The Fundamentals of a Real Estate Transaction Flashcards
Basic Stages
The basic stages of a real estate transaction are:
The listing;
The contract for sale;
Financing; and
Settlement
Listing Contract
A listing contract is a contract wherein a property owner employs a real estate firm to market a property for a prescribed period of time at a prescribed price and terms. Under this contract, the real estate firm becomes the agent of the seller.
Listings represent the inventory of a real estate brokerage and are the lifeblood of the business. Without listings a real estate firm is severely handicapped and is limited to marketing the listings of other real estate offices.
The Licensee’s Purpose
As an agent for the seller, the real estate broker and his or her associates are empowered to market the listed property. The listing contract does not authorize the licensee to bind the seller in a contract to sell the property.
The licensee’s purpose is to find a ready, willing and able buyer; “able” means a financially qualified buyer. The seller has the right to accept, reject, or counteroffer all offers to purchase
Contract for Sale
A binding contract to buy and sell real property results from the written acceptance of a written offer to purchase or/of a written counteroffer. In presenting the offer, the real estate licensee must always remember for whom he or she works. The listing agent works for the seller and must always give the seller the benefit of all information regarding the buyer’s qualifications and the quality of the offer.
In many instances, however, a real estate licensee establishes a contract for services with the buyer. This person is called a buyer’s broker. Under buyer brokerage, the real estate agent must represent the best interests of the buyer rather than the seller.
Limited Agent
Finally, in some instances the licensee acts as a limited agent to both buyer and seller. This form of contract for services requires explicit and specific disclosures to both buyer and seller.Under this form of service contract, the licensee is a dual agent and must be careful to treat both parties fairly.
