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• Direct Sales
• FSBO
• Builders
• Resort Properties
• Sales by Brokers
•Realtors
• Sales by Dealers
• Portfolio
• Flipping
Sale of Real EstateSale of Real Estate
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Two Types of AgentsTwo Types of Agents
• Broker
A broker is licensed to act on their own behalf and hire and supervise others in business
• Sales Person (Real Estate Agents)
Licensed but must work for a broker
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Missouri Real Estate LicenseMissouri Real Estate License
• Be 18 years of age
• Be of good moral character
• Satisfactory completion of a course of study in real estate from a school accredited by the commission
• Course of study requires 60 hours of classroom instruction on designated topics
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Where Do Buyers Where Do Buyers Come From? Come From?
• In town buyers
• Agents – 50%
• Yard Signs – 17%
• Newspaper Ads – 12%
• Other – 21%
• Out of town buyers
• Agents – 61%
• Yard Signs – 15%
• Newspaper – 11%
• Other - 13%
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For Owners Selling PropertyFor Owners Selling Property
• Used only an agent to sell home – 70%
• First tried to sell themselves but then used agent – 9%
• Sold home themselves without agent – 14%
• First listed with an agent then sold property themselves – 5%
• Other purchase options – 2%
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AgencyAgency
• Designated Agency Law
• Sept 1st 1997
• Allows different types of agency
• Agent can be:
• Buyers Agent
• Sellers Agent
• Dual Agent
• Transaction Agent
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Brokers ObligationsBrokers Obligations
• Tell the truth
• Disclose all material facts
• If they knowingly make false statements or conceal a material fact that is considered misrepresentation and can be sued under fraud statutes
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Fair Housing Act of 1968Fair Housing Act of 1968
• Bars any form of discrimination applies to landlords, sellers, brokers and agents:
• Law covers race, religion, color, national origins and sex/gender.
• Added recently age, #of children and disability.
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Broker CommissionsBroker Commissions• Changed since 70’s
• All brokers use to charge the same commission
• Real Estate Board set commissions
• Federal Trade Commission stepped in and sued the boards for price fixing.
• Today commissions are negotiable
• Sliding Scale (Time or Price)
• Flat Fee
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Listing ContractsListing Contracts
• Open Listing
• Exclusive Agency
• Exclusive Right to Sell
• Net Listing
• Net Profit = Price – Commission(Price) – Closing Cost
• Auction
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Mortgage FinancingMortgage Financing
TWO KEY DOCUMENTS
• Promissory Note
• Deed of Trust
Advantage to having two instruments gives lender more options that they can take against the borrower.
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Mortgage – Transaction between lender and borrower
Deeds of Trust – 3rd party transactions: Borrower, Lender and Trustee
• Provides greater protection for lender
• Conveys title of property to a trustee, who holds it as security for the debt
• Empowers trustee to foreclose on your house
Deed of Release – Recorded by trustee when loan is paid off, showing debt has been paid
Mortgages Cont.Mortgages Cont.
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Mortgage ControversiesMortgage Controversies
• Pre-payment Penalties
• Lender charges 2 – 5% fee if mortgage is paid off early
• Due On Sale Clauses
• In every deed of trust and mortgage
• If you sell the property you must pay the loan
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FNMA CovenantsFNMA Covenants
• Escrow Deposit
• Borrower Must Insure Property
• Borrower Must Maintain Property
• Inspections
• Negotiated Covenants
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Types of MortgagesTypes of Mortgages
• Conventional
• Open-end
• Package
• Blanket
• Budget
• Government Sponsored
• FHA
• VA
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FHA CharacteristicsFHA Characteristics• Low Down Payment
• Higher Risk Borrowers
• 2.25% Insurance Premium
• Monthly Insurance Premium
• Interest Rate Varies with Market
• Most are fixed rate mortgages
• Loaned Monies come from Financial Institutions
• Loan Limits
• Assumable
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VA CharacteristicsVA Characteristics
• Guaranteed by Veterans Administration
• Created in 1944
• Guaranteed no Insured
• No Insurance Premiums
• No Down Payment
• Fixed Rate and ARMs
• Entitlement Capped
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PMIPMI
Private Mortgage Insurance
• If only have 5 – 10% down payment
• Started in 1920’s
• Stopped during Great Depressions due to defaults
• Until 1957 no PMI
• Mortgage Guarantee Insurers Corp started it back up in Wisconsin
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Special Types of MortgagesSpecial Types of Mortgages• Home Equity Lines of Credit
• Wrap Around
• Blended Rate
• Rollover Mortgage
• Graduated Payment
• Growing Equity
• Shared Appreciation (SAM)
• Adjustable Rate (ARM)
• Reverse Annuity (RAM)
• Bi-Weekly
• 15 Year
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Mortgage TerminationMortgage Termination
• Mortgage Satisfaction
• Mortgage Default
• Lender Options
• Refinance
• Voluntary Sale
• Deed in Lieu
• Foreclosure
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Mortgage MarketsMortgage Markets• Mortgage Banker
• Mortgage Broker
Markets
• Primary
• Secondary
Transaction Types
• Direct Sale Program
• Mortgage Backed Securities