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NC Real Estate Exam Prep > Level 9 NC Real Estate > Flashcards

Level 9 NC Real Estate Flashcards

1
Q

Oral Agreements Are
Okay If:

A

A broker is representing a buyer or a tenant.

The oral agreement’s terms are clear and
understood by all parties.

The oral agreement does not keep the buyer or tenant from working with
another broker.

The buyer or tenant can terminate the agreement at any time.

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2
Q

The Oral Agreement Must
Be Put into Writing If:

A

An offer is made by any party in the transaction.

Any attempt is made to obligate the buyer or tenant for a period of time

The agreement seeks to make the broker relationship exclusive.

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3
Q

Oral listing agreements and property
management agreements….

A

Are unlawful in NC.

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4
Q

Types of Agency Contracts

A
  1. Listing contract: A seller employs a broker to sell a property they own.
  2. Buyer agency contract: A buyer employs a broker to represent them in the
    purchase of a property.
  3. Contract to procure tenant: A property owner enlists a broker to find a
    tenant for their rental property.
  4. Property management contract: A property owner enlists a broker to find a tenant for their rental property and manage the operations of the rental property.
  5. Tenant representation contract: A prospective tenant employs a broker
    to find a property to rent. (This is more commonly used in commercial
    real estate.)
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5
Q

NCREC Rule 21 58A.0104(a)

Per this rule, agency contracts must:

A

Be in writing.

Have a defined expiration date.

Contain the anti-discriminatory language prescribed by Commission Rule 58A.0104(b)

Be signed by all parties

Include the listing broker’s individual license number

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6
Q

As of October 1, 2011

A

all agency agreements must be in writing and
signed by the party to be charged in order to be considered valid. In other
words, if you want to be paid for your work as a broker, you must have a
signed written agreement for brokerage services.

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7
Q

A listing broker must do the following to
earn their fee:

A

Have a current North Carolina real estate
license that is active

Have a valid written listing contract with the seller

Procure a “ready, willing, and able” buyer

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8
Q

When a listing broker takes on a client
as their principal…. (how is commission determined?)

A

the broker negotiates
how compensation is earned, what form
compensation will take, and who will be eligible for compensation

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9
Q

A buyer’s broker has a similar set of requirements to earn their fee:

A

Have a current North Carolina real estate license that is active

Have a valid buyer agency contract

Must locate a property that the buyer agrees to purchase

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10
Q

Buyer Broker Compensation..

Often, there is language stating that the broker’s compensation will come
from the…

A

commission split offered by the seller (as outlined in the MLS).

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11
Q

These are the formulas that can help you solve for different parts of a
commission

A

Commission amount: Total x Percentage = Part

Commission percentage: Part ÷ Total = Percentage

Sales price: Part ÷ Percentage = Total

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12
Q

independent contractor

A

works according to their own methods and is
responsible to their employer only as to
the results of that work. Most brokers are
independent contractors!

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13
Q

For both independent contractors and
employees,

A

the employer oversees the
individual’s work, since the individual is a licensee. With an independent contractor, though, the how, when, and where of their work is more flexible.

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14
Q

Independent Contractor
vs. Employee

A

If the worker controls how they accomplish their work, the worker is likely an independent
contractor.

If the employer controls how the worker
accomplishes their work, the worker is likely an employee.

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15
Q

ready, willing, and able buyer

A

a buyer who is ready and willing to purchase the property and is financially
and legally able to do so

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16
Q

procuring cause

A

the defining action or actions that brought a buyer or buyers to purchase a property

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17
Q

retainer fee

A

a non-refundable, specified fee paid by the buyer after entering into an oral or
written buyer agency contract

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18
Q

success fee

A

a specified amount in the buyer agency contract that the buyer’s broker will
earn upon the closing of the transaction

If commission exceeds success fee amount, success fee isn’t paid.

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19
Q

net listing

A

an agreement in which the seller names a minimum sales price they will accept
for a property, with any excess paid to the broker as commission

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20
Q

protection period

A

a limited time frame after an agency agreement ends where an agent can be
owed compensation if certain situations occur

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21
Q

What’s in a Listing
Agreement? Standard Form 101 (NC) 10 things

A

The price of the property

The amount of commission (usually a percentage of the sales price but
sometimes a flat fee)

How the cooperating broker will be paid
(if applicable)

Date of inception and date of expiration (that is, when the agreement begins and
when it ends)

Name and address of the listing broker
and the seller

Legal description of the property

Fair housing statement

Financial information (i.e. the terms the seller is offering)

Approval for the broker to place signs on the property, install a lockbox, post the
listing on the MLS, etc.

Broker protection clause

22
Q

What’s NOT in a Listing Agreement?

A

A valid listing agreement should not have a clause for automatic renewal.
In other words, the listing agreement can’t state that once the agreement
expires, it automatically renews for, say, another two months.

23
Q

Listing Price

A

The listing price must be determined before the seller signs the listing
contract. It’s important for the listing agent to note two things:

  1. Listing Prices Are Set by Sellers
  2. Listing Price = Initial Asking Price
24
Q

exclusive agency

A

an agreement in which the seller has an exclusive relationship with a broker
but retains the right to sell the property to named prospects

25
Q

exclusive right to sell

A

an agreement in which the seller guarantees the named broker receives a
commission if the property is sold, regardless of who brings the buyer

26
Q

limited services model

A

a type of listing agreement that allows the client to select brokerage services
for a flat fee

27
Q

open listing

A

a nonexclusive listing agreement that gives multiple brokers (and owners
themselves) the right to sell the property

28
Q

Broker Cooperation
Through the MLS

A

To be a member of the MLS, you have to
cooperate with other brokers. It’s one of
NAR’s rules.

29
Q

The MLS takes all of the guesswork out of…

A

cooperating with buyer brokers. If a broker is
a member of the MLS, then there’s no need
to negotiate a cooperation agreement. The
buyer broker can see what the commission
split will be before ever showing the home

30
Q

National Advertising Laws

A

The Telephone Consumer Protection Act
(TCPA) regulates telephone solicitations.
The most important component of the
TCPA is the Do Not Call Registry,
which regulates telemarketing calls
from commercial organizations (such as
brokerages).
The CAN-SPAM Act was created to govern
the use of commercial email advertising.

31
Q

Antitrust Laws

A

Antitrust laws are legislation aimed at
promoting competition and preventing
unfair trade practices and monopoly.

32
Q

What are the 6 main ways to break antitrust laws?

A
  1. Price fixing
  2. group boycott
  3. market allocation
  4. tie-in agreements
  5. setting listing lengths
  6. bid rigging
33
Q

Collusion

A

is an unlawful agreement
between competitors to monopolize a
market, disadvantage other competitors, or
otherwise undertake activities in violation of
fair trade laws.

34
Q

boycotting

A

an agreement between two or more competitors to NOT do business with
another competitor for the purpose of inducing the other competitor to change
its business practices or fail altogether

35
Q

Do Not Call Registry

A

regulates telemarketing calls from commercial organizations (such as
brokerages)

36
Q

for sale by owner (FSBO)

A

a property owner who is selling their own home

37
Q

price fixing

A

any effort made by competitors to jointly establish a fixed rate, price, or
commission; considered an antitrust violation

38
Q

Sherman Antitrust Act

A

a landmark law passed in 1890 that prohibits the formation of trusts, or
monopolies, in the marketplace; this law governs business by regulating
anti-competitive conduct to promote fair competition on behalf of American
consumers

39
Q

tortious interference with contractual relations

A

wrongful interference in a business relationship

40
Q

Agent: Documents
to Gather Before
a Listing Meeting

A
  • The North Carolina Association of
    REALTORS® Standard Form 101
  • The Commission’s Working with Real
    Estate Agents Brochure
  • The Residential Property and Owners’
    Association Disclosure Statement
    and Mineral and Oil and Gas Rights
    Disclosure forms. It’s your duty to
    provide sellers copies of these forms.
  • The MLS Property Data Sheet
41
Q

Seller: Documents
to Gather Before
a Listing Meeting

A

Deed
* Survey
* Restrictive covenants
* Homeowner’s association information
(including dues and assessments)
* Balance due on existing mortgage(s)

42
Q

Things to Do at a Listing Meeting

A
  1. At the first substantial contact with your client, you’ll want to present the
    Working with Real Estate Agents brochure and go over any questions
    they may have.
  2. After sharing the brochure, have the potential seller sign the Working with
    Real Estate Agents Disclosure and have the seller choose which type of
    agency relationship they are agreeing to.
  3. Outline your marketing plan.
  4. Review the seller’s documents.
  5. Discuss your firm’s brokerage fee policies and make sure your prospective
    client knows your fee is always negotiable.
  6. Do a walkthrough and inspect the property for defects, improvements that
    might have required a permit, and updates/repairs that need to be made.
  7. Take note of septic system capacity.
  8. Verify the lot acreage and square footage of the indoor space(s).
  9. Help the owner fill out the Residential Property and Owner’s
    Association Disclosure Statement (RPOADS), the Mineral and Oil and
    Gas Right Disclosure (MOG), and the Residential Lead-Based Paint
    Hazard Reduction Act.
  10. Discuss what the seller hopes to net from the sale of the property.
  11. Go over the CMA you’ve prepared and provide a listing price range based
    on comparables.
  12. Agree on a listing price and sign the completed listing agreement. Never
    sign an incomplete agreement!
43
Q

The formula for gross profit is:

A

Sale price - Purchase price = Gross profit

44
Q

To express gross profit as a percentage:

A

Gross profit ÷ Sale price = Gross profit as a percentage

45
Q

The formula for net profit is:

A

Adjusted sale price - Adjusted cost = Net profit

46
Q

Formula for adjusted cost:

A

Purchase price + Closing costs + Brokerage fee =
Adjusted cost

47
Q

formula for adjusted sale price:

A

Sale price - (Closing costs + Brokerage fee) =
Adjusted sale price

48
Q

net profit full formula with everything broken down:

A

[Sale price - (Closing costs + brokerage fee)] -
(Purchase price + Closing costs + Brokerage fee) =
Net profit

49
Q

The algebraic formula for solving for
sale price is:

A

(100% x Sale price) -
(Commission rate x Sale price) - (Closing costs + Mortgage payoff) = Net to seller

50
Q

The shortcut method to solve for
sale price is:

A

Mortgage balance + Closing
costs + Desired profit =
Target sales price

Target sale price ÷ (100% -
commission percentage) =
Sale Price

51
Q
A

NC Real Estate Exam Prep (3 decks)

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