Chapter 5 real estate practices

Including these phrases in an ad wouldn't make it necessary to disclose other information

"No downpayment," "Low monthly payments," "Save money with an adjustable-rate mortgage," or "Low-cost FHA and VA financing available."

There are many actions that are unlawful under both federal and Washington fair housing laws. Here is a brief list:

- refusing to receive or failing to transmit a bona fide offer; - refusing to negotiate for the sale of residential property, or otherwise making it unavailable; - changing the terms of the sale for different potential buyers; - discriminating in providing services or facilities in connection with a real estate transaction; - representing that a property is not available for inspection or sale when it is in fact available; - failing to advise a prospect about a property listing; - using any application form or making any record or inquiry which indicates, directly or indirectly, an intent to discriminate; and - discriminating in negotiating or executing any service or item in connection with a real estate transaction (such as title insurance or mortgage insurance).

Unlicensed assistants may not:

- show properties, or answer questions or interpret information about a property, its price, or its condition; - interpret information about listings, titles, financing, contracts, closing, or other information relating to a transaction; - fill in legal forms or negotiate price or terms; hold or disburse trust funds; or - perform any act with the intent to circumvent, or which results in the circumvention of, real estate licensing laws.

An agent should bring the following items to a listing appointment

A CMA A NET PROCEEDS TO SELLAR FORM INFO ABOUT THE AGENT AND HER FIRM A MARKETING PLAN A LISTING AGREEMENT FORM COPY OF THE PAMPHLET EXPLAINING AGENCY RELATIONSHIPS

Listing flyer

A listing flyer should include the address, price, terms of sale, number of bedrooms and bathrooms, square footage, year of construction, and other basic information, along with one or more photos of the home.

Even an agent who doesn't ordinarily pursue FSBOs might contact one if he has a particular buyer in mind for that property. In this situation, the agent may call the seller and ask for a one-party listing.

A one-party listing is a listing agreement that's valid only for one particular buyer.

FSBO's

Agents often prospect for listings by contacting sellers who are trying to sell their houses on their own.

In addition to the listing price, one of the sellers' main concerns will be how much cash they'll walk away with once the transaction has closed.

An agent can use a "net proceeds to seller" form to show the sellers what the bottom line is likely to be after expenses are paid.

farming

An agent should choose a neighborhood to farm based on three factors: diversity, affinity, and turnover. We'll look at diversity first.

Some examples of potential contacts are mortgage brokers, escrow officers, attorneys, and accountants. Many agents also obtain listings through satisfied clients, either through repeat business or word-of-mouth.

An agent should let friends, relatives, and other acquaintances know that she's in the real estate business and is eager to help anyone they know who needs real estate services.

Listing appointment - going over agency law pamphlet

As you know, a real estate agent is required by law to provide clients and customers with a pamphlet explaining agency relationships, and also to inform them which party he's going to be representing in a particular transaction. The listing presentation is a good opportunity to give the sellers the agency pamphlet and discuss agency issues with them. (This must be done before a listing agreement is signed.)

Visit the property

Before preparing a competitive market analysis, an agent should get the owner's permission to stop by and inspect the property. *The agent will count the rooms, look for special features, check the quality of the construction, and look for any other characteristics that suggest the house is worth more (or less) than one would assume based only on its location, age, and square footage.

Marketing the property

FOR SALE SIGN

TILA prohibits advertisements that describe only the most attractive aspects of a loan and disguise its true cost.

For instance, an advertiser can't claim "Low payments of $500 per month!" without mentioning that those payments require a 50% downpayment or a 40-year loan term. If certain details about a loan are included in an ad, the law requires that certain other details must also be disclosed.

Types of buyers

Home buyers typically fall into one of four categories: first-time buyers, trade-up buyers, empty nesters, and retirees.

Many agents rely on cold calling to obtain listings, since it's an inexpensive method that can be done during any free time the agent has.

It involves calling homeowners on the telephone and asking if they or anyone they know is interested in selling their home. This can be done randomly, or as part of a systematic plan (such as calling all homeowners in a particular neighborhood).

An agent needs to do a lot of preparation before going into a listing presentation.

It's necessary to research the property, visit the property, complete a competitive market analysis, and prepare a marketing plan.

refferals

One of the most effective ways to get listings is through referrals. Every agent should try to cultivate a referral network. The network should include other professionals involved in real estate or related services who might receive referral business in return.

First impressions are lasting impressions, so a particular concern is enhancing curb appeal, which is how the property looks from the street.

Pressure washing the exterior, putting a fresh coat of paint on the trim, and planting colorful flowers in the front yard can do a lot to enhance those first impressions.

Best indicators of value

Recent sales current listings expired listings Prices paid for recently sold properties are the best indicators of a property's value, since they represent what buyers were willing to pay in real-world transactions.

An attempt to turn a "for sale by owner" (FSBO) into a listing is often successful, since the sellers have already decided to sell. They just need to be convinced that the agent has resources and skills that they don't have and that will enable the agent to sell the property more quickly and for a better price.

Some agents will contact any FSBO they can find, while others use a systematic approach, such as contacting only those in a certain neighborhood or price range. Agents can find FSBOs by noticing "For Sale by Owner" signs and by looking at classified ads and websites.

After a listing agreement is signed

Tasks involved in servicing a listing include preparing the property for showing; submitting the listing to the MLS; marketing the property; holding an open house; ongoing evaluation (considering whether changes are necessary); and regular communication with the seller.

A loan's annual percentage rate (APR) is the relationship of the total finance charge to the amount of the loan, expressed as an annual percentage.

The APR will always be higher than the loan's quoted interest rate, since the APR takes into account not only interest but most other charges the borrower will have to pay in order to get the loan (such as an origination fee, discount points, or mortgage insurance premiums).

Whats your marketing plan?

The agent should be prepared to discuss what steps she will take to market the property to prospective buyers. This will include listing it with the MLS and placing a sign out front, as well as Internet-based advertising.

The Truth In Lending Act

The federal Truth in Lending Act (TILA) contains important restrictions that apply to real estate advertising. * Generally, anyone placing an ad for consumer credit must comply with the terms of the act. This includes real estate agents who advertise homes for sale.

In a CMA the agent will present 3 different figures

The first figure is a general price range. The second figure is a suggested listing price, which is usually optimistic, leaving room for negotiation. The third figure is what the agent expects the property to actually sell for. This estimated sales price should be close to the property's market value.

Real estate agents must be aware of state and federal restrictions on advertising.

These include the advertising rules in Washington's real estate license law and the federal Truth in Lending Act.

Once an agent has found a prospective buyer, the next step is for the agent and the buyer to discuss the buyer's housing needs.

This involves finding out the answers to two questions: What does the buyer want? What can the buyer afford?

When presenting the CMA, the agent should focus on objective data (such as the square footage, room count, age, location, and terms of sale) for both the seller's property and the comparables.

This will help the seller better understand current market conditions in the neighborhood, and encourage a more realistic approach to setting a listing price.

License Law

Under Washington's real estate license law, all advertising placed by a real estate licensee must be truthful and not misleading. Most ads must also state the brokerage firm's name as licensed. An ad that doesn't do so is a "blind ad" and violates the license law. If the firm is part of a franchise, the ad must include the firm's own name as well as the franchise name.

In Washington, there is a statutory limit on liquidated damages in real estate transactions.

When a buyer's earnest money deposit is treated as liquidated damages, the amount the buyer forfeits cannot exceed 5% of the purchase price of the property.

The basic steps in arranging an open house include:

selecting an appropriate day and time, advertising the open house, preparing an information packet for visitors, making sure the home and yard are ready, setting up directional signs in the neighborhood, putting out a guest log, welcoming guests during open house hours and giving tours, and following up with thank-you notes to visitors who signed the guest log.

If an ad contains one of the "trigger terms" specified by the act, the ad must include other required disclosures. (If the ad doesn't have any trigger terms, no additional information has to be disclosed.) Trigger terms include:

the amount of the downpayment ("10% down"), the amount of any payment ("Only $1,500 per month"), the number of payments ("360 monthly payments"), the period of repayment ("30-year loan term"), and the amount of any finance charge ("1% origination fee").

If any trigger terms are used in an advertisement, all of the following disclosures must be made:

the amount of the downpayment, the terms of repayment (such as the number of payments and the payment amount), and the annual percentage rate (APR).