CA_Principles_07[1]

CA_Principles_07[1] - Principles of California Real Estate...

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1 Lesson 7: Types of Real Estate Contracts Principles of California Real Estate » The types of contracts real estate agents commonly encounter include: listing agreements buyer representation agreements purchase agreements land contracts options leases Types of Real Estate Contracts Listing Agreements » Listing agreement : Written contract between property seller and real estate broker. Sets forth parties’ rights and responsibilities, for the sale of the property. Parties are seller and broker (not salesperson). Only broker can contract directly with public for brokerage services.
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2 Listing Agreements » A listing agreement creates an agency relationship between the broker and the seller. The broker is required to act in the best interests of the seller, pursuant to their contract. Earning a Commission » In a listing agreement, seller agrees to compensate broker for services, usually by commission (also called brokerage fee ). Earning a Commission Requirements » In California, a broker can’t sue a seller to collect a commission unless they had a written listing agreement. » The broker must also be properly licensed at time services rendered, and have fulfilled conditions in listing agreement that describe circumstances for payment.
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3 Earning a Commission » A listing agreement can make payment of a broker’s commission dependent on any lawful conditions agreeable to broker and seller, e.g. “no sale, no commission.” » However, certain standard rules generally apply to the payment of most brokerage commissions. Earning a Commission » Generally, listing agreements require the seller to pay the listing broker’s commission only if a ready, willing, and able buyer is found during listing period. Ready, willing, and able buyer Earning a Commission » Ready and willing : A buyer is considered “ready and willing” if she makes an offer that meets the seller’s stated terms, e.g. price, closing date, financing and others. » Able to buy: A ready and willing buyer is “able” if they have the capacity to contract and financing to complete purchase. Ready, willing, and able buyer
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4 » If offer meets all of seller’s terms, broker is usually entitled to commission, even if seller chooses not to accept it. » Broker is generally entitled to commission if buyer makes offer on terms in listing agreement OR other terms seller accepts. Earning a Commission Ready, willing, and able buyer Earning a Commission Ready, willing and able buyer » Sometimes the seller and broker disagree as to whether a buyer was ready, willing and able. » In California, a court will presume this is true if a written purchase agreement was signed (even if buyer later defaults). Ready, Willing, and Able Buyer
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This note was uploaded on 09/06/2011 for the course FI 365 taught by Professor Staff during the Spring '11 term at S.F. State.

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CA_Principles_07[1] - Principles of California Real Estate...

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