brokerage practice

8/17/2019 Brokerage Practice

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Real Estate Brokerage

• The act or practice whereby a natural or

juridical person

•On behalf of a principal

• For and in expectation of commission or

fee

• egotiates the sale! purchase! exchange!lease! loan "mortgage# of real estate


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Brokerage Scope

• $ales agency % engage to look for a buyer

• &urchase agency % authority to look for aproperty

• Exchange agency % negotiate exchange ofproperties between two or more owners

• 'ease agency % procure tenants for rental

properties• 'oan agency % procure loan secured by

real estate


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Elements of (gency

• )onsent % mutual consent of both parties

• Object % legal implementation of purpose

of agency• (gent acts on behalf of &rincipal

• (gent acts within $cope of authority


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Brokerage Steps

• $ecure listing

• &rocure prospects

• &resentation*briefing• +emonstration*tripping

• egotiation and )losing


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'isting

• The authority gi,en by the seller*buyer!

lessor*lessee! owner! borrower for the

broker

• to negotiate the sale! purchase! lease!

exchange! mortgage of real estate

• For a certain period of time! at a certain

price and terms! for a stipulated rate of

commission


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'isting! Kinds

• (s to form % Oral

% -ritten

• (s to exclusi,eness

% Open*on.exclusi,e! First)ome First $er,e

% Exclusi,e (gency )ontract/broker not entitled tocommission if principal

closed the transaction % Exclusi,e Right to $ell/

broker entitled tocommission e,en ifprincipal closed the deal

• (s to Function of Broker % $&E''

• (s to Basis of)ommission

% &ercentage 'isting

% et listing "$elling &rice 0et to Owner 1 Expensesof $ale#


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'isting! sources

• &ersonal contacts

• Referrals

•3embership in clubs and association• Fellow real estate practitioners

• Banks and Financing institutions

• (d,ertisements• 4nternet

• &roperties with for sale sign


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Prospect! &rocuring

• &rospect . person

who is need! can

afford to buy

• $uspect % no need!can afford or has

need cant afford

• Future prospect %

willingness to afford

• : reasons why people

in,est

% Occupancy

% 4n,estment % $peculation

• ;ualifying factors

% eed

% )apacity to pay

% 'egal aspect


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+emonstration*Tripping

• The process of showing

the property and pointing

its physical 5ualities and

other benefits*ad,antages

to arouse desire topossess or own it<

• o tripping! no closing

• &reparation

% &repare checklist of

attributes

% (nticipate objections

% Organi6e selling points

% (ppointment with

prospect

% otice to owner

% $election of ideal route tocreate fa,orable

impression of

neighborhood


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egotiation

• The process of reconciling theopposing ,iew of the parties to atransaction as to price and terms

• 4tems co,ered

% &rice and Terms

% Expenses of execution andregistration of sale

% +ate of deli,ery of property

% &ro rating of insurancepremiums and utilities

% &ro rating of income or rentalfrom property

% 4tems included or excludedfrom sale

• )ommon +ifficulties

% 2esitancy of prospect toexpress objection

% &resence of supposedad,isors of the prospect

% Failure or inability to analy6eprospect=s profitability

% &rejudice on either or bothseller and buyer because ofdifferences in religion!beliefs! superstition


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)losing

• The process whenthrough the mediation ofthe broker! the minds ofparties meet

• >eneral $teps % &ersuading the prospect to

submit a written offer topurchase preferably withearnest money

% $ecuring acceptance of theoffer to purchase orassisting seller in preparinga counter offer

% &reparing drafts toagreements for

consideration of the parties % (rrangement of

appointment between theparties for contract signingand payment


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Earnest 3oney

• The amount accompanying an offer to

purchase to manifest the good faith or

genuine desire of the buyer to purchase

the property

• $ometimes called reser,ation money


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Escrow

• (greement wherein theconsideration of acontract or portion thereofis entrusted to a third

party known as escrowagent! who is authori6edto release payment uponfulfillment or performanceof some act or condition

• (pplication of Escrow % -hen the property is

occupied with s5uattersand the seller assumes theresponsibility to eject them

% -hen the seller is gi,entime to ,acate the premisesand escrow is pro,ided toinsure deli,ery within thestipulated period

% -hen title to the propertyhas certain annotationsthat the seller assumes toeffect the cancellation of<


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Option )ontract

• )ontract between seller and buyer

wherein seller! for a consideration known

as option money! binds himself to reser,e

the property for the buyer to purchase

within a stipulated period of time at

specified price


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)ommission "Broker=s Fee#

• Rate % &urchase! $ale or 'oan "?@ of price*

loan# % Exchange "?@ of fair market ,alue# % 'ease "A month rental for e,ery year

or 8 years of contract#

% o legal rate on commission• Re5uisites to be entitled commission<

Broker must be/ % +uly authori6ed % &rocure a ready! will! able buyer % The procuring cause< 3ust be

instrumental in effecting the meetingof minds< % )lose the transaction during the

period of authority % )lose at the price and terms

authori6ed<

• 2old o,er clause

% Entitles the broker tocommission e,en if salewas closed after theperiod of authority!

pro,ided he registered inwriting the name of thebuyer during the periodof the authority

• -hen )ommission is +ue

% Entitlement to the

commission uponconsummation "notperfection# of thecontract


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'isting ,s< Option

Listing Option

>enerally a contractbetween $eller and

Broker

)ontract between $ellerand Buyer

Refers to (uthority to$ell

Refers to Reser,ation toBuy


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Earnest 3oney ,s< Option 3oney

Earnest Money Option Money

$um accompanying anoffer to purchase

)onsideration of anOption )ontract

Forms part of the pricein case of sale

+istinct from the price


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$ales (gency ,s< &urchase (gency

Sales Agency Purchase Agency

(uthority gi,en by theseller

(uthority gi,en by thebuyer

$eller pays thecommission

Buyer pays commission


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&roject $elling ,s< >en Brokerage

ItemProj Selling

General ro!erage

4n house (gents (ccredited Brokers

Seller +e,eloper +e,eloper ot! any real estateproperty

Salary"Allo#ance -ith one

Sales $uota -ith one

Employee%Employer &el

one! acts likeemployee

one! free agent

O''ice Facilities Free Own office Own office

Contract o'Agency

Tiedone! can sell otherproperties

(or!$ell! getreser,ation! +&*Full

$ell! get reser,ation!+&*Full payment

)ocumentation

&egistration+one by de,eloper +one by de,eloper

+oes it for buyer andseller

Commission pon full +& 2igher than in.house pon full payment


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3onthly (morti6ation Factor

• 3(F 0 $i*$.A

• $0 "A1i#n

• i0interest per period• n0number of paying period


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+iscount Factor

• +iscount Factor 0 $.A*$i

• $0"A1i#n

• i0interest per period• n0number of paying period


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3onthly (morti6ation

• 3onthly amorti6ation 0 'oan 7alue x 3(F

brokerage practice

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