Real Estate Practice: Ch 6

Listing agreement

(must be in writing to be enforceable) creates an agency relationship authorizing a broker to serve as the agent for a principal in a real estate transaction.

Open Listing (Buyer or Seller)

o Non-exclusive unilateral contract authorizing a broker to serve as the agent for either the sale or the purchase of property.
o Gives the seller or buyer the right to engage any number of brokers as agents.
o Only the broker who brings the “ready, willing and able” buyer or finds the right property will receive the commission.

Exclusive-Authorization-and-Right-To-Sell (Seller)

o Broker has the exclusive right to market the property for a specified period of time.
o If the property sells while the broker has the listing, the seller must pay the agreed upon commission, regardless of who actually procured the buyer.
o All exclusive listing contracts must contain a definite termination date.

Exclusive Agency (Seller)

Gives one broker the exclusive right to market and sell the property, while the owner retains the right to find a buyer and sell the property without owing the broker a commission.

Net Listing (Seller)

o An owner sets a minimum amount that he wants to receive from the sale of the property and lets the broker have as commission any amount above the set minimum.
o Violates the broker's fiduciary responsibility of putting the client's interests above his or her own.

Exclusive-Authorization-To-Acquire Property (Buyer)

o Authorizes the broker to act as the agent of the buyer rather than the seller.
o Commission is negotiable. Agreement must specify a definite termination date. Commission might be paid by the seller

Bilateral employment contracts

promise to pay a commission in exchange for the broker's promise to locate a "ready, willing and able" buyer for the seller or a suitable property for the buyer.

California Listing Agreement

California law requires that the sellers receive a copy of the listing agreement at the time the signatures are obtained. A buyer has no need to ever see this agreement.

Paragraph 3 - Listing Price and Terms

unless the terms are specified, a seller is not required to pay a commission when refusing a full price offer unless the offer is all cash.

Paragraph 4 - Compensation to Broker

• The broker is still entitled to a commission if the seller makes the property unmarketable by any voluntary act during the listing period.
• Owner is not obligated to pay a commission to any other broker if the property sells within the listing period, except if the property is sold to any of the listed prospective buyers.
• The safety clause allows the broker to receive a commission if the property is sold within a specified number of days after the listing contract expires.

Paragraph 7 - Seller Representations

awareness of any legal, financial or physical reasons that would affect the seller's ability to sell the property.

Paragraph 11 - Security and Insurance

the broker is not responsible for loss or damage to the property, even with a lockbox present.

Paragraph 12 - Keysafe/Lockbox

people using the lockbox are not insured against theft, damage, vandalism, etc. attributed to lockbox use.

Paragraph 20 - Entire Contract

anything that is not written into this agreement is not part of the agreement.

Seller's Advisory (SA)

disclosures that sellers need to think about and do as they market their property.

Disclosure Regarding Real Estate Agency Relationships (AD)

describes the agency relationships available in California.

Seller's Affidavit of Nonforeign Status and/or California Withholding Exemption (AS)

deals with an IRS requirement that a buyer may need to withhold income tax if the seller is a "foreign person."

Supplemental Statutory and Contractual Disclosures (SSD)

seller fills out this form to disclose awareness of death on the property, insurance claims against the property, location in or near an industrial zone, etc. Sellers can hire someone to help with it.

Smoke Detector Statement of Compliance (SDS-11)

California law requires at least one operable smoke detector in every single-family dwelling.

Water Heater Statement of Compliance (WHS-11)

Water heaters need to be strapped, braced or anchored to resist earthquake motion.

Lead-Based Paint and Lead-Based Paint Hazards Disclosure, Acknowledgment and Addendum (FLD-11)

Deals only with properties built prior to 1978.

Estimated Seller's Proceeds (ESP-11)

estimates what the seller can expect to walk away with after the sale.

Notice to Buyers and Sellers-Defective Furnaces in California

explains that the Consumer Product Safety Commission has issued a warning for a certain type of horizontal gas-fired attic furnace, manufactured by Consolidated Industries, which has been known to cause fires.

Home Warranty Application or Waiver

protects the buyer from major failures for up to a year after purchase. (If not interested, seller must sign a waiver indicating the policy was explained and declined.