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Chairman’s Message: Real Estate Teams — Risk Can Equal Reward

Quincy Virgilio: MLSListings Inc 2018 Chairman

Quincy Virgilio
2018 Chairman, MLSListings

With the growing popularity of real estate teams, there is also greater potential for missteps that can have serious consequences. After all, a team leader is ultimately responsible for the members of his or her team and if someone violates a law, you will likely be held accountable for their actions. Team leaders can also inadvertently put themselves at risk if they fail to know or understand the difference between what constitutes an independent contractor relationship and what is considered an employee relationship.

Your Exposure

There are a number of areas that require attention in operating a team or having ultimate management oversight of teams: licensing, employment and marketing are the primary areas. A few key laws to consider:

  • A broker has legal liability for everyone he or she manages, including teams operating within the brokerage. It’s important to be aware of what your teams are doing and ensure that they are well educated and trained on how to manage their teams.
  • An unlicensed assistant cannot perform licensed services, or services where only a licensed agent or broker is allowed to conduct or perform those duties.
  • Imposing specific requirements on a team member, such as requiring that a set number of calls be made each day or that they be in the office from 8:00 am to 5:00 pm, can risk putting the team member into an employee classification.
  • If a team member is not providing licensed services, they cannot be paid with commission fees paid to the team on a transaction.
    • All team signs and marketing materials must have the responsible broker name and BRE number on them, as well as the team name and the name and license number of at least one of the licensed members of the team. NOTE: the former must be the same size as the latter when printed on the materials.

Systems and Training Are Key

The best way to manage teams properly is through organization, which means establishing systems and processes that team members must follow. This ensures consistency and accountability. It’s helpful to have these guidelines and protocols for everything from operational tasks to communications.

Keep in mind that the larger the team, the harder it is for a team lead to maintain knowledge and oversight of the individual team members’ behavior, communications and adherence to the law. For this reason, training is crucial. Team members need to be trained on each of these aspects and be well versed in the industry’s code of ethics and professional standards. Not only are they expected to behave in a professional, ethical manner, they also need to understand that they represent you in the field. Establishing expectations of how they speak, act and perform their duties should be part of the training process.

One Size Doesn’t Fit All

Real estate teams are not for everyone. Some agents or brokers prefer to maintain their independence and freedom from managing others, and harness their own abilities to generate business and manage the client relationship through the transactional cycle. For those who thrive in a team environment, be aware of the rules and risks that go with the model.

To learn more about the laws pertaining to managing or being part of a real estate team, check out the National Association of REALTORS® at https://www.nar.realtor/being-a-realtor/partnerships-teams/legal-issues-for-teams

You can also find information about California law as it pertains to teams by going to http://www.dre.ca.gov/files/pdf/forms/re559.pdf

 

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