The strengths, weaknesses, opportunities, and threats facing a business
What is a SWOT analysis useful for determining?
You and your staff
Who has the best information about your firm’s operations to assist in writing your disaster recovery plan?
The number of licensees to use
Which of the following is one of the key decisions a brokerage makes when deciding how to staff the sales force?
This is a valid reason to terminate the licensee’s affiliation with the broker.
Broker Craig fires salesperson Enrique for violating a provision of the license law. Which of the following is true of this situation?
Due to circumstances beyond their control, the parties can’t legally or practically do what they’ve agreed to do.
In which of the following scenarios is impossibility of contract performance occurring?
Employment Level
Which of the following demographic data points would a brokerage be most interested in when evaluating a market?
Management Style
When discussing a merger, what would corporate cultural fit relate to?
Line (Judy has line authority because she’s directly responsible for achieving the company’s financial goals.)
As manager of the sales team, Judy has direct responsibility for reaching the company’s financial goals. What type of authority does Judy have?
Is she interested in promotion?
Before spending time to evaluate Harriet’s skills related to promotion, managers should find out if Harriet is even interested in being promoted.
Harriet is a hard worker. Of all of the unlicensed staff, she receives the most consistently positive evaluations from her boss. She’s the face of the firm, greeting walk-in and telephone clients with a friendly, efficient manner. She knows exactly where to find anything and any information she and her colleagues need. What’s the first question managers should ask when determining if Harriet is suitable for promotion?
Indirect
Marketing is a strategic process that impacts all departments in a firm. Its impact on sales is critical, but indirect
What impact do marketing efforts have on sales?
Culture of retention
A(n) __ is certain to save a brokerage money
Require identification from customers and clients before real estate professionals go into the field with them.
Which of the following is a good example of proper safety and security measures for employees at a brokerage office?
Tactical planning
Tactical planning is the most granular level of planning. Once the long-range plan has been broken down into smaller tasks, the management and staff are responsible for carrying out the tactics.
Which of the following business planning activities breaks the long-range plan down into smaller tasks and identifies which segment(s) of the company are responsible for doing what?
As more staff is hired, she will spend more time managing sales staff.
Broker Donna plans to hire three licensees to begin growing her business from a one-agent to a four-agent firm. What tip would you offer Donna regarding the impact of growth on her as the broker-owner?
Values
Leaders communicate and live by their __.
The licensees don’t do any active selling.
The licensees at an LFRO gather referrals and feed them to a full-service brokerage but don’t do any active selling.
Which of the following statements is true regarding licensees who work at a limited function referral organization?
Performance
Rust Brokerage is run as a lean machine and requires its employees to be both productive and cost-efficient. It pays employees on a scale that relates their worth to how much their work has contributed to overall revenue. This reflects a(n) __ compensation philosophy.
Files can be used for operations analysis.
Retention of transaction files is important for two reasons: to meet state regulatory requirements and to analyze business operations.
Which of the following represents a reason for maintaining complete transaction files?
Suggest that her client contact a roofing expert to make a determination.
Samantha is a real estate licensee. She’s showing her client a property. The client asks about some spots on the ceiling and wonders if they’re an indication of a roof leak. What should Samantha do?
Quack-a-Doodle-Doo Realty
Which of the following business names would be the most likely outcome of a merger between Duck Realty and Rooster Realty
Sales Contract
Offer to purchase, sales agreement, contract of purchase and sale, and purchase agreement are other names for the __.
Damage to the building from the storm and melting snow could destroy Jarrod’s office and records.
Forecasters predict a huge spring blizzard. Jarrod’s not concerned about operations because everyone could use a couple of days off, anyway. The snow will melt eventually. What long-term issues could arise that would cause more damage than Jarrod realizes?
Because the plan includes both a cost for developers and the benefit of making an area more desirable, it could be weighted differently, depending on the services the real estate business offers.
If a community plan requires developers to build new public spaces in urban areas as part of new construction projects, and the result is that more people want to live and work in the city, what impact would this have on a real estate business? Select the most complete answer.
Federal Trade Commission Act
The Federal Trade Commission Act created the FTC. This agency investigates practices and will stop companies and individuals from committing antitrust violations.
Which act created an agency to investigate antitrust practices?
He wants control over branding.
Sole proprietorships offer complete control but no personal protection.
Arnold plans to open a brokerage. What might make him select a sole proprietorship legal structure?
Making a plan and implementing it is essential to the future success of an organization.
Broker Millie wants to start her own brokerage. The market is hot right now, and she wants to get her brokerage up and running ASAP. Once things slow down a little, she’ll figure out a business plan and other details. Which of the following is true of this situation?
Fraudulent misrepresentation
Mortgage fraud is a form of fraudulent misrepresentation that, because it’s become so prevalent, has been named as its own category of fraud.
Mortgage Fraud is considered __
It helps to ensure that well-trained talent is available in the event that a critical position becomes vacant.
Succession planning not only ensures that a solid pipeline of qualified individuals is ready to move into critical positions, but it also motivates staff to perform at a high level in order to e considered for promotion.
Loronda is working on her business plan in preparation for opening her own brokerage. Why should she consider including succession planning in her plan?
No. However, in some situations, Tanner’s attempts at training and enforcement may help lessen sanctions against him.
Though technically Tanner is responsible, if he can prove that the firm has policies and procedures in place and that he provides training and coaching to licensees, he may receive less blame than he might otherwise.
As the supervising broker, tanner makes sure that the firm’s policies and procedures manual is updated regularly and is enforced. He provides formal and informal training on the manual’s contents. Does this relieve Tanner of vicarious liability if a licensee performs an unethical act?
Job Description
The Job description describes how a person in a given role relates and interfaces with others in the organization.
Keep windows clear so passersby can see inside
Make certain windows are not obstructed so that passerby can see in and notice if there is trouble in the office.
Decisiveness
Which of these leadership traits is useful in a crisis and in establishing work flow?
Misrepresentation
Mortgage Fraud is considered
Anittrust
Activities that restrain trade and reduce competition and choices for consumers are considered to be what kind of violations?
Internal equity
compensation plans should be fair from both an external and internal perspective. Internal equity means workers are paid fairly in relation to the work they do, and when compared to others who work there.
The compensation plan at Giny’s brokerage makes pay levels consistent with their level of responsibility, so that people are paid fairly when compared to what others at her brokerage do. What is this called?
Results
A broker/independent contractor relationship is one in which the broker is primarily concerned with the end result of listing and selling property, and leaves the day-to-day decisions on how things are done to the salesperson.
In a broker/independent contractor relationship, the broker is primarily concerned with what?
Risk is and inherent part of real estate activities.
E&O insurance is necessary for all licensees because risk is an inherent part of real estate activities.
Why is error and omissions insurance recommended for all licensees?
Triple Net lease
With a gross lease, the landlord typically pays these expenses. With a triple net lease, the tenant pays all three. To help you remember this, the first letter in the three expenses (taxes, insurance, and maintenance) spell out TIM.
With this type of commercial lease, the tenant typically pays the taxes, insurance, and maintenance expenses.
He’ll have less time to grow the business.
As a business grows and more staff is hired, the broker-owner must spend more time managing sales staff and less time on activities to grow the business. With more sales staff, revenue responsibility is shared.
Georgio, a managing broker, has just increased the size of his firm from 2 to 13 licensees. What can he expect?
Acceptance
Rogelio and Carla’s firm identified three risk sources as high level (6 and 9 on their ranking scale). They’ve set themselves up for disaster by using _ as their risk management strategy.
FHA approval for subdivisions that plan to allow FHA financing
FHA approval for subdivisions that plan to allow FHA financing is one of the four federal government controls that can affect development and investment projects.
There are four key federal government controls that can potentially affect development and investment projects: _; EPA-required environmental review; the protection of wetlands; and the protection of endangered species.
TRUE
The ADA doesn’t apply to residential housing. Instead, it applies to public places such as stores, restaurants, and office buildings.
Is this true, false or something else? “With respect to persons with disabilities, the Fair Housing Act regulates housing-related issues, and the Americans with Disabilities Act regulates issues related to public spaces. “
Attorney General
The attorney general may bring federal antitrust suits on behalf of individuals who live within the state, through the legal concept of parens patriae, or on behalf of the state as a purchaser.
Which entity has the authority to represent the state and citizens of the state in antitrust cases?
Supervise
Independent contractors are to be supervised, not managed or directed.
A broker must __ independent contractors.
The cash flow statement
The cash flow statement helps match income to expenses for any given month, indicating whether additional cash will be needed.
Which of the following itemizes income to expenses for given month?
Historical
To gain a true view of firm’s financial position, evaluate the current and previous
A __ analyses of the balance sheet and its related ratios provides the clearest picture of a firm’s financial health.
Long-range plan
The terms “blueprint” and “long-range plan” are used interchangeably in business.
Marc is working on the “blueprint” for his brokerage, which is another term for the brokerage’s __.
Dictatorial
They’re effective in crises and when an employee or a group needs brought into line.
Coercive and __ management styles are similar in their demand for action.
They require you to pay franchise fees.
One drawback to franchises is _
general operating budget
A variable expense budget, monthly operating budget, or profit center budget is prepared using the _ as a basis.
Purpose of business
What’s the most important determining factor for the type of office the brokerage needs and the systems required?
Liability for someone else’s acts or omissions
Vicarious Liability
Review, plan, and forecast proactively
How may a broker effectively manage the firm’s cash flow and expenses?
Video
A video allows learners to see the physical details of the appraiser’s inspections without requiring each individual to be present tat the property being appraised.
A broker wants his associates to know how an appraiser performs a physical inspection of a property so they’ll e more familiar with the information they see in an appraisal report. Which of the following delivery options would make this training mot effective for his associates?
Feelers
Feelers are the people in your office who are always looking out for everyone else. This is the personality type that is perfect for heading up your community service project.
If you need an employee to take charge of a commuity service project, which personality type would be your best pick for the project?
The marketing department is an integral component of the firm’s activities.
What is the relationship between the marketing department’s efforts and those of other departments in the firm?
Active
Deidre owns her own brokerage firm. In addition to running the business, she continues to assist clients and manage transactions. What type of broker-owner is she?
It covers licensees sued by consumers for inadvertent mistakes.
Which of the following is true about errors and omissions insurance
The policies and procedures manual
Which of the following is one of a firm’s best defenses against damage to its image
Delegator
Soriyah has most of the qualities needed to be a an effective leader, but she won’t let other licensees lead sales meetings. What quality of an effective leader is she lacking?
Different language
What’s an obstacle to working with culturally diverse populations?
Value
Katrina and Greg are comparing the overall value of the services they will use to sell their home.
Katrina and Greg are selecting a firm and a licensee to help them sell their home. They’re comparing commission-based and flat-fee listing services. The commission-based service will cost more, but they’ll have a licensee who performs most of the work. The flat-fee listing service costs much less, but they’ll have to do more of the work. What marketing model concept will their decision represent?
Using a system to reduce the risk’s likelihood or severity
Risk mitigation means __
The Occupational Safety and Health Act
The Occupational Safety and Health Act primarily addresses the rights of employees, not independent contractors. The self-employed aren’t covered under OSHA.
Which of the following establishes requirements for employers to provide a safe and healthy workplace for their employees?
Talk to them each individually to clarify the situation.
You’re a broker, and lately you’ve noticed that three of your licensees seem to be constantly sniping at each other. It’s affecting everyone at the brokerage. What should you do?
Add a standard addendum using standard language.
When a sales contract doesn’t cover the terms needed by the parties, which of the following actions is a licensee allowed to take?
Tax
Because property taxes increase at a constant rate in many areas, the tax clause is becoming increasingly common in office leases—even on short-term leases.
Which special lease clause stipulates that the tenant is responsible for paying any increase in taxes over the base year’s taxes, in addition to the base rent?
Lost productivity
Broker Tiffany does her best to make her licensees satisfied they’ve affiliated with her, in part because replacing them costs her brokerage in time, expense, and _
Vicarious liability
What legal concept relates to a broker’s responsibility for licensee misconduct?
Vertical chain of command
Which of the following is a characteristic of centralized organizational structures?
Corporation
Jorge works at a firm where elected officers govern the affairs of the organization, while a licensed broker, Shonda, is directly responsible for the real estate transactions. The officers and Shonda are responsible to a large number of stockholders. What type of legal structure is this?
No, because it’s not time-based.
Olivia, the owner of Your Home Brokerage, develops a goal for all of her licensees: Increase sales by 15%. Is this a SMART goal?
S.M.A.R.T
Automatic renewal
This situation is an example of an automatic renewal clause.
Carmen’s original one-year commercial lease has ended, and now, with her landlord’s permission, she has gone into a month-to-month lease situation. What type of clause was in the original lease agreement that enabled this situation to occur?
The technology tools and physical environment that the job requires
A broker wants to make sure that her sales associates can perform as effectively as possible. She uses a solid business model and a clear business mission; she communicates expectations to her licensees; she recognizes their efforts and compensates them fairly; and she provides the training they need. What else should she make sure her licensees have to allow them to perform at their best?
Brainstorm a solution.
The third step in this process is to brainstorm the solution. Some problems will have a fairly straightforward solution, while others will be more complex.
You’re a broker who sees a potential issue with your licensee, Joss. You’ve identified the problem behavior and analyzed the problem. What is the next step in the problem-solving process for personnel issues?
To detail all costs Jennings will owe at closing
Jennings has received a Closing Disclosure from his lender. What’s the purpose of this form?
Birth
A business that’s establishing a customer base and market presence is most likely in what stage of the business life cycle?
Keep keys locked in a secure location.
Which of the following is a good way to ensure safety and security of properties listed by your brokerage?
The growth of a business through the gradual adoption of new services and increases in market share
How is organic growth defined?
Diversity
__ in a brokerage may include a variety of skills, language, personalities, and cultural backgrounds.
Base her compensation on her sales output
Broker Saul has just signed a written agreement with his newest licensee, Jill, stating that Jill is an independent contractor. To ensure Jill is properly classified, Saul should do which of the following?
It’s budget-friendly for the brokerage when a large, physically dispersed audience is involved.
Although training delivered via a recorded webinar may not be very engaging for a learner, it does have one advantage over other training delivery methods. What is it?
Leave clients unattended in the office.
Everything in your office is potentially at risk from thieves and other criminals. Because of this, what should you never do?
Client data can be exposed when a brokerage’s computer system is compromised.
Technology poses risks for everyone, but real estate licensees need to be especially careful. Which of the following is true about risks related to computer systems?
Estoppel
Which of the following has the legal effect of preventing a person from making a claim based on her prior behavior or statements?
Building codes and standards
If a developer wishes to make FHA loans available to future buyers, what must she keep in mind when working on a development
To form a larger company that is more competitive
Which of the following is a good reason to merge with or acquire another company?
Average days on market
Which of the following is an industry trend that a brokerage should track?
It has a horizontal structure.
A decentralized structure is more efficient for larger organizations. There are few levels of management at the top.
Which of these describes a decentralized management system?
The company’s mission statement
A general business objective is designed to expand on which of the following?
The agreement between the two firms
Two large local brokerage firms agreed to lower their commission rates to the same amount—approximately 1% less than any other firm in town. After extensive marketing of their new lower rate, these two firms began to see a big increase in the number of listings they received, costing their competitors substantial amounts of money. What about this situation makes it a per se antitrust violation?
Describes how a person in a position relates and interfaces with others.
What’s the purpose of a job description?
The services your customers want
A market analysis can help you decide which office and business systems you need. Which of the following can be determined from your market analysis?
To prevent new people from getting lost in details they don’t understand, and to save experienced people from sitting through explanations they don’t need
A broker is training all affiliated licensees on a recent change in fair housing laws. Why should she deliver the training to new licensees separately from experienced salespeople?
Jane will need to fill out a W-9 for IRS reporting purposes.
Broker Sam has extended an offer to licensee Jane, who has accepted the offer. Jane will work as an independent contractor for Sam. Based on this, which of the following statements is true?
It is a secure website.
When a website has an S in the “http” portion of the URL, such as: “https://www.google.com,” what does it mean?
Manage
Retaining paper and electronic records of transactional documents for the time period prescribed by your regulating authority helps to __ risk.
Match revenue and expenses with cash flow.
Which of the following is a good cash management technique?
There should be consequences for violating the firm’s code of ethics, and these consequences should be communicated and documented.
Which of the following statements about enforcing a firm’s code of ethics is true?
The Texas Real Estate Commission
All real estate licensees in Texas must abide by the Canons of Professional Ethics and Conduct enforced by __.
The general bombardment of messages everyone receives daily
The sheer volume of messages our market receives daily through all mediums is largely responsible for the increased number of touches each consumer must get from a firm.
Which is most closely related to the dramatic increase in the number of touches you must have in order to be remembered by your target audience?
varied
Which of the following best describes a broker’s supervisory requirements?
Use caution.
What should be kept in mind when offering personal guarantees in commercial lease negotiation?
National Association of Hispanic Real Estate Professionals (NAHREP)
The __ is a purpose-driven organization propelled by a passionate combination of entrepreneurial spirit, cultural heritage, and the advocacy of its members.
Tactics
When a strategy is determined, the work unit who will be charged with achieving that strategy should be charged with coming up with the tactics to do so, and with implementing those tactics.
Broker Finn is looking at the strategies to plan his brokerage’s next move. Which of the following will be used to carry out the plan?
Percentage
Tyra owns a nail salon that’s located in a strip mall. Her rent every month includes $1,800 base rent and 10% of her gross sales. What kind of lease does Tyra have?
“What did you enjoy about working here?”
Whether good or bad, the information collected can be evaluated to help the organization determine what it is doing well and what it can improve in terms of worker relations. The interviewer should not be confrontational or argumentative.
Broker Jill is conducting the exit interview with one of her licensees, who is heading to a larger brokerage. Which of the following is an appropriate exit interview question for Jill to ask?
Eliot filled out the sign-out sheet when leaving the office and called in his location for a listing appointment.
Broker Sam requires her licensees to follow strict safety and security measures when working in the field. Which licensee followed proper safety and security measures?
Describe the behaviors expected of the brokerage’s affiliates or employees.
The new worker orientation at a brokerage should do which of the following?
Aligning pay ranges with the level of responsibility and skill required for each position
What action allows a company to establish internal equity with a compensation plan?
Independent contractors
__ workers aren’t protected under the FLSA, because in the eyes of the law they’re not viewed as being as vulnerable.
Start her own brokerage.
Jennifer likes to be in charge, and doesn’t mind hard work or risk. Why type of brokerage should she consider?
The _ is required to ascertain that Brokers are aware of all of their responsibilities.
Texas Real Estate Commission
The _ course is to address the regulatory aspects of the management, operation and supervision of a real estate brokerage firm in Texas. The course provides an understanding and working knowledge of a broker’s responsibilities and obligations under 22 TAC §535.2.
Broker Responsibility MCE
Who Must Take The Broker Responsibility MCE Course?
A broker who sponsors salespersons, a designated broker of a business entity, and a license holder who is a delegated supervisor of one or more license holders (for six months or more during the supervisor’s current license period), to complete this six—hour broker responsibility course to renew a license.
“Act of God”
A natural disaster or fire
Broker must, at a minimum, maintain the following records in a format that is readily available to the Commission for at least __ years from the date of closing, termination of the contract, or end of a real estate transaction
4
Recruitment of a salesperson by a broker is not regulated with the exception that instructors or other persons associated with a _ may NOT recruit or solicit prospective salespersons or brokers in a classroom during class time
School
There is no provision in the Act or the TREC Rules prohibiting a broker from _ a salesperson or broker—associate affiliated with another broker.
Recruiting
__ are exempt from any of the provisions of the Texas Real Estate License Act. They are permitted to represent clients in real estate transactions by virtue of their license to practice law.
Attorneys
Brokers CANNOT share their fees with attorneys who perform a brokerage service, attorneys must seek compensation for that service directly from one of the __ in a transaction
Principals
Can a listing broker share a portion of the listing broker’s commission with an attorney who represented the buyer in a real estate transaction?
No. A broker is prohibited from sharing fees with or otherwise compensating the attorney acting as a buyer’s agent unless the attorney holds an active real estate license.
Is a link to the IABS form required on my website?
Yes. Rule 531.20(b) states that each broker and sales agent must provide a link on its homepage to the IABS Form labeled “Texas Real Estate Commission Information About Brokerage Services”.
IABS link must be in at least a __ point font and in a readily noticeable place on the homepage of the business website of the broker and sales agent.
10
Does a link to the IABS Form in my email signature satisfy the representation disclosure required by TRELA §1101.558?
No. Rule 531.20(d) states that providing a link to the IABS Form in a footnote or signature block of an email is insufficient
The IABS Form can be provided by:
(1) personal delivery; (2) first class mail or overnight common carrier delivery service; (3) in the body of an email; or (4) as an attachment to an email or as a link in the body of an email so long as there is a specific reference to the IABS Form in the body of the email.
Reasons people give for wanting to open their own Brokerage:
Wanting to create something from scratch, Wanting to be their own boss, Wanting to train and motivate real estate agents to be successful, Wanting to be leader in their community or in the industry, An entrepreneurial spirit
Two good resources for finding past statistic for the real estate industry are
The National Association of REALTORS® and the Real Estate Center at Texas A&M University.
The _ indicates the strength of the economy.
Gross domestic product or GDP
Most good economies have a GDP of about _
3%
A new broker will need a good real estate attorney and a good _ on their team.
Certified public accountant (CPA)
The Rules of the Texas Real Estate Commission require that a Broker have a_______ before you start hiring agents
Policy and Procedures Manual
Policy and Procedures Manual must include
Agent’s Authorized Activity, Advertising, Compensation, Records Management, Trust Accounts
The new broker will want to consider three possibilities.
Purchasing an existing real estate business, purchasing a franchise office or a start up from scratch
All business entities engaged in real estate brokerage activity, including __, need to be licensed.
Partnerships
If the designated broker does NOT directly own at least 10% of the entity TREC requires proof that the business entity maintains _ in the amount of $1 million per occurrence.
Errors and omissions insurance
Two requirements that must be met for all advertisements
Must “clearly and conspicuously contain the name of the broker, either a business entity or an individual.”
and An advertisement must include a designation that serves to clearly identify the advertiser as a real estate agent.
TREC Qualifications to obtain a Broker’s license:
Citizen of the United States or lawfully admitted alien, 18 years of age or older, Resident of Texas, unless you: were licensed in Texas as a sales agent or broker in the last two years; or you are licensed as a broker in another state, Meet TREC’s qualifications for honesty, trustworthiness, and integrity
Instructors must pass the test with a grade of __ or higher to be able to teach the course
80%
To become a Broker you need to complete your qualifying education- __ classroom hours of qualifying real estate courses
270
Principles of Real Estate I (30 classroom hours), Principles of Real Estate II (30 classroom hours), Law of Agency (30 classroom hours), Law of Contracts (30 classroom hours), Promulgated Contracts Forms (30 classroom hours), Real Estate Finance (30 classroom hours), Real Estate Brokerage (30 classroom hours)
Brokerage mandatory courses
The Real Estate Brokerage course must be completed not more than __ years before the application date.
2
The Broker will become both the Leader and the _
Manager
Broker/Owners become responsible for the______ of the entire company
Management, operation and supervision
A broker must maintain all records for _ years.
4
Purchasing or starting a new brokerage business is exciting and _
Risky
Builders do NOT have to be _, in Texas
Licensed
CRS—
Certified Real Estate Specialist
ABR—
Accredited Buyer’s Representation
ALC—
Accredited Land Consultant
SRS—
Seller’s Representation Specialist
CRB—
Certified Real Estate Broker
CPM—
Certified Property Manager
GRI—
Graduate of the REALTOR® Institute
CRE—
Certified Real Estate Counselor
SRES—
Senior Real Estate Specialist
REALTOR® members agree to submit commission disputes
between Brokers to arbitration through their _
Association of REALTORS®.
A broker may only _ another license holder to withdraw or transfer money from any trust account, but the broker remains responsible and accountable for all trust money received by that broker and all deposits to or disbursements from the trust account.
Authorize
Any money received by a real estate sales person must be immediately delivered to the salesperson’s _
Sponsoring broker
The law prohibits _ money a license holder holds for another with a license holder’s own funds.
Commingling
When a broker holds earnest money or any money from property management activities in a trust account, how often is a broker required to account for that money?
Monthly
As the broker, it will be your job to gather and _ information
Disseminate (spread)
It is the obligation of a real estate agent to be knowledgeable as a real estate brokerage practitioner. The agent should be informed on
(1) Market conditions affecting the real estate business and pledged to continuing education in the intricacies involved in marketing real estate for others;
(2) National, state, and local issues and developments in the real estate industry
(3) Exercise judgment and skill in the performance of the work.
NEVER delete a message from _ without reading it carefully. It may contain information that you and your sponsored sales people need to know.
TREC
Two things that an individual needs before she or he can start a brokerage firm:
A real estate broker’s license and funding
The _ is the newsletter from TREC and often contains information regarding changes in rules, contracts, etc.
Advisor
Real estate _ offer buyers a packaged business operation and built—in name recognition, as well as national advertising paid for by the franchiser.
Franchises
The broker has a few choices on how to obtain funding; a broker can get a business loan or use her or his own __
Personal funds
When obtaining a Real Estate Broker’s License, normally a real estate licensee must have __ or more years of experience as an active salesperson, completed a required number of classroom hours (specified by each state), and successfully mastered the Real Estate Broker’s License Examination.
2
An individual with a bachelor’s or master’s degree from an accredited college or university, members of the state bar, and licensed attorneys are eligible to take the _ without completion of classroom work and real estate sales experience
Real Estate Broker’s License Examination
To become a Broker you have __ from the date your application is filed to meet all license requirements.
1 year
Once you have met all the requirements to get your license, TREC will send an active broker license to you via
Email
A __ is a person who provides real estate services to another person in exchange for a commission
Licensed Real Estate Broker
Candidates for a broker license must also meet the following experience requirements:
Have at least four years’ active experience as a licensed real estate sales agent or broker during the 60—month period preceding the filing of the application, Your experience must total 3600 points and be reported on the Qualifying Experience Report for a Broker License. You must also include a transaction identification list for each transaction claimed on the experience report
Business Structure:
Doing business as an individual you will be able to do so under the name your Broker’s license is in. You will be taxed as an individual and will need to pay income tax quarterly.
Independent
Brokers can operate under an assumed name as long as the assumed name is registered with _
TREC
Allows any number of “limited partners,” whose liability is limited to the total amount of their investment in the company.
Limited partnership (LP)
__ are sometimes referred to as “silent partners”—in other words, they can make investments in the company but have no voting power or control over its day—to—day operations.
Limited partners
The least complex business structure. It gives you the perk of pass—through taxes, limited liability and legal protection for your personal assets.
Limited Liability Company (LLC)
Both C and S Corps offer limited __
Liability protection
C Corporation and. S Corporation differ in the complex realm of __ and corporate ownership
Taxation
C Corps are subject to _ taxation
Double
S Corps are pass—through __, allowing them to avoid being taxed at the corporate level and again on shareholders’ personal income taxes.
Tax entities
C Corps have NO restriction on __, they have unlimited growth potential
Ownership
S Corps are restricted to no more than __ shareholders.
100
S Corps cannot be __ by a C Corp, LLCs, partnerships, or many trusts.
Owned
Certain states allow companies to form a distinctive business structure called __, it takes its name from the fact that it can have multiple members, managers, or business lines within it.
Series Limited Liability Company (LLC)
Allows a company to separate and protect multiple assets without the need to form additional entities.
Series LLC
A licensed business entity real estate broker is an organization that can act as a _ and is qualified to conduct business in Texas.
Real estate broker
A licensed business entity real estate broker qualifications
Be authorized to transact business in Texas and Designate an active Texas real estate broker to act on behalf of the organization
A business entity cannot act as a broker in Texas unless the entity designates an _ to act on its behalf. They must be a managing officer of the business entity and must be in good standing with the Commission.
Active individual broker
If the designated broker owns __ or more of the entity, proof of the designated broker’s ownership
10%
Search Engine Optimization (SEO)
A systematic process of ensuring that your firm comes up at or near the top of lists of typical search phrases related to your business
FBN
Fictitious Business Name
“Doing business as” name
DBA
Before a business selects its name, it should make sure that no one else is using the DBA by performing a search through its _
County clerk’s office or online system
Corporations are NOT required to file a _ because the corporation is a legal entity and is entitled to use its own name
Certificate of business name
The DBA should be registered with the _ and be approved before it can be used.
County clerk’s office
There is NO requirement that a _ included in an advertisement belong to the broker
Phone number or email address
The term REALTOR®, whether used on the Internet, as part of the domain name, or in any other advertisement, must refer to a member or member’s company, may NOT be used with descriptive words or phrases, and SHOULD be _ from the member’s name or company’s name. Ex: (johndoe—REALTOR®.com or abcrealty—realtors.com)
Separated
The biggest issue about office space that most brokers do not feel comfortable about is the long— _
Term lease commitment
Real estate offices have to comply with the _ requirements
ADA
In the 1970s the Texas Real Estate Commission adopted the first three Cannons of Ethics
Fidelity, Integrity and Competency (codified in 1976)
A rule or principle or standard of conduct adopted by a professional organization to guide the conduct of its members
Cannons
Licensees must be faithful and observant to the trust placed in them, as well as scrupulous and meticulous in performing task.
Fidelity
Licensees must use prudence and caution to avoid misrepresentation by acts of commission or omission.
Integrity
Licensees must use judgement and skill when exercising their duties.
Competency
Limitation or discrimination based on race, color, religion, sex, national origin, ancestry, familial status or handicap of an owner, previous or current occupant, potential purchaser, lessor or potential lessee of the property.
Discriminatory Practices
Includes anyone who has, had, or may have AIDS, an HIV-related illness or HIV infection
Handicap
Each active real estate broker shall provide this notice by (1) displaying it in a readily noticeable location in each place of business the broker maintains and (2) providing a link to it labeled “Texas Real Estate Commission Consumer Protection Notice”, in at least a 10 point font
The Consumer Protection Form (CN 1-2)
A broker owes the highest __ obligation to the principal and is obliged to convey to the principal all information known to the agent that may affect the principal’s decision, unless prohibited by other law
Fiduciary
The __ duties a broker owes to his or her client are obedience, loyalty, confidentiality, good faith, honesty, refraining from self-dealing, integrity, fair and honest dealing, and disclosure of anything that may have an effect on the client’s decision.
General fiduciary
A broker owes a customer __ along with disclosure about the property. Brokers
Honesty and fairness
_ means client’s money, earnest money, rent, unearned fees, security deposits, or any money held on behalf of another person
Trust money
_ means an account managed by one party for the benefit of another in a banking institution authorized to do business in Texas.
Trust account
Any trust money received by the broker must be deposited in a trust account or delivered to an authorized escrow agent within a reasonable time, which the Commission has determined to be not later than the close of business of the _ WORKING day after the date the broker receives the trust money. (Ex: Tues–> end of Wed)
2nd
Usually the broker is holding money for the owner in the broker’s _ when managing the property.
Trust account
The principal governing bodies that directly affect the real estate industry are the:
Texas State Legislature, the Texas Property Code and the Texas Real Estate Commission (TREC).
Is responsible for all laws in Texas, which includes those laws that directly affect the real estate industry.
(State Senate and the House of Representatives)
Texas State Legislature
The state legislature created _ and it has two main functions:
Enforce all real estate-related statues in the Texas Occupations Code, Chapter 1101 and 1102, also referred to as The Texas Real Estate License Act (TRELA) and To adopt and enforce new rules governing the practice of real estate, as needed to administer the law and protect the public
The Texas Real Estate Commission (TREC)
Provides that The Commission is granted the authority to enforce all the statutes contained in the Act as well as provide for the commission to adopt and enforce new rules.
The Real Estate License Act (TRELA)
Licensed real estate professionals and licensed real estate inspectors are responsible for ADHERING to the Texas Real Estate License Act (TRELA), and ABIDE by the rules of the __
Texas Real Estate Commission (TREC)
A common state law, which, in Texas, requires the Sunset Commission to evaluate all state agencies every 12 years with respect to their efficiency and the need for their services.
Sunset Act
Fee Simple
Ownership with the greatest bundle of rights – the owner has all available rights to the property and can always pass it to his heirs – also called fee simple absolute
Promulgated Contract Forms
Must be used by all licensees
The Real Estate License Act (TRELA) is one section of a larger law passed by the State Legislature called the __
Texas Occupations Code
The Real Estate License Act (TRELA) is Chapters 1101 and 1102 of the __. Chapter 1101 pertains to Real Estate Brokers and Salespersons and chapter 1102 pertains to Real Estate inspectors.
Texas Occupations Code
Empowers TREC to enforce the Real Estate License Act and to make and enforce new rules. Requires that those persons who perform any real estate acts as defined in Sec. 1101.002 (sell, exchange negotiate auction or deal in real estate) in expectation of compensation must obtain a state license.
Texas Real Estate License Act (TRELA)
The Texas Real Estate License Act (TRELA) was formerly called Vernon’s Texas Civil Statutes, Article 6573a, and is now known as
Chapter 1101 of the Texas Occupations Code
There are two types of real estate licenses:
A broker’s license and a salesperson’s license
A broker sponsored by another broker
Broker associates
An _ status means that the license holder does NOT have a sponsoring broker
Inactive
The _ status means that the license holder did not renew his or her license
Expired
A person who holds an _ license can practice real estate while the other two cannot
Active
The National Association of REALTORS® Code of Ethics is reviewed and updated _
Annually
TRELA is reviewed and updated every __ years when the Texas Legislature meets
2
A license holder shall provide to a party to a real estate transaction at the time of the first substantive dialogue with the party the __
Written statement
The primary functions of the Real Estate Commission are to:
Protect the public from unlawful or unscrupulous acts of licensed real estate brokers salespersons and certificate holders, Set minimum standards and qualifications for licensing brokers and salespeople,
Protect licensed brokers and salespeople from unfair or unethical com
The Texas Real Estate License Act (TRELA) requires anyone that assist others to sell, rent or lease property for anything of value to have a
Real estate license
After filling out the application and asked about criminal history. Sam did have a misdemeanor charge several years ago but did not put it on the application. He decided it was too long ago to mention.
A misdemeanor charge was on a background report. What do you think TREC will do?
It is very possible TREC will consider dishonesty on the application and a sign of untrustworthy. They will listen to the reasoning but he will probably not get a license
The __ was enacted in 1973. The purpose of the act is to protect consumers against false, misleading, and deceptive business practices, unconscionable actions and breaches of warranty
Texas Deceptive Trade Practices Act (DTPA)
Unless a licensee has committed an unconscionable act, misrepresentation of a material fact, or a failure to disclose with the intention of inducing a consumer into a transaction, the licensee can NO longer be held liable under _
DTPA
DTPA defines an “_” as one that “takes advantage of the lack of knowledge, ability, experience, or capacity of a person to a grossly unfair degree.”
Unconscionable action
__ are still responsible under DTPA
Sellers
_ allows an aggrieved consumer to hold a seller of goods and services liable for damages resulting from deceptive or unfair trade practices
The Texas Deceptive Trade Practices-Consumer Protection Act (DTPA)
In the context of real estate, consumer is the _
Buyer
In the context of real estate, seller of goods is the _ of real property
Seller
The DTPA lists _ specific violations, commonly referred to as the “laundry list.”
25
The licensee must disclose _ defects in a property (of which he or she is aware), including any additional information about the property that may affect the prospective buyer’s final decision
Any and all
The State of Texas requires all sellers of residential property to submit a _
Seller’s disclosure form
This form is required even when an owner sells his or her own property
Seller’s disclosure form
If a client or customer asks for an agent’s opinion, the agent should refer the individual to a __ (for example, a property inspector, an attorney, or a plumber) who can provide unbiased and informed assistance to the consumer.
Specialist
Agent should avoid recommending a particular specialist; if the consumer is dissatisfied with the work of that individual, the licensee could be held liable. Instead, the agent can provide the consumer with _
A list of qualified professionals
Agent should always keep __ notes throughout the real estate transaction
Detailed and accurate
Material misrepresentation or failure to disclose any known or latent property defects, Deceptive practices in the marketing, selling, or offering of real property, False promises made to the consumer through advertising or directly through the agent, Failure to disclose which party is compensating the agent, or that more than one party is liable for compensation without the written consent of all parties involved, Request or acceptance of an undisclosed compensation, Acting as agent and undisclosed principal in a transaction
Violations of license law which are also violations of the DTPA
The REALTOR® logo can only be used by those who are members of the _
National Association of REALTOR® (NAR)
If a broker joins _ they have to agree that all of their associated agents will also become a member
NAR
The Code of Ethics consists of a Preamble and _ Articles:
17
The first 9 Articles are
Duties to Clients and Customers
Articles 10 through 14 are
Duties to the Public
Articles 15, 16, 17 are
Duties to REALTORS®
_ was a system of land ownership in which all the land in the kingdom was considered to be owned by the head of the state (the king or queen).
Feudalism
In recognition and appreciation of their obligations to clients, customers, the public, and each other, REALTORS® continuously strive to become and remain informed on issues affecting real estate, and as knowledgeable professionals, they willingly share the fruit of their experience and _
Study with others
_ are zealous to maintain and improve the standards of their calling and share with their fellow REALTORS® a common responsibility for its integrity and honor
REALTORS®
Filled with or showing a strong and energetic desire to get something done or see something succeed
Zealous
The term _ has come to connote competency, fairness, and high integrity resulting from adherence to a lofty ideal of moral conduct in business relations
REALTOR®
“Whatsoever ye would that others should do to you, do ye even so to them.”
Golden Rule
What are the REALTOR® marks?
The REALTOR® marks include the terms REALTOR®, REALTORS®, and REALTOR-ASSOCIATE®, as well as the REALTOR® block “R” logo. These marks are all federally registered collective membership marks owned by the National Association of REALTORS® (NAR)
_ is defined as an intentional, false communication, either written or spoken, that harms a business/person’s reputation.
Trade defamation
__ can also include both written statements, known as libel, and spoken statements, called slander
Trade defamation
Libel
Written statement
Spoken statements
Slander
The federal _ provides compensation, injunctive relief, attorney fees and punitive damages to companies that are harmed by theft or misuse of trade secrets.
Uniform Trade Secrets Act (UTSA)
Unfair business practice in relationship to real estate buyers or sellers is generally covered under the _
Texas Deceptive Trade Practices Act (DTPA)
Individuals with disabilities are protected under the _
Americans with Disabilities Act (ADA)
ADA addresses discrimination in four general areas:
Employment, Public Transportation:, Public Accommodations and Commercial Facilities and Telecommunications
Businesses and establishments affected by the ADA:
Businesses with 15 or more employees, Any facilities or offices affiliated with state or local government, Public and private schools, Hospitals and dental offices, Hotels and motels, Grocery and retail stores, Shopping malls, Libraries and museums, Banks, Theaters, Amusement and recreation parks
_ (also known as the Architectural and Transportation Barriers Compliance Board) a federal organization that issues guidelines to ensure that buildings, facilities and transit vehicles are accessible and usable by people with disabilities.
The Access Board
The Americans with Disabilities Act prohibits discrimination against the disabled, and _ protects the disabled from unfair housing practices.
Title VIII of the Civil Rights Act of 1968
Grants all citizens of the United States—without exception—a set of basic rights regardless of their race, color, or previous condition of servitude. Among the rights granted by this Act are the rights to “make and enforce contracts, to sue, be parties, and give evidence, to inherit, purchase, lease, sell, hold, and convey real and personal property.”
Civil Rights Act of 1866
The _ included a prohibition against discrimination on the basis of race, color, and national origin in any program or service funded by the federal government. Religion, sex, handicap and familial status were later added to the act.
Civil Rights Act of 1964
Shortly after the assassination of Dr. Martin Luther King Jr., Congress passed the Civil Rights Act of 1968. Title VIII of this Act, also known as the _, prohibits discrimination in real estate practices
Fair Housing Act
The Department of Housing and Urban Development, commonly referred to as HUD, enforces the __
Civil Rights Act of 1968
The Fair Housing Act does NOT cover __ buildings
Non- dwelling
The fair housing laws do NOT apply to _ transactions unless those transactions include property that would be properly defined as a dwelling
Commercial
The federal Fair Housing Act is primarily intended to _ in the sale, rental, and advertisement of dwellings
Prohibit discrimination
Commercial property transactions are NOT normally included under the Fair Housing Act, they are covered by other laws, such as the __
Americans with Disabilities Act
Four general circumstances under which a dwelling is exempt from the federal Fair Housing Act
Single-Family Residences Sold by Owner, Rental of Rooms or Units in Owner-Occupied Property, Dwellings Belonging to Religious Organizations or Private Clubs and Housing for Older Persons
Landlords have to allow tenants to make modification to their property to accommodate their handicap. The modifications must be paid for by the __ and the landlord can require the property to be put back to its’ original condition when the tenant moves out.
Tenant
Landlords cannot forbid assistance animals to help a __ for being there even if they have a no pet policy.
Handicapped tenant
Under the federal Fair Housing Act, there are __ protected classes
7
Protected classes under the federal Fair Housing Act
- Race
- Color
- National origin
- Gender
- Familial status
- Religion
- Disability
Sex was added in 1974 to the protected classes by the _
Housing and Community Development Act
A 1988 amendment to the federal Fair Housing Act itself added __
Familial status and handicap
Infected with HIV or having AIDS, being an alcoholic, and having a learning disability. However, if a party has entered a drug or alcohol treatment program they are protected under the handicapped laws.
Definition of Disability
Although you may not discriminate against people because of a disability, it is NOT illegal to refuse housing to prospective tenants or to evict current tenants who have a physical or mental impairment that poses a __ of harm to other tenants
Direct threat
A tenant with Tourette’s syndrome who cannot help making loud noises throughout the night may pose an indirect threat to other tenants through the long-term effects of sleep loss, but does NOT pose any immediate, __
Direct threat
The federal Fair Housing Act also protects families with children under the age of 18 living with one or more parent or guardian, as well as pregnant women and those planning to __
Adopt
There is one exception to this prohibition: what the Fair Housing Act calls “housing for older persons.”
That dwelling is provided under any state or federal program that the Secretary of Housing and Urban Development determines is designed and operated to provide assistance to the elderly, That dwelling is intended for and occupied solely by people who are 62 years of age or older and At least 80% of all occupied units in that dwelling house at least 1 person over the age of 55 and the landlord generally adheres to a policy with the demonstrable intent of housing persons over 55
This Act required HUD to set reasonable limitations on the number of occupants allowed in a dwelling
Quality Housing and Work Responsibility Act
HUD concluded that a “_ occupants per bedroom” rule—taking other factors into consideration—constitutes a good basic model
2
The practice of providing real estate advice or other real estate services in a manner that perpetuates segregated housing
Steering
The practice of encouraging the panic selling of homes below market value, generally by raising fears that an influx of individuals belonging to a particular minority group will decrease property values in a neighborhood and affect the area negatively.
Blockbusting
Blockbusting may also be referred to simply as _
Panic selling
There are NO EXCEPTIONS to the Civil Rights Act of 1866.
This means that you may NEVER turn away a __ because of race or color; neither may you publish an advertisement that discriminates against someone on this basis.
Qualified tenant or purchaser
HUD may also ask the _ to handle the suit in court to obtain temporary or preliminary relief.
Attorney General
Taxpayers can deduct __ from taxes
Interest
To lease you must have a _
Real estate license
Texas Deceptive Trade Practices Act (DTPA)
Protects consumers against false, misleading, and deceptive business practices
Unconscionable action
An _ is an action that takes advantage of the lack of knowledge of someone with more than a reasonable or acceptable level or amount.
An attempt to resolve the issues raised by a complaint or an investigation though informal negotiations between the aggrieved person, the respondent, and the HUD Secretary
Conciliation
If HUD determines that a discriminatory practice has occurred- violation of fair housing law: Pay the Federal Government a civil penalty. The maximum penalties are _ for a first violation and another violation within seven years $50,000
$10,000
The _ makes it illegal for a lender to discriminate against borrowers
Equal Credit Opportunity Act (ECOA)
Lenders protected classes:
1.Race or color
2.Religion
3.National origin
4.Sex
5.Handicap
6.Familial Status
7.Marital status*
8.Age (as long as you are old enough to enter into a contract )*
9.Receipt of income from any public assistance program*
10.Exercising in good faith your rights under the Consumer Credit Protection Act*
It is interesting to Note that you can be too young to get a _ but you cannot be too old
Mortgage loan
A lender may ask only questions that are relevant to an individual’s __ standing. This means that while asking if someone is divorced is inappropriate, asking if someone must pay alimony is acceptable
Financial
Is LEGAL if a lender asks about the credit of a loan applicant’s husband when the husband is a party to the loan application
Correct. If an applicant’s spouse is named as a party to the loan application, the lender may ask about him or her
Is LEGAL if a lender asks a loan applicant how much child support she, the applicant, is receiving, although she has stated that she doesn’t intend to use the money to qualify for the loan
Incorrect. Under the ECOA, a lender may only ask about child support if the applicant intends to use that money to qualify for the loan
The _ seeks to enable all parts of a community, no matter if a wealthy community or a poor community are able to have access to credit.
Community Reinvestment Act (CRA)
The _, passed in 1977, requires lenders to assist their local communities by participating in community development projects. The Act also requires that lenders submit an annual statement including public comments about their attempts to help low-income communities.
Community Reinvestment Act (CRA)
What is the term if a financial organization refuses to make mortgage loans in certain areas because they consider it an unsafe area? They are guilty of __
Redlining
The __ requires lenders to disclose specific lending information, which HUD then uses to map lending patterns
Home Mortgage Disclosure Act
The Office of __ (a bureau of the U.S. Treasury) also passed a regulation banning redlining
Thrift Supervision
In 2015 a Texas law was passed that made it a crime for harboring or concealing immigrants that are in the U.S. without documentation.
Recently the U.S. Court of Appeals for the __ clarified that landlords are NOT breaking Texas law and “harboring” if they rent to these individuals
5th Circuit
Is any individual acting as a representative for another individual in
dealings with a third party
Agent
Is the individual that authorizes another person to act on his or her
behalf. This person may also be referred to as the client.
Principal
Is the individual with whom the agent and principal enter into real estate negotiations; he or she is also sometimes referred to as the
customer.
The Third Party
The third party negotiates with the principal through the agent
Principal- Agent- Third Party
The agent works for the principal and works with, but not for, the third party
The Agency Relationship
The amount of authority that an agent has differs depending upon the arrangement
Authority
The __ agent has a great deal of authority in his or her principal’s affairs. A legal guardian, for example, has all of the power of this agent
Universal
A __ agent has more limited authority than a universal agent but is usually authorized to manage all of the principal’s affairs in certain specified areas, like the business manager who is allowed to enter into contracts and make business decisions for a company. Associated licensees usually also have a relationship of this agency with their supervising brokers
General
The _ agent has the most limited authority of any type of agent. Usually, the agent only has authority in one specific transaction. Also, the agent may not enter into or sign contracts on behalf of his or her principal. In the real estate industry, the licensee generally has this agency relationship with the principal
Special
Express agreements and some implied agreements grant actual authority to the agent.
Actual
Sometimes, the actions or words of a principal can convince a third party that the agent has authority when in fact the agent has no authority
Apparent
Duties that the principal specifically tells the agent to do
Express Actual Authority
Actions that are necessary to complete the duties that were expressly authorized
Implied Actual Authority
Most agency relationships are formed by this agreement, where a principal appoints an agent, and the agent accepts the appointment.
Express Agreement
The only requirement for establishing an agency relationship is the consent of both parties
Forming An Agency Relationship
The principal and agent may never explicitly state the nature or terms of the relationship, but the agent will be held to the duties of an agency relationship
Implied Agreement
Agency relationships are _ in nature because one person places trust and confidence in another to responsibly handle the obligations of the position as his or her representative.
Fiduciary
To prevent the broker from becoming a common law dual agent, Texas has specific laws called the intermediary laws. The broker that is representing both the buyer and the seller in the same transaction becomes an __
Intermediary
__ relationships are the backbone of the modern real estate industry
Agency
Only a _ can enter into an agency relationship with a seller, buyer, landlord or tenant
Broker
_ means a meeting or written communication that involves a substantive discussion relating to specific real property
Substantive dialogue
A broker may act as an intermediary between the parties if the parties consent in __
Writing
A broker can assist you in locating a property, preparing a contract or lease, or obtaining financing without _
Representing you
The buyer should not tell the owner’s agent anything the buyer would not want the owner to know because an owner’s agent MUST disclose to the owner any _ information known to the agent
Material
With the parties’ consent, a broker acting as an intermediary between the parties may __ a person who is licensed under The Texas Real Estate License Act and associated with the broker to communicate with and carry out instructions of one party and another person who is licensed under that Act and associated with the broker to communicate with and carry out instructions of the other party
Appoint
A license holder appointed under this section may provide_____ during negotiations to the party to whom the license holder is appointed.
Opinions and advice
The license holder MUST put the interest of the license holder’s __ above the license holder’s own interest
Principal
The Texas Real Estate License Act (TRELA) is strongly based upon __
The Code of Ethics
The agents will have a _ relationship with you as their sponsoring broker. It makes the broker liable and responsible for the agent’s transactions
General agency
Is an on-going relationship. It will cover many transactions.
General agency
The relationship with a client is called _ It is for one specific transaction. The agent in the transaction is the broker
Special agency
The only requirement for establishing an agency relationship is the __ of both parties
Consent
A __ is one where one party (the client) puts complete trust in another party (the agent).
Fiduciary relationship
The licensee is NOT required to disclose to third parties any issues with the property that are not _
Material facts
The duty of reasonable care includes two components:
Integrity and competency
The concept of _ overlaps with the duty of honest and fair dealing
Integrity
The agent should be informed on:
Market conditions affecting the real estate business and pledged to continuing education in the intricacies involved in marketing real estate for others; Be informed on national, state and local issues and developments in the real estate industry; and Exercise judgment and skill in the performance of the work
The obligation of a real estate agent to be knowledgeable as a real estate brokerage practitioner
Competency
“Reasonable time” means
30 days after demand is made for an accounting or for remittance of money belonging to others
“Properly account for or remit” means
To pay the money to the party or parties entitled to the money if it can be reasonably determined to which party or parties the money should be paid
In Texas, most licensees prefer an independent entity, usually the _, hold these funds in an escrow account
Title company
Texas license law makes it illegal to _ funds with the licensee’s personal or business accounts
Commingle (mix)
The license act requires that the funds are deposited into the account within a reasonable time, allowing up to the close of the______ from the signing of the contract for the deposit to be made
Second business day
If the transaction does NOT close, the money can only be released upon _ of all parties involved
Written consent
The “Information About Brokerage Services” form is the written agency information required by _
TRELA
What was once cold calling and door knocking has turned into web-sites, texting, tweeting, blogging, skyping and making you-tube videos among other things
Prospecting
Civil Rights Act is also known as
Fair Housing Act
Federal Uniform Trade Secrets Act (UTSA)
Provides compensation, injunctive relief, attorney fees and punitive damages to companies that are harmed by theft or misuse of trade secrets
Dwelling
A building or place of shelter to live in
Fair Housing does NOT cover __ unless defined as dwelling
Non dwelling building or commercial
Fair Housing Act
Prohibits discrimination in the sale, rental, advertisement and financing of dwellings
The Home Mortgage Disclosure Act (HMDA)
(REG C: “C” discrimination)
Requires lenders to disclose specific lending information, which HUD then uses to map lending patterns
The Equal Credit Opportunity Act (ECOA)
(REG- B: Be Equal)
Makes it illegal to discriminate against borrowers
Fair Credit Reporting Act (FCRA)
(REG-V)
Act that protects privacy of background information and ensures that information supplied is accurate.
Does NOT need to be in writing to be valid
Express Agreement
_ provides both Approved and Promulgated (required) contract forms, addenda, an amendment, 2 temporary leases
TREC
Provides listings agreements, buyers representation agreements, property management plus brokerage forms
Texas Association Of Realtors (TAR)
Secure and Fair Enforcement Act
What does SAFE Act stand for?
Housing and Economic Recovery Act of 2008 (HERA)
Law that created SAFE Act
TREC has adopted a __ for staff and enforcement to use in directing license holders as to what might be considered clear and conspicuous in advertising
Safe Harbor Policy
On a sign or other advertising media, the broker’s name or assumed name must be at least _ of the size of the largest item of contact information
50%
Anyone who is going _ with people to prospect for buyers and sellers MUST have a valid real estate license
Call or visit
_ can write ads, put up signs, deliver contracts and paperwork but cannot prospect for buyers or sellers
Unlicensed Assistants
Can my unlicensed assistant unlock the door for potential buyer, if I’m running late?
No. Unlicensed assistants cannot show a home, and following the passage of a 2007 law requiring criminal background checks for license holders, TREC’s interpretation of “show” has expanded to include unlocking and opening doors for potential buyers
A person who controls the collection of __ on a single family residence must have a real estate license
Rent
TREC does NOT provide Listing Agreements, _ or Property Management Agreements
Buyer’s Representation Agreements
If John is a real estate agent and is selling his own home does he have to use a promulgated sales contract form?
No
George is a listing agent. He was showing his listing to a personal friend of his. He shared with his friend that the seller was very anxious to sell. Did George violate his duty of fidelity to his seller?
Yes
Barry has a listing. Another company brought him an offer. Barry happens to know this buyer and knows this buyer filed bankruptcy a few years ago. Barry is concerned as to if the buyer can qualify for financing. Should Barry tell his seller what he knows about the buyer?
Yes
Must the earnest money check be deposited to create a binding contract?
The formation of a real estate contract requires “consideration” for the contract to be binding
My wife and I signed an offer to buy a house over the weekend. Now we have changed our minds and don’t want to buy the house after all. Can we get out of the deal?
If the seller has accepted your offer, you may have a binding contract. There is no automatic three-day or 72 hour cooling off period for you to change your mind like in some other consumer contract situations. Any rights that you have to terminate the contract will be contained in the contract. For example, you may have paid a fee to obtain an “option” period in the contract. You should consult with a private attorney for advice regarding termination of your contract.
Does a lease for a term of longer than one year and a contract for the sale of real estate need to be in writing to be enforceable?
Yes. The Statute of Frauds, as defined by Chapter 26 of the Business and Commerce Code, requires that certain agreements be reduced to writing to be enforceable. However, you should consult with a private attorney for advice on this matter.
Does a license holder have to use TREC’s contract forms?
Yes
Does TREC ever discipline a license holder who fails to use an adopted form?
Yes
Can a non-license holder use the promulgated contract forms?
Yes, forms are available for public use
My broker did not fill out our contract properly and the effective date is blank. Does this mean that the contract is invalid or void?
The Commission cannot make a determination about the validity of your contract. You should consult a private attorney regarding this issue. A license holder’s failure to properly complete a TREC promulgated form completely and accurately could be considered negligence and subject the license holder to disciplinary action
My client does not want to accept the property “as is” and wants to wait until after the inspection to list specific repairs that he wants the seller to fix. Can I just leave both boxes in Paragraph 7D of the One to Four Family Residential Contract (Resale) blank or can I check 7D 2 and write in “repairs to be listed following inspection”?
The buyer should only choose Paragraph 7D2 if there are specific repairs known at the time of the contract that the buyer wants the seller to pay for. Otherwise, the buyer should check Paragraph 7D1
Most buyers in your client’s situation will then also elect to pay an option fee pursuant to Paragraph 23 in exchange for the right to terminate for any reason within a negotiated number of days. During this __, an inspection can be performed and if specific repairs are identified, the parties can negotiate to amend the contract to address these items, or the buyer can terminate the contract
Option Period
How are days counted in a TREC contract? Starting with the effective (final execution) date of the contract, the first day of the period starts __ Each day is counted as calendar day.
The next day
TREC Promugated Contract Forms Available
- 6 promulgated contracts
- 15 promulgated addenda
(including 2 temporary leases) - 1 promulgated amendment
- 2 promulgated resale certificates
- 2 promulgated notices
- 2 promulgated consumer disclosures
- 7 approved forms
The six contract forms promulgated by TREC are:
1.One to Four Family Residential Contract (Resale)
2.Farm and Ranch Contract
3.Condominium Contract
4.Unimproved Property Contract
5.New Home Contract (Complete Construction)
6.New Home Contract (Incomplete Construction)
When filling out the TREC contract forms, licensees should only include information that they know is _
Factual and Truthful
Texas courts have consistently held that the One-to-Four Family Residential Real Estate Contract is
an __
As-Is Contract
An as-is clause might bar claims brought under the _
DTPA
The contract is canceled and the parties are restored legally and financially to the position they were in before entering the contract
Rescission
To the extent that a deed restriction applicable to a structure on residential property requires the use of a _, the restriction is void
Wood Single Roof
*Environmental Issues (Wetlands, Endangered Species, Soil Contamination, Asbestos, Radon, Stucco, Lead Paint, Electromagnetic Forces)
*Flood Zones/ Mud Districts/ Zoning Issues
*Information to Buyer’s and Seller’s regarding Assumptions
*Items that do not stay with the Property
*Mandatory Membership in an Owner’s Association and Resale Certificates
*New Home Insulation
Property Condition (Roofs, Drainage, Foundation, Plumbing, Electrical, Termite Damage, Artificial Stucco)
*Representation by the agent
*When the agent is acting as a Principal
*Roll Back Taxes and Tax Exemptions
*Stigmatized Property (Unrecorded Cemeteries, Notorious Properties, Violent Death,)
*Title Notice recommending buyer obtain a title policy or an abstract
Factual Information
Previous or current occupant of real property may have had, has, or may have AIDS, HIV-related illnesses, or HIV infection as defined by the Centers for Disease Control of the US Public Health Service
Cannot disclose, it would be illegal
Death occurred on a property by natural causes, suicide, or an accident unrelated to the condition of the property
Not required to disclose but MAY TELL
Registered sex offenders. The law says the agent has NO duty to disclose but with the __ the agent MAY Disclose
Client’s Permission
Stigmatized
Suicide, natural death, criminal activity, paranormal, etc
The purpose of antitrust laws are to protect competition and prevent monopolies for the benefit of consumers
(Fined up to $350,000 + 3 years in prison)
Sherman Anti-Trust Act
2 antitrust violations that affect real estate companies are
Boycotting and Price Fixing
Brokerage firms may not agree or confer with other brokerage firms about commissions
Price Fixing
An illegal group boycott is an agreement among two or more competitors not to do business with another competitor for the purpose of inducing the other competitor to change its business practices
Group Boycotts
The _ is a list of phone numbers from consumers who have indicated their preference to limit the telemarketing calls they receive
National Do Not Call Registry
A company with which a consumer has an established business relationship MAY call for up to _ after the consumer’s last purchase or last delivery, or last payment, unless the consumer asks the company not to call again
18 months
The consumer asks the company NOT to call again, the company must honor the request. If the company calls again, it may be subject to a fine of up to _
$40,000
If a consumer makes an inquiry or submits an application to a company, the company can call for __
3 months
Consumer whose number is not on the national registry can still prohibit individual telemarketers from calling by asking to be put on the _ do not call list
Company’s own
If calls are being made for the sole purpose of conducting a survey or poll, they are __
Exempt
Purported survey calls are NOT exempt if they are also part of a plan, program or campaign to induce __
Purchases of goods or services
How often must I access the registry and remove numbers from my calling list?
At least every 31 days
How often may I download data from the national registry?
1 Year
You may download data files from the national registry only ONCE in any __ period.
24-hour
What if I call a number that’s not on the registry without checking the registry first?
It’s against the law to call
Unsolicited advertisements sent to a fax machine are sometimes called __
Junk Faxes
The 3 basic types of compliance defined in the CAN-SPAM Act
Unsubscribe, content and sending behavior compliance
Opt-out lists also known as _ are only used for compliance purposes.
Suppression lists
A message CANNOT be sent through an open relay, CANNOT be sent without an unsubscribe option, CANNOT be sent to a harvested email address, CANNOT contain a false header, SHOULD contain at least one sentence, CANNOT be null, Unsubscribe option should be below the message
Sending behavior compliance
CAN-SPAM makes it a __ to send spam with falsified header information.
Misdemeanor
Created in 1974 to educate consumers and to help them shop for settlement services. Another goal of the act was to eliminate kick-backs
The Real Estate Settlement Procedures Act (RESPA)
RESPA stipulates certain procedures and disclosures that must happen during closing. First, within three days of receiving a loan application, the lender must provide the applicant with the following material within 3 days of the application
- A booklet entitled “Know Before You Owe,” concerning settlement services and lending information.
- Loan Estimate- indicating the total credit costs and the annual percentage rate (APR) of the loan, a good-faith estimate of settlement costs
RESPA requires the Loan Disclosure to be delivered to the buyer at least _ PRIOR to consummation or closing
3 days
RESPA also requires that any time the closing agent refers a borrower to a firm with which the lender is affiliated, the lender must inform the borrower of the connection through an _ Disclosure stating the relationship and that the buyer need not use affiliated firms.
Affiliate Business Arrangement (AfBA)
Violations of RESPA regulations can lead to serious penalties for both licensees and lending institutions’ employees. Fines of up to
_ can be assessed, as can prison terms of up to a year.
$10,000
Each active real estate broker shall provide _ by displaying it in a readily noticeable location in each place of business the broker maintains
The Consumer Protection Form CN 1-2
Educate consumers and to help them shop for settlement services and eliminate kickbacks
Real Estate Settlement Procedures Act (RESPA)
(REG-X)
Bribe or payment that’s given to someone as a reward for their help with something
Kickback
Truth in Lending Act (TILA)
(REG-Z: GodZILLA)
A federal law requiring lenders to provide residential loan applicants with estimates of the total finance charges and the annual percentage rate (APR)
Truth in Lending Laws
Requires that a firm making loans disclose all the information about the terms of that loan
Niche Markets
Catering to the unique demands that mainstream providers aren’t addressing
Market is a place where things are _
Bought and sold
The real estate market is unique and is constantly __
Changing
The __ is in charge of the Fed’s principal tool—its open-market operations. These operations consist of buying government securities, either from the U.S. Treasury or from other federal agencies, and selling them.
Federal Open Market Committee (FOMC)
A _ is a debt instrument, such as a mortgage loan, that is held as evidence of a debt to be repaid with interest
Security
The __ sells securities when it needs to acquire funds to finance government activities or to repay other securities
U.S. Treasury
The Fed typically has one of two goals in mind when buying and selling securities:
To reach a targeted amount of reserve balances held at the Reserve or to reach a targeted federal funds rate
The lending rate between banks at the Federal Reserve is known as the __
Federal Funds Rate
The government may also increase the quantity demanded of a good or service by granting __
Tax Incentives
A tax exemption is a dollar-by-dollar reduction in the __ of a property
Appraisal Value
Tax incentives include tax exemptions, tax deductions, and __
Tax Credits
A property that is occupied by its owner as a permanent residence is considered a __
Homestead
Texas offers a __ senior citizen exemption in addition to the homestead exemption for residents who are 65 or older on January 1. School taxes are also frozen when the homeowner files for the over 65 exemption in Texas
$10,000
_ are immediate, dollar-for-dollar reductions in a taxpayer’s tax liabilities
Tax credits
_ are reductions in a taxpayer’s taxable income, which in turn lower the amount of that taxpayer’s income tax liabilities (that is, his or her taxes owed).
Tax deductions
Married couples who sell their principal residences are exempt from the capital gains tax up to _
$500,000
Homeowners who are single are exempt up to _
$250,000
Measures current construction activity
The Texas Residential Business Cycle (Coincident) Index
Signals future directional changes in the residential construction business cycle
The Texas Residential Construction Leading Index (RCLI)
__ is a general rise in prices; it results in a decrease of the dollar’s purchasing power
Inflation
__ are highly concerned with predicting inflation.
Economists, Market Analysts, and Investors
The __ is the amount of a foreign currency that a dollar can buy
Exchange Rate
Strong economic growth can also indicate future inflation
Gross Domestic Product (GDP)
Physical characteristics occur _
Naturally
Economic characteristics are __
Man-made
Immobility
Unable to move or be moved
Non Homogeneity
Land: No two pieces are exactly alike
The investment permanence of land, also known as __ refers to the idea that the cost of both real estate and improvements to real estate take many years to recoup
Fixity
Location preference, or __, is an economic preference for a particular location and not a geographic one
Situs
If supply is high and demand is high, the values will __
Remain Stable
As supply decreases prices will __
Increase
Supply and price move in __
Opposite directions
As supply increases prices will _
Decrease
As demand increases the prices _
Increase
As demand decreases the prices _
Decrease
Demand and price move in the _
Same direction
Brokers can find _ from census data, banks, the Chamber of Commerce, school districts, and MLS
Demographic information
Yard signs account for about ____of sales transactions
14%
__ offer buyers and sellers full-service real estate brokerage services at a price lower than the prevailing commission fees
Discount brokers
Offer home sellers the option to purchase less than the full bundle of services traditional brokers provide
Fee-for-service brokers—”flat-fee” brokers or “limited-service” brokers
These sellers market their homes themselves by placing ads in local media, posting signs, and conducting their own open houses
For-sale-by-owners (FSBOs)
Some national Internet websites aggregate some of the MLS data from across the country and allow potential home buyers to search the databases
Broker Referral Networks
An NAR Survey estimated that FSBOs account for about _ of home sellers, with an additional 5 percent of sellers first trying the FSBO route, but then retaining a broker to complete the sale.
12%
Does not require proof of damages or reference to circumstances
A per se violation
Five Anti-trust Issues
Price-fixing, Market or customer-allocation, Bid-Rigging, Group Boycotts and Real-estate brokers constantly work collectively
Bid-Rigging
Competitors’ agreement that one bidder will have the lowest bid for a particular job
Real-estate brokers constantly work collectively, presents many opportunities for illegal _
Collective activity
The purpose of a _ is to direct the organization’s financial and human resources to the activities that will yield the greatest return on investment
Business plan
A written declaration of an organization’s core purpose and focus that normally remains unchanged over time
Mission statement
Should be specific, have a time limit and be measurable
Goals
Has more to do with the future and really describes what an organization plans or hopes to be in the future
Vision statement
A __ will include information about the company—such as the Mission Statement, the Vision Statement, a description of the business, marketing techniques, operating procedures, competition, and personnel
Business plan
Business plans serve three basic purposes:
Communication, management and planning tools
Must show whether the business has the potential to generate profit. Attract investment capital, secure loans, hire employees, and appeal to potential investors
Communication tool
Allows business owners to track their progress
Management tool
Allow business owners to prepare for any potential roadblock or complication.
Planning tool
Business plan usually should include sections that cover:
The Mission statement
The Vision statement
The business description
Marketing
Finances
Management
Operations
Introduces the reader to the product or service that the business will provide and the techniques the business will use to promote it.
Marketing section
Provides information pertaining to a business’ customer base—such as their age, income, education level, household structure, and the number of people who rent. Analyzing
Market analysis
The _ of the business plan includes cash flow statements, income statements, profit and loss statements, balance sheets, and a first-year budget
Financial section
The business owner identifies the owners and employees in the _ of the business plan and explains how their skills will benefit the company
Management section
The __ allows the business owner to establish how he or she wishes to run the business by describing how the business will be managed, its hiring procedures and insurance and lease agreements
Operations section
The _ provides an overview of the business plan, a brief description of the company’s history and basically explains why the business owner believes the company will be a success.
Executive summary
This section of a business plan should summarize findings and company highlights, rather than detail accounts of every document and piece of information the company holds
Appendices/Appendix
Appendix will include:
Pictures of the locations and/or agents
Management resumes
Examples of marketing material
Market survey and research
The Fed has the authority to require all depository institutions to keep a certain percentage of their funds in the regional __
Reserve bank
The Fed may require an institution to reserve at most 0% of its first _, 3% of the first $25 million after that and 10% of all other funds.
$2 million
The economic characteristics that distinguish land as a commodity are:
Economic scarcity, alteration, fixity and situs
Ground lease
Lease of land only
Fee simple land owner (lessor) enters into contract with ground lease with person or entity (lessee)
Leasehold
Land owner
Lessor
Lessee
A person who acquires the right to possession and use of goods under a lease
Land reverts back to lessor
Reversion
The licensee can never give an agency disclosure verbally
False
The Texas Real Estate Commission (TREC) requires sellers disclosure
False
The Deceptive Trade Practices Act (DTPA) provides both public and private remedies
True
Tenant harassing verbally- all other tenants, the landlord has the right to evict him
False
The seller and listing agent should disclose a murder that took place on the property to prospective purchaser
True
The Texas Property Code invalidates any deed restrictions that require wood shingle roofs
True
The License Act says the licensee MUST disclose a suicide that took place on the property
False
Landlord cannot charge pet deposit for an assistance animal for handicapped individual- not considered pet
True
Owners that are selling own home do NOT have to complete sellers disclosure- only used by real estate community
False
Only owners with housing that qualifies as senior housing can discriminate families with children
True
All fair housing laws are federal laws
False
Non Homogeneity
Not the same
Non Fungible
Land is unique
Economic Scarcity
Created solely by demand for land in particular areas
-most valuable when it is in short supply and high demand
-some land is more desirable than other land
Alteration
Improvements
Cost of both real estate and improvements may take years to recoup
Fixity
Straw buyer
Does not intend to pay any payments
Buyer borrows money for down payment and has to repay it.
Lender thinks they used their own money for down payment
Silent 2nd
Equity Skimming
Investor uses a straw buyer and false documents to obtain a loan. The straw buyer signs the property over to the investor who rents the property, but makes no payments on the loan and eventually loses it in foreclosure.
Fair Housing Act civil penalties up to _ 1st violation and $65,000 for future violations
$16,000
Assets less liabilities
Net worth
Assets
Include everything owned or due to be paid to the company (cash, inventory, equipment buildings)
Liabilities
All debts the owner owes on equipment to investors, etc
Liabilities must be paid in the next _ or are considered current liabilities
12 months
Income statement
Earning and expenses over period of time
(profitability of company)
Revenues
Income
Received
Receipts
Expenses
Money paid out to cover the cost
Revenues from 2nd activities (Non operating revenues)
Amounts a business earns outside of selling services
Gains
Reported on the income statement as the net of two amounts: the proceeds received from the sale of a long-term asset minus the amount listed for that item on the company’s books (book value)
Cash Flow Statement
Shows how the companies cash is acquired (receipted) and how its spent (disbursements)
Acquired
Receipted
Disbursements
Spending of money
Investors invest in your business- cash will show on balance sheet as _
Asset
Debt to be repaid
Liability
Assets going down in value over time and eventually disappear are being __
Depreciated
_ offers mentoring and guidance for small business owners
SCORE
_ basis of accounting revenues are reported on the income statement when earned- before cash received
Accrual
Company has operated profitably- bottom line of income statement indicates a __
Net income
Debt financing
Funds provided by lenders (creditors) that will be repaid with interest
Equity financing
Funds provided by the owners of a company, selling ownership interest to investors in exchange for capital
U.S. Small Business Administration (SBA)
Independent agency of federal government to aid, assist and protect the interest of small business
Staff and agents know to NEVER say things like:
*Before you decide to list with ABC Realty you should know they are a discount broker. No one shows their listings.
*The Association of REALTORS® (or MLS) sets the rate. Everyone charges the same thing.
*If I lower the commission no one with show your house
Violations of the Sherman Act individuals can be fined up to __ and sentenced to up to 3 years in prison. Companies can be fined up to $10 million
$350,000
A company’s risk management plan should involve two key components:
A lawyer and an accountant
Brokerage define what insurance that he or she is required to have.
*Automobile: The sales associate would be likely required to have the brokerage as a co-insured on their business vehicle.
*Errors & Omissions: The sales associate would likely be required to have the E&O insurance or pay for their share of the brokerage coverage.
*General Liability: The sales associate will almost always be required to have minimum liability insurance as well.
Agents should NEVER respond to a subpoena or provide a deposition related to an E&O claim. The agent must notify the __ and they will notify the E&O company.
Broker
An _ notice is required to be given at the first substantive communication
IABS
Brokers may also require the agent to have automobile insurance and name the _ as an additional insured
Company
If a company was not able to operate profitably—the bottom line of the income statement indicates a _
Net loss
A __ occurs when the proceeds are MORE than the book value.
Gain
Bonding Program (Surety Bonds)
Helps small business contractors who cannot obtain surety bonds through regular commercial channels
The _ helps Americans start, build and grow businesses
U.S. Small Business Association (SBA)
To be eligible for SBA 7(a) loan program assistance, businesses must:
*Operate for profit
*Be small, as defined by SBA
*Be engaged in, or propose to do business in, the United States or its possessions
*Have reasonable invested equity
*Use alternative financial resources, including personal assets, before seeking financial assistance
Be able to demonstrate a need for the loan proceeds Use the funds for a sound business purpose
*Not be delinquent on any existing debt obligations to the U.S. government
Businesses types are not eligible for SBA 7(a) loan program assistance because of the activities they conduct:
*Financial businesses primarily engaged in the business of lending, such as banks, finance companies, payday lenders, some leasing companies
*Businesses owned by developers and landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds
*Life insurance companies
*Businesses located in a foreign country
*Businesses engaged in pyramid sale distribution plans
*Government-owned entities
*Businesses primarily engaged in political or lobbying activities
*Speculative businesses (such as oil exploration)
What does SBA offer to small business owners?
Can help facilitate a loan for you with a third party lender, guarantee a bond, or help you find venture capital.
Provides a number of financial assistance programs for small businesses that have been specifically designed to meet key financing needs, including debt financing, surety bonds, and equity financing
SBA’s Role
When a business applies for an SBA loan, it is actually applying for a _ loan, structured according to SBA requirements with an SBA guaranty
Commercial
SBA’s Small Business Investment Company (SBIC)
Program is a public-private investment partnership created to help fill the gap between the availability of growth capital and the needs of small businesses
New way of making investments and loaning money on the internet
Crowdfunding
_ have less than $21.5 million in annual receipts
Small business
Buying existing business, lenders will need information about business for the past __
3-5 years
Having trouble making ends meat, contact creditors or see a legitimate __
Credit consulor
General Operating Budget
Company’s financial picture how company plans to use financial resources, projected income and expenses over period of time
Operating Expenses
Cost business must incur in order to remain in business
Leasehold Estate
Allows company temporary ownership of land to use for algaculture, business or dwelling
Tenancy Of Years (Estate For Years)
Leaseholds are designed to expire after certain terms of years (starting date and ending date)
Periodic Estate (Periodic Tenancy)
Automatically continuing for consecutive periods of time (month to month)
Estate At Will (Tenancy At Will)
Lease agreement that permits tenant or landlord to terminate the lease at any given time
Tenancy At Sufferance
Not a lease agreement, tenant continues to occupy the property beyond existing lease agreement without consent of landlord (both ignoring the expired lease agreement)
Gross Lease (Straight Lease)
Residential lease, tenant pays flat rental fee.
Owner pays taxes and maintenance fees
Net Lease
Tenant pays base rent and all expenses
(commercial properties only)
Net
Rent paid to the lessor/landlord
Double Net Lease (Net-Net)
Charges for community area maintenance and property taxes in addition to base rent
Triple Net Lease (Net-Net-Net)
Tenant to pay a prorated portion of all the operating expenses for property
Calculating Net Lease
Tenant pays fixed and variable operating expenses
Lenders are obliged to leave a _ on your credit file when you apply for a loan. This is to help the industry make their borrowing decisions
Mark
The thing to look out for is where it says________.
Neither are necessarily the rates you’ll be offered for your loan, as the rate you’ll get will be personalized to your circumstances.
Headline rate or Rep/ Representative APR
This allows lenders to give you the actual rate you could borrow at before we leave a mark on your credit file that is visible to people other than you and Zopa.
Soft search
Business owners typically opt for __ because loans are a fixed expense, the creditor does not have any ownership rights in the business and the interest on the loan is tax deductible
Debt financing
Once the annual general operating budget has been established, the broker should set up monthly __ to determine whether or not the company is meeting its financial goals.
Benchmarks
Steps to Take If W-9 Is Not Completed:
The W-9 should be in hand before the commission is paid. If not, then the IRS rules specify that the payor (here, the listing broker) should withhold _ of the payment as backup withholding
28%
Steps to Take If W-9 Is Not Completed:
If you still do not receive the W-9, file the __ and write in the field for the cooperating broker’s tax ID number “refused to provide.”
Form 1099-MISC
May an unlicensed person, identified as such, make calls to determine whether a person is interested in buying or selling property, or has property they wish to sell, and if so, make an appointment for a licensed agent to talk to them?
No
May unlicensed assistants set appointments to show a listing?
Yes
What functions may an unlicensed office manager perform?
Administrative tasks such as training or motivating personnel, and those tasks dealing with office administration and personnel matters
Broker’s License
You must renew your license every _ years
2
Broker’s License
You may renew your license up to __ after the expiration date
6 months
Broker’s License:
After _ years past the expiration date, you will have to reapply and pass the examination.
2
Active individual broker license renewal requirements
18 hours of approved Continuing Education (CE) courses
Complete 18 hours of approved Continuing Education (CE) courses:
- 8 hours of TREC Legal Update I and II; and
- 6 hours of Broker Responsibility Update
- 4 hours of elective CE
If you have sponsored one or more sales agents, served as the designated broker for a business entity broker that sponsors sales agents, or have been made a supervisor of other license holders, you will need to take the __ Broker Responsibility Course as part of your 18 hours of CE
6 hour
If TREC records do not reflect completion of CE requirements at the time you submit your renewal application, you must pay a _ CE Deferral Fee, or renew in inactive status.
$200
Payment of the CE Deferral Fee allows you to remain active for an additional 60 days from your expiration date to complete CE requirements. To receive the additional 60 days to complete any outstanding CE, the CE Deferral fee must be paid __ the expiration date of your license.
Before
4 reports that show the financial picture of a business:
Balance Sheet
Income Statement
Cash Flow Statement
Statement of Stockholders’ or Owner’s Equity
SCORE is volunteer business people helping small business people solve _
Business problems
SCORE volunteers donate over __ of their time each year to support their communities
1 million hours
Calculating a Net Lease
Requires a tenant to pay fixed and variable operating expenses
Option Agreement (Lease Option)
A contract between a tenant and landlord that gives the tenant the option of purchasing the property at the end of his or her lease period
Texas has no documents to prepare a _. The documents must be prepared by a licensed attorney
Lease-option or a Lease-purchase
Sale-Leaseback Agreement
A grantor (owner) sells a property to a grantee (buyer), and then leases it back from him or her
Graduated Lease Agreement
Is usually a long-term lease that is periodically adjusted to reflect changes in the appraised value of the leased property
Index Lease
Allows for rent payments to increase or decrease relative to a selected set of economic conditions, which describes the value of money and goods at a particular time
Provides for a fixed amount of rent over a fixed rental period (term)
Fixed Lease
Provides for set rent increases to take effect at stated times
Step Lease
Landlord shares in your good (or bad) fortune. The lease provides for a fixed amount of rent, plus an additional amount that is set as a percentage of your gross receipts or sales
Percentage Lease
Provides for increases in rent over a specified time period
Escalation Clause
Spells out whether, and under what conditions, you are entitled to sublease the premises to another, you normally will still be liable for paying the rent if the subletting tenant does not pay.
Subletting
A useful provision from your point of view, which spells out your rights as a tenant if your landlord’s mortgage company forecloses on the leased premises
Landlord’s Solvency
A fear of many small tenants in a shopping center is that a major tenant will go out of business or not renew its lease, known as __
Going dark
Responsible for the general upkeep and maintenance of buildings to ensure that they meet health and safety standards and also the legal requirements. They need to manage the cleaning, waste disposal, catering, security and parking of each site, while managing the budgets and keeping records of all payments. Managing the office systems, which can often include the IT and office equipment.
Facilities Managers
When a business owner shops around for an office space, he or she should take the following factors into consideration:
- Location
- Site
- Size
Actual location of the office space
Site
Area where the company wishes to do business
Location
How much space is needed
Size
Metropolitan Regional Information Systems, Inc. (MRIS)
The largest MLS information system in the country
The North Texas Real Estate Information System (NTREIS)
Provides the information for the MLS in much of Texas
There are over _ MLS systems in the United States
800
__ U.S. adults shop online at least monthly
70%
_ shop online each week
33%
Broker should hire _ sales agents
Ethical and professional
Ethics
Wrong/Right
Ethical standards include
Honesty, Compassion and Loyalty
Good leaders share 3 C’s
Communication, Commitment and Charisma
Design your site to help make it __ for your customer to complete their most common tasks: from task conception, to visiting your site, to task completion.
Easier
The page uses the same URL and the same code whether the user is on a desktop computer, tablet, or mobile phone— only the display adjusts or “responds” according to the screen size
Responsive Web Design (RWD)
One of the benefits of RWD is that you’ll only need to maintain _ version of your site
1
Top 3 mistakes beginners want to avoid?
Forgetting their mobile customer, Implementing the mobile site on a different domain, subdomain, or subdirectory from the desktop site and Working in isolation rather than looking around for inspiration
Collect aggregate information about your site’s performance
Web Analytics
In an NAR Profile of Buyers and Sellers __ of homebuyers said that Open Houses were useful or somewhat useful in their search for a home
87%
Written or oral statement or communication which induces or attempts to induce
Advertisement
A residential service company is paying me a fee to advertise for it. Do I have to disclose that fee to my client and use a TREC form?
Yes and yes. You must also provide the client with the TREC Disclosure of Relationship with Residential Service Company form (RSC-2)
Can a license holder offer to give a $50 gift card to an unlicensed person for referring a potential lessee or buyer?
Although a license holder may not pay an unlicensed person valuable consideration for referring a potential lessee or buyer, gifts of merchandise with a retail value of $50 or less are not considered valuable consideration. [Rule 535.20(a)] Therefore, a $50 gift card that is only redeemable for certain merchandise (e.g. a gift card to a restaurant or department store) is not defined as valuable consideration and is permissible
May a license holder use an assumed name in business (DBA)?
Yes. TREC, however, must be notified in writing by the broker of the broker’s or sponsored sales agent’s use of an assumed name in business within 30 days of starting or stopping use of the name
Between VA and the Texas Veterans program, veterans are treated very well in Texas. Disabled veterans have even more help available. Veterans with a 100% disability pay NO _ in Texas
Property tax
Is available for teachers, fire fighters and EMS personnel, police and correctional officers, and veterans.
The Homes for Texas Heroes Home Loan Program
Is available for Texas home buyers with low and moderate incomes.
The Home Sweet Texas Home Loan Program
An excellent program to help first time home buyers and low income buyer is the _ programs.
Texas State Affordable Housing Corporations (TSHAC)
With an Mortgage Credit Certificate (MCC), the qualified homebuyer is eligible to take a portion of the annual interest paid on the mortgage as a special tax credit, up to _, EACH YEAR that they occupy the home as their principal residence.
$2,000
TSAHC also provides an annual tax credit to qualifying first-time homebuyers through the issuance of a _
Mortgage Credit Certificate (MCC)
A company website should provide customers with:
Information about its products and services
A company description
Contact information
Office locations
Businesses should use at least one of the following tools to promote their products and services:
Radio and television
Print media
The Internet
Brochures
Rumor Procedure. If what others say is not true, you should employ the following three steps of the rumor procedure
(1) Don’t publicize the rumor
(2) Promote the opposite of what the rumor says without mentioning the rumor
(3) Provide undeniable and verifiable proof to support
Fact Procedure. If you did something wrong, you should employ the following fact procedure
(1) Admit and apologize
(2) Limit the scope (or put the mistake in perspective)
(3) Propose a solution so the mistake is unlikely to reoccur
How to protect your Corporate Image
Rumor Procedure, Fact Procedure and Turn negatives into positives
The study and development of one’s ethical standards
Ethics
Look at your keywords, page titles, text, etc. to rank internet pages
Web-crawlers and Bots
A company’s image:
Examples of image builders are
*Donating money to local non-profit organizations and charities
*Promoting the company as an equal opportunity employer
*Being affiliated with companies that have a good public image
*Being able to substantiate claims
Extremely structured and restrictive; this means that the manager has complete control over every aspect of the organization
Dictatorial
Similar to the dictatorial style, but it is not as authoritative
Autocratic
Allows its’ agents and employees to have more input in the decision-making process
Participative
Are strongest when it comes to finding new directions and new potential solutions to a given problem
Visionary leaders
Are ones who spends a great deal of time and energy on the individuals in a given group
Coaching leaders
Place high emphasis on a “team first” approach
Affiliative leaders
Is one who leads by example
Pacesetting leader
Non-management
Laissez-faire
A salesperson may NOT pay a commission or other valuable consideration to another person except with the __ consent of the salesperson’s sponsoring broker.
Written
Not responding to a TREC investigator’s request for an interview or documents is usually a straightforward __
Violation
About __ of the agency’s real estate brokerage complaints relate to property management.
15-25%
Helps in delegating and coordinating the task in the real estate organization.
Real estate management hierarchy
_ real estate management officials make all decisions in accordance with the company goal or mission
Top level
Highest Level Management
*Director
*Chief Executive Officer
*Chief operating Officer
*Managing Director
*Chief Finance Officer
*Senior Accounting Manager
*Senior Law Consultant
Mid-Level Management
*Project Director
*General Manager
*Assistant General Manager
*Deputy Director
*Assistant director
*Accounting & payroll Manager
*Legal Consultant
*Legal Assistant
Lower Level Management
*Regional Manager
*Admin Manager
*Brokerage Manager
*Sales Manager
*Sales Executive
Means that you have a staff of people who specialize in one specific area of the property management business
Departmental Structure
This is a more professional structure, which means that each staff member or property manager is individually responsible for all aspects associated with one given property
Portfolio Structure
_ positions can be unlicensed employees
Administrative
Sometimes companies charge a _, and for a new business owner that may be a great way to go. You can build your business quickly that way; just make sure you don’t over-commit to all the things that will fall under that set price, otherwise you’ll be doing a lot of work for free
Flat-fee
The Different Property Management Pricing Structures
Flat-Fee Pricing Structure, Percentage of the Rent and Hybrid
A _ will track the status of all of your leads, and remind you to follow up with them on a regular basis
CRM system
_ is great for a company that is looking to show up on the first page of Google (or Bing, or Yahoo) for keywords relevant to their business.
Search Engine Marketing (SEM)
A really good supplement to traditional SEM campaigns
Content Remarketing (Banner ads)
Your ad is a reminder to people who weren’t ready to buy right away
Content Remarketing (Banner ads)
Great for targeting an audience that’s ready to buy
Search Engine Marketing (SEM)
Help you build an email list even if a customer isn’t ready to buy
Giveaway Campaigns
Effective, especially on social networking sites like Facebook and LinkedIn. These can target very specific demographics. They work best when coupled with a tangible giveaway like an eBook
Giveaway Campaigns
If I am buying, selling or leasing property for a relative, do I need to disclose that I have a real estate license?
Yes. If you are acting on your own behalf or on behalf of your spouse, parent or child, you must inform any person with whom you deal that you are a licensed broker or sales agent acting on that relative’s behalf
I signed a Property Management Agreement and do not understand some of the terms. Can you explain them to me?
No. A Property Management Agreement is a private contract and TREC is unable to advise you in private contractual matters. You should discuss the terms of the agreement with a private attorney.
Can a sales agent be the owner of a property management company?
Yes. A sales agent may own the firm but the business must be conducted through the sales agent’s sponsoring broker
I have a property management company and engage in leasing activity. May I have some of my unlicensed employees solicit business for me?
No. A rental agent who solicits a prospect by phone must be licensed
It depends on what the property manager is doing for the property owner. If the duties include __ the property for the owner for which the manager gets paid, a license is required.
Showing or Leasing
A license is required for any person who controls the __ or deposit of rent from a resident of a single-family residential real property unit
Acceptance
Independent Contractors
Own boss
Negotiating a listing agreement with a property owner, spending the afternoon with a couple showing houses for sale or rent, or negotiating a contract to buy or lease real property
Require a license.
May unlicensed persons assist in arranging financing?
Yes; however, great care must be taken that the person acts solely in an administrative capacity
A Realtor team is like a _ inside of a larger brokerage.
Mini company
If you work in Texas, __ employment laws protect your workplace rights
Federal and State
The Age Discrimination in Employment Act of 1967 (ADEA) applies to employers with _ employees.
20 or more
Under The Age Discrimination in Employment Act of 1967 (ADEA) , all individuals OVER the age of __ are protected from employment discrimination based on age
40
States that it is unlawful to discriminate against an individual due to his or her age with respect to any aspect of employment—such as hiring, firing, promotions, providing benefits, and awarding compensation
The Age Discrimination in Employment Act of 1967 (ADEA)
It is _ for your employer to take any negative job action against you, whether you complain within the company, to a government agency (like the Equal Employment Opportunity Commission or the Texas Workforce Commission), or in a lawsuit.
Illegal
Texas law is very clear on the definition of harassment. There are two primary elements to a harassment offense:
*The intent of the perpetrator
*The harassing behavior itself
The intent of the perpetrator
“Harass, annoy, alarm, abuse, torment or embarrass” another person.
The harassing behavior itself
The Texas Penal Code lists the following activities which may be considered criminal harassment
*Requesting an obscene activity, such as sexual activity
*Threatening to inflict bodily harm on another person, family member or property
*Conveying a false report of the death or bodily injury of another person
*Repeatedly calling another person on the telephone in an annoying manner
*Sending electronic communications, such as emails or text messages, in an annoying, threatening or abusive manner
Harassment typically occurs through a __ medium, such as: Telephones, Email, Text messages
Communication
Often involve physically pursuing or sending items to another person in a threatening manner
Stalking and Bullying
1st time conviction for stalking can lead to:
Up to _ of incarceration in county jail and a fine of up to _
6 months, $2000
A 2nd conviction for harassment is a Class A misdemeanor offense and is punishable by:
Up to _ in county jail and a fine of up to ___
1 year, $4000
The federal __ sets the wage and hour standards employers must follow, including the minimum wage, overtime, and other wage protections
Fair Labor Standards Act (FLSA)
The Texas minimum wage is the same as the federal minimum:
$7.25 an hour
In Texas, employers may pay tipped employees as little as
$2.13 an hour
Under the FLSA, Texas employers must pay employees overtime—time and a half—for all hours worked after the first _ in a week
40
Employees have the right to request an Occupational Safety and Health Administration (OSHA) inspection if they believe their employer has committed _ violations.
Safety
If you suffer an on-the-job _, you will likely be eligible for workers’ compensation
Injury or Illness
Workers’ comp provides you with a % of your usual earnings, pays for necessary medical treatment, and provides __ and other benefits
Vocational Rehabilitation
Employers may be required to offer UNPAID leave for reasons such as:
*Family and medical leave
*Military leave
*Military family leave
*Jury duty
*Voting
Family and medical leave.
The federal Family and Medical Leave Act (FMLA) requires employers with at least 50 employees to give eligible employees up to _ of UNPAID time off per year for illness, caregiving, and bonding with a new child
12 weeks
Military leave.
The federal Uniformed Services Employment and Reemployment Rights Act (USERRA) and Texas law both require employers to allow employees to take leave from work for __
Federal or state military service or duty
Military leave.
In Texas, employees may also take UNPAID time off work for military _. Employees must be reinstated after their leave, and may not be discriminated against because of their military service.
Training
Military family leave.
Under the FMLA, eligible employees may take up to _ off in a single year to care for a family member who was seriously injured on military duty
26 weeks
Jury duty.
Texas employers must also allow employees to take time off work for jury service. This time is __
Unpaid
Voting.
Texas employers MUST give employees PAID time off work to cast their ballots. However, employees are NOT entitled to voting leave if they have at least __ consecutive hours off work while the polls are open
2
In Texas, most employees work at will. This means they can be __ at any time, for any reason that is not illegal.
Fired
Unemployment Benefits:
In Texas, you must have worked in at least __ of the four quarters of the base period (a 12-month stretch before you lost your job), and you must meet an earnings requirement, to qualify for benefits
2
Unemployment Benefits:
If you are eligible, you will receive a percentage of your previous earnings for _ (up to a maximum of $479 per week) while you are looking for a new job
26 weeks
A good real estate salesperson must:
*Have excellent communication skills
*Be disciplined
*Be organized
*Be educated
*Be able to work independently
There are four steps in the employment process:
Prescreening, Formal interview, Selection and Hire
Before holding a seminar, brokers should:
*Select a central location for the meeting
*Pick a facility that can hold the expected number of people who will attend; typically hotels and conference centers are best
*Advertise the career seminar through flyers at least two weeks in advance
*Obtain the necessary equipment, such as projectors, easels, and sound systems
Create marketing packets that include general information about real estate careers and their firms Outline and plan the topics that will be discussed
During the interview and application process, the employer should avoid questions about:
*Race, color, religion, sex, age, national origin, marital status, and familial status
*Physical disabilities or mental disabilities
*Experience and education that is not required for the job
*Birth dates
*A spouse’s employment status
*The number of children in an interviewee’s family
Clearly addressing how employees are expected to behave on the job is essential
Conduct
To make sure your goals are clear and reachable, each one should be:
*Specific (simple, sensible, significant)
*Measurable (meaningful, motivating)
*Achievable (agreed, attainable)
*Relevant (reasonable, realistic and resourced, results-based)
*Contributing to the company’s goals for the company
Who reports to whom, who’s responsible for what areas of the company’s work, who makes things happen
Structure of responsibility
Who participates in what decisions; when various people can act independently and when they need to check with someone else; who shares in hiring, grievance, conflict resolution, and other decisions. It is important agents have someone to call for help 24/7
Decision-making structure
Role, structure, and membership of the Board; actual powers of the director and other administrators; parts that others – line staff, participants, community – play in the governance of the company
Governance structure
Depending upon the size and geography of the company, anything from where people’s desks are located in the (one and only) office to where various sites are located in different towns and what happens at each
Office locations
Is time taken off from work to make up for unpaid overtime
Compensatory time (comp time)
Teach your agents about roll back taxes and why it is dangerous to sign a Builder’s contract that says “_” without understanding what that means
All tax prorations are final
Ending on time is respectful to all participants of the meeting. Schedule your meetings so that they will last no longer than _. Start the meeting on time and end on time.
1 hour
A place you can go to be alone, to get away from it all
Retreat
Experienced agents compare selling real estate to being a counselor, __, and a teacher all rolled up into one
A minister
People born between 1977 and 1994
Millennials (Generation Y or Boomerang Generation)
Born between 1965 and 1976
Generation X (Latchkey Kids)
Born between 1946 and 1964
Baby Boomers
People were born between 1927 and 1945
Silent Generation
Born between 1901 and 1926
G.I.Generation (Greatest Generation)
When an Agent changes Brokers, the agent and the new sponsoring Broker complete the SALES AGENT SPONSORSHIP FORM-1. If it is completed on line the fee is _. If the form is mailed the fee is $40.
$20
When a Broker terminates an agent or an agent resigns the Broker will need to notify TREC by sending them the NOTICE OF SALES AGENT SPONSORSHIP TERMINATION. It can be done on line with _ fee or the form can be mailed with a $20 fee.
No
The combined goals of the agents, the staff, the managers and the company
Performance management
Going to another city to take a designation or an MCE class where you can just go to class, then see the city after hours, stay in a hotel, eat in restaurants (where they cook and do the dishes) can provide a needed change and be __
Tax deductible
An outline of how the company will allocate its financial resources. It is a forecast of anticipated income and expenses for a specified period of time (normally one year).
General Operating Budget
There are two parts to the general operating budget:
Gross income and operating expenses
Roll Back Taxes
The difference between the taxes paid on the land’s agricultural value and the taxes that would have been paid if the land had been taxed on a higher market value for every year permitted under that type of exemption
Gross Income
Total amount of earnings a company acquires before taxes are deducted
Brokers have 4 types of records:
*Transaction Records
*License Records
*Personnel Records
*Financial Records
Commissions on in-house sales
Cooperating transaction commissions
Appraisal Fees
Referral fees
Gross Income
MLS fees
Rent
Commissions paid to salespeople
Marketing costs
Office supplies
Legal services
Operating Expenses
Maximize NOI
Increase gross rental income, control expenses and minimize vacancies
NOI
Net Operating Income
Improvements are __ expenses on rental property
Tax deductible
Improvement that __ add value-
New Roof or Flooring (necessary)
Landscaping or Cosmetic Enhancements (unnecessary)
Do
Improvements that __ add value-
Plumbing and Foundation Repairs (necessary)
Expensive Fixtures or Amenities (unnecessary)
Don’t
IT Infrastructure
Businesses entire collection of hardware, software, networks, data centers, development equipment, test, operate, monitor, manage, support IT services
Horizontal Expansion
Expanding in other locations and buying other offices
Horizontal Integration
Merging 2 or more companies at the same point in their business
Monopoly
All producers of particular service were to merge
Oligopoly
Horizontal integration- A few competitors remain
Vertical Expansion
Expanding new operations
(ex: add mortgage company to brokers business)
Organic Growth
Companys existing business growth
Market Penetration
Market existing services within the same market
Market Expansion (Market Development)
Selling current services in a new market
Acquisition
Company purchases another company to expand its operations
Even an unlicensed person can own a real estate company by hiring a broker to be the __
Sponsoring broker
An unlicensed owner cannot collect commissions but can collect __ from the company
Profit
Personal Information:
Business required to destroy such records that are NOT required or _ for business operations
Needed
Every investor want to maximize __
Net operating income (NOI)
So how do you maximize NOI?
Increase gross rental income, control expenses and minimize vacancies
So how do successful investors consistently increase gross rental income?
The best way is to include a rent escalator in all leases
Using an _ means the rent will increase without question or negotiation. When presented at the time the lease is signed, prepares the renter for scheduled increases up front
Escalator
Another way to increase NOI?
Make strategic improvements to the property to make it stand out, drawing tenants willing to pay a premium for nicer kitchens and bathrooms, or washers and dryers.
The key to minimizing vacancies is having a plan to keep tenants longer and market _ faster
Vacant properties
A good investor knows NOT to minimize _ at the expense of income and equity gains
Operating costs
__ can determine the likelihood of success in any level of expansion
Location
In _, “The three most important factors are location, location, and location”:
Horizontal Expansion
__ is the percent of unit and dollar sales a company holds within a certain market vs. all other competitors
Market Share
The rate of growth of business, sales expansion etc. by increasing business reach by acquiring new businesses by way of mergers, acquisitions and take-overs
Inorganic Growth
There are such things as natural monopolies, which occur for several reasons that are Not illegal. Public industries like the _ are good examples of sectors where natural monopolies flourish
U.S. Post Office and the utilities industry
Is a real estate license necessary in order to be an apartment locator?
Yes
The only way to grow using existing services and markets is to increase __.
Market Share
A broker owns 70% of the firm, in order to renew a Business Entity Broker License what documentation is needed?
Proof of ownership of the firm