Aceable Principles 1 combined Exam Questios with 100% Correct Answers

Aceable Principles 1 combined Exam Questios with 100% Correct Answers BPO - answerbroker's price opinion. process used by a hired sales agent to determine the potential selling price or estimated value of a real estate property. Reasons for a BPO. 1. The people in the home have asked to refinance the home and the lender does not want to pay for a full appraisal, but they do want to have some assurance that the home is valued at or above what the loan will be. 2. The people in the house are about to be foreclosed on and the lender wants an inexpensive estimate of value. Approaches to value - answerCost to replace: a method of estimating the value of a property by determining how much it would cost to replace the building or other improvements, minus the cost of depreciation, plus the value of the land itself Sales comparison approach: a property appraisal method that estimates value by comparing the subject property to the sales prices of similar properties in the same market area Income approach: a method of estimating the value of a property by applying a rate of return to the net income it produces Reconciliation - answerappraiser will compare estimates they made based on the cost approach, sales comparison approach, and/or income capitalization approach. Sales Comparison Approach - answerThis approach bases its valuation on the local real estate market. The appraiser is concerned with local market demand for the property. CMA - answerComparative Market Analysis. A report that compares the prices of sold homes that are similar to the subject property. Not the same as an appraisal NAR Standard of Practice 11-1 - answerWhen REALTORS® prepare opinions of real property value or price (like a comparative market analysis), other than in pursuit of a listing or to assist a potential purchaser in formulating a purchase offer, such opinions shall include the: Identification of the subject property Date prepared Defined value or price Limiting conditions, including statements of purpose(s) and intended user(s) Disclosure of whether and when a physical inspection of the property's interior was conducted Any conflicts of interest Any present or contemplated interest, including the possibility of representing the seller/landlord or buyers/tenants Basis for the opinion, including applicable market data If the opinion is not an appraisal, a statement to that effect (Amended 1-01) OLD CAR - answerThe fiduciary duties an agent owes a client have been organized into six categories or areas of responsibility. A great way to help you remember the fiduciary duties is the acronym OLD CAR. Obedience (if legal) Loyalty (100%) Disclosure (full) Confidentiality (forever) Accounting (forever) Reasonable care Fiduciary Duty: Obedience - answerWhile an agent will understandably want to use their expertise to guide the client to a good decision, ultimately the final decision is the client's alone to make. Letting a client make an unadvisable choice can be one of the hardest things to do — but that's just what obedience entails. Fiduciary Duty: Loyalty - answerAn agent has a duty of loyalty to their principal. Their job is to represent their principal's best interests, even over their own Fiduciary Duty: Disclosure - answerLicense holders are required, whether working as an agent for someone or not, to disclose "material facts." Material facts are facts, oftentimes related to the condition of the property, that might cause a buyer or seller to change their mind about a transaction. The disclosure of material facts is a duty of disclosure owed to everyone, but a fiduciary duty of disclosure goes beyond that. It is a duty to disclose EVERYTHING an agent knows or learns about related to a transaction that would serve the interest of their client. Some of this, of course, would NOT be disclosed to the other party in the transaction. Fiduciary Duty: Confidentiality - answerThe fiduciary duty of confidentiality is connected quite closely to that of loyalty and disclosure, in that private information given to the agent by the client will be kept secret (unless the client wants to have the information shared). It should be noted that the duty of confidentiality is one that extends beyond the relationship, meaning that after termination of the agency relationship, regardless of whether or not the objectives of the relationship were met, the agent must keep confident anything learned during the relationship. Fiduciary Duty: Accounting - answerLicense holders owe their clients a duty of accounting — agents must account for records and all funds entrusted to themselves. License holders are not to use a client's funds for their personal funds, nor can they store them in the same account. Commingling Mixing a client's funds with an agent's personal funds is known as commingling and is illegal. Mixing money that belongs to another person with personal money is both messy and unethical. Handling of Escrow Funds If a license holder receives escrow funds in a real estate transaction, that money must be deposited within a reasonable amount of time into a separate account. Agents (and any sales agents acting on their behalf) cannot wait any longer than the close of the second business day after the signing of a contract to make these deposits. The money will then be held in the escrow or separate account until closing, at which time the agent must release the funds to the appropriate party. Likewise, license holders may not disburse money deposited in a custodial, trust, or escrow account before the completion or termination of the real estate transaction. Note: As with the fiduciary duty of confidentiality, the duty of accounting exists beyond the termination of the agency relationship — as long as there remain any outstanding funds to be settled. Fiduciary Duty: Reasonable Care - answerYou, as a license holder, will be hired to do more than just find a willing and able buyer or locate an adequate property. When hired, you are held to a high standard of care that requires knowledge concerning real estate. In other words, the exercise of your expertise as a real estate professional is an expectation and requirement if you are to fulfill your duty of reasonable care. You must use reasonable care when doing such things as: Filling out paperwork Writing an offer Inputting information into MLS Preparing graphics, taking pictures, mailing flyers, and staging properties Completing a listing and showing properties Writing agreements Knowing what to say and when to keep quiet. In short, take care of the client the way that you would want to be taken care of yourself, using the education, experience, and expertise you have gained during your career as a sales agent. This duty is based on what could be reasonably expected for a professional real estate agent to do. Buyer-Customers - answerOne of the challenges with working with buyers as customers (as opposed to clients) is that when they spend time with agents, the buyers can fall under the impression that the agent is on their side and looking out for them in the transaction. Timely Disclosure That is why it is so important for an agent to disclose upfront to the buyer the exact nature of their relationship. By doing so, the agent will meet the state requirement, but also put the buyer on notice that the license holder does not have a duty to represent them unless they become a client.