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Real Estate Vocabulary (161 - 169 of 300) Real Estate Exam Prep Videos - YouTube
Channel: The Real Estate Classroom
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in today's real estate exam prep video
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we're going to continue our vocabulary
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word series those important words you
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have to know for your real estate
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licensing exam and we're starting right
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now
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[Music]
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hey everyone my name is paul vachesky
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and welcome to the real estate classroom
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youtube channel where my mission is
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simple to help you pass your real estate
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exam the first time and man those key
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real estate
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vocabulary terms go a long way of you
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achieving that goal today we're going to
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do 161 through 169 of 300
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and it starts with our very first word
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our term it's independent contractor now
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99.9999
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of all real estate professionals in the
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united states is an independent
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contractor if you're an independent
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contractor it simply means that you are
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in one category and that is
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self-employed you have your own business
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you are your own business
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really not unlike if you went out and
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started a yogurt franchise right you you
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are responsible for your own schedule
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your own taxes everything
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key thing you have to remember about an
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independent contractor in relation to
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real estate is number one
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you schedule your own work schedule
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uh your broker cannot tell you when you
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have to be in the office when
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uh you gotta show up to do prospecting
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they have no control over your schedule
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one whatsoever number two is your broker
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can't determine your dress code for you
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number three you pay all your own tax
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liabilities so
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you know if you're an employee your
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employer
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is going to have to pay certain parts of
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your your tax liability so for example
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your your fica they pay half and you pay
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half here you got to pay the whole thing
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uh and you have to pay estimated taxes
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and those type of things
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your broker cannot mandate that you
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attend certain training events they
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can't mandate that you come to um
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sales meetings those type of things
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and then you file as an independent
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contractor most of you are going to file
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what's called a schedule c
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on your 1040 tax return now if you are
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if you live in a state where that state
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allows you to to be a real estate
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professional and operate as a
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s corporation or a limited liability
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company
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then there's a a different form point is
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here is you are responsible for your own
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business tax filings that is an
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independent contractor
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number 162 a comparable market analysis
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in the business we refer to it as a cma
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now a cma is in basically just an
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estimate of the home's
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current
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market value that is so important
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now market value is defined as a price
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at which a willing buyer will buy in a
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willing seller will sell
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and we come up with this current market
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value based on
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homes
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that are similar to our uh property that
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we're trying to determine value on uh
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that have sold recently we use
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you know average market times for that
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area the number of offers that we're
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seeing in that area those type of things
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which does differ from
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a fee
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based appraisal report
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lot of times
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appraisers will argue that a cma really
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should be done the same way as a cma
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or i'm sorry an appraisal and that's
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simply not true so the best way to
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describe it is a fee appraisal
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is a history report of the area where
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they're looking at comparables that have
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sold within the last six months
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a cma
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is the market value today and the agent
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is going to use a lot of a lot of
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different points of data to determine
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that all right um
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it's a little bit more up to date as far
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as valuation than a than an appraisal
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and what we're seeing in today's market
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in many markets across the country is
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there is a disparity there is a
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discrepancy between
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what
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buyers are willing to buy and sellers
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are willing to sell and what the
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ultimate appraisal comes back at as far
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as valuation
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and we're finding that we're as agents
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having to deal with that on a regular
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basis
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why do we do cmas number one we do a cma
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or a comparable market analysis to
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determine what we want to list a home
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for on the market and also buyers agents
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should be using them as well
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you know we want to make sure that our
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our buyer isn't paying more than the
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home is worth and if they are which
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they are in many markets we are at least
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advising them accurately right so that's
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the point of a comparable market
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analysis
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number 163 is a listing contract what is
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a listing contract well i actually did a
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video a really good video on the
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different specific
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listing contracts that are out there if
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you want to check that out here's a link
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up here in the upper right hand corner
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to that video so a listing contract is
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essentially an employment contract
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between the listing broker and the
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seller that's very important that you
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remember that for your real estate
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licensing exam all right
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now sometimes the real estate exam will
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ask you or they'll reference the
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brokerage firm and that's fine but just
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remember every brokerage firm
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has one designated broker that operates
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it so the listing contract is between
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the broker the designated broker and the
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seller now
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in most areas of the country
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the the the designated broker doesn't go
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on on listing appointments it is the
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agent that goes out and the agent signs
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all the listing contracts and the
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listing documentation and the reason
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they can do that is because there is an
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agency relationship
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between the
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person or associate broker and the
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designated broker and it's a general
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agency relationship and remember from
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that video we discussed where under
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general agency then the agent can speak
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on behalf of the broker and sign those
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documents
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but ultimately in the end the listing
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contract is between the broker and the
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seller that's the first thing you have
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to know number two
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it outlines
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um all the terms and conditions
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of
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that sale meaning
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what is the list price at what point is
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the or what price is the seller willing
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to offer the property under what terms
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and conditions are they willing to offer
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the property for sale now that may end
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up differing from the final offer that's
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agreed to between the buyer and seller
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in the purchase contract but this is
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what are what is the seller willing to
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offer
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uh what terms are they willing to offer
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the market
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to sell their property um in exchange
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then the real estate broker receives a
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commission
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now let's talk about four of the main
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types of listing contracts that you need
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to know for your real estate exam number
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one is an exclusive right to sell
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that's probably
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99.9 of all of the listing contracts
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that realtors and agents enter into with
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their clients but
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the important thing you have to remember
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under this type of listing contract the
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seller is required to pay the listing
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broker a commission regardless of
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where the buyer comes from or who
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procured the buyer so
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uh it could be where the seller does
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their own open house on a sunday there
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is a buyer that comes through
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that open house and maybe the seller sat
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down with that buyer and wrote up the
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contract
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basically didn't even use the listing
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agent to write up this contract once
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that buyer and seller agree
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using that homemade contract
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guess what the broker still gets paid a
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commission even though they weren't
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involved in it
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that's because exclusive right to sell
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the seller is obligated to pay a
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commission no matter who or where
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that buyer is procured
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the next type of listing is what's
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called an exclusive agency now that is
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sometimes confusing right remember
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exclusive agency simply means an
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exclusive listing contract it is a type
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of listing contract and so often
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students get it confused with agency so
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please don't do that there's really no
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such thing as an exclusive agency
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relationship but there is an exclusive
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agency listing contract
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this allows the listing broker to market
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the property and if through their own
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through their own efforts procure a
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buyer then the listing broker is
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entitled to a commission and that
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includes things like putting uh the
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uh
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the details of the listing out on the
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multiple listing service or out on
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zillow trulia those type of things but
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it also allows the seller
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to retain the right that if they procure
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their own buyer then they don't have to
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pay a commission so
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maybe in reality the problem with an
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exclusive listing agency
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is
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let's say for example the buyer
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sees an ad on social media
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that the broker put out
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so they drive by the house
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the seller had put a sign out in the
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front yard that says that they're gonna
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do their own open house sunday from one
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to four so
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sunday that buyer
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then comes through the open house and
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then the seller writes up the offer
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so who procured the buyer was it through
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the efforts of that social media ad that
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the broker put out or was it because of
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the
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uh the open house that the seller did
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that is the problem with exclusive
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agencies
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you don't have to go that deep for the
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real estate exam all you have to know is
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under exclusive agency
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the broker gets a commission if they
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procure the buyer the seller does not
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have to pay a commission if they
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procured the buyer
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number 166 an open listing this allows
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the seller to hire as many listing
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brokers as they want and only the broker
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that produces the buyer is entitled to
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the commission so let's say the the
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seller goes out and
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and hires company a b and c
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and a b and c they have marketing they
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put it out on the mls out on zillow and
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all of that
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let's say company f an outside
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cooperating broker
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they
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have a buyer they call
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company a listing company a to schedule
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the showing and then they decide they
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want to write an offer so they submit
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the offer to listing company a
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and the offer comes together and it goes
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to closing so
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listing company a would be the company
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that gets paid the commission because
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they procured
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that buyer
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number 167 a net listing now
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in many states net listings are not
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legal
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i'm in nebraska and we are one of the
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few states where net listings still are
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legal
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so a net listing is where the broker
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agrees to accept a commission
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or anything above a reserve purchase
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price as the commission
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so let's say that the seller calls
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company a
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then says
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i want to sell my house
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i need to net a hundred thousand dollars
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anything above and beyond that is your
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commission
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so the uh the listing broker lists it
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for 125 000
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and uh a deal comes together it goes to
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closing the seller
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gets their net of a hundred thousand
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and then the broker gets to keep the
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difference
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uh in as a commission again these are
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not legal in most states so make sure
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that on your state side of your exam
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when you're studying for your state side
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that you know whether in your state a
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net listing is legal or not number 168
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the multiple listing service
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uh it's commonly referred to as the mls
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and the multiple listing service is a
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tool to help listing brokers find
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cooperative brokers
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that are working with buyers to help
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them sell their their listing okay now
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the key thing to remember here is only
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members of the national association of
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realtors have access to the multiple
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listing service
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all right
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if you don't know
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you need to know that
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everyone is a real estate licensed agent
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but not everyone is a realtor
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realtors are members of the trade
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association called the national
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association of realtors
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many licensees are not members
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you have to know the difference but only
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realtor members have access to the
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multiple listing service
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and then last but not least for this
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video is the sherman anti-trust act and
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i did a previous video where we really
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dove deep into the sherman antitrust act
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you might want to
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check that out so the anti-trust act
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it impacts many many industries but how
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it impacts the real estate industry is
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what i have on your screen it prohibits
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competing brokers real estate
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associations and governing bodies
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and
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multiple listing services from agreeing
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to
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price fix boycott
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allocation of customers or markets and
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tie-in agreements so
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what i mean by that is basically if two
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or more
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companies
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or
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let's say we have a local board of
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realtors and there are a hundred members
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if two or more of those members
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conspire that's what we're talking about
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basically if two or more parties or
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brokers or you know organizations they
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conspire to do price fixing group
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boycotting allocating customer mark
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customers and markets or tie-in
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agreements then that's an anti-trust
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violation so let's look at each one of
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these specifically number one is price
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fixing
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if
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let's say two brokers within a market
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maybe they're maybe they're the majority
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shareholders so if you combine the two
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they make up a majority of the market
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share that's not a requirement
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but this is where typically we've seen
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these issues where
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broker a broker b together they own or
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they control sixty percent of the local
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market they get together they conspire
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and say if you only charge seven percent
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on your listings we'll only charge seven
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percent
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therefore we're going to be guaranteed a
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seven percent commission commission that
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is price fixing all right
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group boycotting is where two or more
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brokers work to get together and say we
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don't like
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company a
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and so let's try to put them out of
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business or reduce their market share or
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somehow penalize them the reasons don't
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matter
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but let's say that two brokers don't
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like this third broker so they they all
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agree to boycott this particular
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company that is group boycotting and it
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is illegal under the antitrust laws
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so the next one i want to talk about is
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allocating customers or markets and
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where we have seen this typically and
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historically is let's say we have two
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major players in a local market company
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a and company b
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so company a and b agree they remember
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they conspire they agree that any any
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properties
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south of main street is going to be
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companies a
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jurisdiction any
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housing or real estate transactions
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north of main street is company b's area
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of operation and they promise not to
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poach in each other's
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territories that would be an example of
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allocating customers or markets and then
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the last one is what we call a tie in
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agreement
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now this doesn't have to be a con two or
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more parties conspiring to do this and
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the most common areas that we really see
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this in the real estate
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world is where a single agent one agent
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they go to a seller and they say listen
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normally i charge seven percent in
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commission but if you agree
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to guarantee that you will use me on the
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buy side of the transaction then i will
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reduce the listing commission to let's
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say four percent
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so the listing agent is going to take a
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four percent listing with the guarantee
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that the seller is going to use them
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when they buy because remember they're
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going to sell a house and then they have
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to buy a house that is considered a tie
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in agreement and those are illegal
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in real estate because they violate the
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sherman anti-trust act now if you're
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going to continue studying check out
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this video right here i highly recommend
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it if you have not subscribed click the
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little circle to my left comments and
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questions down below and share this
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video see you all next time
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