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Agency Law and Real Estate License Law Duties

• An agent owes a principal the duties of loyalty/confidentiality, obedience, accounting, disclosure, skill, care, and diligence, remembered as OLDCAR or LOADS.
• A fiduciary relationship is when someone acts for another in a position of trust, obligated to act in the other's best interest, prioritizing their interests over their own.
• Violating Agency Law also violates Real Estate License Law.
• Consequences for violating Agency Law include real estate license revocation or suspension, civil liability, and loss of commission.
• The Real Estate Commission cannot fine a broker for violating Real Estate License Law.

Material Facts

• Material facts categories: facts about the property itself, facts directly related to it, facts affecting the principal's ability to complete the transaction, and facts of special importance to a party.
• Example of facts about the property itself: HVAC not working.
• Example of facts directly related to the property: state-approved plans for a four-lane bypass nearby.
• Example of facts affecting the principal's ability to complete the transaction: the seller unable to convey clear title
• Example of facts of special importance to a party: current zoning won't permit a buyer's intended use.
• Death or murder on a property is not a material fact.
• A convicted sex offender in a neighboring property is not a material fact.
• A gravesite on a property is a material fact.
• A property believed to be haunted is not a material fact.
• A property located in an airport approach flight path is a material fact.
• A seller behind on mortgage payments is not a material fact
• A listing broker cannot withhold a detrimental material fact from the buyer.
• A broker must obey a seller client's instruction to withhold a material fact.
• A broker cannot advise a buyer on how to take title to a property.
• A listing broker cannot disclose to a buyer how much the seller will accept for the property.
• A buyer agent cannot withhold information about the buyer's inability to obtain funds to purchase the property.
• A buyer agent must disclose material facts to the seller.
• If a material fact is public record, the listing broker still has to inform the buyer or seller of that fact.
• Limited-service agreements do not remove the broker's requirement to discover and disclose material facts.

Doctrine of Caveat Emptor

• Caveat Emptor means "Let the Buyer Beware"; the seller has no affirmative duty to disclose known property facts to prospective buyers.
• North Carolina adheres to the Doctrine of Caveat Emptor.
• In North Carolina, sellers do not have to disclose material facts to buyers.
• Sellers in North Carolina do not have to disclose anything on the RPOADS.
• Buyers in North Carolina may not be able to determine a property's condition from the mandatory property disclosure form.
• Sellers are not liable for damages if they don't lie on disclosure forms.

Agency Disclosure

• Brokers present the Working with Real Estate Agents Disclosure at first substantial contact, not initial contact.
• Information that indicates that first substantial contact includes confidential information that could harm an individual in a negotiation. This includes financial, family, job information, motivation for buying or selling, requirements to buy or sell, specific needs, etc.
• Review of the WWREA Disclosure is not needed in all real estate transactions.
• The WWREA Disclosure is used only in all sales transactions (residential and commercial) but not in lease transactions.
• When presenting the disclosure, the broker must review it, request a signature from the buyer or seller, and provide a copy of the signed disclosure.
• After disclosure, the buyer must decide the type of agency relationship they want with the broker.
• A broker can work with a prospect who refuses to sign the disclosure.
• Before disclosure at an open house, you can give the price, age, or features of the property, and any other published information.
• The WWREA Disclosure does not need to be reviewed with every prospective buyer at an open house.
• Before providing brokerage services, a broker should review the WWREA Disclosure with a prospective buyer.
• If a buyer doesn't want to be represented by a broker, the broker can work with the unrepresented buyer as a seller subagent, if the company's policy allows.
• If a seller subagent broker with Firm A wants compensation when the buyer is interested in a listing by Firm B, and Firm B doesn't offer compensation to seller subagents, the buyer should be referred to a broker affiliated with the listing firm, and a referral fee requested.

Do Not Call Registry

• When prospecting, brokers can call people not on the Do Not Call Registry, businesses, people with prior business relationships (up to 18 months), inquirers (up to 3 months), those giving express permission, and those with personal relationships with the broker.
• Brokers cannot call those on the Do Not Call Registry or the company's do not call list.
• A broker can call a FSBO seller when acting as a buyer's agent to obtain property information even if the seller is on the Do Not call Registry.
• Bulk emails and advertising emails are allowed as long as a prominent opt-out option is clearly offered.
• The broker can call someone they had a previous relationship with to solicit business.
• The broker can call someone they had a previous relationship with to solicit business.
• The broker can call someone they had a previous relationship with to solicit business.
• The broker can call someone they had a previous relationship with to solicit business even if the previous client is listed on the Do Not Call Registry for 18 months

Prelisting Meeting

• At the prelisting meeting, the seller should provide the deed (to verify property and legal descriptions), survey (to check boundaries, acreage, and encroachments), restrictive covenants and HOA information (to answer questions about the HOA, dues, and assessments), and balances due on mortgages and liens (to verify mortgage status and balances and to determine foreclosures).
• The seller needs to provide the balances on existing mortgages to determine if there is a potential short sale or imminent foreclosure.
• The broker does not need a copy of the seller's homeowners' insurance policy.
• When preparing for a prelisting meeting, the broker should provide the listing agreement to review, WWREA Disclosure, RPOADS (if applicable), MOG Disclosure (if applicable), Lead Based Paint Disclosure (if applicable), property listing data sheet, and sample contract
• The seller(s) should complete the RPOADS and MOG Disclosures.

Misrepresentation and Omission

• Misrepresentation of a material fact includes communicating incorrect information, verbally or writing.
• Omission of a material fact includes not disclosing information that should have been disclosed.
• Misrepresentation or omission is willful when it is intentional.
• Misrepresentation or omission is negligent when it is unintentional or from a lack of discovery.
• Communicating unverified information from the seller can make the listing agent guilty of negligent misrepresentation.

Property Disclosures

• When reviewing the RPOADS with the seller, the listing agent advises disclosure, helps understand it, keeps it accurate, and delivers it.
• The listing agent does not fill it out for the seller.
• The buyer does not have to get the RPOADS or MOG Disclosures before a showing.
• The buyer should get the RPOADS or MOG Disclosures before making an offer.
• If the buyer doesn't get the disclosures by the time an offer is made, they can rescind the contract within 3 days.
• The seller's information on the RPOADS and/or MOG Disclosures does not remove the agent's need to discover and disclose.
• If the seller has disclosed to the listing agent a property defect or previous sale of MOG rights, but says otherwise on the disclosure forms, the agent must disclose it anyway.
• The broker must disclose facts whether or not the seller wants them to.
• On a previous MOG lease, the fact that minerals, oil, or gas were not discovered or recovered does not impact the validity of the lease.
• The broker must disclose the transfer of MOG rights by a previous owner, even if the seller says not to.

Residential Square Footage

• The square footage of a one-story home is measured from the exterior.
• The area occupied by stairs is included in the area for both the first floor and second floor.
• The minimum wall height for a room with sloped ceilings to be included is 5',
• The basic requirements for a space to be heated square footage are: Heated, finished and accessible from other heated living areas.

Lead Based Paint

• Target housing for possible lead-based paint disclosure is the sale or lease of most residential housing built before 1978.
• Basic disclosure requirements: provide the EPA booklet, complete the Lead-Based Paint Addendum signed by all parties, and allow the buyer to do an assessment (which they can waive in writing).
• The seller does not have to certify that the house is lead base paint free.

CMA/BPO

• Any full broker can be paid for a CMA/BPO. Provisional Brokers cannot be paid
• When doing a CMA/BPO for a fee, the broker has to personally inspect the property, unless the client waives this requirement.
• A CMA/BPO cannot be used for making a mortgage loan.
• A CMA/BPO will not determine market value. It can only determine the probable price of the space.
• The seller has the right to expect their broker to advise them on the probable price of the space.
• A broker cannot do an appraisal.
• The owner does not have to research the probable price of the space.
• The probable selling price can be reported as a single figure or a range (as long as the high side of the range is not more than 10% higher than the low side).
• The property does not have to be listed for the probable price indicated by the CMA.
• To allow negotiation, it should be listed slightly higher than the probable price.
• The listing price should ensure the property is not underpriced and allow for some negotiation.
• The Real Estate Commission does not require a form to be use when giving a CMA/BPO.
• In describing the results of a BPO/CMA, CANNOT use the terms value or worth.
• Factors considered when selecting comparables: date of sale, type of property, location, construction/design features, square footage, age, neighborhood, acreage.
• If similar properties are available, a short sale property CANT be used as a comparable.
• Cant sell due to job transfer being used when comps are available to use.
• Comparable properties should be sold within in the last 6 months.
• The seller agent can give a buyer the data prepared to list the property.
• In a clients case, the CMA can be shared.
• If the buyer is customer the data gives an estimate of data and gives the recent sales.

CMA/BPO (continued)

• Methodology used in performing a residential or vacant lot is Sales Comparison Approach.
• Methodologies used doing income properties is Income Capitalization Approach or Gross Rent Multiplier Approach.
• To give the probable selling price by income capitalization its: Projected annual gross income minus vacancy and collection losses equals effective gross income minus operating expenses equals net operating income (NOI). NOI divided by the capitalization rate equals the probable sales price of the property.
• gross rent multiplier method: Multiply the properties gross income by the gross rent multiplier.

Real Estate Problem

• A 10-unit apartment building has 7 units that rent for $800 per month and 3 units that rent for $650 per month. Vacancy and collection losses for the past year have totaled 5% of gross potential income. Annual operating expenses are $51,000. Estimating value = $350,700
• A 6-unit apartment building has 3 units that rent for $1200 per month and 3 units that rent for $1050 per month. Vacancy and collection losses for the past year have totaled 8% of gross potential income. Annual operating expenses are $68,000. Estimating value = $65,200

Listing Agreements

• Listing agreements can never be open-ended with no termination date.
• Listing contracts do not have to be exclusive. Open listing agreements are nonexclusive.
• A broker-in-charge doesn't have to sign the listing contract for a provisional broker.
• If someone is married, the listed property owned also has to be signed by the spouse.
• NC Realtors and not at the NC Real Estate Commission provides the pre printed agreements.
• Should the individual license is the one the individual broker is signing the firm to agreement.
• The sellers need to obtain their signed copy within 3 days.
• No one is able to cell to the exclusive to right listing.
• Can't fill in TBD.
• Limited listings do not call for a broker.

MLS (multiple listing services)

• The multiple listings must be either exclusive and limited
• Non exclusive would not be accepted.
• For incorrect information is always the holders responsibility.
• cant avoid

Commissions

• Its determined by who is paying the commission
• With the firms policy, negotiations are good.
• Response the similar fees "thats that my company charges."
• No one determines is at the country.
• The limited are done at the seller.
• No market rate and standard fee.

Trigger

• Terms such as a down payment or a payment.
• HOA Dues don't require regulation.
• Payments under $800 (true)
• 4% Closing costs.

Unrepresented Seller

• When listing for a client required a real estate agent.
• Provided NO LATER than the selling aspect.
• The broker to the seller must have.
• Yes on the property.
• Advise the seller.

Working with Buyers

• Its an agreement if how the buyer wants to.
• Its exclusive if it an mls.
• If no you don't know the agency.

Practicing Law

• Recommend.
• Subdivision.
• Select service.
• Refer to attorney.

Prequalifying the Buyers

• Housing is including
• Personal debts inclue
• What is not? Phone bills, groceries etc.

Dual Agency

• It the firm.
• Provisional Yes Agent.
• Disclosures.

More Dual Agency

• What situation is not closed when agreed? If the agent is brokering or signing.
• They aren't acting in the first place.
• Yes its always right.
• No automatic agent.
• If you can the Yes be you
• Agreements.

Property Management

• How many real estate agreements for compensation?
• Can non salaries work can they show? yes
• The amount and agreement and fees.
• What property manager should do? Plan to operate a manager or budget or help.

Agreements for selling

• How do they sale once.
• Yes, Both firms.

License Agreement

• 30 hours.
• Inactive after.
• 8 Hours to get the class.
• Always be inactive til done.
• Expired wont let you renew.