Tracking transactions handled by a broker’s agents

Real estate brokers have a big job, and their reputations are on the line every time one of their sales agents conducts business on their behalf. Brokers handle the obligation of tracking the activities of sales agents by using these tips.

A Broker and their supervision of agents

Only a CalBRE licensed broker is authorized to advertise, contract for and provide services to real estate clients in expectation of compensation. In fact, sales agents are most appropriately described as agents of the broker, not the client though they work on behalf of the client as an employee of the broker. It is the broker who is the “agent of the client;” the broker’s sales agent thus interacts with the client on the broker’s behalf. [Grand v. Griesinger (1958) 160 CA2d 397]

Further, the broker is the only individual who may lawfully pay the sales agent for real estate related services. All types of compensation arising out of licensed services are first paid to the broker, and in turn the broker pays the sales agent as agreed in writing. [Calif. Civil Code §2079.13(b)]

As an employee, a sales agent’s real estate activities need to be supervised at all times by their employing broker. The broker is responsible for the consequences of all their agents’ activities carried out within the course and scope of their employment with the broker. When a broker fails to properly supervise their sales agents, they face review from the California Bureau of Real Estate (CalBRE) upon a complaint made by another licensee or member of the public. [Gipson v. Davis Realty Company (1963) 215 CA2d 190; Calif. Business and Professions Code §10177(h)]

Duties to supervise sales agents include:

• establishing office policies and procedures;
• storing all transaction documents appropriately;
• handling trust funds received by the agent for deposit, retention or transmission;
• overseeing advertisements;
• ensuring compliance with unlawful discrimination, fair housing and agency laws;
• soliciting and negotiating client listings and real estate transactions – sales, property management/leasing and mortgage activity; and
• reviewing periodic transaction reports from agents for compliance with office policy. [CalBRE Regulations §2725]

Tracking the transaction

At the core of broker supervision is the duty owed the CalBRE to be aware of the agent’s activity on real estate transactions. To accomplish this, the broker needs to require their employed agents, whether sales agents or associate brokers, to report when:

• a listing is taken;
• an offer is accepted; and
• the sale closes escrow.

However, it’s most prudent to have their agents report transaction activity by documentation at every step of the process. Documentation provides primary evidence of the agent’s activities which helps the broker fulfill their duty to supervise. It also gives the broker a paper trail to refer to when something goes wrong (i.e. if an agent is negligent or a client pursues legal action against the broker and sales agent).

When a sales agent enters into a listing with a client for the services of their broker’s staff, they need to prepare and submit a checklist type of form to the broker’s transaction coordinator. On the form, they note all relevant information about activities undertaken in the employment. This includes information on:

• the type of listing
• the client;
• how the listing was obtained;
• the property involved;
• the agreed-to brokerage fees; and
• office duties required to service the client. [See RPI Form 522]

It is the broker’s transaction coordinator or office manager who works with the listing agent to identify the steps to be taken to fulfill their due diligence obligations owed the client. This includes actions the coordinator can assist with, like ordering the for-sale sign and installing the key safe on a sales listing. [See RPI Form 521; Form 521-1]

The broker reviews these completed forms, directly or through the office manager they have employed. The review needs to be done regularly, once a week or at minimum once a month depending on the nature of the listing and the size of the broker’s staff.

The broker also needs to decide how often the agent will update the status of the listings with the transaction coordinator on the listings they obtained. For smaller brokerages, the broker may want to meet with the sales agent themselves for regular updates, especially with sales agents new to the office, to make sure they’re acting in compliance with the policies set and conduct expected by the broker.

The broker will find it helpful to have agents report all actions taken on behalf of a listed client in a single file activity sheet for that listing. Additionally, reports tracking each action on the listing assist the sales agent as a review of their time spent with each client. Keeping records induces efficiencies when scheduling activities and planning for future listings. [See RPI Form 520]

Finally, when escrow is closed on a sales transaction a property sold report is prepared. This lists the property’s sales price and the fees paid to the broker, listing agent and any referral fees. It also contains information on trust account funds, service providers and the buyer and seller for structuring future marketing. [See RPI Form 523]

Or, if the property does not sell and the listing expires, the agent files an expired listing report. Here, the agent details the steps taken to sell the property, why the property did not sell and whether or not the brokerage should consider working with this client in the future. [See RPI Form 522-1]

An office manager needs supervision, too

Agents and broker associates aren’t the only individuals who perform duties on behalf of the broker. It’s common for a corporate broker to hire office managers, administrative assistants and transaction coordinators. For instance, office managers:

• oversee the handling of documents and trust funds;
• assist in prospecting for clients;
• communicate with participants in a transaction;
• review agent reports; and
• coordinate closings.

A transaction coordinator performs many of the broker’s duties to track their agents’ activities. To ensure everyone is doing their job, the broker needs to set procedures in place for documenting the transaction from start to finish.

Methods of tracking

Depending on how tech savvy the brokerage is, the preferred method of tracking varies. The bare bones tracking method is a spreadsheet with the listing details, dates and amounts paid. And while relying on spreadsheets and filing cabinets is a time-tested way to follow and record sales agent activities, more efficient — digitized — ways of tracking now exist to make everyone’s lives easier.

PropertyBase is a customer relationship management (CRM) software that helps brokers manage their agents’ listings by storing documents, tracking emails, tracking agent fees and even generating leads. PropertyBase is an expensive option, starting at $89 per month for each user at large brokerages. However, it works with many other online platforms, like DocuSign and MailChimp, allowing brokers and agents to run their entire business from one platform. It’s brokerage efficiency at its best.

For less money and fewer features, Broker Mint tracks transactions, agent fees and offers. It’s also integrated with Quickbooks to make office accounting easier. Pricing is per brokerage, with their most popular package at $99 per month for a brokerage with up to six users.

Finally, if a broker wants to take their management activities from paper to the screen, they ought to ask their transaction coordinator what programs they recommend. The coordinator may be familiar with a software already. Or, they may have other ideas about making the tracking process run more smoothly.