out to be a sale and thus revenues to us.

The client is also right in his views that he might have his contacts too to close the deal and hence would like to keep this option and thus avoid the brokerage charges.

A win-win state for both the parties would be a fixed and small listing fees to be paid by the client to account for the resources spend on the listing. Also there can b another clause of “If the sale happens through us, we would deduct these listing charges from the final brokerage” to make the seller keen to list with us. Also in such a case we should be an exclusive agency to list the property.

Explain why there occurred numerous experimental or innovative approaches to residential real estate brokerage in the United States in the years following 2000.

Years following 2000 were very turbulent for global markets, countries due to various boom/bust cycles which lead to lot of wealth erosion, turbulence in the society. Real Estate being an important asset class had its’ own fair share of the impact, ignominy etc

Thus the industry reinvented itself in the form of more encompassing, accommodating ways to do business in order to keep the asset class ALIVE.

Explain one insight from the article, “The Costs of Free Entry: An Empirical Study of Real Estate Agents in Greater Boston,” which can be found in the articles folder.

How would real estate change if a flat fee was charged for each deal as opposed to the current percentage commissions?

It is practically very difficult to image a flat fee structure as the value of the property is directly linked to the effort that goes in to connect the parties and close the deal. Flat fees would work when most of the properties are of approx. same value and same properties. We can have a mix of both (fixed and brokerage types) where the flat fees can be set at various geographical levels like Townships, Counties etc (but not higher than County level is advisable).

It might make the real estate market and its players less competitive in a fixed fees setup as there is no incentive to close a higher value deal. Other implications could also creep in such as the brightest of the sales talent might move away to another industry.

Buyers and sellers would be impacted due to information asymmetry in the market which was earlier offset by the additional efforts by the agents for higher value properties etc

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