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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