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

© 2008 by South-Western, Cengage Learning

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

facts



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

AIDS


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”

HUD-1

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

V&C

GPI

GEI



Expenses

Fixed

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

DOJ



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

FBPA



Exchange Programs Name & address of company

Voluntary, mandatory or projects affiliation with the program

Exchange procedure

Fees


Key TermsKey Terms

Boycotting

BRRETA

CAM

Commercial Real Estate Broker Lien Act

Good faith estimate

HUD-1

Listing presentation

Monopoly

Price fixing

Property Owners’ Association Act

RESPA

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.