B428 Real Estate Day 3 Brokerage, Appraisal and Prelim Agreements

Power of Attorney Authorizing another to act on your behalf. Person is called “attorney in fact.” Must be in writing, signed and notarized. Jed Clampett by Jethro Bodine, his attorney in fact The durable power… Termination

Two Programs of Ownership Condominiums Condominiums Cooperatives Cooperatives

Public Recording Interests in land are recorded on the local level… County Recorder, County Clerk, County Registrar, Clerk of the Court or Bureau of Conveyances.

What is recorded? Deeds Deeds Mortgages Mortgages Easements Easements Land Contracts Land Contracts Options Options Mechanics Liens Mechanics Liens Long-term Leases Long-term Leases

Listing Arrangements 1. Open Listing 2. Exclusive Agency 3. Exclusive Right to Sell

Commissions Remember: Commissions are negotiable. Full Commission Full Commission Discount Commission Flat Fee

The Net Listing Why would the book say that “ Net listings are illegal in some states and frowned on by other real estate regulatory agencies?” Why would the book say that “ Net listings are illegal in some states and frowned on by other real estate regulatory agencies?”

When Commissions/Fees are Paid 1. Ready, willing and able buyer. 2. Compliance with signed listing agreement. 3. Sale must be consummated. 4. If sale is terminated by seller’s refusal to close, fee must still be paid.

Real Estate Associations Local Associations Local Associations National Associations National Associations National Association of Realtors®National Association of Realtors® National Association of Real Estate BrokersNational Association of Real Estate Brokers Multiple Listing Services Multiple Listing Services

Agency Relationships Seller Agency Seller Agency Buyer Agency Buyer Agency Subagency Subagency Dual Agency Dual Agency

Duties of the Agent To the Principal (the client) loyalty and honestyconfidentiality obedienceaccounting full disclosureskill To the Customer (third party, i.e. the buyer) disclose agencyprovide good service avoid misrepresentationprovide information present offers in timely way

Valuation The most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. The most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.

Purposes for Setting Value Market Value Market Value Loan Value Loan Value Insurance Value Insurance Value Estate Tax Value Estate Tax Value Tax Assessment Tax Assessment Eminent Domain Eminent Domain Personal or Business Financial Statements Personal or Business Financial Statements Liquidation’ Liquidation’ Property Settlements Property Settlements

Sales Comparison Approach Sales Comparison Approach = Sales Comparison Approach = Market Approach Market Approach The assumption is that the informed investor will not pay more than what other investors have recently paid for comparable properties.

Choosing Comparable Properties Quality Quality Construction Construction Size Size Age Age Location Location Lease maturities Lease maturities Lease terms Lease terms

Income Capitalization Approaches* Gross Income Multiplier Gross Income Multiplier Direct Capitalization Direct Capitalization Discounted Present Value Discounted Present Value *The value has something to do with the property’s ability to produce income

Option Irrevocable Offer Irrevocable Offer Seller bound to sell if option exercised Seller bound to sell if option exercised Supported by “separate consideration” Supported by “separate consideration” When might an option be useful? When might an option be useful?

Options continued… Key terms: Option price Exercise price Expiration date Manner of Exercise Contrast: Right of first refusal

Things to Watch For in an Earnest Money Agreement Parties Parties Purchase Price Purchase Price Earnest MoneyEarnest Money Existing LoansExisting Loans Seller FinancingSeller Financing

3. Items included in the sale 3. Items included in the sale 4. Title conveyed 4. Title conveyed 5. Costs of Closing 5. Costs of Closing 6. Inspection 6. Inspection 7. Title Insurance 7. Title Insurance 8. Time of the essence 8. Time of the essence 9. Possession 9. Possession 10. Default 10. Default 11. Signatures 11. Signatures

Purchase and Sale Agreement Agreement to purchase and sell land to close on a future date. At the closing title is transferred in return for payment of the purchase price.

Assignment Read Chapter 8 Read Chapter 8 Do Review Questions 1-16, pages Do Review Questions 1-16, pages Read Chapter 10, beginning on page 150 thru 159. Read Chapter 10, beginning on page 150 thru 159. Do Review Questions 3,7,8,14 on pages 169 and 170. Do Review Questions 3,7,8,14 on pages 169 and 170.