California Real Estate Practice, 2nd Edition

Cover Page......Page 1
Title Page......Page 2
Copyright Page......Page 4
Brief Contents......Page 5
Preface......Page 13
About the Authors......Page 18
Contents......Page 6
1 STARTING YOUR REAL ESTATE CAREER......Page 20
1.1 THE REAL WORLD OF REAL ESTATE......Page 21
1.2 BUSTING A FEW MYTHS......Page 25
1.3 THE ATTITUDE OF PROFESSIONALISM......Page 27
1.4 GOAL SETTING......Page 29
1.5 PLANNING......Page 33
1.6 YOUR REAL ESTATE BUSINESS PLAN—PREPARATION IS EVERYTHING......Page 36
Business Plan......Page 38
Learn Office Policies and Procedures......Page 40
Tax Knowledge......Page 41
Equipment Needed......Page 42
About You......Page 43
SUMMARY......Page 44
CHAPTER 1 QUIZ......Page 46
2 CHOOSING THE RIGHT BROKER......Page 48
2.1 GENERAL BROKERAGE......Page 49
2.2 CHOOSING THE RIGHT BROKER......Page 52
What Should the New Licensee Look for in a Brokerage Firm?......Page 55
2.3 BROKER/SALESPERSON RELATIONSHIPS......Page 56
2.4 CONTINUED AND ADVANCED TRAINING......Page 62
Survival Training......Page 64
2.5 PROFESSIONAL DESIGNATIONS......Page 66
SUMMARY......Page 67
CHAPTER 2 QUIZ......Page 68
3 ETHICS, FAIR HOUSING, AND RESPA......Page 70
3.1 WHAT IS ETHICS?......Page 71
Realtists®......Page 72
Federal Laws That Affect Real Estate......Page 81
Fourteenth Amendment......Page 82
Civil Rights Act of 1964......Page 83
Civil Rights Act of 1968......Page 84
Jones v. Mayer......Page 85
1988 Fair Housing Amendments Act......Page 86
Unruh Act......Page 87
Rumford Fair Housing Act......Page 89
Section 2780: Discriminatory Conduct......Page 90
Section 2725f: Duty to Supervise......Page 91
3.6 SEXUAL HARASSMENT......Page 92
3.7 REAL ESTATE SETTLEMENT PROCEDURES ACT......Page 93
Exceptions to RESPA’s Prohibitions......Page 95
Examples of Permissible Activities and Payments......Page 96
Examples of Prohibited Activities and Payments......Page 97
Case Study 2......Page 98
Case Study 3......Page 99
Analysis 4......Page 100
Case Study 6......Page 101
Analysis 7......Page 102
Analysis 9......Page 103
SUMMARY......Page 104
CLASS DISCUSSION TOPICS......Page 106
CHAPTER 3 QUIZ......Page 107
4 DISCLOSURES......Page 110
4.1 UNDERSTANDING MANDATED DISCLOSURES......Page 111
4.2 YOUR FIDUCIARY RESPONSIBILITIES AND DISCLOSURES......Page 113
4.3 AGENCY DISCLOSURE......Page 117
The Disclosure Process......Page 120
Disclosure Timing......Page 124
4.4 DEATH OR AIDS DISCLOSURE......Page 125
4.5 REAL ESTATE TRANSFER DISCLOSURE STATEMENT (TDS)......Page 126
4.6 AGENT’S INSPECTION DISCLOSURE—HOW AND WHY?......Page 127
Insect Infestation......Page 132
Water Damage......Page 133
Structural Failure......Page 134
4.7 SELLER FINANCING DISCLOSURE......Page 136
Addendum to the RPA-CA Seller Financing Addendum and Disclosure (SFA Revised 10/02)......Page 139
4.8 ENVIRONMENTAL HAZARDS DISCLOSURE......Page 144
Hazardous Substances Released......Page 145
Military Ordnance Location......Page 146
Earthquake Safety......Page 147
Special Study Zone......Page 151
4.12 RIGHT OF RESCISSION......Page 154
SUMMARY......Page 156
CLASS DISCUSSION TOPICS......Page 159
CHAPTER 4 QUIZ......Page 160
5 LEAD GENERATION OR PROSPECTING FOR CLIENTS AND CUSTOMERS......Page 162
5.1 WHAT IS LEAD GENERATION OR PROSPECTING?......Page 163
Attitude Is Everything......Page 164
5.2 DO YOUR RESEARCH FIRST......Page 165
5.3 FORMULATING A BUSINESS PLAN......Page 166
5.4 THE DO-NOT-CALL LIST......Page 168
5.5 FOR SALE BY OWNERS......Page 169
5.6 EXPIRED LISTINGS......Page 171
5.7 YOUR SPHERE OF INFLUENCE......Page 172
5.8 GEOGRAPHICAL FARM......Page 173
5.9 OPEN HOUSE......Page 175
Internet Site......Page 177
Absentee Owners......Page 178
5.10 BUILDING YOUR DATABASE......Page 180
SUMMARY......Page 181
CHAPTER 5 QUIZ......Page 182
6 WORKING WITH BUYERS......Page 184
6.1 SOURCES OF BUYERS......Page 185
6.2 THE FIRST APPOINTMENT......Page 189
6.3 PREAPPROVED FOR FINANCING......Page 191
6.4 AGENCY DISCLOSURE......Page 193
6.5 BUYER/BROKER AGREEMENT......Page 194
6.6 TIPS ON SHOWING PROPERTY......Page 195
6.7 BUYING SIGNALS......Page 198
SUMMARY......Page 200
CHAPTER 6 QUIZ......Page 202
7 WRITING AND PRESENTING EFFECTIVE PURCHASE CONTRACTS......Page 204
7.1 SELLING OR COUNSELING......Page 205
7.2 WRITING THE RESIDENTIAL PURCHASE CONTRACT......Page 208
7.3 UNDERSTANDING THE RESIDENTIAL PURCHASE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (RPA-CA)......Page 212
Understanding the C.A.R. RPA-CA Purchase Agreement Form Revised 4/10......Page 213
Short Sale......Page 232
7.4 PREPARING TO PRESENT THE OFFER TO PURCHASE......Page 233
7.5 NEGOTIATING THE OFFER WITH THE SELLERS AND LISTING LICENSEE......Page 234
7.6 SELLING YOUR OWN LISTING......Page 235
7.7 HANDLING SINGLE AND MULTIPLE COUNTEROFFERS......Page 236
7.9 SETTING UP THE ESCROW TIMELINE......Page 239
SUMMARY......Page 240
CLASS DISCUSSION TOPICS......Page 241
CHAPTER 7 QUIZ......Page 242
8 PREPARING FOR THE LISTING APPOINTMENT......Page 244
8.1 RESEARCH THOROUGHLY FIRST......Page 245
8.2 COMPETITIVE (OR COMPARATIVE) MARKET ANALYSIS......Page 246
8.3 THE LISTING PRESENTATION MANUAL......Page 248
8.4 ESTIMATED SELLER’S PROCEEDS FORM......Page 250
SUMMARY......Page 251
CHAPTER 8 QUIZ......Page 252
9 THE LISTING PRESENTATION......Page 254
Definition......Page 255
Elements......Page 256
Exclusive Authorization and Right to Sell Listing......Page 257
Open Listing......Page 258
Exclusive Authorization to Acquire Real Property (Buyer Representation Listings)......Page 259
Option Listing......Page 261
9.3 THE EXCLUSIVE AUTHORIZATION AND RIGHT TO SELL LISTING FORM......Page 266
Paragraph 2: Items Excluded and Included......Page 267
Paragraph 4: Compensation to Broker......Page 271
Paragraph 10: Agency Relationships......Page 272
Paragraph 16: Additional Terms......Page 273
9.4 PRESENTING THE COMPETITIVE MARKET ANALYSIS AND YOUR MARKETING PLAN......Page 275
Competitive Market Analysis......Page 278
9.5 ESTIMATED SELLER’S PROCEEDS......Page 280
9.6 COMMON SELLER OBJECTIONS AND HOW TO HANDLE THEM......Page 282
SUMMARY......Page 285
CHAPTER 9 QUIZ......Page 286
10 SERVICING THE LISTING......Page 288
10.1 YOUR MARKETING PLAN......Page 289
Next Meeting......Page 290
For-Sale Sign......Page 292
Lockbox Installation......Page 293
Multiple Listing Service......Page 294
The Internet......Page 295
Advertising......Page 297
Office Tour......Page 298
Just Listed Postcard......Page 299
10.2 GOOD COMMUNICATION......Page 300
Showings......Page 301
Explain Your Advertising Policy......Page 302
Pricing Strategy......Page 303
Market Conditions......Page 304
10.4 PRESENTING OFFERS TO YOUR SELLERS......Page 305
Presenting Your Buyer’s Offer......Page 308
Presenting Co-op Offers......Page 309
Presenting Multiple Offers......Page 310
10.5 HANDLING SINGLE OR MULTIPLE COUNTEROFFERS......Page 311
Don’ts......Page 313
SUMMARY......Page 314
CHAPTER 10 QUIZ......Page 316
11 REAL ESTATE FINANCING......Page 318
11.1 AN APPRAISAL OR AN ESTIMATE OF VALUE?......Page 319
11.3 PRIMARY AND SECONDARY FINANCING......Page 320
Freddie Mac......Page 321
11.4 CONFORMING VERSUS NONCONFORMING LOANS......Page 322
Institutional Lenders......Page 323
Noninstitutional Lenders......Page 324
Real Estate Brokers......Page 326
11.6 TYPES OF LOANS......Page 327
Conventional Loan......Page 328
Government Participation Loans......Page 329
Other Types of Mortgages and Trust Deeds......Page 332
Qualifying the Borrower......Page 345
Qualifying the Property......Page 353
Computerized Loan Origination......Page 354
Truth-in-Lending Act (TILA)......Page 355
SUMMARY......Page 356
CHAPTER 11 QUIZ......Page 358
12 ESCROW AND TITLE INSURANCE......Page 360
12.1 ESCROW......Page 361
Escrow Responsibility......Page 362
Parties to an Escrow......Page 363
Broker as Escrow......Page 365
Advantages of an Escrow......Page 366
Opening the Escrow......Page 368
Escrow Instructions......Page 369
Closing the Escrow......Page 371
Common Escrow Documents......Page 373
Common Escrow Transaction Terms......Page 376
12.2 TITLE INSURANCE......Page 385
CLTA Policy......Page 387
ALTA Policy......Page 396
SUMMARY......Page 399
CHAPTER 12 QUIZ......Page 401
13 THE LIFE OF AN ESCROW......Page 404
13.1 OPEN ESCROW......Page 405
Home Inspector......Page 408
Licensed Roofer......Page 409
Mandated Disclosures......Page 410
13.3 FINANCING......Page 413
13.4 REVIEW REPORTS......Page 414
13.5 NEGOTIATE REPAIRS......Page 417
13.6 PROPERTY INSURANCE......Page 418
13.7 THE FINAL WALK-THROUGH INSPECTION......Page 419
13.8 THE CLOSING......Page 420
SUMMARY......Page 421
CHAPTER 13 QUIZ......Page 423
14 REAL ESTATE TAXATION ISSUES......Page 426
14.1 REAL PROPERTY TAXES......Page 427
The Tax Bill......Page 428
Supplemental Tax Bill......Page 429
Proposition 13......Page 430
Proposition 60......Page 431
Exemptions......Page 433
Capital Gain Tax......Page 435
Land......Page 436
Deductible Versus Nondeductible Home Buying Expenses......Page 437
Business and Investment Property......Page 438
Property Basis......Page 439
Depreciable Basis......Page 440
Depreciation Calculation......Page 442
Tax-Deferred Exchanges......Page 443
Exchange Mechanics......Page 444
The Entity Rule......Page 445
Like-Kind Rule......Page 447
The Delayed Exchange......Page 448
Installment Sales......Page 449
14.3 TAX SHELTER......Page 450
Home Interest......Page 451
Relief for “Forced” Sales......Page 455
14.4 FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT (FIRPTA)......Page 456
Federal Withholding......Page 457
SUMMARY......Page 462
CHAPTER 14 QUIZ......Page 465
15 ADVERTISING AND MARKETING......Page 468
Advertising......Page 469
Marketing......Page 476
15.3 THE ADVANTAGES OF NICHE MARKETING......Page 479
California Real Estate Law (from the Business and Professions Code)......Page 480
SUMMARY......Page 484
CHAPTER 15 QUIZ......Page 486
16 ALTERNATE REAL ESTATE CAREERS......Page 488
16.1 COMMERCIAL REAL ESTATE BROKERAGE......Page 489
Education and Specialization......Page 490
16.2 PROPERTY MANAGEMENT AND LEASING......Page 492
State-Defined Responsibilities......Page 493
Specific Duties......Page 494
Accounting Records......Page 498
Leasing......Page 499
Types of Leases......Page 500
Residential Leasing......Page 502
Tenant’s Responsibilities......Page 515
Assignment Versus Sublease......Page 516
REO and Forclosed Homes......Page 517
The Value of a Licensee’s Time......Page 518
The Art of Transitioning......Page 519
Training......Page 521
The Four Deadly Sins......Page 522
It’s a Family Affair......Page 523
SUMMARY......Page 524
CHAPTER 16 QUIZ......Page 526
APPENDIX A: QUIZ ANSWERS......Page 528
APPENDIX B......Page 530
Glossary......Page 533
Index......Page 563