How The Business Works
Point Bridge is committed to transparency and this begins with an “open book” approach on how the real estate business works.
Q. Is a license required to provide real estate agency, brokerage or consulting services in Pennsylvania?
A. YES. The Pennsylvania Real Estate Licensing and Registration Act (RELRA) provides for over nine categories of licenses. Although a “Broker’s License””and “Salesperson’s License” are the most common, there are other types of licenses including cemetery, campground and time-share sales.
Real estate licensing in Pennsylvania is overseen by the Department of State, Bureau of Professional and Occupational Affairs, State Real Estate Commission. You may check the type and status of an individual or company’s license at http://www.licensepa.state.pa.us/
Q. I hear the terms “broker”, “agent”, and “salesperson” and they seem to be used interchangeably. Are these references one in the same?
A. NO. A Salesperson may only practice in Pennsylvania if they are employed by or affiliated with a Broker. Only a Broker may practice independently or manage others in a real estate office, where they are referred to as the “Broker of Record”. A Broker who works in a real estate office under the management of another Broker is known as an “Associate Broker”. The educational and experience requirements of a Broker are significantly greater than those of a Salesperson.
“Agent” is a generic term in Pennsylvania and is not defined under RELRA. However, “Agency relationship” is defined as “a relationship whereby the broker or licensees in the employ of the broker act as fiduciaries for a consumer of real estate services by the express authority of the consumer of real estate services”.
RELRA requires the following qualifications of potential license holders:
The applicant for a broker’s license, shall as a condition precedent to obtaining a license, take the broker’s license examination and score a passing grade. Prior to taking the examination:
- The applicant shall be at least 21 years of age.
- The applicant shall be a high school graduate or shall produce proof satisfactory to the commission of an education equivalent thereto.
- The applicant shall have completed 240 hours in real estate instruction in areas of study prescribed by the rules of the commission, which rules shall require instruction in the areas of fair housing and professional ethics.
- The applicant shall have been engaged as a licensed real estate salesperson for at least three years or possess educational or experience qualifications which the commission deems to be the equivalent thereof.
Each applicant shall as a condition precedent to obtaining a license, take the salesperson license examination and score a passing grade. Prior to taking the examination:
- The applicant shall be at least 18 years of age.
- The applicant shall have completed 60 hours in real estate instruction in areas of study prescribed by the rules of the commission, which rules shall require instruction in the areas of fair housing and professional ethics.
*There are proposed changes to RELRA that would require a “Salesperson” to be a high school graduate and increase the number of hours in real estate instruction.
Q. Who is a “realtor” ? Aren’t all real estate brokers or salespersons in Pennsylvania realtors?
A. A real estate agent is a Realtor® only when he or she becomes a member of the National Association of Realtors®. The term “Realtor®” is a registered collective membership mark that identifies their members.
Q. Are there different licenses for residential and commercial property in Pennsylvania?
A. NO. The same Broker could sell a house in Erie and a skyscraper in Pittsburgh.
Q. Are there “standard” fees or commission rates for real estate transactions in Pennsylvania?
A. NO. Under Pennsylvania law, the rate of commission or fee for the sale, lease or management of real estate is negotiable. Any statement or suggestion to the contrary probably violates state and / or federal law.
Q. If I hire Point Bridge Realty Advisors, LLC to be my exclusive tenant or buyer agent, then will I only see properties listed by Point Bridge?
A. NO. You will be shown all available properties that meet your specific criteria regardless of whether or not the properties are listed by Point Bridge, another brokerage firm, or they are for sale / for lease by owner.
Q. What types of real estate agency relationships are allowed in Pennsylvania?
A. In an effort to enable consumers of real estate services to make informed decisions about the business relationships they may have with real estate brokers and salesperson (licensees), the Real Estate Licensing and Registration Act (RELRA) requires that consumers be provided with a Consumer Notice at the initial interview. There is an exemption from the Consumer Notice requirement for commercial property (as defined) where the consumer is an entity.
Q. Who pays your commissions or fees ? Will I be responsible to pay any commissions ?
A. If Point Bridge is engaged as a tenant or buyer agent, then real estate commissions are typically paid by the seller or landlord, or their agent. However, other compensation arrangements are available to clients and these can be discussed on a case by case basis. You will not be responsible to directly pay us commissions or fees unless your services agreement with Point Bridge says so. This is made clear up-front, so there are no surprises.
Under Pennsylvania law, even if a tenant / buyer’s agent is paid fees by the seller, landlord, or their agent (which may be based on a percentage of the purchase price or lease value), the tenant / buyer’s agent represents the interests of the tenant / buyer.
Q. What is Subagency and how can it be a serious problem ?
A. The PA Real Estate Licensing and Registration Act (RELRA) defines a subagent as a broker, not in the employ of the listing broker, who is engaged to act for or cooperate with the listing broker in selling property as an agent of the seller. A subagent is deemed to have an agency relationship with the seller. For example:
Landlord hires Broker A to lease vacant space in Landlord’s building, Bay Center, pursuant to an exclusive listing agreement between Landlord and Broker A. Therefore, Broker A has an exclusive agency relationship with Landlord, as well as a fiduciary obligation to Landlord, under Pennsylvania law.
XYZ Company has been looking for new space for six frustrating months. XYZ has visited numerous available spaces in the market and, in this process, has talked with many different landlords, owners and brokers. XYZ has not engaged a broker to act as its tenant / buyer’s agent and prefers to go it alone.
XYZ has developed a good rapport with one of the brokers (“Broker B”). Broker B offers to show XYZ some buildings in the area that could work for their needs. XYZ and Broker B do not sign a tenant / buyer agency agreement.
Broker B takes XYZ to Bay Center where Broker A is the Landlord’s agent. XYZ loves the space and asks Broker B to begin negotiating a lease on XYZ’s behalf. XYZ feels comfortable with Broker B and shares confidential information about XYZ’s finances and what they are willing to pay for the space.
Under Pennsylvania law, because Broker B does not have a tenant / buyer agency agreement with XYZ, Broker B is deemed to have an agency relationship with the Landlord! If XYZ believed that Broker B was acting as XYZ’s “agent”, then Broker B may be in a very precarious position as an Undisclosed Dual Agent. While Dual Agency is permitted in Pennsylvania with the explicit consent of all parties, Undisclosed Dual Agency is a serious offense.
Could the Landlord take the position that Broker B (as Landlord’s sub-agent) is required to inform Landlord of XYZ’s “confidential” statements to Broker B regarding what XYZ is willing to pay for the space? The answer is Yes.