[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 multiple real estate listing?
The multiple listing combines the features of the open listing and the Exclusive Right to Sell agreement. The seller agrees that the property will be submitted to a multiple listing group, the members of which are furnished the details of the listed property. When sold, the broker who originated the listing shares the commission with the selling broker.
In what ways a real estate listing agreement may be terminated?
§ Sale of the property
§ Events that prevents performance (ex. Death of the principal or destruction of the property)
§ By mutual agreement or consent of the parties
§ By revocation
If the owner/ seller cancel the listings agreement before the expiration date, the broker is entitled to compensation for the time and money expended in exercising the agency.
Or if the broker has completed the agency assignment with a ready, willing, and able buyer, the owner cannot cancel the agreement to avoid payment of a commission.
§ By expiration of the period for which the agency was constituted.
What is an option? What is the difference between option and listing?
An option is a contract between the seller and the buyer wherein the seller for a certain consideration called the option money reserves the property for the buyer to purchase within a stipulated period of time at a specified price and term.
While a listing is a contract between the seller or owner and a broker, where by the seller/ owner authorizes the broker to negotiate the sale of his property within a certain period of time, at a stipulated price and terms at a stated rate of commission.
What is an escrow?
Escrow is an agreement whereby a contract of sale together with its consideration is deposited with or entrusted to a third party, called an escrow agent, authorizing him to release the said consideration to the seller upon the fulfillment of certain conditions stipulated in the contract of sale, and to deliver the said contract and supporting papers to the buyer upon release of the consideration of the seller.
When will an escrow may be applied in real estate transaction?
§ When the property sold is still occupied by the seller, tenants, or squatters, the balance of the contract price is deposited in escrow, to insure the delivery of possession within the period agreed upon
§ When the certificate of title show subsisting encumbrances which the seller promises to a clear within a definite period, the full or balance of the contract price is deposited in escrow until such encumbrances are cleared by the seller
§ When the building sold is deposited in escrow to be released upon the completion of the building
What is the difference between a hold over clause and a procuring clause in a real estate transaction?
A hold-over clause or safety clause is a stipulation in a listing contract which entitles the broker to a commission even if the sale is closed after the period of his authority has expired, provided that he submitted or registered in writing to the seller the name of the buyer during the period of his authority.
While a procuring clause, means that the broker was solely instrumental, or was the direct and efficient cause in effecting the meeting of the minds of the parties. In short, the broker was the one who procured a ready, willing and able buyer that lead to the execution of the sales contract.
What are the requirements for the real estate brokers to be entitled to a commission?
§ The broker must be the procuring cause of the sale.
§ The broker must hold a valid license as real estate broker issued by the DTI.
§ The broker must prove employment.
§ The broker must meet the purpose of the agency – to find a willing and qualified buyer who is agreeable to the terms of the seller.
What is a real estate client and customer prospect, suspect, and future suspect?
§ Prospect is a person who is in need and qualified to buy, lease, exchange or mortgage real estate.
§ Suspect is one who is willing but without capacity to buy or one with ability to buy but without willingness.
§ Future suspect is one with willingness but without ability to buy may improve his qualification to buy.
What can the real estate practitioners do to surpass real estate consumer expectations and satisfaction?
Consumers today have the information and will personally discount the amount of effort and level of service they see the real estate practitioner offer. The practitioner will be delivering quality service. They will do this by adding value to the information already available to the consumer and by adding value to the home-buying and home-selling transaction. The practitioner will add value in at least five (5) ways.
§ The real estate professional will be sorting through information that is available and giving the consumer quality information that more closely meets the needs of that particular consumer. There is so much information available now to the consumer that the consumer is starting to get overwhelmed. Information will be increasingly available in the future. The astute real estate professional will assist the consumer by “qualifying the consumer’s needs” and then helping them find or giving them the information that meets those needs. Real estate professional used to have to qualify the buyer’s/seller’s needs in buying or selling the home. When they were assisting the buyer, they also had to assess the consumer’s purchasing power. The real estate professional’s job is still the same, but now it also includes giving consumers the information that meets their needs and helping them find the information that is most pertinent to their needs. The practitioner of today and tomorrow will be a buffer around all this information and save the consumer the time, efforts and frustrations associated with sorting through all this information.
§ The real estate professional will be interpreting and integrating the information. In other words, the real estate professional will turn information into usable knowledge. Consumers can get the information on their own. Unless the consumers have been through the home-buying process numerous times, they still need help understanding what that information mean. The real estate professional should not allow the consumer or the availability of all these information in ways beyond their thoughts. You will add value to the relationship by demonstrating your expertise. Consumers who value information especially value someone who can effectively and efficiently use that information. These consumers will more highly value knowledgeable real estate professional.
§ The real estate professional will be adding to this knowledge by showing “wisdom” about the marketplace, the property, the real estate transaction, etc. Wisdom occurs when someone shows significant insight beyond the information. Effectively identify the buyers’/sellers’ needs above and beyond consumers’ awareness of their needs, and then use that information in their home-buying and home-selling experience. For example, note that the buyer really wants a low maintenance property, even though his or her past property was far from maintenance free. Show the consumer the pros and cons of certain information you have or he or she has available that relates to that newly realized need. This is “wisdom.” This is the value-added service.
§ The real estate professional will give true quality service. This means speedily meeting the needs of consumer throughout the entire transaction and after the transaction, etc. Also, the real estate professional will do things that keep the home-buyer and eventual seller emotionally attached to that particular real estate professional. As people move less often and realize that they do not need a real estate professional to help them stay where they’re at, it will become increasingly important to capture those who do not move or people they know in their influence circles who will be moving. Follow-up mechanisms will need to be put in place to effectively meet these needs.
§ The real estate professional in the future will need to offer the consumer all the services the consumer is interested in. A “shopping” list of quality service offered by the brokerage or the agent can be given to the home buyer or seller. Let consumers choose their interests. Because most agents do not like to deal with these ancillary services, it makes sense that brokers offer to service the real estate agent’s client/ consumer on this dimension. The real estate broker of the future will have greater services expected of them by the more knowledgeable and demanding consumer. To effectively compete in the marketplace, real estate professionals should consider being more flexible, being more willing to actually change, being better listeners and being quicker learners.
What is the summary of Real Estate Brokerage practice?
Getting started in Real Estate Brokerage
§ Secure your license
§ Register as sole-proprietorship, partnership, or corporation
§ Business permit from a local government unit where you will hold office
§ Register with the BIR (TIN, VAT)
Securing Listing- the process of soliciting authority to sell, lease, joint venture, etc. over properties from owners.
§ Decide whether to go into general brokerage, project selling (developer based), or a combination of both. The trend now is to focus on a particular market or a specific geographical location.
§ Kinds of properties to choose from- rawland, residential lots, commercial properties, industrial properties, condominium, leisure properties, and memorial lots.
§ As to kind of transaction- sale, lease, joint venture, packaging projects, syndication.
§ Learn some negotiating techniques for getting of listing.
§ Manage your listing-manual or use of information technology
§ Source of listing- relatives, friends, neighborhood associations, civic organization, fellow brokers, realty association, banks, real estate developers, and newspaper ads.
Marketing of Listing
§ Prospecting- generating leads for customers
§ Qualifying- evaluating the capacity, need, and urgency of the customer
§ Presenting- making presentation of possible and suitable property for the qualified customer
§ Tripping- bringing the customer to the site of the property being offered
§ Negotiating- bringing the client and the customer into an agreement
§ Closing, leading the customer and the client to finally sign a contract and make payment.
§ Completing the transaction
§ Documenting and registering
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