[Basic Knowledge for Brokers Series]
A Real Estate Broker is a duly registered and licensed natural person who, for a professional fee, commission or other valuable consideration acts as an agent of a party in a real estate transaction to offer, advertise, solicit , list, promote, mediate, negotiate or effect the meeting of the minds on the sale, purchase, exchange, mortgage, lease or joint venture, or other similar transactions on real estate or any interest therein.
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What is a Real Estate Salesman?
A real estate salesman is a natural person who performs for and in behalf of a real estate broker under whom he is licensed, any of the functions of a real estate broker, for or in expectation of a share in the commission, fee, compensation or other valuable consideration.
What is a real estate brokerage?
Real estate brokerage is the profession, occupation, practice or calling regulated and/ or governed by MO No.39, Series of 1985; whereby a natural or juridical person acting as an agent of another person, and for and in expectation of a fee, commission or other valuable consideration, negotiates the sale, purchase, lease, mortgage or exchange of real estate or of any interest therein is real estate brokerage.
What are the steps in real estate brokerage?
1. Securing Listings
2. Procuring Prospects
3. Presentation and Demonstration
What is Securing Listing as part of the steps in real estate brokerage?
§ Looking or searching for properties for sale, mortgage or exchange.
What is Procuring Prospect as part of the steps in real estate brokerage?
§ Looking for persons who want to buy, sell, lease mortgage or exchange real estate;
What is Presentation and Demonstration as part of the steps in real estate brokerage?
§ The process of showing the property to a prospective buyer, lessee or exchanger by underscoring its favorable physical qualities and such other benefits and advantages as to arouse the desire to buy, lease or exchange.
The process of presentation and demonstration generally involves the following procedures:
§ Preparation of sales or lease materials such as plans, price lists, brochures, maps, etc., and a check list of data about the property;
§ Organization of selling points;
§ Anticipation of possible objections;
§ Arrangement of appointment;
§ Selection of the best route to give the most favorable impression of the neighborhood
What is Negotiation as part of the steps in real estate brokeragee?
§ The process of reconciling or bringing together the opposing views of the parties;
§ The process whereby through mediation of the broker, the minds of the parties meet on mutually acceptable price or consideration, terms and other conditions.
What is Consummation as part of the steps in real estate brokerage?
§ The process whereby the consideration is paid, the proper document is executed, the commission is paid, the instrument is notarized, filed and registered with the register of deeds concerned.
When is commission due?
In the absence of any stipulation, the commission is due and payable in full upon the consummation of the contract, even if the price is to be paid in installments only.
What are the essential elements of real estate brokerage?
§ Employment of the broker as an agent – A real estate broker acts on behalf of his principal without acting on his own name and without entitled to the possession of the property which is the subject of the transaction
§ Function - a broker must perform only specific functions;
§ Service rendered – a broker must be the procuring cause of the sole instrumentality in effecting the meeting of the minds of the parties in the transaction during the period of agency.
§ Compensation – For services rendered, a real estate broker is paid a fee, commission or other value consideration.
What is the difference between Real estate as a profession and real estate as business?
§ Real Estate as profession refers to the practice of real estate brokerage in which a duly licensed real estate broker acts as an agent of another person, and for a fee, commission, compensation or other valuable consideration, negotiates the sale, purchase, lease mortgage or exchange of real estate, and/ or renders appraisal reports or advise on real estate matters. The practitioner does not have any propriety interest on the real property involve, neither does he use his own funds in the process.
§ While real estate as a business refers to the activities of a real estate dealer engaged in the buying, selling, exchanging, leasing or renting, financing or developing real properties with use of his own funds, with the main purpose of delivering profit or gain from the processor or activities.
What is a real estate listing?
§ Listing is a contract between a property owner and a real estate broker where the property owner authorizes the real estate broker to sell or lease or mortgage or exchange the former’s property, as the case maybe, wit in a certain period of time, at a certain price and terms, and a certain fee or commission.
What are the contents of real estate listing?
§ Description of the property, i.e., Block No., Lot No., TCT No.
§ Lot area and technical description of lot
§ Description of improvement, if any
§ Mortgage, if any
§ Commission rate
§ Terms of authority
§ Hold-over clause, if any
§ Authority to receive earnest money
What are the different kinds of real estate listing?
As to Form
§ Verbal – where the authority is orally given;
§ Written – where the authority is given in writing.
As to the Nature of Function of the Broker
§ Sales agency – where the owner or principal gives authority to a real estate broker to look for a buyer and negotiates the sale of his property;
§ Purchase agency – where a principal gives authority to a real estate broker to look for a certain property and negotiates the purchase thereof;
§ Lease agency – where a principal gives authority to a real estate broker to look for prospective tenant or lessees, or where a prospective tenant or lessee gives authority to a real estate broker to look for space to be rented or leased;
§ Exchange agency – where a principal gives authority to a real estate broker to negotiate the exchange of his property for another property;
§ Loan agency– where a principal gives authority to a real estate broker to look for a money lender and negotiates for a loan.
As to Exclusiveness
§ Non-Exclusive or Open Listing – where a principal gives authority to two or more real estate brokers to negotiate the sale of his property. The agents may act simultaneously but the principal is obligated to pay commission only to the broker who successfully procures a ready, willing and able buyer. If the principal himself sells the property without any aid or assistance from the authorized brokers, he is not obliged to pay any commission. However, should any one of the authorized be in any way a procuring cause in the transaction, the principal is obliged to pay the commission agreed upon.
§ Exclusive Listing - a listing wherein only one real estate broker is authorized to negotiate the sale of the property of the principal.
§ Exclusive Agency Listing – where only the broker is specifically authorized to act as exclusive agent of the principal. However, the principal retains the right to sell the property himself without obligation to pay commission to the exclusive agent if he makes the sale himself, unless another broker makes the sale, or that the exclusive agent acted as a procurement cause in the transaction, whereby he is entitled to the commission agreed upon.
§ Exclusive Right to Sell – this is a cooperative arrangement among members of a real estate board or organization, whereby each member brings his real estate listings to the attention of the other members so that if a sale is made, the commission is divided between the member who submitted the listing and the member who made the sale, with a small percentage previously agreed upon deducted from their respective commissions and paid to the multiple listing service of the real estate board or organization.
As to Basis of Commission
§ Percentage Listing - the commission of the broker is a pre-agreed percentage of the total compensation
§ Net Listing - the compensation of the broker depends on the “overprice”
What are the steps for securing real estate listing?
§ Contracting owner-seller
§ Inspection of property for details necessary for selling (location, size, improvement utilities, etc.)
§ Determine reasonableness of seller’s asking price taking into consideration the following: (1) Character of the neighborhood where the property is located; (2) Favorable and unfavorable physical features of the property which may affect its price; and (3) Market data on nearby or comparable properties as obtained from registered sales, offering in the Multiple Listing Service, advertisement, etc.
§ Examination of titles and other documents as to liens, encumbrances, restrictions, and information which may affect salability and value of the property.
§ Formalizing of listing contract.
§ Prepare selling presentation which includes plans, pictures, maps, etc.
What are the sources of real estate listings? Where can it be obtained from?
§ Personal contacts, such as friends, relatives, fellow brokers, associates, affiliates in civic clubs, professional or religious organizations;
§ “For Sale” signboards of owners;
§ Acquired assets and real estate departments of banks and other financial institutions;
§ Classified ads and newspaper advertisements;
§ Legal notices, such as foreclosure proceedings, extrajudicial and judicial partitions.
What is a real estate listing contract?
Listing contract is an agreement between the broker and the owner of real property whereby the owner of authorizes the broker to negotiate for the sale, lease, joint venture, exchange, or mortgage of his or her real property for a commission or any valuable consideration.
What are the contents of a real estate listing contract?
§ Date of the authority
§ Name and address of the broker, license number
§ Functions to be performed or service to be rendered by the broker
§ Type of listing
§ Description of the property; to include location, kind, title, area of land and improvement, if any; utilities included, if any; liens and encumbrances, if any.
§ Price and terms
§ Duration of the authority
Note: Hold over clause is a provision in the listing contract which entitles the broker to a commission even though if the sale is consummated after the period of his authority provided that the buyer has been registered by him with the owner/ seller during the period of his authority.
§ Commission or compensation of the broker and terms of payment
§ Name, address and signature of the owner/seller
§ Acceptance by the broker
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