Ohio Real Estate Statutory Requirements for Brokers

Instructor: Tara Schofield
Brokers have regulations they must follow and rules that apply to how their business and operations are handled. Learn about the Ohio regulations that apply to brokers and their offices in this lesson.

Broker Rules

The Ohio Real Estate Commission is the governmental agency that oversees the behavior and actions of real estate agents, especially regarding how the agents interact and represent consumers. The Commission creates rules for brokers' responsibilities. To become a broker, an agent must complete at least 20 real estate transactions, take 12 credit hours of approved broker prerequisite courses, have an associate degree or 60 semester or 90 quarter credit hours of higher education, pass the Ohio real estate exam, and complete a ten-hour real estate course within one year of being licensed.

If you continue in your career and become a broker, you may decide to work independently or hire other agents. Either way, you must have a physical office and ensure all Commission rules and real estate laws are upheld. You must also ensure money is handled appropriately and transaction paperwork is completed without error. You'll be responsible for the actions of your agents and must be involved in their work.

Commissions and Fees

So, a seller calls you and wants to list her home for sale. The home will have an asking price of $300,000 and the commission rate will be 6%. Commission rates are negotiable, but you find that most sellers are willing to pay 6%. A buyer working with another agency in town makes an offer that's accepted. At closing your broker gets paid 6% of the $300,000 sales price, or $18,000. Your broker splits the fee with the buyer's broker, giving each broker's company $9,000.

You have an agreement with your broker to split commissions 60/40. This means you'll earn 60% of commissions you bring into the brokerage and your broker retains 40%. In this scenario, you earn 60% of the $9,000, or $5,400, and your broker keeps the other $3,600.

Once you become a broker, you'll keep 50% of the total commission, and the other 50% will go to the other brokerage. If you have agents working for you, you can negotiate their terms based on their experience, client base, and the amount of sales they close. You may offer some agents 70%, while a new agent may only earn 30% or 40%.

Trust or Special Accounts

After you become a broker, you'll have several types of accounts. You'll need an operating account to hold the money that comes in and out of the business in the course of operations. You may deposit commissions earned and write checks or pay bills for your office, advertising, and payroll expenses from the operating account.

You must also have an escrow trust account that's exclusively for holding earnest money deposits from clients who are putting money down to secure the transaction. This money must be separate from operating funds or brokerage funds. These funds belong to the buyer or seller of the transaction and must be kept safe in a trust account. Likewise, if you manage properties, you'll need to have trust accounts to hold deposits for tenants and the property owner. You must provide a thorough and complete accounting for all funds you manage.

Ancillary Trustee

Say, there are some extenuating circumstances that may cause a broker to be unable to continue to manage his or her agency. The broker's license may be suspended or revoked, or the broker may have died. In any of these situations, it's necessary to appoint an ancillary trustee, or a qualified person who can maintain the operations of the brokerage until long-term plans are made to operate the business. An ancillary trustee must be approved by the Ohio Department of Commerce.

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