Practical Applications- 2
That the broker and the seller will submit to mediation prior to litigation Explanation Mediation provision: Mediation provides for disputes between the parties to submit the matter first to mediation.
An Exclusive Right-to-Sell Listing contract establishes which of the following agreements? That the broker will never sue the seller That the seller will never sue the broker That the broker and the seller will use the same attorney That the broker and the seller will submit to mediation prior to litigation
Advise the buyer of the defect Explanation Advise the buyer of the defect - this is a material fact.
A broker has a listing on a house that contains a provision that the house is to be sold in "as-is" condition. The broker learns of a major hidden defect in the property. When showing the property to a prospective purchaser, the broker should: Advise the buyer of the defect Point out that the house will be sold in "as-is" condition Mention the defect to the buyer only if asked Inform the buyer that the seller has told him of no defect
All offers will probably be presented at the same time, and the seller will select among them Explanation Agents are required to submit all offers received, if more than one offer is received before an offer is presented then the agent must submit all offers at the same time.
A buyer submits an offer to purchase to the listing agent. He finds out that more than several offers are coming in for the same property. He can expect that: His offer is presented first because it was received first If it is unacceptable to the seller, they counter his first before accepting any other offers The listing agent rejects all other offers until a decision is made regarding the first one All offers will probably be presented at the same time, and the seller will select among them
A contingency that they sell their home before they can purchase Explanation The contingency clause for selling their house first, should be in the additional provisions of the contract.
A buyer wants to buy a new home, but must first sell his/hers in order to afford to do so. In the offer to buy, you must write: A contingency that they sell their home before they can purchase Nothing; you cannot write the offer until their home is under contract Nothing; as it will hurt your buyer's chances of having it accepted Verbiage that says there may be a cloud on the title
Buyer's asking how soon can the sellers move out Explanation Being able to close means you need to be able to identify a buyer's buying signs.
A good Realtor should be able to pick up on buying signs from the buyer. These signs might include: Buyer's not saying anything as you walk through the house Buyer's saying bedrooms are very small Buyer's commenting on poor housekeeping of sellers Buyer's asking how soon can the sellers move out
$470.14 debit to the buyer, credit to the broker Explanation $165,000 (loan amount) x .065 (Interest Rate) = $10,725 (annual interest) / 365 (days in year) =$29.38356 (interest per day) x 16 (days owned by buyer in May -May 16-31) = $470.14 Debit to the buyer (because they owe the interest) credit to the broker (because the money is being paid into the escrow account controlled by the broker/closing agent so that they can cut a check for the interest to the lender.)
A new loan for $165,000 is taken out at 6 1/2 % by the buyer, the closing is May 16. How will the interest be shown on the settlement sheet? $440.75 debit to the buyer, credit to the broker $470.14 debit to the buyer, credit to the broker $3966.78 debit to the buyer, credit to the broker $3996.16 debit to the buyer, credit to the broker
Escheat Explanation DEFINITION OF 'ESCHEAT' The transfer of title of property or an estate to the state when an individual dies without a will and legal heirs. Escheat ensures that property always has a recognized owner, which would be the state or government if no other claimants to ownership exist. Most jurisdictions have their own laws and regulations defining escheat and the circumstances under which it can be invoked. Escheat is usually done on a revocable basis, which means that ownership of the estate or property would revert to a rightful heir should one turn up. Reference Investopedia.com
A property owner died, having willed his real property to his two daughters. There is still a chance that they could lose the land for a variety of reasons, but it CANNOT be taken through: Escheat A challenge to the will Condemnation Sale to satisfy a tax lien
Exclusive agency listing Explanation Do not confuse an exclusive agency agreement with an exclusive right to sell. An exclusive agency means that if the seller finds a buyer independent of their listing broker - the seller owes no commission. An exclusive right means that the listing agent is owed a commission regardless of who found a buyer.
A seller listed her home with a broker. After a few months, the seller found a buyer, and the sale closed. The seller was not obligated to pay a commission to the broker. This listing was MOST likely: Net listing Buyer agency agreement Exclusive agency listing Exclusive right to sell listing
Materials used in plumbing Explanation Building ordinances, also called building codes, are a set of standards established and enforced by local government that specify the minimum standards for construction. The main purpose of building codes are to protect public health, safety and general welfare as they relate to the construction and occupancy of buildings and structures.
Building Ordinances may specify & regulate: Use of land Zoning Materials used in plumbing Easements
Written disclosure of agency relationships Explanation E-35 requires the written disclosure of agency relationships.
Colorado Commission Rule E-35 regarding disclosure of agency relationships requires: Real estate agents to use commission-approved forms Written disclosure of agency relationships An escrow account for earnest money Use of the Licensee Buyout Agreement when purchasing his/her own listing
Arrange another time to meet with the buyers and show them properties Explanation Lock box information should never be given to the buyer, and you the broker, should be the first into the home as well as the last person to leave the home, to make sure lights are turned off and all windows and doors are locked and secured.
During a showing on a property with a buyer, the broker is called away on a family emergency. In this situation the broker: Should allow the buyers to lock the house up when they are finished Should give the lock box information to the buyers so they can view the other properties, while the broker takes care of the family emergency Call his or her assistant to show the properties to the buyers Arrange another time to meet with the buyers and show them properties
Not suspended or revoked until a hearing is held Explanation Licenses are never automatically revoked or suspended without a hearing.
If a Colorado real estate licensee's license is revoked, his employing broker's license may also be: Cancelled until a hearing can be held Automatically revoked Automatically suspended Not suspended or revoked until a hearing is held
Refuse to release the earnest money Explanation The broker must act according to the terms and conditions of the purchase contract. Absent the buyer's and seller's written approval to release the earnest money early, the broker has two options: to release nothing or to "Interplead." To interplead is to turn the earnest money over to the courts and let them decide.
If a purchase agreement says to release earnest money after the inspection date, but then the seller demands the money be released prior to the inspection date, what should the broker do? Refuse to release the earnest money Tell the buyer of the situation Release the earnest money
Any neighborhood Explanation Stereotyping a buyer is not illegal however steering is illegal. A broker must assume that a buyer would want to live in any neighborhood.
If an Asian family is looking for a home, you must assume they would want a home in: A predominantly Asian community A good neighborhood Any neighborhood A predominantly black neighborhood
It is the company's listing, the company keeps the listing Explanation The key point here is that contracts are with the company and not the agent. The agent is the person designated to perform the agreement on behalf of the company. Therefore legally, if the agent goes away, the old company keeps the listing. However, as a practical matter, in real life, the companies know that it is tough to keep a listing when the personal relationship is between the seller and the agent and not the company. Most companies will cut a deal with the departing agent to allow them to complete the transaction.
If an agent has a listing and transfers companies, does the listing stay with him/her and the new company OR does the listing remain with the original company? It is the agent's listing, the listing transfers with the agent It is the company's listing, the company keeps the listing
The buyer is in default if he/she does not close Explanation A buyer has until the Loan Objection Deadline to provide written notice s/he cannot receive a satisfactory loan and wants to terminate the contract. If s/he does provide such notice, the earnest money must be refunded to the buyer. If the buyer does not provide such notice, the contract continues, but the buyer's earnest money becomes nonrefundable should s/he not receive a loan.
If the Loan Objection Deadline passes and there is no loan commitment by the lender, what happens to the contract if the buyer and seller have not signed an amendment extending the date? It terminates There is a three-day grace period Nothing The buyer is in default if he/she does not close
The seller keeps the earnest money, but cannot sue Explanation When the Specific Performance box is checked on the purchase and sales contract, this is the Seller's sole and only remedy for a Buyer default. If no box is checked - the default remedy is Liquidated Damages. Specific Performance means that the Seller can sue the Buyer for damages and take their Earnest Money. Liquidated Damages means the Seller CANNOT sue for damages and may only take the Earnest Money.
If the Specific Performance box is not checked, and the buyer defaults: The buyer cannot default without mediation The seller keeps the earnest money, but cannot sue The buyer is entitled to receive the earnest money Buyer and seller split the earnest money
Prepare a promissory note to submit with the offer Explanation In lieu of earnest money the agent should have the buyer sign a promissory note to the listing company or closing agent. The earnest money shows good faith to the seller. The note should not be for more than 10 or 20 days. Just long enough for the buyer to come up with some funds.
If the buyer has no earnest money: Prepare a promissory note to submit with the offer That is okay, if the seller doesn't mind They can write a postdated check, and the other broker can hold it They cannot write an offer
Negotiable Explanation This is usually paid by the seller, but is always negotiable.
If the homeowner association charges a transfer fee to the new owner of the property, who normally pays this? Negotiable Always paid by the seller Always paid by the buyer There is no such thing as a transfer fee
The listing broker Explanation Earnest money is made out to whomever it states in the Contract to Buy and Sell Real Estate. Usually it is the listing company or the title company.
The earnest money check is usually made out to: The selling broker The seller The listing broker The lender
Has permission to work with other sellers Explanation The other sellers provision of the listing contract specifically allows the broker to work with other sellers.
The licensee is holding an Exclusive Right-to-Sell Listing contract, he: Must sell the seller's property to comply with the contract Has permission to work with other sellers Agrees to work exclusively with this seller and no others at the same time Cannot work with buyers who might be interested in the property
No minimum Explanation The amount of time a buyer will allow a seller to respond to the offer is up to the buyer, and should be stated in date and time in the contract. There is no minimum or maximum.
The minimum amount of time you must give a seller to respond to your offer is: 24 hours 8 hours No minimum 24 hours when in town, 48 hours if out of town
Also initial the change, and the contract is deemed accepted by all parties Explanation Initialing is legal but is not a preferred method of changing a contract, the best way would be to write up a counteroffer with the change.
The seller agrees to all terms of the offer presented, except that they want 72 hours before possession, not 48 hours as in the offer. Since it is such a small change, they made the change by crossing out the 48 hours and writing in 72 hours and initialing the change. They then signed the contract as accepted. The buyer may, at their discretion: Also initial the change, and the contract is deemed accepted by all parties Not initial but they are still bound because of the seller's acceptance They must initial since the price and all other terms were acceptable Proceed with the contract since the sellers signed it, but do not initial the change and consider the original 48 hours as the accepted terms
Debit to the seller, credit to the buyer Explanation Debit Seller/Credit Buyer. The term Closing Costs covers a variety of charges such as Recording Fees, Survey, Documentary Fee, Appraisal and others. The Seller contribution may not cover all of them. To keep it simple and make it work the concession itself is a Seller Debit and Buyer Credit. This gets the dollars into the Buyer's side. The Buyer is then debited for his/her share of the Closing Costs. The Buyer's individual closing cost charges will each be a debit to the Buyer and a credit to the Broker (this deposits the money into the Trust Account for the Broker/Closing Agent to actually pay the vendor who is owed the Closing Costs.)
The seller agrees to pay $1500 of the buyer's closing costs; this is shown on the settlement sheet as: Debit to the seller, credit to the broker Debit to the seller, credit to the buyer Debit to the seller single entry Debit to the broker, credit to the buyer
In the inclusions section of the contract Explanation All items that are inclusions to the sale and not to be sold as personal property must be included in the inclusions part of the contract.
The seller of the property is including the refrigerator and window coverings with the sale. Where in the offer to purchase is this addressed? Since these items are in the multiple listing, there is no need to mention them In the inclusions section of the contract In the other provisions section of the contract Since these items are personal property, they cannot be mentioned in the contract to purchase the real property
The name of her employing broker Explanation All advertising must include the employing broker's name.
Tina Dooley, a salesperson, ordered this listing in the real estate section of the local phone directory: Tina Dooley, Real Estate Salesperson, Residential Property My Specialty." What additional information must be included? Her street address Her license number The expiration date of her license The name of her employing broker
The closing instructions Explanation The closing instructions are signed by the seller at the time the listing is taken and by the buyer when he makes an offer for the property.
What form signed by the buyer and seller instructs and authorizes the title company to prepare all of the closing documents? The closing instructions Contract to buy and sell real estate Title authorization form The amend/extend form
Debit seller, credit buyer Explanation The seller still owes the amount that is assumed (debit seller). On an assumption, that the buyer will be making payments against the loan does not relieve the seller of the obligation that it be paid in full. The buyer will not be required to bring this amount to the closing (credit buyer)
What is the debit/credit entry when a buyer assumes a loan from the seller? Debit broker, credit buyer Debit seller, credit buyer Debit buyer, credit seller Debit seller, credit broker
Broker A is responsible for retention of all records prior to sale Explanation Broker selling company is responsible for retention of all transaction records that occurred prior to the sale of the company.
When employing broker A sells his company to broker B: Broker A is responsible for retention of all records prior to sale Broker B is responsible for retention of all records before and after sale Broker A is only responsible for records of transactions not completed Broker A is only responsible for their personal transactions
Change only the dates that need to be changed Explanation The only dates which are changed in the original Contract to Buy/Sell Real Estate are those specified as changed in the Counterproposal form. All other dates are assumed to not have been affected.
When making a counter offer using the approved Counterproposal form, how do you change dates? Add an addendum Mark through the old dates and enter new ones Do nothing, a verbal notification is sufficient Change only the dates that need to be changed
As specified in the offer Explanation Everything is negotiable and the time to accept the offer should be written into the Contract to Buy and Sell Real Estate. It is best to use both date and time for acceptance.
When must a seller respond to an offer to buy? Automatically within 24 hours An offer never expires until the seller responds As specified in the offer No later than 48 hours after it is written
Distribute factual literature prepared by a licensed associate Explanation An unlicensed assistant is allowed to distribute literature, they can chauffeur buyers to a property with the seller's permision as long as no licensed activity is performed and they may complete but not present market analysis.
Which of the following would an unlicensed personal assistant be permitted to do? Complete and present a comparative market analysis Drive potential buyers to a listing and discuss purchase options Answer questions about the seller's motivations as long as they are correct Distribute factual literature prepared by a licensed associate
You must disclose this information to the seller's agent Explanation This is considered to be a material fact and it must be disclosed to the listing agent. You should also tell your buyer that you have to disclose it to the seller.
You are a buyer's agent. The buyer is anticipating a large legal settlement that will allow them to purchase a home with cash. It hasn't come through yet, but is anticipated within the next three months. Your buyer finds a home right away and wants to write an offer. The owners of the property are being transferred and the only way an offer will be accepted is if the closing is within 30 days. The buyer's ask you to write and present an offer for cash, with a 30-day close, knowing that it is highly possible that their funds will not be available at that time. As a buyer's agent: You cannot disclose this information to the seller's agent You must disclose this information to the seller's agent You may disclose this information, if your conscience is bothering you you tell the buyer that you cannot write the offer
Is returned if the contract is not accepted by the seller Explanation Earnest money must be returned to the buyer if there is no accepted contract.
Your buyer's earnest money: Is put in the broker's trust account, whether or not the offer is accepted Is held, but not cashed, until the closing date and returned to them at that time Is returned if the contract is not accepted by the seller Is deposited in the selling broker's trust account until the contract is negotiated, and then turned over to the listing broker
The buyer must proceed Explanation If the damage is repaired and the cost of the repairs are less than 10% of the cost of the property, then the buyer cannot terminate the contract. If the repairs exceed 10% then the buyer may terminate the contract.
Your offer to buy a property for $150,000 is accepted, but unfortunately there is a fire in the kitchen prior to closing. The insurance company estimates about $9,000 to repair and repaint. The repairs will be made in time to meet the closing date. The buyer has the option of terminating The buyer must proceed The contract automatically terminates The buyer and seller renegotiate the price of the property