Real Estate Principles Chapter 4

Principal

(Client) is a person who hires or employs an agent to work for him or her

Agency Disclosure Law

-Declare in writing -Disclose, elect, & confirm

Real Estate Transfer Disclosure Statement (TDS)

-identifies items of value attached to the structure or land and states whether these items are operational -filled out & signed by seller @ time of listing encourage honesty. -agent should visually inspect property -can cancel

BRE Notification

-if salesperson fired for cause, broker must notify the BRE within 10 days. -if new employee: 5 days

Broker-Associate Contracts

-must have a written contract with each licensed member of the sales staff -Copy must be kept for 3 years form the date of termination

Required Disclosures

-visual inspection -agency relationship -negotiability of real estate commissions -no disclosure required for manner/occurrence of death; afflicaion of occupant with aids

Express

-written -If there is a written listing between the seller and the broker,

Principal's Duties, Rights

1. honesty-disclose material facts 2. utmost Care: honest &fair dealing 3. integrity- accounting for actions 4. Loyalty 5. Obey- Lawful Instructions 6. No secret Profits: $ on loans w/out disclosing

Responsibilities of Agency

1. must inform the principal of all material facts pertaining to the handling of the principal's property 2. agent may not gain any monetary interest in the property to his or her own advantage

Third Parties duties, rights

1.Honesty-Disclose Material Facts 2.Reasonable Skill and Care 3. Fair Dealing 4. Good Faith

A licensee has the right to:

1.sell or offer to sell 2. buy or offer to buy 3. solicit prospective buyers or sellers 4. negotiate the purchase, sale, loan, or exchange of business opportunities or real estate 5. negotiate leases and collect rents

Visual Inspection (AVID)

A listing and selling broker must each conduct a reasonable competent and diligent inspection of the property and disclose to the prospective buyer all material facts affecting the value, desirability, and intended use of the property

Secret Profit

An unlicensed person my make a secret profit on the purchase of real property, but an agent may not

Law of Agency

Found in civil law -requires parties to be fiduciary and competent. -Doesn't require payment of "consideration"

Personal Assistants

Handle such things as clerical tasks, paperwork, marketing, tickler files, and conduct computer research.

Trust Accounts

Other people's money -deposits are required to: 1. give it to the principal 2. place it in a trust account 3. give it to an escrow company

Policy Manual

Other specific rules and policies for handling procedures at a specific brokerage firm are usually set down -must be read by all salespeople

Dual Agents

Represents both buyer and seller

Selling Agents

Represents buyer

Listing Agents

Represents seller

TOE

Total Operating Expense

Agents who buy and sell for their own account

When acting as a principal and not as an agent -disclose, licensed real estate professional -written -inform broker

Real Estate Broker

a broker's license holder (boss/owner) and therefore permitted by law to employ those individuals holding a salesperson's license (or another broker).

Listing

a contract to employ a broker as an agent, to do certain things for the owner/seller. It is an employment contract for personal service -Not assignable & death of the seller of broker cancels a listing unless the broker is a corporation (which may live forever)

Subagent

a licensed broker or salesperson whom some of the powers of an agent have been conferred, not by the principal, but by the agent with the principal's authorization.

Exclusive agency listing

a listing providing that only one agent (the listing broker) has the right to be the only person, other than the owner, to sell the property during a specified period and earn a commission.

Multipel Listing

a listing, usually an exclusive right to sell, taken by a member of a MLS, with provision that all members of the MLS have the opportunity to find an interested buyer.

Real Estate Auction

a meeting where interested parties come together and continue to offer highest bid pays until only one bidder is left, to whom the property is sold.

Cooperating Broker

a non-listing broker with whom the listing broker agrees to share a commission if the non-listing broker sells the property. -agreements made must be in writing

Fiduciary

a person acting in a position of trust and confidence in a business relationship

Real Estate Agent

a person licensed by the BRE who holds either a broker's or salesperson's license and negotiates sales for other people.

Commission Split

a previously agreed split between a broker and his or her salesperson of a commission earned on a sale (note, cash, or personal check)

Auctioneer

a seller

Procuring Cause

a series of unbroken events that lead to an acceptable agreement with the seller.

Termination of an Agency Relationship; Acts of the Seller or Broker

a. agreement by both Broker and Seller b. Renouncement of listing by the broker c. revocation of listing by the seller d. close of escrow

Termination of an Agency Relationship; Operation of Law:

a. expiration of the agency (listing) agreement b.destruction of the property c. death or incapacity broker or seller (listing only)

Gross Dollar

all the income that is received by the office before paying out commissions.

General Power of Attorney

allows the person so authorized to perform any act the principal could perform

Power of Attorney

an acknowledged, written authorization of one person to act for another

Net Listing

an agreement providing that the agent agrees to sell the owner's property for a set minimum price, any amount over the min. being retained by the agent as commission. (ex. best for agent)

Multiple Listing Service (MLS)

an association of real estate brokers that provides a pooling of listings, recent sales, and the sharing of commission on a specified basis

Absolute Auction

an auction where the property must be sold to the highest bidder no matter how low the final bid

Open Listing

an authorization to sell a property. It may be given to several brokers or the property may be sold by the owner. -no time limit

Real Estate Salesperson

an individual holding a salesperson's license who must be employed by a real estate broker to perform any of the activities of a real estate broker.

Real Estate Associate or Associate Licensee

another name for a real estate salesperson.

Tort

any civil injury or wrong committed upon a person or that person's property (fraud, misrepresentation, negligence and secret profit all stem from a breach of an agent's duty.)

Ratification

approval (confirmation) of a transaction which has already taken place

Exclusive Right to Sell Listing

entitles the listing broker named in the agency contract to a commission even if the owner sells the property. -commission paid listing period -seller may revoke to sell listing by sending a written letter to the broker

Negligent misrepresentations

false statements believed to be true, but made without reasonable grounds for that belief

Innocent Misrepresentations

false statements that are not known to be false at the time they are made

Option Listing

gives the listing broker the right to purchase the property -must disclose to prospective buyers that he/she is actin in the dual role of agent and principal, and present all offers to the seller

Safety Clause

in a listing is a negotiated period (any agreed to time period) after the termination of a listing in which the listing broker may still be entitled to a commission.

Commission

in real estate is a fee paid, usually as a percentage of the selling price, to a broker agent as compensation for his or her services. -negotiable

Special power of Attorney

is acknowledged, written agreement authorization of one person act for another (ex. sign on their behaf).

Agent

is one who acts for and with authority from another, called the principal

One-Stop Shopping

means the brokerage is involved in multiple facets of property transactions, including escrow and title services, property management, and mortgage brokerage.

Death disclosure

must disclose within 3 years of death

Estoppel

prohibits the principal from denying that a person is his or her agent if the principal has misled another of his prejudice into believing that person is the agent.

Fiduciary Relationship

requires the highest good faith from the agent to his or her principal

Independent Contractor

sells results rather than time, and his /her physical conduct is not subject to the control of another

Fradulent Misrepresentations

statements made at a time when the broker knows the statement is false, or statements in which the broker fails to disclose (conceals) material facts.

Desk Cost

the "TOE" divided by the # of agents in the office

Company Dollar

the amount left to management after payment of all commissions, including in-house salespeople and other multiple listings brokers and salespeople

Ostensible or Implied Authority

the authority that a third person reasonably believes an agent possesses because of the acts or omissions of the principal

agency

the authority to act in place of another, a principal, to do a specified act for a stated period of time.

Transaction File

the file or folder (all documents) kept for 3 years (by law) by the broker for each real estate transaction in which the broker or his or her salespeople participated.

Commingling

the mixing together of the funds of a principal and a licenseeConversion-illegal

Third Party

the other person in a contractual negotiation, other than the principal and his/her agent.

Conversion

the unlawful misappropriation and use of a client's funds by a licensee

Implied Warranty of Authority

to act for a seller by the mere fact that he or she shows the seller's property -no written

Warranty of Authority

to offer the property for sale

Attorney in Fact

under a "general" power of attorney is a person who has been given the right to transact all of a principal's business -must be in writing -Death of either party or an acknowledged declaration from the principal may revoke this power

Attorney in Fact

under a "special" power of attorney, has the authorization to perform only a specific act.

No-Sale Auction

where there is a minimum bid underlying each property so that a certain price must be reached before the property will be sold.

Employee

works under the direct control (designated hours and breaks) and supervision of the employer.