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Real Estate Buyer Agent Independent Contractor Agreement

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					1       Introduction to Real Estate Practice


                Learning Objectives
   Identify the various careers available in real estate
    and the professional organizations that support them
   Describe the five categories of real property
   Explain the types of laws that affect real estate




           Modern Real Estate Practice in Texas   12th Edition
1   Introduction to Real Estate Practice

       A Business of Many
          Specializations
 Brokerage
 Appraisal

 Property Management

 Apartment Locating

 Financing

 Property Development

      Modern Real Estate Practice in Texas   12th Edition
1   Introduction to Real Estate Practice

       A Business of Many
       Specializations (cont.)
 Home Inspection
 Counseling

 Education

 Title and Abstract

 Urban Planning

 Petroleum Landman

      Modern Real Estate Practice in Texas   12th Edition
1      Introduction to Real Estate Practice

        Types of Real Property
   Residential
 Commercial
 Industrial

 Agricultural

 Special Purpose




         Modern Real Estate Practice in Texas 12th Edition
1      Introduction to Real Estate Practice

         Seven Sources of Law
   U.S. Constitution                    State Constitution
   Federal Laws                         State Laws and
   Regulations of                        Regulations of State
    Federal Agencies                      Agencies
                                         Local Ordinances

                      Court Decisions



         Modern Real Estate Practice in Texas 12th Edition
1    Introduction to Real Estate Practice

Federal Laws Affecting Real Estate

 Capital gains tax law
 Fair housing law
 Equal credit law
 Real estate settlement law




      Modern Real Estate Practice in Texas   12th Edition
1     Introduction to Real Estate Practice

    State Laws Affecting Real Estate
 Contract law
 General property law
 Landlord-tenant law
 Agency law
 Real estate license law
 Consumer protection law




       Modern Real Estate Practice in Texas   12th Edition
1    Introduction to Real Estate Practice

     Professional Organizations
 National Association of REALTORS ® (NAR)
   REALTOR ®
 Texas Association of REALTORS ®
 Local Associations of REALTORS ®
 National Association of Real Estate Brokers
 Others - Not Affiliated with NAR




         Modern Real Estate Practice in Texas   12th Edition
2       Real Property
            Learning Objectives
   Distinguish among the concepts of land, real
    estate, and real property
   Identify the rights that convey with ownership
    of real property and the characteristics of real
    estate
   Describe the difference between real and
    personal property and the various types of
    personalty
   Explain the legal tests for fixtures

             Modern Real Estate Practice in Texas   12th Edition
2        Real Property

   Land - The Earth’s surface extending downward to
    the center of the earth and upward to infinity,
    including permanent natural objects
   Real Estate - Land at, above, and below the
    Earth’s surface, plus all things permanently attached
    to it, whether natural or artificial
   Real Property - The interests, benefits, and rights
    that are automatically included in the ownership of
    land and real estate



              Modern Real Estate Practice in Texas 12th Edition
2     Real Property

    Land, Real Estate, and Real Property




         Modern Real Estate Practice in Texas   12th Edition
2   Real Property


            Bundle of Rights




        Modern Real Estate Practice in Texas   12th Edition
2    Real Property

     Personal Property vs. Real
              Property
 Personal Property
 Manufactured Housing
 Plants
  Real estate: fructus naturales
  Personal property: fructus industriales



         Modern Real Estate Practice in Texas 12th Edition
2    Real Property

      Personal Property vs. Real
               Property
 Fixtures
   Agreement
   Intent
   Adaptation to real estate
   Method of annexation
 Trade Fixtures



         Modern Real Estate Practice in Texas 12th Edition
3       The Real Estate Market


               Learning Objectives
   Describe the economic and physical characteristics
    of real estate
   Explain the operation of supply and demand in the
    real estate market
   Distinguish the economic, political, and social
    factors that influence supply and demand
   Analyze the local real estate business cycle as it
    relates to supply and demand forces


           Modern Real Estate Practice in Texas   12th Edition
3     The Real Estate Market

     Characteristics of Real Estate

Economic Characteristics
    Relative scarcity
    Improvements
    Permanence of investment
    Area preference



          Modern Real Estate Practice in Texas   12th Edition
3      The Real Estate Market

     Characteristics of Real Estate

Physical Characteristics
    Immobility
    Indestructibility
    Nonhomogeneity




           Modern Real Estate Practice in Texas   12th Edition
3   The Real Estate Market

     Factors Affecting Supply

 Labor force
 Construction costs
 Government controls

 Government financial policies




       Modern Real Estate Practice in Texas   12th Edition
3    The Real Estate Market

    Factors Affecting Demand
 Population
 Demographics

 Employment levels

 Wage levels




      Modern Real Estate Practice in Texas 12th Edition
3   The Real Estate Market

          Business Cycles

 Expansion
 Recession
 Depression
 Revival




       Modern Real Estate Practice in Texas 12th Edition
4      Concepts of Home Ownership
            Learning Objectives
   List and discuss at least seven types of
    housing
   Describe at least four factors that influence
    home ownership
   Explain the tax benefits of home ownership
   Describe the characteristics and coverage of
    Texas homeowner’s packages, including
    coinsurance provisions
   Identify program requirements for National
    Flood Insurance
          Modern Real Estate Practice in Texas   12th Edition
4   Concepts of Home Ownership

          Types of Housing

 Single-family detached
 Condominium

 Cooperative

 Town house

 Planned Unit Development (PUD)

 Converted-use property


        Modern Real Estate Practice in Texas 12th Edition
4   Concepts of Home Ownership
      Types of Housing (cont.)

 Retirement Community
 Highrise Development

 Manufactured Housing

 Modular Home

 Timeshare




        Modern Real Estate Practice in Texas 12th Edition
4    Concepts of Home Ownership

       Housing Affordability
 Mortgage Terms
 Ownership Expenses

 Ability to Pay

 Investment Considerations

 Tax Benefits

 Homeowners’ Insurance



       Modern Real Estate Practice in Texas   12th Edition
4      Concepts of Home Ownership

                      Tax Benefits
   Income Tax Deductions
   Capital Gains Exclusions            (once every two years)
    On sale of a principal residence, owner-occupied
     at least 2 of last 5 years
    Up to $500,000 — married couple filing a joint
     return
    Up to $250,000 — single taxpayer
   Penalty-Free IRA Withdrawals
   Estate Tax Exemptions


           Modern Real Estate Practice in Texas   12th Edition
4      Concepts of Home Ownership

        Homeowners’ Insurance
Five types of coverage:
   Dwelling
   Personal property
   Liability
   Medical payments
   Loss of use




          Modern Real Estate Practice in Texas   12th Edition
4      Concepts of Home Ownership

       Homeowners’ Insurance
 HO-A, HO-B, HO-C Policies
 Coverage

 Endorsements

 Coinsurance Clause and Claims
    80% of replacement cost
    Less than 80%
   Flood Insurance

          Modern Real Estate Practice in Texas   12th Edition
5       Brokerage and the Law of Agency
            Learning Objectives
   Identify the various types of agency
    relationships common in the real estate
    profession and the characteristics of each
   Describe the fiduciary duties involved in an
    agency relationship
   Explain the process by which agency is
    created and terminated and the role of
    disclosure in agency relationships
   Distinguish the duties owed by an agent to
    his or her customers from those owed to a
    client

           Modern Real Estate Practice in Texas 12th Edition
    5    Brokerage and the Law of Agency

        Learning Objectives (cont.)
   Distinguish employees from independent
    contractors and explain why the distinction is
    important
   Explain the legal requirements for broker
    compensation
   Describe the various types of antitrust violations
    common in the real estate industry and the penalties
    involved
   Identify the most common violations of the DTPA,
    broker defenses, and consumer recovery for
    damages

               Modern Real Estate Practice in Texas   12th Edition
5      Brokerage and the Law of Agency

           Real Estate Agency
   Definitions:
    Agency
    Agent
    Subagent
    Principal
    Client
    Customer
    Intermediary broker

          Modern Real Estate Practice in Texas 12th Edition
5    Brokerage and the Law of Agency

               Types of Agencies
Universal Agent      General Agent           Special Agent

Empowered to do      Represents the          Authorized to
anything the         principal in a          represent the
principal could      broad range of          principal in one
do personally        matters related         specific act or
                     to a particular         business trans-
                     business or             action under
                     activity                detailed
                                             instructions


          Modern Real Estate Practice in Texas   12th Edition
5        Brokerage and the Law of Agency

    Creation and Termination of Agency

        Creation                              Termination
                                      Death or incapacity of a party
   Express Agency                    Destruction or condemnation of
                                       the property
                                      Expiration
   Implied Agency
                                      Mutual agreement
                                      Renunciation (broker) or
   Agency by Ratification             revocation (owner)
                                      Bankruptcy of the owner if title
                                       transferred to receiver
                                      Completion, performance, or
                                       fulfillment

               Modern Real Estate Practice in Texas   12th Edition
5    Brokerage and the Law of Agency

     Fiduciary Duties of an Agent

 Care
 Obedience

 Accounting

 Loyalty

 Disclosure




        Modern Real Estate Practice in Texas   12th Edition
5    Brokerage and the Law of Agency

    Duties of a Principal to an Agent

 Compensation
 Information

 Indemnification

 Availability




         Modern Real Estate Practice in Texas   12th Edition
5      Brokerage and the Law of Agency

     Duties of an Agent to a Customer

 Reasonable care and skill
 Honest and fair dealing
    Puffing
    Misrepresentation
    Fraud
   Disclosure of known material facts

           Modern Real Estate Practice in Texas   12th Edition
5    Brokerage and the Law of Agency


 Latent   Defect
    A hidden structural defect that would not
    be discovered by ordinary inspection
 Stigmatized Property
    Properties branded ―undesirable‖ because
    of actual or rumored criminal, tragic, or
    scandalous events that occurred on the
    property


           Modern Real Estate Practice in Texas 12th Edition
5     Brokerage and the Law of Agency
         Agency Relationships
 Disclosure Requirements
  Agency Statutes (Subsections 1101.557-.561,
    TRELA)
 Seller Agency
 Subagency
 Buyer Agency
 Intermediary Agency
    Appointed licensee
 Undisclosed Dual             Agency
          Modern Real Estate Practice in Texas   12th Edition
5    Brokerage and the Law of Agency

                  Single Agency

    Seller (Client)                  Buyer (Client)




    Seller’s Broker                  Buyer’s Broker




        Modern Real Estate Practice in Texas   12th Edition
5   Brokerage and the Law of Agency

              Subagency
               Seller (Client)


               Listing Broker


               Selling Broker
                (Subagent)


             Buyer (Customer)

       Modern Real Estate Practice in Texas   12th Edition
5   Brokerage and the Law of Agency

           Intermediary Agency

          Seller                        Buyer



               Intermediary Broker




       Modern Real Estate Practice in Texas 12th Edition
5    Brokerage and the Law of Agency

 Broker-Salesperson Relationship

Real estate salesperson: licensed to
 perform real estate activities on behalf
 of a licensed real estate broker
 Employee

 Independent        Contractor


         Modern Real Estate Practice in Texas   12th Edition
5      Brokerage and the Law of Agency

              Broker’s Compensation
   Owed If                                Owed When
    – Agent is licensed                      – Contract closes
    – Agreement to pay is                    – Broker produces
                                               ready, willing, and
      in writing and signed
                                               able buyer (even if
    – Broker advises buyer                     not closed)
      about title insurance                  – Broker is procuring
      or abstract                              cause




              Modern Real Estate Practice in Texas 12th Edition
 5     Brokerage and the Law of Agency

     Salesperson’s Compensation
  Amount and method of compensation—
  agreement between the broker and the
  salesperson
 Fixed salary
 Share of commission
 100% Commission Plan
 Graduated Commission Split




           Modern Real Estate Practice in Texas   12th Edition
Computing a commission: A property sold for $73,000. The
6% commission was split equally between Broker H and
Broker M. Salesperson T received 55% of Broker M’s share.




            Modern Real Estate Practice in Texas   12th Edition
5     Brokerage and the Law of Agency

                 Antitrust Laws
 Price-fixing
 Boycotting competition
 Allocation of customers or markets




          Modern Real Estate Practice in Texas   12th Edition
5       Brokerage and the Law of Agency

              Antitrust Penalties
 Misdemeanor or             felony
 Individuals
    up to $100,000
    up to 3 years in jail
 Corporations
    up to $1 million
 Civil   suit = 3 × actual damages + attorney’s
  fees and court costs

            Modern Real Estate Practice in Texas   12th Edition
5     Brokerage and the Law of Agency

Texas Deceptive Trade Practices –
 Consumer Protection Act (DTPA)
 Laundry list of 23 false or misleading acts
 Innocent misrepresentation is actionable
 Exclusions from DTPA
   Broker’s providing professional advice,
     judgment, or opinion
   Consumer waiver under certain
     circumstances


          Modern Real Estate Practice in Texas   12th Edition
5     Brokerage and the Law of Agency

Broker Defenses to DTPA Charges

 Reasonable offer of   settlement
 Written notice to the consumer (prior to
  the sale) of reliance on written
  information from others
 Impossibility of broker’s knowing the
  information was false or inaccurate


         Modern Real Estate Practice in Texas   12th Edition
5      Brokerage and the Law of Agency
         Recovery in a Law Suit
 Unintentionally: Economic damages

 Knowingly: Economic damages + mental
  anguish (up to 3 × economic damages)
 Intentionally: Up to 3 × economic and
  mental anguish damages
 Civil Penalties
    $20,000 per violation
    $250,000 for targeting the elderly

           Modern Real Estate Practice in Texas   12th Edition
5     Brokerage and the Law of Agency

                DTPA Footnotes

 Parties to a contract and licensees are
  protected from liability unless they knew of
  the falsity or concealment
 The broker is responsible for the
  salesperson’s acts
 E&O insurance will not cover fraud or
  intentional acts


          Modern Real Estate Practice in Texas   12th Edition

				
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