Chapter 5: Real Estate Practice Flashcards
When does the due diligence period usually begin?
usually begins after the contract has been signed and acceptance communicated
What are the requirements of a valid listing?
- signatures of all the owners and the listing licensee
- legal description of the property
- list price – this must be set by the seller
- definite starting and termination date
- broker compensation
What are the 4 types of listing agreements?
Exclusive Right to Sell
Exclusive Agency
Open Listing
Net Listing
Exclusive Right To Sell
The broker is the exclusive agent and receives the commission even if the seller sells the property himself. This type of listing eliminates most procuring cause controversies. The broker will be entitled to a commission no matter who sells the property.
If a seller sells his own property and owes a commission on the sale, the seller had probably signed which kind of listing agreement?
Exclusive Right to Sell
Exclusive Agency
The broker is the exclusive agent and receives the commission UNLESS
the seller sells the property himself.
The seller competes with the broker.
This type of listing
is often used by builders who reserve the right to sell new construction through their own sales office without paying a commission
Exclusive Agency
Open Listing
- owner reserves the right to list with as many brokers as he chooses.
- also reserves the right to sell the property himself and avoid paying a commission.
- Open listings are NOT found in the MLS.
- Only a broker who brings a written contract will be paid.
- An open listing can be compared to an FSBO where the owner advertises a willingness to cooperate with licensed agents
Net Listing
All money over the amount the owner wants for the sale of the property is
treated as the broker’s commission.
The net listing is ILLEGAL IN SOME STATES. Other states have strictly regulated it by setting max. commissions and requiring brokers to provide a CMA to the seller.
“Buyer Rep”
An employment contract wherein the broker will be the buyer’s agent. The purpose is to find a suitable property for the buyer. The buyer’s broker must protect the buyer’s interests at all points in the transaction. The specific services provided to the buyer should be spelled out. Compensation issues should be addressed. The agreement must have a starting date and a termination date. All listings (and buyer representation agreements) are taken in the name of the broker and become the broker’s property. If a sales licensee leaves his sponsoring broker, he also leaves (or loses) any listings or buyer representation agreements he procured under that broker. All agency agreements must be in writing to satisfy the Statute of Frauds.
Acts of law that terminate a listing/buyer representation agreement
- Bankruptcy of the seller or the broker, or foreclosure
- Death – although sales contracts and leases survive death, service contracts are terminated by the death of either party. The broker and seller are the parties to the listing. The salesperson is not a party; therefore, the death of the salesperson will not terminate a listing.
- Destruction of the property or condemnation under Eminent Domain
- A change in property use by outside forces, such as zoning
A property manager is in what kind of agency?
General Agency
Operating Expenses
recurring expenses necessary for the monthly operation and maintenance of a property. They include fixed
expenses such as taxes and insurance and variable costs such as utilities, payroll, and reserves for repairs, replacement, and maintenance.
Operating expenses DO NOT
INCLUDE
mortgage payments/debt reduction, depreciation, and capital improvements/ expenditures
The Civil Rights Act Of 1866
prohibits discrimination based on race or color. There are no exceptions
or exemptions to this law.
