Direct Sales FSBO Builders Resort Properties Sales by Brokers Realtors Sales by Dealers Portfolio Flipping Sale of Real Estate

Two Types of Agents Broker A broker is licensed to act on their own behalf and hire and supervise others in business Sales Person (Real Estate Agents) Licensed but must work for a broker

Missouri Real Estate License Be 18 years of age Be of good moral character Satisfactory completion of a course of study in real estate from a school accredited by the commission Course of study requires 60 hours of classroom instruction on designated topics

Where Do Buyers Come From? In town buyers Agents – 50% Yard Signs – 17% Newspaper Ads – 12% Other – 21% Out of town buyers Agents – 61% Yard Signs – 15% Newspaper – 11% Other - 13%

For Owners Selling Property Used only an agent to sell home – 70% First tried to sell themselves but then used agent – 9% Sold home themselves without agent – 14% First listed with an agent then sold property themselves – 5% Other purchase options – 2%

Agency Designated Agency Law Sept 1 st 1997 Allows different types of agency Agent can be: Buyers Agent Sellers Agent Dual Agent Transaction Agent

Brokers Obligations Tell the truth Disclose all material facts If they knowingly make false statements or conceal a material fact that is considered misrepresentation and can be sued under fraud statutes

Fair Housing Act of 1968 Bars any form of discrimination applies to landlords, sellers, brokers and agents: Law covers race, religion, color, national origins and sex/gender. Added recently age, #of children and disability.

Broker Commissions Changed since 70’s All brokers use to charge the same commission Real Estate Board set commissions Federal Trade Commission stepped in and sued the boards for price fixing. Today commissions are negotiable Sliding Scale (Time or Price) Flat Fee

Listing Contracts Open Listing Exclusive Agency Exclusive Right to Sell Net Listing Net Profit = Price – Commission(Price) – Closing Cost Auction

Mortgage Financing TWO KEY DOCUMENTS Promissory Note Deed of Trust Advantage to having two instruments gives lender more options that they can take against the borrower.

Mortgage – Transaction between lender and borrower Deeds of Trust – 3 rd party transactions: Borrower, Lender and Trustee Provides greater protection for lender Conveys title of property to a trustee, who holds it as security for the debt Empowers trustee to foreclose on your house Deed of Release – Recorded by trustee when loan is paid off, showing debt has been paid Mortgages Cont.

Mortgage Controversies Pre-payment Penalties Lender charges 2 – 5% fee if mortgage is paid off early Due On Sale Clauses In every deed of trust and mortgage If you sell the property you must pay the loan

FNMA Covenants Escrow Deposit Borrower Must Insure Property Borrower Must Maintain Property Inspections Negotiated Covenants

Types of Mortgages Conventional Open-end Package Blanket Budget Government Sponsored FHA VA

FHA Characteristics Low Down Payment Higher Risk Borrowers 2.25% Insurance Premium Monthly Insurance Premium Interest Rate Varies with Market Most are fixed rate mortgages Loaned Monies come from Financial Institutions Loan Limits Assumable

VA Characteristics Guaranteed by Veterans Administration Created in 1944 Guaranteed no Insured No Insurance Premiums No Down Payment Fixed Rate and ARMs Entitlement Capped

PMI Private Mortgage Insurance If only have 5 – 10% down payment Started in 1920’s Stopped during Great Depressions due to defaults Until 1957 no PMI Mortgage Guarantee Insurers Corp started it back up in Wisconsin

Special Types of Mortgages Home Equity Lines of Credit Wrap Around Blended Rate Rollover Mortgage Graduated Payment Growing Equity Shared Appreciation (SAM) Adjustable Rate (ARM) Reverse Annuity (RAM) Bi-Weekly 15 Year

Mortgage Termination Mortgage Satisfaction Mortgage Default Lender Options Refinance Voluntary Sale Deed in Lieu Foreclosure

Mortgage Markets Mortgage Banker Mortgage Broker Markets Primary Secondary Transaction Types Direct Sale Program Mortgage Backed Securities