Chapter 4Breakdown of the Listing AgreementHow to Fill Out the Listing Agreement

I. Breakdown & Analysis of Listing Agreement

Listing Agreement

Because the listing agreement is usually the first in a series of contracts and documents used in the sale of real property, you must completely understand the form and fill it in accurately and explicitly, leaving no room for doubt

II.Completing the Listing Kit

Listing Kit

A LISTING KIT is the packet of forms an agent provides to the seller when taking a listing

III. The Broker’s Role in Real Estate Appraisal

Appraisal

Helping a seller determine a home’s selling price is the key to getting the seller to set a reasonable listing price

Proper valuation is the key to real estate sales

A. Helping Sellers Determine Listing Price

Market value is sometimes referred to as “exchange value” or “value in exchange”

MARKET VALUE refers to the amount of cash that is most likely to be paid for a property on a given date in a fair and reasonable open market sale

A property well listed is a property half sold

As a fiduciary, you owe it to your principal to obtain the best market price, but you also owe it to yourself to get the listing at a saleable price

It’s up to you to research the market and come up with a saleable price, or market value, derived from a reliable source, usually the MLS

There are several approaches to valuation: Market Data/Comparative Approach Cost Approach Net Income/Capitalization Approach

B. Market Data Approach or Comparative Approach

• Comparing the potential listing with similar properties of the same type and class, which have sold recently or are currently on the market, produces an estimate of value under the market data approach

• The comparative approach is the most reliable expression of value because it represents the reactions of informed buyers and sellers

• A comparative market analysis is your most effective tool at your disposal

C. Inventory (MLS)

Inventory (MLS) – is the number of months’ supply of home listings “for sale” at a particular time

In a BUYER’S MARKET there are more listings than buyers

In a SELLER’S MARKET there are more buyers than listings

D. Pitfalls in Accepting Overpriced Listings

Do not take a listing when it is overpriced by a relatively large margin

Overpriced properties are stigmatized by market-savvy brokers who won’t waste their time showing them

Houses on the market for too long, even with a price reduction, may now be perceived by buyers as having something wrong with them

E. Licensed Appraisers

California allows sales agents to make unverified or informal appraisals, but professional appraisers must be licensed by the California Office of Real Estate Appraisers

Professional appraiser’s work is vital to lenders, expert testimony in legal proceedings, or taxation matters.

CHAPTER SUMMARY

• Breakdown and Analysis of the Listing Agreement

• Completing the Listing Kit

• The Broker’s Role in Real Estate Appraisal