Unit 10 Review (Real estate)

What is broker protection clause?

1. A broker protection clause says that the owner will compensate the broker if, within a certain number of days after the listing expires, the owner sells the property to someone the broker introduced to the property during the listing period. 2. Broker clause terminates if owner lists with another brokerage. 3. Brokerage must give protective list to seller

What is a listing contract?

1. A fiduciary (<- someone you trust) employment contract (A) Owner/seller hires a brokerage frim to act as a special agent. (B) The specific purpose is to find a buyer who is ready willing and able to buy according to the terms of the listing contract. 2. Parties (A) Seller = Principal/client (B) Brokerage firm = agent/fiduciary

What is multiple-listing clause?

1. Authorizes brokerage to list property in the Multiple listing service (MLS) 2. All listing brokerage licensees represent the seller 3. All buyer's brokerage licensees represent the buyer

What are net listings?

1. Brokerage receives as commission all money above minimum agreed sales price. 2. Illegal or not recommended in most states to protect sellers, who may not be aware of true market value.

What are the negotiable commission clause?

1. Commissions are always negotiable as required by the Sherman antitrust act. 2. Licensees may only be paid by their brokerage firm. 3. Allows brokerage to share commission with (Co-op) other firms.

What should listings have?

1. Definite Beginning and expiration dates (A) Contract must be amended to extend listing past expiration date (B) Automatic renewal clause is not allowed (C) If the listing expires while the property is under contract the listing contract is typically extended through closing.

What are the Types of Listings?

1. Exclusive means you will be my only agent (A) Right to sell (B) Agency 2. Nonexclusive says your not my only agent (A) Open

What is exclusive listing?

1. Exclusive right to sell (A) Brokerage gets paid if the property sells, regardless of who finds the buyer. (B) Even if the seller sells the property (C) Maximum protection to brokerage broker will give maximum effort (D) Bilateral contract

What terminates the agency contracts?

1. Full performance, closing, or expiration of the contract 2. Death or bankruptcy of principal or brokerage firm (Not salesperson or broker associate) 3. Destruction of improvements (The house burns down) 4. Mutual rescission (NOT Unilateral) 5. Breach by either party (A) Can terminate the contract (Voidable) there may be liability issues

What is the 2 types of warranties that are involved in residential real estate transaction?

1. Home owner insurance 2. Statutory Warranty / Home construction warranties

What is Home warranty plan.

1. Home warranties plans cover existing homes (A) Can cover the majority of the home including all major systems and appliances or cover one or more specific items ( Furnace, water heater, appliances, etc. 2. Home warranties may be offered by sellers or negotiated in an offer. 4. Terms and length are determined by the contract with the warranty company. 5. Warranties usually feature a deductible and may exclude some items coverage 6. Real estate professionals should make sure buyers know that warranties are available. (A) Real estate professionals should not recommend them just to obtain a referral fee (B) Agents must comply with real estate settlements procedures act (RESPA) when receiving fees 7. Disclosure requirements for warranties vary based on state law

What are the element of a listing contract?

1. In writing (to be enforceable) 2. Price and terms (A) Listing price (B) Financing terms (C) Amount and/or method of compensation (flat fee or percentage of sales price) 3. Signatures Listing contract must be signed by all property owners

Who can a listing broker pay?

1. Listing broker may pay referral or co-op fees to other brokerage firms 2. Cannot pay broker associates or salespersons from other firms 3. May only pay their own salespersons/broker associates.

What is nonexclusive listings?

1. Only the brokerage that procures (Finds) the buyer gets paid. 2. Seller can sign open contracts with more than one brokerage firm

Buyer Representation contract

1. Parties (A) Buyer is principal. (B) Brokerage frim is agent/fiduciary. 2. Same elements as listing contract 3. Can be exclusive right to buy or exclusive agency contract

What is the obligation of brokerage under listing contract?

1. Present all written offers promptly. (Only reason this won't apply is if the seller tells gives you special instructions on offers) 2. Complete a written offer if buyer requests 3. Pay fees to licensed brokerages only (A) No fees or commissions may be paid to unlicensed persons. 4. Market and sell the property per the terms of the listing contract 5. Put all contracts in writing, have them signed, and give copies to all parties 6. Verify that all marketing is correct and truthful (A) This includes the disclosure of material facts and property information 7. Verify the buyer has received the seller's property disclosure per state law 8. Failure to fulfill these obligation allows the seller to terminate the listing upon written notice to the brokerage ( Breach creates a voidable contract)

What is Home construction warranties?

1. Required by state statute 2. This statutory warranty is provided on newly constructed homes (A) Must meet strict underwriting guidelines (B) Also known as warranty of habitability or suitability (C) Convers defects due to faulty installation (1) Structural issues, Exterior/interior construction, heating ventilation and cooling (HVAC), Poor materials or workmanship, or faulty appliances (D) Dose not cover damage form outside forces. 3. The requirements for builder warranties are determined by state or local ordinances. 4. Third-party home warranties can provide buyers additional coverage for new construction 5. Real estate professionals should make sure buyers full y understand the limits of all warranties

What is exclusive agency?

1. Seller has no liability to pay the brokerage if the seller finds the buyer 2. Bilateral contract 3. Co-op firms will be paid if they procure the buyer

What is unilateral contract?

Sale to a buyer automatically terminates all other open listings with or without notice

What happens when a customer signs a agency agreement?

They are no longer customers. They are now your client

What is open listing?

When other seller list property with other firms but only pay the one that finds the buyer.