real estate principles and practices chapter 9 marketing and selling real estate © 2010 by...

Real EstateReal Estate Principles and Practices Principles and Practices

Chapter 9Chapter 9

Marketing and Selling Real EstateMarketing and Selling Real Estate

© 2010 by South-Western, Cengage Learning


Key TermsKey Terms

Auction

Bill of sale

Counteroffer

Disclosure statement

Earnest money

Equitable interest

Errors and omissions insurance

Home buyer’s insurance

Home warranty insurance

Lease option

Marketable title

Purchase agreement

Right of first refusal

Straw man

Trust account


OverviewOverview

Purchase agreement

Presenting counteroffers

Earnest money deposits

Seller disclosure statement


The Purchase AgreementThe Purchase Agreement

Prequalify buyer

Buyer’s cost estimate

Purchase agreement

Upon acceptance it becomes a contract

Statue of frauds: in writing to be enforceable

Practice of law?

Presented to seller by listing agent


Presenting the OfferPresenting the Offer

Copy to offeror

Presented to offereeUsually by listing agent

If sellers agree – sign acceptance

Copy left with seller

Notify buyer of acceptance

Receives signed copy

Offer may be rescinded any time prior to Offer may be rescinded any time prior to acceptanceacceptance


CounteroffersCounteroffers

Counteroffer: Counteroffer: revokes previous offer with entire new offer

Not a partial acceptance

Available for another offer

Withdraw counteroffer prior to accepting a new offer


Earnest-Money DepositsEarnest-Money Deposits

Purchaser’s deposit

Demonstrates good intent

Placed in broker’s trust account

Credited to buyer at closing

Returned if offer is not accepted


Earnest-Money DepositsEarnest-Money Deposits

Buyer default could result in forfeiture of funds

Disclose in writing prior to presentation of contract

May be split between seller and broker after broker expenses

Interpleader


Trust AccountsTrust Accounts

Clients and customers money must be kept in a trust account

Ledgers & journals

Sales and rents kept separately


Trust AccountsTrust Accounts

Broker entitle to money only after final sale

Interest v. non-interest bearing accounts

Audits


Lease OptionsLease Options

Lease option: Lease option: leasing with option to buy

Purchase within a set period of time

Price and terms defined

Rent may be applied to down payment



Right of first refusal: Right of first refusal: tenant may match any offer owner receives

Tenant is not obligated to purchase

Disadvantage to owner



Tenant must purchase at the end of the lease

Allows time to arrange financing or clear title

Portion of rent may be applied to purchase



Equitable interest: Equitable interest: buyers interest in property once offer is accepted

Assignment is allowed unless specifically prohibited

Straw Man: Straw Man: offer made with intent to transfer prior to closing



Bill of Sale: Bill of Sale: used to transfer chattel

Personal property



Marketable title: Marketable title: free of defects, liens and encumbrances


Sale by AuctionSale by Auction

Auction: Auction: absolute sale sold to the highest bidder

Licensed auctioneerLicensed auctioneer

Absolute: Absolute: sold no matter sold no matter how high the bidhow high the bid

Seller is offerorSeller is offeror


Sale by AuctionSale by Auction

With reserve: With reserve: bid may be bid may be rejectedrejected

Bidder is offerorBidder is offeror

No warranties No warranties exceptexcept

Property is being soldProperty is being sold

Right to sell and Right to sell and transfer titletransfer title


Representing the SellerRepresenting the Seller

Owe fair treatment to the Owe fair treatment to the buyer buyer

Confidentiality to the Confidentiality to the sellerseller

Full disclosure to the Full disclosure to the buyerbuyer



Disclosure statement: Disclosure statement: checklist of inspections and potential problem areas

Seller must disclose all defects

Latent - hidden

Patent - visible



Errors and omissions insurance: Errors and omissions insurance: malpractice insurance

Mandated by many states

Brokers may require the disclosure in non- mandated states


Buyer’s WarrantiesBuyer’s Warranties

HOW: Home owner’s warranty

10 year warranty plan for new homes

Covers defects



Insurance for existing homes

Purchased by buyer or seller

Deductible amount



Protection against financial loss due to damage

Premiums are invested to build reserves

Lender requires a policy Endorsement or rider:

covers additional risk



HO-1: basic

HO-2: broader scope

HO-5: covers all risks except specific exclusions

5 different types of policies


Basic Homeowner CoverageBasic Homeowner Coverage

Fire

Lightning

Windstorm or hail

Explosion

Property removal from endangered premises

Riot

Aircraft

Vehicles

Smoke

Theft

Vandalism

Breaking of glass

Collapse

Falling objects

Weight of ice, snow or sleet

Hot water heating system or appliance

Frozen plumbing

Electrical appliances

Artificially generated current



Tenant insurance for personal belongs

Commercial:Business equipment

Interruption of business

Flood Insurance

Optional coverage

Deductibles



Insurable interest to collect

Rates are in direct proportion to risk

$210 for $60,000 of coverage$210 for $60,000 of coverage

Rate =Rate =210210

$60,000$60,000= .0035 = .0035

or $3.50 per $1,000 or $3.50 per $1,000


Buyers WarrantiesBuyers Warranties

Personal liability from injury to oneself or others

Annual fee

real estate principles and practices chapter 9 marketing and selling real estate © 2010 by...

Documents

cengage learning slide

purchase slide

acceptance slide

new offer slide

owner slide

payment slide

listing agent slide

offer copy