BROKERAGE 1. Broker and his duties.—"Real estate brokers are thost who negotiate between the buyer and seller of real property, either finding a purchaser for one desirous to sell, or vice versa; they also manage estates, lease or let property, collect rents, and nego tiate loans on bonds and mortgages." 1 A broker has also been described as "one who makes a bargain for another and receives a commission for so doing." The broker is an agent or middleman; those he rep resents are called the principals and they include buyer and seller, lender and borrower, lessor and lessee.
The compensation paid a broker for his services is called commission. It is a certain rate per cent com puted on the gross amount involved in the transaction. On sales it is based on the sales price, on exchanges on the values in exchange, on loans on the amount of the loan and on rentals on the rent called for by the lease. Brokers really make their living by doing piece work, as they are paid for each transaction separately. They do not receive a salary. If they did they would not be brokers but salesmen.
A successful broker possesses the qualities of a good salesman. He has a thoro knowledge of the thing he is selling and is able to bring it before the right cus tomer in the right way. He has also certain rights and duties of a legal nature. In this chapter we shall consider him briefly as a business man and also out line the most important of the legal principles in volved in his activities.
2. Nature of the broker's business.—The ordinary real estate broker does a general real estate business. He will earn a commission whenever he can whether by securing a tenant for a cheap flat or by bringing about a sale of property involving thousands of dol lars. Many brokers are specialists and will devote their energies only to some particular part of the busi ness. Some brokers work entirely on sales of real estate, others make a specialty of securing mortgage loans while others seek to effect commercial leases.
Whether the broker's business is a general one or whether he specializes in some particular part of it, the requirements for success are the same.
The confidence and good-will of his customers are the broker's chief stock in trade. If he obtains the confidence of a customer, that customer will be glad to do business with him again and will recommend him to his friends. In that way the circle of the broker's acquaintance will gradually widen—he will slowly but steadily build up a clientele, and if the uniform experience of these business friends with him is satis factory, and they find him dependable and truthful, his business is bound to grow. The underlying prin ciples of success, whether ethical or practical, are the same in this business as in any other business or in any of the professions.
The real estate man should possess a thoro and ac curate knowledge of the property he wishes to sell or rent. He should have a diagram showing the exact lo cation, dimensions and shape of the land. He should know all about the buildings on the land—the size, number of floors and number of rooms and the ma terial of which it is built. He should know the age of the building, the improvements it contains, whether it isin good or poor repair, the tenures under which it is held, the rent paid by each tenant, the length of the term of rental and the number of vacant apartments or stores. The foregoing has to do with the physical condition of the building and its present rents and tenants. In addition, information about the mort gages on the property should be obtained—their amount, rate of interest, when due, privileges of pre payment, and the name of the mortgagee.
A convenient way of keeping a record of the prop erties listed with the broker is by means of a card in dex or loose-leaf book. The card or sheet should have a printed or typewritten outline to be filled in with the information noted about each piece of property.