Final answer:
Before acting as an intermediary, a broker must have the right to enter contracts and be properly regulated. Understanding of escrow is essential, as it involves funds management by a third party. Brokers also need to adhere to the legal requirements of the industry for their own livelihood.
Step-by-step explanation:
Before a broker can act as an intermediary in a real estate transaction, certain prerequisites must be met. Firstly, the broker must have the right to enter into contracts on behalf of the property owner, which implies that either the individual or firm must own the property or have explicit authorization to represent the owner. Moreover, a clear understanding of escrow is crucial as it involves a neutral third party managing the deposit of funds to be released upon completion of certain conditions of the sale, including payments for home insurance and property taxes. Additionally, brokers must be regulated and supervised to ensure they are qualified and legally permitted to deal in the sale of securities, as this is part of their professional responsibility and affects their livelihood.