Brokerage and Leasing

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Lecture 17

• Brokerage and Leasing

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Issues in Buyer Brokerage

• Determining Needs and Wants
• Qualifying Buyers
• Searching the Market for Property
• In-Depth Submarket Analysis
• Contract Negotiation
• Closing Process

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Issues in Seller Brokerage

• Ready, Willing, Able Buyers
• Competition between Agents
• Commission Rates
• Marketing / Advertising
• Service Record
• Marketing Property for Buyers
• Market Studies
• Identifying most appropriate listing (asking)
  price
• Contract Negotiation
• Disclosure / Material Defects
• Follow-Up with Closing Process

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Success in Real Estate Brokerage

• Long Hours, High energy
• Drive to Succeed
• Well-Networked
• Word-of-Mouth Advertising
• Ability to use up-to-date technology
• Service After Contract
• Service After the Sale
• Strong Referral Network

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Lecture 17

• Real Estate Agency

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Agency Terms

• Agent Specialist who provides professional
  representation
• Commission Fee charged for time and expenses by
  an agent to a client
• Client vs. Customer

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Types of Agents and Agency in Real Estate

• Broker Licensed by state represents Agency
  in real estate transactions
• Establishes Agency
• Assembles Sales Agents who are responsible to the
  Broker
• Sales Agents Licensed by state UNDER the
  Broker assigned by the Broker in agency

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Types of Agents and Agency in Real Estate (Late
1990s)

• Owner/Seller Agency Most prominent agency form
  in real estate
• Owner instructs Agent to locate a customer or
  buyer who is ready, willing, and able to
  purchase a property at a set price
• Listing Agreement is the governing agency
  agreement
• Buyers Agent Agent who solely represents a
  buyer of real estate
• Dual Agent Represented BOTH PARTIES to the
  transaction

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Types of Agents and Agency in Real Estate
(Current)

• No Agency (Non-Representation) Occurs before an
  offer is made with an agent
• Single Agency Represents one party in a
  transaction
• Represents seller, buyer, lessor, lessee
• Transaction Agent (Facilitator) Brings two
  parties together for a fee Only requires basic
  fiduciary responsibilities

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Agent Responsibilities

• Accountability of all funds
• Confidentiality of known facts which could harm a
  clients position
• Disclosure of all relevant facts
• Obedience of clients legal instructions
• Skill, Care, and Obedience must be practiced in
  gathering facts and negotiating contracts

11
Agent Misrepresentation

• Intentional Misrepresentation Can be considered
  FRAUD on the part of the Agent if the following
  can be proven
• Intent by the Agent
• Information was used by the Agent for making a
  decision
• Monetary loss occurred
• Unintentional Misrepresentation Occurs when
  unverified facts are given to a potential
  buyer/seller
• Recovery Funds
• Errors Omissions Insurance
• Puffing Exaggeration of a propertys features

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How Agency is Terminated

• Actions by Agent
• Completion of Agency Purpose
• Mutual Agreement by Both Parties
• Unprofessional Actions
• Loss of License
• Conviction of a Felony
• Death
• Actions by Principal (Client)
• Death
• Breach of Agency by Principal
• Mutual Agreement by Other Parties
• Other Means of Termination
• Expiration of Agency Agreement
• Condemnation of Property
• Destruction of Property

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Lecture 17

• Closing Expenses
• The Settlement Statement

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Settlement Typical Seller (Grantor) Expenses

• Title Abstract and Miscellaneous Title Charges
• Title Insurance (typically Owners policy only)
• Recording of New Deed
• Satisfaction of Existing Mortgage
• Documentary Stamps
• Survey
• Agency Commission
• Proration of Ad Valorem Expenses
• Repairs
• Home Warranty

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Settlement Typical Buyer (Grantee) Expenses

• Appraisal and Credit Report
• Processing and Application Fees to Lender
• Other Mortgage Fees and Title Endorsements
• Origination Fees and Loan Points (if applicable)
• Escrow Accounts
• Recording Fees for New Mortgage
• Simultaneous Title Insurance Policy
• WDO and Inspections
• Hazard Insurance
• Proration of Homeowners Asso. Dues

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The Settlement Statement

• Shows Money Owed/Received at Settlement (Closing)
• Debits All expenses OWED at Settlement
• Credits All funds TO BE RECEIVED at Settlement

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Settlement Prorations of Expenses

• Dividing Income and Expenses
• Between Grantor and Grantee for Settlement
• Expenses Paid in Advance
• Homeowners Association Dues
• Rental Income
• Termite Bond Policies
• Expenses Paid in Arrears
• Ad Valorem Property Taxes

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Settlement Prorations of Expenses

• Day-of-closing expenses are responsibility of
  Buyer/Grantee
• Expenses Paid in Advance Seller credited, Buyer
  debited.
• Expenses Paid in Arrears Buyer credited, Seller
  debited.

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Settlement Prorations of Expenses
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Lecture 17

• The Settlement Statement (HUD-1)

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