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Lecture 17

Lecture 17. Brokerage and Leasing. Issues in Buyer Brokerage. Determining Needs and Wants Qualifying Buyers Searching the Market for Property In-Depth Submarket Analysis Contract Negotiation Closing Process. Issues in Seller Brokerage. “Ready, Willing, Able” Buyers

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Lecture 17

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  1. Lecture 17 Brokerage and Leasing

  2. Issues in Buyer Brokerage • Determining Needs and Wants • Qualifying Buyers • Searching the Market for Property • In-Depth Submarket Analysis • Contract Negotiation • Closing Process

  3. 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

  4. 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

  5. Lecture 17 Real Estate Agency

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

  7. 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

  8. Types of Agents and Agency in Real Estate (Late 1990’s) 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 Buyer’s Agent: Agent who solely represents a buyer of real estate Dual Agent: Represented BOTH PARTIES to the transaction

  9. 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

  10. Agent Responsibilities • Accountability of all funds • Confidentiality of known facts which could harm a client’s position • Disclosure of all relevant facts • Obedience of client’s 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 property’s features

  12. 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

  13. Lecture 17 Closing Expenses & The Settlement Statement

  14. 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

  15. 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

  16. The Settlement Statement Shows Money Owed/Received at Settlement (Closing) Debits: All expenses OWED at Settlement Credits: All funds TO BE RECEIVED at Settlement

  17. 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

  18. 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.

  19. Settlement: “Prorations” of Expenses

  20. Lecture 17 The Settlement Statement (HUD-1)

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