Cram

Client

A person who is represented by a real estate licensee.

Customer

A person who is not represented by the licensee.

Fiduciary Duties

Duties owed to clients including: OLDCAR

obedience

loyalty

disclosure

confidentiality

accounting

reasonable care.

Obedience

Following lawful instructions from your client.

Loyalty

Putting the client's interests ahead of your own; never secretly profiting from a transaction.

Disclosure

Informing your client of material information that could affect decisions.

Confidentiality

Protecting client secrets even after the transaction closes.

Accounting

Properly handling all money and property entrusted to you.

Reasonable Care

Performing duties competently and professionally.

Dual Agency

Occurs when a brokerage represents both buyer and seller, requiring full disclosure and informed consent.

Material Fact

Something that could influence a buyer's decision, such as roof leaks or structural defects.

Non-Material Fact

Personal opinions, rumors, or future market predictions that do not need to be disclosed.

Trust Account

Account used to hold earnest money deposits, security deposits, and escrow funds.

Commingling

Mixing client funds with personal or business funds.

Conversion

Using client money without authorization.

Fee Simple Absolute

The highest ownership interest available, where the owner has possession, control, enjoyment, exclusion, and disposition.

Joint Tenancy

Co-ownership with the main feature of right of survivorship.

Tenancy in Common

Co-ownership form with no survivorship and unequal ownership shares.

Severalty

Ownership by one person only.

Life Estate

Ownership that lasts for the lifetime of a specific person.

Escheat

Property goes to the state when someone dies without a will or heirs.

Deed

The document used to transfer ownership of real property.

Title Transfer Conditions

Title passes after the deed is delivered and accepted.

Recording Purpose

Provides constructive notice to the public.

General Warranty Deed

Offers greatest protection, guaranteeing good title and no undisclosed encumbrances.

Quitclaim Deed

Transfers whatever interest the grantor has with no guarantees.

Mortgagor

The borrower in a mortgage agreement.

Mortgagee

The lender in a mortgage agreement.

FHA Loan

A government-insured loan with lower down payment options.

VA Loan

Loan benefits for eligible veterans, often requiring no down payment.

Conventional Loan

A loan not government-insured, often requiring stronger credit and larger down payments.

PMI

Private Mortgage Insurance, usually required with conventional loans when down payment is less than 20%.

Equity

The value of a property minus the debt owed on it.

Market Value

The most probable price a property will bring under normal market conditions.

CMA

Comparative Market Analysis prepared by real estate licensees to estimate market value.

Appraisal

Evaluation by licensed appraisers often required by lenders.

Sales Comparison Approach

Frequently used for single-family homes to establish market value.

Cost Approach

Estimates value based on replacement cost minus depreciation and land value.

Income Approach

Valuation method based on income produced, used for investment properties.

Physical Deterioration

Depreciation due to wear and tear on the property.

Functional Obsolescence

Depreciation from internal property issues such as outdated designs.

Economic Obsolescence

Depreciation resulting from external factors affecting property value.

Protected Classes

Groups protected under fair housing laws including race, color, religion, sex, familial status, disability, and national origin.

Steering

Directing buyers toward or away from neighborhoods based on protected characteristics.

Blockbusting

Encouraging owners to sell by suggesting certain groups are moving into the neighborhood.

Redlining

Refusing loans or services based on neighborhood demographics.

Valid Contract Requirements

Competent parties, mutual consent, consideration, and legal purpose.

Earnest Money

A deposit showing good faith, commonly used in real estate transactions.

Counteroffer

An offer that rejects the original offer and creates a new offer.

Statute of Frauds

Legal requirement for most real estate contracts to be in writing to be enforceable.

Executed Contract

A contract that has been fully performed by all parties.

Commission Formula

Commission = Sales Price × Commission Rate.

Down Payment Formula

Down Payment = Purchase Price - Loan Amount.

Percent of List Price Formula

Percent = Sale Price ÷ List Price.