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Michigan Real Estate Statutory Requirements for Brokers

Instructor: Tara Schofield

Tara has a PhD in Marketing & Management

There are requirements beyond education, testing, and licensing that brokers must follow. Where will you work? What will you do if there is a legal battle with a client, agent, or other party? Learn about these questions in this lesson.

Michigan Real Estate Broker Statutory Requirements

Being a managing broker is an exciting job. You get to help agents succeed in listing and selling homes, work with buyers to purchase a home, and ensure transactions are handled professionally and ethically. Not only are you responsible for your own actions, you must also help and oversee the actions of your agents, including how they advertise, handle paperwork, and resolve issues with their clients. It's important you understand the rules and requirements that come with being a broker to ensure you follow the laws. Take some time to understand the basics. Remember, to be a licensed broker in Michigan you must have at least three years of full-time agent experience, complete at least 90 hours of required coursework within three years, and pass the broker exam.

Place of Business Requirements

When you run a brokerage, you must have a place of business; that means you must have an office that's designated for your real estate business. You'll likely spend a lot of time out of the office meeting with clients, showing houses, and attending closings. But, you need to have a place to work and it cannot be a home office. There needs to be signage that designates the space as your business location. Think about it this way: if the public were to see your site or clients are trying to come to your office, can they tell where it is by a sign or other indication that your real estate business is there? The Real Estate Commission requires you have a legitimate office.

Another reason you need an office is for your agents. The agents that work for you will also use this space as their offices for clients to meet with them or handle paperwork. Also, the busier your office, the more likely you'll need someone to answer phones and greet clients. In addition, when you open an office, you'll need to register with the Real Estate Commission. If you move locations or add a second site, make sure you register the new location, as well. Any agents affiliated with your office will also need to be updated with the state.

Alternative Dispute Resolution vs. Arbitration

In the course of doing real estate in Michigan, you may have problems or disputes with your clients, vendors, or other agents. Many issues can be resolved between the appropriate parties. However, if you have a problem that persists or a resolution cannot be reached between you and the other party, you may need additional help to get a solution.

Mediation is an option for dispute resolution where a neutral third-party listens to both sides of a complaint and gives an opinion about how to handle the problem. Mediation isn't legally binding, but does give the parties a chance to work out a problem without going to court. Arbitration is like mediation in that a neutral third-party listens to each side of the problem, but it gives a legally-binding answer to the problem. In arbitration, both parties agree to abide by the answer of the arbitrator and do what the arbitrator orders.

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