Real Estate Sales Agent Terms Level 15
Net Listings
- It is less of a listing type, and more so a different way of charging a fee. - The broker receives the dollar amount above what the owner wants as their commission.
Exclusive Right to Sell Listings
- The agent's brokerage has the one true claim to a commission on the sale. - The broker has the exclusive right to sell the property and the owner has agreed to pay them a commission. - As long as the property is sold within the time frame stipulated in the contract, the listing broker named in the contract will receive a commission for their role as agent in the real estate transaction. - Agents are more incentivized to find the highest bid possible for the seller because they are guaranteed a commission. - grant the broker the authority to advertise the property for sale
Exclusive Agency Listings
- The sellers name who they have in mind to sell the property to, or they just reserve the right to sell it themselves in the addendum. - For Sale by Owner - It releases the owner from any obligation to pay a commission, and the seller agrees to list the property with only one broker during a specified listing term. - The sellers indicates that they would like to have the opportunity to sell the property themselves while the agent is trying to sell the place also. - The named listing broker is owed commission only if the property is sold by someone other than the owner — including the listing broker.
Pocket Listings
- in the time between when it is secured by the sellers' agent and when it shows up on the MLS - when an owner wants to privately sell their house
TREC Rule on Net Listings
1. A broker is obligated under a listing contract to negotiate the best possible transaction for the principal the broker has agreed to represent. 2. A "net listing" is a listing agreement in which the broker's commission is the difference ("net") between the sales proceeds and an amount desired by the owner of the real property. A broker may not take net listings unless the principal requires a net listing and the principal appears to be familiar with current market values of real property. The use of a net listing places an upper limit on the principal's expectancy and places the broker's interest above the principal's interest with reference to obtaining the best possible price. If a net listing is used, the listing agreement must assure the principal of not less than the principal's desired price and limit the broker to a specified maximum commission. 3. A real estate license holder is obligated to provide a broker price opinion or comparative market analysis on a property when negotiating a listing or offering to purchase the property for the license holder's own account as a result of contact made while acting as a real estate agent.
Arbitration
A conflict resolution technique that requires a third party in the room to make a final decision on the best method of resolving the conflict
Listing Agreement + Buyer's Representation Contract
A contract between a principal and a broker to sell or lease a property Listing agreements and buyer's representation agreements are basically service contracts made between a buyer or seller and a broker. A listing agreement allows you to market the property for the seller and obtain and submit offers to lease or buy the property. A buyer's representation agreement allows you to assist the buyer to find a property and negotiate an offer for purchase.
Public Improvement District (PID)
A district where property owners can decide on government financed and approved improvement projects for which they will be taxed
Buyer Representation Agreement
A document that creates agency between a broker and a buyer
Exclusive Agency Listing
A listing agreement in which the owner retains the right to sell the property themselves without paying a commission, or the commission will be paid to the named broker if the broker or any other party sells the property Exclusive agency listings combine elements of open listing agreements and exclusive right to sell agreements. As with open listings, exclusive agency listings release the owner from any obligation to pay a commission in the event the owner secures the sale of their property. As with an exclusive right to sell listing, the seller agrees to list the property with only one broker during a specified listing term. The distinguishing characteristic of exclusive agency listings is that the named listing broker is owed commission only if the property is sold by someone other than the owner — including the listing broker.
Exclusive Right to Sell Listing
A listing agreement which gives the agent the sole right to sell the property and guarantees that the broker receives a commission if the property is sold, even if the seller brings the buyer themselves An exclusive right to sell listing agreement also grants the broker the authority to advertise the property for sale.
Special Agent
An agent that is contracted by the client to perform a certain act; typically the broker of the agent involved in buying/selling transactions
Net Listing
An agreement in which the seller names an amount they want their property to sell for, and then the broker tries to sell it for more, because they receive the difference (the dollar amount above what the owner wants) as their commission Net listings are legal in Texas, but it is uncommon for brokers to allow them. Net listings should only be taken if the client insists on it and is familiar with current market values.
Open Listing
An agreement that allows multiple real estate brokers (and the owners themselves) the right to sell the property with the individual considered the procuring cause of the sale of the property getting the commission
additional tax liability
Another disclosure that has to take place is a disclosure of additional tax liability. If the license holders involved in the transaction do not disclose tax liability, then the title company will likely do so at the closing. This extra tax liability happens most commonly in the sale of ranches. If the disclosure is not made to the buyer, then the seller may be held responsible for paying the taxes. It is easy to see that if this disclosure does not take place, then someone could get really angry with the real estate agent.
Homeowners' Associations
Another disclosure that takes place quite often is a notice of the obligations that the buyer will have to a Property Owners' Association (POA), also known as a Homeowners' Association (HOA). HOAs exist to help the residents in that area maintain their property values. They do this by watching over the construction of new improvements and making sure that homes meet the standards that are required in that area.
Disclosure of Multiple Offers
As you know, when a buyer makes an offer on a property, it's possible that other offers will be delivered to the listing agent at the same time. The owner could be pondering on one offer and receive another offer a day or two later. We call that multiple offers. Buyers who create a multiple offer situation should be notified about the fact that there are other offers on the table besides theirs. Purchase offers are normally not confidential documents. Sellers and their agents are free to share the offer with other potential buyers and agents as a negotiation tool. This is a seller decision and their agent must follow their direction.
Texas Disclosures
Disclosures required by Texas law: - Every potential buyer, seller, or agent is entitled to be told immediately if the broker is representing anyone on the property they are inquiring about. - Every unrepresented buyer or seller must be given the Information About Brokerage Services form at the first substantive discussion about specific real property. - Every buyer must be advised, in writing, that they should get an abstract of title examined by an attorney of their choice or obtain a policy of title insurance. - All buyers must be advised that the property they are interested in may have lead paint if it was built prior to Jan 1, 1978 through the Addendum for Seller's Disclosure of Information on Lead-Based Paint and Lead-Based Paint Hazards as Required by Federal Law.
Exclusive Right to Sell Listings: Seller Benefits
From the license holder's perspective, holding an exclusive right to a commission protects them from the possibility of dedicating time and effort to a sale only to have the commission go to another party. For this same reason, real estate professionals encourage sellers to favor exclusive right to sell listings. They argue that when an agent has a vested interest in a property, they are more willing to expend time, effort, and money on diligently marketing that property. Because the listing agent has a secure hold on the commission in an exclusive right to sell listing, they can spend more time and energy finding a qualified buyer. This stands in opposition to an open listing agreement, in which brokers may expend less effort promoting a property. An agent with an exclusive right to sell listing is more incentivized to find the highest bid possible for the seller because they are guaranteed a commission. They don't have to fear that another broker may secure the sale of the property before they do and consequently receive the commission.
HOA Disclosure
HOAs usually charge fees, and they can be substantial. Fees go toward the cost of taking care of the common areas in a community, such as the swimming pool, park, and maybe the gate at the front of the neighborhood. This disclosure is important because some buyers just do NOT want to live in an area with an HOA. Some buyers do not want the expense of a payment to the HOA, while others simply don't want to be told what they can and cannot do on their property.
Mold Remediation Certificate
If a home has had mold in the past, but the mold has been removed, the owner will receive a Mold Remediation Certificate from the company who worked on the home. That certificate is good for five years. Every time that home sells for the next five years, that certificate must be passed on to the subsequent buyers.
Lead-Based Paint Addendum
If a home was built prior to 1978, it is possible that the paint in the home contains lead. Lead-based paint can have negative effects on the health of people living in the home. This is something that is required by law to be disclosed. This disclosure can be made through the use of the Addendum for Seller's Disclosure of Information on Lead-Based Paint and Lead-Based Paint Hazards as Required by Federal Law.
Padgett v. Pharett (Cal. 1997)
In 1991, the Padgett family entered into a real estate contract from the Stone Point development for $207,500. The standard real estate contract specified the sellers were to provide copies of the governing documents of the development and its homeowners' association, the Stone Point-Sweetwater Homeowners' Association, to buyers. These documents included the covenants, conditions, and restrictions (CC&Rs), bylaws, and financial data. Sellers were also required to disclose, in writing, any known pending litigation affecting the property. Despite this, the buyers' and sellers' real estate agents and brokers failed to disclose to the defendants that there was a pending lawsuit between the development's homeowners' association and the developer concerning alleged construction defects in the common areas of the property. The Padgetts were able to successfully sue for negligence against their real estate broker and the sellers' real estate broker.
Types of Listings
Open listings Exclusive right to sell listings Exclusive agency listings Net listings
Open Listings: Seller Benefits
Open listings allow a seller to list their property concurrently with a number of competing brokers or offer to pay anyone bringing them a buyer. It also gives them the option to sell the property on their own without facing liability for a commission payment. Some sellers believe this type of listing works in their favor because more listings mean more prospects, and the seller will not be locked into paying a commission if the property is sold as a result of the seller's own initiative. In addition, an open listing may be terminated at any time before performance and releases the seller from any obligation to inform the other listing brokers when the property goes under contract or is closed. The sale of the property under such an agreement essentially cancels all outstanding listings.
Article 2 of the NAR Code of Ethics
REALTORS® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction. REALTORS® shall not, however, be obligated to discover latent defects in the property, to advise on matters outside the scope of their real estate license, or to disclose facts which are confidential under the scope of agency or non-agency relationships as defined by state law.
Open Listings: The Drawbacks
Real estate license holders, on the other hand, generally avoid open listing agreements. This is primarily because it can be difficult to determine who is entitled to the commission payment when so many brokers are involved. Furthermore, brokers often do not feel protected in this type of agreement because a license holder who diligently advertises a property might not be rewarded for their efforts if another license holder secures the sale of the property. Even if the compensated agent benefits from the marketing effort of others, the commission is earned only by the individual who closes the sale. Open listings are not the most desirable listings for a real estate agent to take. For one thing, MLS systems do not allow agents to put open listings into the system. Plus, an open listing is almost always a verbal agreement. The broker will not be able to sue for a commission without a written agreement to bring to court. The other difficulty is that if the broker winds up in an intermediary relationship, there is no document that has been signed by the seller who agreed to an open listing that gives the broker permission to act as an intermediary broker. The agent who took the open listing will have to backtrack and have the owner sign a listing agreement before negotiations can begin.
Exclusive Right to Sell: Broker Benefits
Real estate professionals generally prefer exclusive right to sell listings over other listing agreements. This type of agreement states that as long as the property is sold within the time frame stipulated in the contract, the listing broker named in the contract will receive a commission for their role as agent in the real estate transaction.
Municipal Utility District (MUD)
Rural districts of Texas with lower tax rates that exist to provide developers a way to finance or be reimbursed for utility improvements they make
Extra Territorial Jurisdictions (ETJ)
Smaller towns that surround cities across Texas are areas known as Extra Territorial Jurisdictions (ETJ). These are areas just a few miles outside the city limits that the city may decide to annex someday as part of their tax base. The distance limit for what counts as an ETJ is dependent on the population of the town or city. If a seller is selling a home inside the ETJ, the buyers should be notified so that they can make a decision about whether they would like to buy in an area that may be subject to city taxes in the future. The other reason why a buyer needs to be informed about an ETJ is because they might be planning on building on the land someday.
Two Steps Before Net
The Texas Real Estate Commission requires two actions to take place before a license holder may take a net listing. 1. The agent must give the seller an opinion of value for the property. 2. The seller must insist that they want to sell using a net listing.
Listing Agreement
The listing agreement outlines the relationship between the involved parties, what's expected of them, and how the broker will be paid. The most widely used listing agreement form, titled Residential Real Estate Listing Agreement Exclusive Right to Sell, comes from the Texas Association of REALTORS®. A listing agreement must be in writing for it to be valid in a court of law.
Seller's Disclosure Notice
The most important disclosure comes from the seller to the buyer rather than from the real estate agent. This document is called the Seller's Disclosure Notice. On the day that the sales agent lists the property, they should give the Seller's Disclosure Notice to the seller. The property owner will fill it out without the assistance of the real estate agent. This is done so that the real estate company has no liability about any mistakes that the owner may make when sharing the information.
Cooperating Broker
The other broker or sales agent that shows the listed property to a buyer who subsequently purchases the property
Addendum for Coastal Area Property
The other disclosure concerns properties along the coast. This disclosure is made through the use of the Addendum for Coastal Area Property. This addendum notifies the buyer that if their property has a common boundary with lands that are submerged at certain tides, then there will be restrictions on how the property may be used and developed.
Listing Appointments
The sales agent will be attempting to sell the owner on the advantages of listing the property with their brokerage. And the owner may be reluctant.
Material Facts
in a real estate transaction is any fact that is significant or essential to the transaction - that is, any piece of information that could reasonably be expected to influence a prudent individual's decisions regarding the transaction.
Pocket Listings
listings that do not appear on the MLS. A pocket listing can also happen when an owner wants to privately sell their house. Some brokers frown upon pocket listings, but others are perfectly okay with them. Agents should check with their broker's policies first before agreeing to a pocket listing situation!
multiple listing service (MLS)
offers advantages to the sellers, brokers, and buyers of real estate. The seller receives greater exposure of their property through the MLS system and the property is, in turn, shown by a larger number of brokers and sales agents to a larger audience of buyers.
