LICENSING LAWS IN THE US NANCY SUVARNAMANI Appropriate RE Licensing Law for Thailand, Bangkok, Thailand on July 7, 2018
Nancy Suvarnamani, ABR, CDPE, CIPS, CRB, CRS, RSPS, TRC nancy@century21sgr.com 2017-2018 - NAR Regional Coordinator to Asia-Pacific 2017-2018 - Federal Political Coordinator for Senator Tammy Duckworth 2013-2016 - NAR, President's Liaison to Thailand 2014 - NAR Chair of Global Business & Alliances 2010 - NAR Leadership Academy 2007 - Chicago Association of Realtors Realtor of the Year 2006 - President of Chicago Association of Realtors FIABCI Chicago, Past President AREAA Chicago, Founding Chair President, Century 21 S.G.R., Inc. 2
Nancy Suvarnamani is the past-president of the 17,000-member Chicago Association of Realtors. One of her chief goals as the association s president was to expand members awareness of international real estate business opportunities. Since founding Century 21 S.G.R., Inc. in 1989, Nancy has grown her firm into one of the most productive Century 21 franchises in Chicago by specializing in structuring international real estate transactions and in raising equity capital for construction developments in the United States and Asia. Nancy has been involved in the development and marketing of over 2,000 residential and commercial units over the past two decades. Before entering real estate, Nancy worked in the corporate world for Beatrice Foods and the Gas Research Institute as a researcher. She holds two Master degrees and numerous real estate designations. Nancy is the 2015 AREAA Global + Luxury Summit Co-Chair, 2014 Chair of NAR s Global Business Alliance Committee; Past Chair of NAR s International Forum and CIPS Advisory Boards; and Past Chair of FIABCI s Chicago Chapter. Nancy has been a member of AREAA s National Board of Directors since 2010, and was past chair of its International Committee. In 2008, she founded AREAA s Chicago Chapter. 3
Overview: Licensing Laws in the U.S. Why the U.S. has adapted them The benefits & disadvantages of the law How the laws were passed Which government bodies enforce them Voluntary Ethical Code Should Thailand adopt a licensing law 4
States Set the Standards 50 States; similar laws in each, but not identical Each state has its own licensing act I will concentrate on the licensing laws in Illinois Acts control the qualifications to be an agent and professional conduct 5
States Set the Standards Illinois adopted its Licensing Act in 1923; last amended in 2010 Purpose of Licensing Acts: To protect the public from dishonest practitioners To set a standard of competence to serve public 6
States Set the Standards Effects of Licensing Laws - Results Order to an unregulated industry Increase public confidence Vast increase in number of people who use agents Ability to charge higher commissions due to public s perception of agents as professionals Increase in agents incomes throughout the country 7
States Set the Standards Licensing Agencies Each state has its own licensing agency In Illinois Illinois Department of Financial and Professional Regulation (IDFPR) Agencies enforce licensing laws as written by their legislative bodies Two main regulatory documents in states Licensing act Administrative codes 8
Licensing Act Totally regulates all aspects of real estate business Defines education requirements to earn a license Mandates Professional and Ethical Conduct Imposes penalties for violation of act or administrative codes 9
Licensing Act Legal responsibility of agent to the public Relationship of agent to the public Relationship of agent to his sponsoring broker 10
Educational Standard in Illinois 21 year of age Good moral character never convicted of a serious crime High school graduate or higher 120 hours of classroom instruction on real estate topics Pass state exam 11
Educational Standard in Illinois Be sponsored by a firm licensed by IDFPR Complete 12 hours of continuing education (CE) every 2 years Renew license every 2 years Work for a sponsoring broker licensed by the state at least 2 years before opening own company 12
Permissible Action To represent members of the public -- buyers, sellers, tenants, landlords in real estate transactions for compensation 13
Licensee s Duties Care Obedience Loyalty Accountability Notice Disclosure Honesty 14
Conduct Not Permitted That Leads To Disciplinary Action Sanctions Fines Suspension Revocation of License 15
Conduct Not Permitted Engaging in real estate brokerage without a license: Fine $25,000 Using advertising that is inaccurate, misleading, or contrary to provisions of the act Making any substantial misrepresentation 16
Conduct Not Permitted Acting for more than one party in a transaction without both parties knowledge and written consent Representing or working for more than one brokerage firm 17
Conduct Not Permitted Failing to account for any documents or monies belonging to others that come into licensee s possession Failing to properly maintain escrow monies 18
Conduct Not Permitted Selling your own property without disclosing to buyer that you are an agent 19
Agency: Defines Agents relationship to member of the public Client Agent legally represents client Customer Agent does not represent customer; but supplies information to him or her 20
Relationship of Agent to Sponsoring Broker: Agent is an independent contractor No taxes taken from commission checks by firm Agent cannot be ordered to work specific time schedule. However, brokerage firm still held responsible for all the actions of an agent This contradiction is being addressed in several states 21
Voluntary Pledge to High Ethical Standards National Association of Realtors (NAR) 1.2 million members in the United States All 1.2 Million members sign written pledge to adhere to its Code of Ethics whose standard of practice is even more strict than the legal standards set by the 50 states 22
Voluntary Pledge to High Ethical Standards Every agent who joins a local association automatically becomes a member of the state association and the National Association of Realtors (NAR) 23
Voluntary Pledge to High Ethical Standards Code of Ethics adapted in 1913 The Code of Ethics ensures that consumers are served by requiring all Realtors to cooperate with each other in furthering clients best interest 24
Voluntary Pledge to High Ethical Standards Code puts interest of the public ahead of the interest of the agent Sellers obtain highest prices when all agents working with buyers can sell their properties Buyers are best served when their agents know about and can show all properties for sale 25
Voluntary Pledge to High Ethical Standards 26
NAR s Belief in Cooperation NAR believes consumers are best served by agents cooperating share information about listings All Realtors agree to input their listings into a common database called an MLS (Multiple Listing Service) Hundreds of MLS s throughout United States serving local markets All Realtors have access to all listings 27
NAR s Belief in Cooperation Each listing broker contractually agrees to share part of the commission with any broker whose buyer purchases the listing through the MLS The most common commission in the United States is 6% Normally listing brokers share 3% of the 6% with any co-broker who sells the listing 28
29
30
How Does Cooperation Help Brokers Instead of having information about 10 or 20 properties brokers have information about all of them At any one time, 10,000 or more listings are in an MLS depending on size of local market Sellers listings exposed to whole marketplace effecting highest price possible 31
How Does Cooperation Help Brokers Buyers have access to all listings instead of a few Sellers and buyers are being represented by their own agents. No conflict of interest. Sellers and buyers have full faith in the laws that govern agents conduct and the high ethical standards they voluntarily agree to. 32
How Does Cooperation Help Brokers Therefore, most sellers and buyers use Realtors to sell or buy their properties In the United States, Brokers participate in almost 90% of all sales. Confidence and trust in the whole process leads the public to use agents and willingly pay well for the ethical and professional services they provide. 33
Should Thailand Adopt Licensing Laws I believe strongly that Thailand should It will help transform the industry into a profession respected by the public It will assure sellers and buyers that the system is fair and honest 34
Should Thailand Adopt Licensing Laws It will lead to more consumers using agents It will lead to higher compensation for brokers It will help eliminate fraud 35
How Would It Work Thailand would write its own licensing law and administrative codes A government agency would be created to enforce the licensing law with authority to create a course of study 36
How Would It Work Topics possibly covered: o Law o Valuation o Deeds o Surveys o Agency o Transaction o Contracts o Transfer of title o Brokerage agreements o Finance o Leases o Property management o Land control o Ethical practices o Environmental issues 37
How Would It Work Determine standards to obtain a license Define what a broker could do Duties the broker would have to the public 38
How Would It Work Penalties for violations of law Publish standardized contracts to be used throughout Thailand Implement disclosure laws to make sure buyers are fully informed about the properties they buy. 39
Associations Present associations would agree on an ethical code of conduct One requirement would be to cooperate and put all listings into a common database MLS 40
Associations Compensation would be offered to all brokers whose buyers purchased agents listings Dual agency would be illegal No agent would represent a seller and buyer in same transaction 41
Title Guarantees Title Insurance created If deed fraudulent, buyer s money is refunded by insurance company who wrote the title insurance policy 42
Results Faith in system vastly increased Industry starts turning into a profession More sellers and buyers use brokerage firms Compensation levels increase Sellers receive fair market value for their properties Buyers find the process much easier to navigate 43
44
45
46