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84 Cards in this Set
- Front
- Back
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List the primary tasks of a residential real estate industry member.
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-prospect for clients
-qualify clients according to their needs and wants -list and show properties -prepare offers -negotiate offers -follow up to complete transaction |
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What is a service agreement? what are the 3 types of service agreements?
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-a contract that establishes a relationship between the parties as to the services and obligations to be performed by an industry member.
~Seller Brokerage Agreement ~Buyer Brokerage Agreement ~Customer Acknowledgment |
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What are the different Types of clients?
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-first time buyers
-move up buyers -move down buyers -investment buyer -elderly property owner |
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What is a Seller Brokerage Agreement?
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A seller grants authority to a real estate brokerage to sell, exchange or lease the seller's property on the terms and conditions described in the contract.
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What is a non-cooperation brokerage?
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-a brokerage that does not use MLS and does not allow other brokerages access to the property.
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What is a Buyer Brokerage Agreement?
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a buyer grants authority to a brokerage to locate a suitable property as identified by the buyer and to generally promote the buyer's interests.
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How can agency relationships be created?
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-Express Agency
-Implied Agency |
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What are the 6 essential elements of a contract?
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1. Capacity of parties
2. Legal Object 3. Legal Intention 4. Consideration 5. Mutual Agreement 6. Genuine Consent page 18 for more info |
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What is Express agency?
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- consent to an agency relationship given orally or in writing
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What is the result if one or more essential elements is missing?
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the contract is not enforceable, and may be Void, Voidable, Illegal.
Page 19 for more info |
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What is sole agency?
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a relationship in which a brokerage or industry member acts as the agent of only one party in a trade. Also known as single agency.
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What is Dual Agency with Limitations?
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a situation in which a brokerage or an individual industry member represents both the buyer and the seller in the same transaction. An agent cannot represent two parties with differing interest; therefore, the duties of the agent are limited. The brokerage must contain informed written consent.
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What is Designated Agency?
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the brokerage will designate an industry member to act as sole agent for each brokerage client.
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What happens when a designated agent has a seller and buyer wanting to enter into a transaction together?
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1. the seller, buyer and brokerage may enter into a transaction brokerage agreement.
2. If they do not agree to a transaction brokerage agreement, the designated agent will continue representing the party who first entered into designated brokerage agreement. The brokerage will offer the other party the option of another designated agent, or to treat them as a customer, or refer them to another brokerage. |
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What is a transaction brokerage?
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the brokerage or the industry member provides only facilitation services to the buyer and seller in the same trade.
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What are the 8 provincial legislation that affect brokerage agreements?
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*Real Estate Act and Rules
*Dower Act *Residential Tenancies Act *Condominium Property Act *Land Titles Act *Municipal Government Act *Mobile Home Sites Tenancies Act *Personal Information Protection Act |
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What is the Real Estate Act and Rules?
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~ the Real Estate Act and its accompanying Rules specify several requirements for listing written service agreements (seller or buyer brokerage agreements)
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What are the 2 Federal Legislation that affect brokerage agreements?
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*Competition Act
*GST |
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What is the Dower Act?
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The Dower Act prohibits a married person, who individually owns land upon which either of the spouses has resided at any time during their marriage, from diposing of that land with the consent of the other spouse.
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What must happen when the Dower Act applies to a transaction?
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>When transactions involve dower rights, dower consent from the non-owner spouse, and a certificate of acknowledgement of free consent from a notary public or other officer of the court must be obtained before the transaction can be completed.
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What is the Residential Tenancies Act? and why is it important to brokerage agreements?
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The Residential Tenancies Act sets out the rights and responsibilities of landlords and tenants. This is important to brokerage agreements because many properties are sold with a lease agreement in place or about to expire, therefore the agent must understand the requirements of the Residential tenancies act.
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What is the Condominium Act?
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The Condominium Act requires the condominium corporation to provide a considerable amount of information upon the request of an owner, a mortgagee or a buyer.
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What is the Mobile Home Sites Tenancies Act?
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The Mobile Home Sites Tenancies Act requires specific information be included in the sale of a manufactured/mobile home such as pad rental $.
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What is Personal Information Protection Act?
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PIPA aims to strike a balance between the publics right to know and the individuals right to privacy as these rights relate to information held by public bodies.
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What is Competition Act?
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The Competition Act makes it an offence for any person promoting any business interest to the public that is false or misleading in a material respect. >do not collude, do not discriminate, do not mislead.
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What is Implied Agency?
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- an agency relationship created by the actions of the parties.
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What is meant by "informed consent?"
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client has full understanding of terms in which they are agreeing to.
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What is the Land Titles act?
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the land titles act provides legistlative framework for the department to register land related documents that both create and terminate legal rights in property.
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What are the factors of production?
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-Land (natural resources)
-Labour (human input) -Capital (man made physical goods used to produce other goods) -entrepreneurial skills (ideas and organization of the other 3 factors) |
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Explain Canada's economy?
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Canada has a mixed economy that using the price system. A circle of resource market ->businesses -> Goods and Services -> Consumers
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What are the Market Indicators?
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- Labour Market - the unemployment rate
- Capital - the availability of capital and the current interest rates |
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What are the Supply and Demand indicators?
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- Business Indicators (supply)
- Consumer Indicators (demand) |
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What are the business indicators?
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- National production (GNP/GDP, production by Canadian Residents)
- Manufacturing Activity (stats on new orders/shipments/inventories) -Utilization Rates (if canadians are utilizing the available products) |
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What are the consumer indicators?
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- Retail sales
- Consumer confidence and spending - Consumer disposable income/debt - Consumer price index |
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What are the different types of values?
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- Objective Value (value reported by a competent and impartial appraiser)
-Subjective Value (personal value) -Market Value (is realistic value as it reflects the actual state of market conditions at a particular time) -Investment Values (established by financial considerations) |
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What factors influence value?
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-Physical factors
-Social factors -Governmental factors -Economic factors |
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What is a role of a Real Estate Appraiser?
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-current property value
-future value of a property being built -value for mortgage lending or investment purposes -value for tax assessments, capital gains and other taxes. -value of property being expropriated or involved in litigation -past value for capital gains tax calculations. |
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What is the role of a real estate member regarding estimating values of properties?
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-provide an informal range of value estimate of market value, but only as part of a trade in real estate.
-cannot offer professional opinions of value independent of their services in respect to a trade in real estate. |
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What principles apply when establishing Real Property Value?
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-Anticipation - of future benefits
-Balance - -Change - todays value only -Competition - excess in profit breeds competition -Conformity - reasonable conformity with existing standards protects value -Consistent use - double recovery -Contribution - to the properties net income -External factors - tax laws, monetary policies or world events -Highest and best use - for the greatest return -increasing and decreasing - returns -progression and regression - -substitution -principle of supply and demand -surplus productivity |
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What are the 3 approaches to evaluating real estates?
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-Cost
-Income -Direct comparison |
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What is the factors used in the cost approach?
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-Land value
-Replacement or reproduction cost - Accrued depreciation -Estimate the value of the property |
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What are the steps to the income approach Re: property evaluation?
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- Estimate the annual gross income of a property, less vacancies and bad debts
-estimate effective gross income -estimate the total annual operating expenses -calculate operating expenses -calculate the net operating income -select an appropriate capitalization rate and convert the net income into an indication of value. |
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What are the steps to direct comparison approach Re: property evaluation?
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-market activity
-compares the subject property to other similar properties that are currently listed, have recently been sold, or have been listed but the listings expired without selling. |
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What are the primary forces underlying fluctuations in the real estate market?
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-Labour Market (the unemployment rate)
-Capital (availability of capital and the current interest rates) |
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What is the difference between an appraisal and a CMA?
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An Appraisal is a valuation of a property, given by an appraiser, who uses a structured format.
A CMA is simply information on similar properties the the marketplace. |
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what are the major principles affecting market value of a property?
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-Physical
-Social -Governmental -Economic |
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When is the income approach for evaluating a property, used?
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- Investing
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What are the limitations to the direct comparison approach?
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- lack of comparable's
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What are the elements of comparison?
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-time
-location -physical characteristics -motivation |
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what is the principle of substitution?
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-states that an informed person would not pay more for a property than it would cost to buy an equally desirable substitution.
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What are the steps in inspecting a property for evaluation?
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-Site(corner lot, shape of lot, location of lot, direction of house, does it have a view....)
-Building(sq footage, # and types of rooms, finishing products, garage?, structural condition) -External factors(economic factors, access to amenities, special levies) |
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when looking into values of comparables where can you get your data from?
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-MLS
-Brokerage/Appraisal Offices -Public Info - Market Statistics |
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When adjusting for differences during comparable matches, how does Positive and Negative adjustments work?>
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-Positive- if the comparable has something that is inferior to the subject, the comparable requires the addition in value to make it more comparable to the subject property.
-Negative- if the comparable has something that is superior to the subject, the comparable will require subtraction of that value. |
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HOw does dollar and percentage adjustments work?
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- Dollar - the appraiser will consider what the market will pay for a feature, and makes the adjustment accordingly. Usually used on the physical characteristics of a home.
-Percentage- usually used on time and location. for time the appraiser would use a trusted market source to determine the increase or decrease in property values. same for Location, percentage increases for or decreases depending on the proximity to certain amenities.... |
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How does an appraiser come to a final reconciliation and Market Value?
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-reconsideration of the purpose of the appraisal
-review of each step in all approaches used (usually 2) -final selection of one approach is determined. |
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What steps can you take to determine whether dower applies to a real estate transaction?
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-Is there only one individuals name on the title?
-Is the person married? -Has either spouse resided on the property since the time of their marriage? If yes to all 3, dower applies. |
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What are the 3 key provisions of the competition act?
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-do not collude
-do not discriminate -do not mislead |
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What term best describes canada's economy?
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Mixed economy - both publicly and privately owned enterprises.
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What 4 characteristics must be present in order for a commodity to have value?
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-there must be a real or perceived need for it
-the supply of it must be relatively scare -it must have utility, meaning it must be useful and efficient -purchasing power must exist, the buyers must have the financial mean to purchase |
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Distinguish between subjective and objective value?
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subjective is based on an individuals personal estimate of future benefits.
objective is based on cost of creation and value in the marketplace. |
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What is the definition of market value?
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- a valuation resulting from the informed, intelligent and voluntary actions of both the buyer and seller, where neither of them is acting from necessity.
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List 4 factors that influence value and give an example for each.
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1. physical- land, climate, quality of building
2. social- population growth, consumer preference, buying habits 3. governmental- land use bylaws, monetary and tax policies. 4. economic- availability and cost of mortgage money, employment and income levels. |
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can a person hold more than one category of licence issued by RECA?
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yes
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What are the 2 methods of adjusting a sale for differences?
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- Dollar adj
- Percentage adj |
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Name 3 approaches to value?
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-cost approach
-income approach -direct comparison approach |
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Name 4 sources of info used in direct comparison approach?
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-time
-location -physical characteristics -motivation |
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What is the adv and disadv to the cost approach/
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- ADV - people understand it, easy to use
- DIS - Difficult to estimate depreciation, construction estimate seem easy but construction costs are constantly changing. |
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what is the adv and disadv to the income approach?
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- ADV - great for estimating the value of investment properties.
- DIS - Estimating capitalization, income and operating expenses could be difficult. |
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what is the adv and disadv to the Direct comparison approach?
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- ADV - Avoids various problems associated with estimating and forecasting.
- DIS - sometimes difficult to obtain good comparable sales. |
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What is capitalization?>
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converting the net income to the appropriate market rate.
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When preparing a CMA you should have comparables of properties that are:
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-available for sale
-currently sold -expired listings |
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What information should a CMA form contain?
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-Area Market conditions
-Terms of sale -Top competitive market value -Probable final sale price -MLS data and computerized CMA |
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What are the 3 types of seller brokerage agreements?
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-MLS listing or exclusive brokerage agreement
-non-mls listing (still sole authority) -general listing or non-exclusive or open listing. |
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when a contract requires additional information what should be used?
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- appendices, if adding an appendix to a contract it must be noted on the brokerage agreement.
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What is a property Appendix?
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- additional information related to mortgages, rental properties, and manufactured/mobile homes.
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What is an appendix to the real estate listing contract?
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- allows more space to describe specific information about the subject property, such as furnishings and chattels.
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What is a condominium property appendix?
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- this appendix provides a checklist for important info related to condominium ownership, these items are required of the seller to be provided to the buyer.
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What is a country residential acreage listing contract appendix?
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-this appendix highlights the important details a industry member should gather when dealing with a rural property, such as source of water, the quality, and quantity of well water, and the septic system,
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What is the dower schedule?
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- when the dower rights apply, the non-owner spouse would complete this form in the presence of a commissioner of oaths or notary public, who then signs the certificate of acknowledgement to certify consent was made with free will.
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what is the data input form?
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-used to provide property information to be used on MLS, such as property type, style, size, number rooms, etc
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What is the purpose of a listing presentation?
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- give the brokerage authority to perform services on the sellers be-half.
-to provide info on the property to the brokerage. -to be the first step in effecting a sale. |
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what information should you have for a listing presentation?
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- CMA
- information about you and your company - marketing plans - appropriate forms - agency disclosure - seller brokerage agreement - sellers net proceeds sheet -anticipate the types of questions -be informed about general market condition, profile of the average buyer in that location, current mortgage rates, title information |
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Who is responsible for measuring the property?
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the listing real estate industry member.
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Why is it important to set a realistic list price?
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-over pricing leads to the property remaining unsold for longer than average time, which leads buyers to assume the property is undesirable. A realistic price will attract a serious buyer.
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