© 2008 by South-Western, Cengage Learning Chapter 26 Charles J. Jacobus Thomas E. Gillett.

Chapter 26Chapter 26

Charles J.Jacobus

Thomas E.Gillett

Georgia Real EstateGeorgia Real EstateAn Introduction to the Profession An Introduction to the Profession

Seventh EditionSeventh Edition

Chapter 26Chapter 26

Georgia PracticeGeorgia Practice

Client: represented by a broker“work for”

Customer: not represented by a broker“work with”

Brokerage engagement: written contract creating a client relationship

Ministerial acts: do not require professional judgment or skill

Material fact: fact a party does not know, could not reasonably discover, and would reasonably want to know

Fiduciary: extraordinary skill, knowledge, & ability

reasonable care

1. Duties descried in the brokerage engagement

2. Seek buyer, tenant, or property suitable for client at acceptable price & terms

3. Timely present all offers

4. Disclose material facts

5. Advise to seek expert advice beyond the broker’s expertise

6. Timely account for all money

7. Reasonable skill & care

8. Keep requested info confidential

Seller financing or loan assumptionMust disclose:

Buyer’s financial ability to perform

Buyer's intent to occupy as principal residence

1. Adverse material facts

2. Adverse neighborhood conditions within one mile

Not liable for false info if:Did not know info was false

Source of info is given

Terminates in one year if no expiration date

Duty to not give false info prevails over confidentiality

1. Types of agency available

2. Existing brokerage relationships in conflict

3. Compensation & if compensation will be

shared

4. Obligation to keep info

confidential

Compensation does not create agency

Informed written consent

ConflictFull disclosure vs. confidentiality

Voluntary consent

One broker with 2 clientsTwo associates

Not a dual agency

Represents no one

Performs ministerial facts Discloses adverse material

Single Agency Seller Agency

Broker represents only the seller

Never represents the buyer

Single Agency Buyer Agency

Broker represents only the buyer

Never represents the seller

Single Agency Co-opRepresents both buyers and sellers but never in the same transaction

Dual AgencyOne associate represents both buyer & seller

Designated Agency

Two associates from the same firm

One represents the buyer

One represents the seller

Sub-Agency Co-opTwo brokers represent the seller

Listing broker is the primary agent for the seller

Selling broker is the agent of listing broker

Subagent to the seller

Transaction BrokerageBroker has no client

Ministerial acts

Working with SellersWorking with Sellers

ProspectingFSBO

Telephone solicitation“Do Not Call” lists

Email solicitation“Can Spam Act”

Sphere of influence

Meet & greet

Listing PresentationLoan information

Age of improvements

Property condition

Survey

Warranty deed

Seller’s motivation

Seller’s expectations

1. Why professional marketing?

Build rapport

Benefits

2. Marketing benefits of our company

Match company assets & seller needs

3. My marketing benefits

Agent’s strengths and seller’s needs

Testimonials

Statistics

Resume

4. Marketing planCommunication

Exposure of property

CMASold properties

Active listings

AgencyCo-op

5. PaperworkSeller’s net worksheet

MLS data profile sheet

Loan information letter

Listing agreementPower of attorney

Corporate resolution

Partnership

Seller’s Disclosure Form

“as is”

Latent defects

Georgia Stigmatized Property Act

Working with BuyersWorking with Buyers

Duties:Advocate for buyer

Full disclosure

Maintain confidentiality

Higher potential liability

Must represent:Yourself

Buyer requiring anonymity

Current clients

Should represent:Former client

Referral from former client

Friends & relatives

Business associates

Need representation:First-time homebuyers

Relocating buyers

Should not representUnmotivated buyers

Unrealistic buyers

Should not representUnqualified buyers

Buyer who presents a conflict with a seller client

Buyer with unethical or illegal expectations

Interview/consultationBroker’s office

Buyer’s Home

Neutral site

Client vs. Customer?Brokerage agreement

Cannot draft legal formsSpecial stipulations

Legal descriptionVoid

Method of paymentClear & definite

Conflicting informationHandwritten controls typed

Typed controls preprinted

Last statement controls

Conflicting informationBest evidence rule

Written over verbal

Vague wording construed against party who wrote it

Blank lines N/A

Exhibit, addendum, riderCross-reference

AssignmentCaution!

Offer presentation

CounterofferStrike, initial, date, & time

Counteroffer form

Communication of acceptance

Contract to ClosingContract to Closing

Contract Explain & maintain communication

Copies

ContingenciesTime limit

Home InspectionStructural defect & wood infestation

Due diligence period

Termination

Repairs

Loan Application

Local lenders

Coordination of the closingContract

Seller’s payoff

Tax receipt

Buyer’s insurance

Scheduling

Blank documents

Cost & net worksheets

Length of closing

Good Faith Estimate

“Settlement Cost: A HUD Guide”

Kickbacks prohibited

Broker or salesperson attend closing

Only an attorney can conduct a closing!

Property ManagementProperty Management

1. Identify property

2. Term & conditions

3. How income will be remitted

Reporting of income & expenses

4. What expenses paid by broker

Payments

5. Terms & amount of compensation

6. Security deposits and prepaid rent

7. Beginning & ending date

8. Termination

9. Signatures

Agreement does not survive sale

Property maintenance Custodial: day to day

Preventive: extend economic life

Corrective: as-needed repairs

Marketing: Expose to:

right people

right time

effective & efficient manner

Market analysis Maximize net income &

economic life of property Incentives?

Lease rates?

Home buying incentives?

New buildings?

Demographics

Certified Property Manager

Accredited Residential Manager

Institute of Real Estate Management

Budgeting: 2 categories

Income GRI + other sources

Expenses

Variable

Reserves for replacement

Tenant selection Credit report

References

Former landlords

Verify employment & banking info

Fair Housing

Negotiating the lease Statue of fraud Forms

Rent collection Late fees Fair Housing

Retaining tenants

Georgia Real Estate FinanceGeorgia Real Estate Finance

Promissory note: creates the obligation

Interest: “rental charge”

Simple interest: based on loan

balance

Security deedLegal title to the lender

Defeasible upon payment

Borrower retains equitable title

Satisfaction of debtSign satisfaction & recordExecute & record cancellation

Importance of real estate to the economy

100% Loans with secondary financing

Sales Price $150,000 $150,000

1st Loan 120,000

80/10/10 80/20

120,000

2nd Loan 15,000 30,000

Down paymt. 15,000 0

Security deed allows non-judicial foreclosure

Power of saleDemand Letter

Advertised 4 consecutive weeks

Public auction

1st Tuesday of each month

Short sale

Lender accepts less than amount owed

Deficiency judgment

Community Association Community Association ManagementManagement

Community Association43-40-1(4.1)

Mandatory owner organization

Community Association Management

43-40-1(4.2)

Community Association

History

No Association

Voluntary Association

Mandatory

Property owners are members

Elect board of directors

Officers elected

Functions of a managerBudgetsRecord keepingCollecting assessmentsPaying bills

Functions of a managerInteract with accountants & attorneysMeetingsHiring contractorsRepairs & maintenanceInsuranceSecurityEnforcing rulesArchitectural controls

Minutes of meetings

CAM License18 years old

Georgia resident

High school graduate or equivalency

25 hour course

State Exam

CAM License

May not list,sell, lease, option or exchange

License with a Broker

Any licensee may act as a CAM

Georgia Property Owner’s Association Act

Voluntary

Enforcement of liens, penalties, & late fees

Automatic liens

Association must respond within 5 days or lien is invalid

Jointly & severally liable

Association may foreclose

Anti-Trust LawsAnti-Trust Laws

Sherman Anti-Trust ActActivities which endanger competition

Real Estate is a trade

Price fixingTwo or more brokers

Pricing set by the firm

Violations occur without formal agreement or intent

BoycottingRefusing access to materials or information

MonopoliesEliminate competition

Tie-in Agreements2nd contract is required as condition for entering the 1st

Violation is a felony

PenaltiesIndividual: $350,000

& up to 3 years in prison

Corporation: $100,000,000

Fair Business Practices ActFair Business Practices Act

Consumer protection law

Primarily covers advertising

Transaction must take place

Must impact more than one consumer

Uniform Deceptive Trade Uniform Deceptive Trade Practices ActPractices Act

Deceptive statement or unfair practices

Easier to apply

Only one consumer

No actual transaction

FBPA & UDTPAFBPA & UDTPA

PenaltiesFines up to $25,000

Injunction

Treble damages

Loss of license

Law suit

TimesharesTimeshares

Use & possession divided

Vacation ownership

Fee ownership

Long term lease

Georgia Time-Share ActPublic offering statement

Trust funds in escrow

Licensed brokers

7 day right of rescission

Exchange Programs Name & address of company

Voluntary, mandatory or projects affiliation with the program

Exchange procedure

Key TermsKey Terms

Boycotting

BRRETA

Commercial Real Estate Broker Lien Act

Good faith estimate

Listing presentation

Monopoly

Price fixing

Property Owners’ Association Act

Tie-in agreement

Time-Share Act

© 2008 by South-Western, Cengage Learning Chapter 26 Charles J. Jacobus Thomas E. Gillett.

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Transcript of © 2008 by South-Western, Cengage Learning Chapter 26 Charles J. Jacobus Thomas E. Gillett.

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