Broker II Flashcards
Valid Contract requirements
Offer and contract
Consideration
Legally competent parties
Voluntary
Statute of Frauds
Must be in writing
Novation
Contract substituted for another
Escalator offer
Person will top an existing offer up to a certain price
PMI Loans
Private Mortgage Insurance- less than 20% down
When can someone terminate PMI
when principal balance reaches 78%
How much are loan origination fees
1-3%
Defeasance clause
immediately release full title when loan is paid in full
FHA borrowers min down payment
3.5%
Deed of trust participants
trustor(borrower)
beneficiary (lender)
trustee (holds deed)
Deed of trust definition
primary security instrument
Universal agent
authority to act for principal
someone w POA
General agent
handles all dealing in a specific area for a client: real estate or escrow
Single license dual agency
Licensee reps both buyer and seller in a single transaction
Designated agency/ dual license dual agency
2 separate licensees from a single firm represent a party in the same transaction
impossible to provide loyalty
or full disclosure
Sub agency
Unrepresented buyer to a transaction
express agency
Agency understood and agreed to
spoken or written
Implied agency
Avoid!
Ratification
Acceptance after the fact-
signing paperwork
or parties actions
Estoppel
prevents parties from suing each other
Actions or statements have implied a certain agreement
Agency
created solely through agreement
Exclusive agency
one brokerage market and sells property
Exclusive right to Sell
listing agent w commission
*start and end dates
Open Listing
Seller can work w multiple agents
Agent who brings successful buyer will be paid
Net Listing
Broker contract w seller to receive all net proceeds above a specific price
-Illegal in most jurisdictions
-conflict of interest
listing contracts basics
1-written or oral
2-protection
3-almost always require date
4-outline duties
5-confidentiality
6-disclosure
7-obligations
8-present offers
Marketing listing - must provide
Specify:
1-MLS
2-Internet
3-Yard signage
Open buyer representation
Allow buyer to work w many agents
can enter into an exclusive w anyone and open agreements are terminated
-addresses compensation
-parties obligations
-general description
-buyers duties
Non agency
provides non agency assistance
POA
grants rights and powers from one person (principal) to another (agent)
-special and general POA
-terminates on death
-or divorce
Different ways to contract Termination
expiration
completion
force of law
destruction of property or death
mutual agreement
Revocation
lack of trust
Post agreement client/licensee relationship
confidentiality extends
Agency Duties
1-act in principals best interest
2-dislose
3-disclose profit
4-reasonable skill
5-care for property received
6-obedience
7-consent
Specific Duties- are general
-seek price and terms acceptable
-show properties
-present offers
-copies
Fiduciary Duties
OLD CAR
Obedience
Loyalty
Disclosure
Confidentiality
Accounting
Reasonable skill and care
-Confidentiality and Accounting don’t end
Agent duty to customer
-Honesty
-integrity
-cooperation
-disclosure
-Fairness
-Accounting
Disclosure
status
-interest
-Agency and interest end at sale of property
-death of principal doesn’t void agency
Eminent Domain
govt takes private land for public use
fairly compensate owners
Taking
govt appropriation
Escheat
-takes property of descendent without will, heirs or creditors
-benefits public
Sunshine Act
FOIA
Freedom of Information Act
FEMA
researches areas that are risky for flooding
Brownfield Act
provides funds for cleaning brown fields
Deed restriction
can have time limit or not
CCR
HOA or developer
expires
member of HOA can pursue enforcement
in civil law court
Prop manager
general agent w license
Types of Leases
-Estate at sufferance
-estate at will- unknown date
-estate for years- terminates at specific date
-periodic estate- auto renewal period to period
Sherman Act
prevent monopolies
Clayton Act
supports Sherman Act- prohibits mergers
FTC
investigates antitrust/penalizes violaters
Property Disclosures- MAAP
Material
Adverse
Actual
Physical
Carpenter ants generate
Frass
General warranty Deed
greatest warranty to buyers
6 covenants:
Present warranties
Seisin
Right to Convey
Against Encumbrances
Future Warranties
Quiet enjoyment
Further assurances
Warranty forever
Bargain and Sale deed
owner has right to convey
no other warranties
Executors Deed
convey property from a decendents estate
Sheriff Deed
convey foreclosed property
Deed in Trust or of Trust
conveys real estate to a trustee for the beneficiary named in the trust
TRID required settlement statement
Closing Disclosure
CD
RESPA
LE 3 days before loan app and CD
Closing Disclosure
minimum of 3 days before closing
Possible Closing Costs
-Loan fees
-appraisal and survey
-title insurance
-legal fees
-real estate commissions
-tax and insurance prepayments
-transfer fees
FIRPTA- foreign investment real property tax act
Withhold 15% of gross sales at closing
Buyer responsible
Closing Agent handles withholding
person under FIRPTA
not a resident alien/ green card holder
not a US citizen
Home warranty
system or appliance problems after home is purchased
Home construction warranty
structural issues
workmanship
system/appliances
10 yr
FHA/VA loans required for new homes
warrantor agrees to pay for covered defects
1 year
finished construction date or
title conveyance
Acceleration clause
entire loan due immediately
Deficiency Judgement
borrower pays shortage due at foreclosure sale
Short sale
Redemption may allow to buy back after foreclosure- not with short sale
Lengthy closing process
Probate
distributing deceased person estate
FIRREA
1898 appraisals state certified/licensed appraisers
FHA insured loan
-appraised by state licensed appraiser
-approved by HUD
VA loan
VA certified appraiser
Appraiser Independence Requirements AIR
Accurate, unbiased value
Approaches to Value
Sales Comp
Cost
Income
Appraisal Process
Reconciliation process
4 Characteristics of Value
DUST:
demand
utility
scarcity
transferability
Other values
Value in use
Assessed value
Mortgage value
Insured value
Investment value
Economic Principles of Value-9
Conformity- conform to neighboring properties
Competition- value in comparison to competitive props
Substitution- value assessed via comparison of other similar props
Contribution- does it add value to area
Plottage- combining plots
Assemblage-
Regression- is value decreased by nearby properties
Progression- is value increased by nearby properties
Anticipation- future development of change in value affecting property
Sales Comparison
most commonly used-
Elements
Units
Cost approach
sum of value of land and improvements on land
Income Approach
Income from property
Gross rent Multiplier- GRM
4 or less units
GRM= sales price/gross monthly rent
Gross Income Mult
5 + units
GIM= sale price/gross annual income
Cap Rate
annual rate of return
I/V=R
I=R x V
Annual
