The Basics to Your Real Estate Career

The Basics to your Real Estate Career

The Jarbly Group at Trend Realty offers a comprehensive training platform designed to help realtors navigate the common challenges in the industry. Our powerful training resources equip agents with the knowledge and skills needed to succeed in real estate. Explore the valuable tools below!

Check out these powerful videos to elevate your real estate career and build a solid plan for success!

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Actionable Guide for Realtors: Prioritizing Success After Joining a Brokerage

1. Master Your Brokerage Tools and Market Knowledge

  • Get familiar with your brokerage’s CRM, MLS platform, and transaction management software.

  • Study local comps daily and visit open houses to understand pricing trends.

  • Drive through target neighborhoods to build market expertise.

2. Focus on Lead Generation and Follow-Ups

  • Dedicate time daily to prospecting (cold calling, door knocking, online engagement).

  • Follow up with leads and past clients through calls, emails, and texts.

  • Use a CRM to organize contacts and track progress.

3. Build a Strong Personal Brand and Marketing Strategy

  • Optimize your social media presence with valuable content (market updates, testimonials, property tours).

  • Run targeted Facebook/Instagram ads to generate leads.

  • Develop a consistent content calendar for marketing efforts.

4. Master the Listing and Sales Process

  • Practice your listing presentation and negotiation scripts.

  • Role-play common objections with a mentor or colleague.

  • Learn pricing strategies and closing techniques to win deals.

5. Network and Grow Your Referral Base

  • Attend local networking events and real estate association meetings.

  • Build relationships with mortgage brokers, inspectors, and contractors.

  • Set up a referral program with past clients and offer incentives.

By focusing on these five key areas, realtors can accelerate their careers, generate more business, and close deals consistently.

Choosing Your Specialty

1. The Process: Size, Scope, and Negotiations

  • Residential Real Estate:

    • Process: Involves buying or selling homes, typically for personal use.
    • Timeline: Transactions generally take 30-60 days to complete.
    • Negotiations: The focus is mainly on price, contingencies, home inspection results, and closing dates. Negotiations tend to be straightforward, with little complexity.
    • Buyer’s Motivation: Primarily driven by personal or family needs, such as finding a home to live in.

  • Commercial Real Estate:

    • Process: Buying or selling commercial properties, such as office buildings, shopping centers, or industrial spaces, typically for business use or investment.
    • Timeline: Commercial deals often take several months to close, sometimes even over a year, due to the complexity of the transaction.
    • Negotiations: More complex than residential, involving price, lease terms, zoning laws, tenant agreements, and return on investment (ROI).
    • Buyer’s Motivation: Primarily focused on securing an investment property for business operations or rental income.

  • Business Brokering:

    • Process: The sale of an entire business, including assets, operations, and management, which may include real estate, but often involves intangible assets like intellectual property and customer base.
    • Timeline: Can take several months to a year or more due to the detailed analysis and transition planning required.
    • Negotiations: More involved than commercial real estate as the buyer negotiates not just the price but also terms surrounding assets, stock vs. asset sale, employee retention, and transition plans.
    • Buyer’s Motivation: Buyers are focused on operational control, profitability, and growth potential, rather than just real estate value.

2. Paperwork: Complexity and Documentation

  • Residential Real Estate:

    • Common Documents:
      • Purchase Agreement: The contract outlining the terms of the sale.
      • Inspection Reports: Verifying property condition.
      • Mortgage Documents: If financing is involved.
      • Title Report: Verifies ownership and encumbrances on the property.
    • Complexity: The paperwork is relatively simple, typically covering the basics of the property transfer and buyer’s financing arrangements.

  • Commercial Real Estate:

    • Common Documents:
      • Letter of Intent (LOI): An agreement to move forward with the sale and lay out high-level terms.
      • Purchase and Sale Agreement (PSA): Details the specific terms of the commercial transaction.
      • Lease Agreements: If the property is being purchased as an investment for leasing.
      • Financial Statements and Market Analysis: To evaluate income-producing potential.
    • Complexity: More detailed than residential, involving financial disclosures, market analyses, and zoning-related documents.

  • Business Brokering:

    • Common Documents:
      • Confidentiality Agreement (NDA): Protects sensitive business information during negotiations.
      • Letter of Intent (LOI): Outlines the initial terms of the deal, including price and transaction structure.
      • Asset Purchase Agreement or Stock Sale Agreement: Specifies which assets or stock are being sold, including detailed lists of tangible and intangible assets.
      • Due Diligence Checklist: Includes financial records, customer contracts, intellectual property, employee agreements, and operational procedures.
      • Transition Plan: Ensures that the business continues operating smoothly after the transfer.
    • Complexity: The paperwork is far more complex than residential or commercial real estate because it involves a wide range of business operations and legal considerations.

3. Financing: Complexity and Requirements

  • Residential Real Estate:

    • Financing Options: Mortgages, typically conventional loans, FHA, or VA loans.
    • Down Payment: Typically 3%-20%, depending on the loan type and buyer’s credit.
    • Approval Process: Quick and straightforward, usually focused on creditworthiness and income verification.

  • Commercial Real Estate:

    • Financing Options: Commercial loans, SBA loans, private lenders, or bank financing.
    • Down Payment: Typically 20%-30% of the purchase price.
    • Approval Process: More complex than residential financing, often requiring business projections, environmental assessments, and a review of the property’s income-generating potential.

  • Business Brokering:

    • Financing Options: Financing can include seller financing, SBA loans, private equity, or investor financing.
    • Down Payment: Typically 20%-50%, depending on the deal structure and business type.
    • Approval Process: More intricate than commercial real estate due to the need to assess the business’s profitability, financial health, and growth prospects. Seller financing is often used in business deals to bridge gaps in financing.

4. Due Diligence: Verifying the Health and Future Potential

  • Residential Real Estate:

    • Due Diligence: Focuses on property inspections, title checks, and appraisals to ensure that the property is in good condition and free from legal issues.
    • Scope: Typically limited to verifying the condition of the property and ensuring there are no legal encumbrances.

  • Commercial Real Estate:

    • Due Diligence: Includes property inspections, lease reviews, zoning verification, market analysis, and often environmental assessments (e.g., Phase I or II).
    • Scope: More extensive than residential real estate, especially if the property is income-generating or if there are existing tenants. There’s a stronger focus on the property’s investment potential.

  • Business Brokering:

    • Due Diligence: This is the most extensive due diligence process of the three. Buyers examine financial statements, customer contracts, intellectual property, employee agreements, and any ongoing liabilities. Additionally, buyers need to assess the operational aspects of the business, including processes, management, and growth potential.
    • Scope: More comprehensive, as it involves not just the financial health of the business but also the operational viability, intellectual property, customer base, and employee retention. Transition plans and the ability for the buyer to take over the business smoothly are also key considerations.

5. Closing Process: Finalizing the Deal and Transfer of Ownership

  • Residential Real Estate:

    • Closing Process: After negotiations, the buyer and seller sign the purchase agreement, pay closing costs, and transfer ownership via deed. Title insurance and settlement agents are typically involved.
    • Closing Costs: Typically include title insurance, appraisal fees, agent commissions, and taxes.
    • Ownership Transfer: Once the transaction is complete, the buyer receives the deed, and ownership is transferred.

  • Commercial Real Estate:

    • Closing Process: The closing can involve additional complexities, such as reviewing lease agreements, tenant concerns, and ensuring compliance with zoning and regulatory requirements. It may take several months.
    • Closing Costs: Higher due to legal, inspection, and due diligence fees.
    • Ownership Transfer: Ownership is transferred once the terms are met and the legalities are settled, but it may include other complexities, such as tenant agreements.

  • Business Brokering:

    • Closing Process: The closing for a business sale involves signing off on the final terms, transferring assets (both tangible and intangible), and possibly managing a transition period where the seller remains involved for a time.
    • Closing Costs: Include broker fees, legal fees, taxes on the sale, and any costs associated with transferring intellectual property or managing the transition.
    • Ownership Transfer: This involves not only the physical assets (inventory, equipment, etc.) but also customer relationships, intellectual property, and employee management. The transition is key to ensuring the business continues to operate smoothly post-sale.

Conclusion:

  • Residential Real Estate: Simplest and most straightforward, involving a quick sale of property with minimal complexity in terms of paperwork and financing.
  • Commercial Real Estate: More complex than residential, focusing on investment potential, tenant agreements, and longer timelines for due diligence and closing.
  • Business Brokering: The most intricate, involving detailed evaluations of both tangible and intangible assets, more complex paperwork, and a lengthy due diligence process. Financing and closing also require more negotiation and preparation to ensure the business continues post-sale.

Understanding these distinctions can help you navigate each transaction type with confidence and ensure smoother, more successful deals in residential, commercial, or business brokering.

Quick Guide to Representing a Client in Real Estate

1. Initial Consultation and Needs Assessment

  • Meet with the client to understand their goals (buying, selling, or investing).

  • Gather key details like budget, timeline, and property preferences.

  • Explain the process, market conditions, and what to expect.

2. Property Search and Market Analysis

  • For buyers: Identify suitable properties, schedule showings, and provide market insights.

  • For sellers: Conduct a comparative market analysis (CMA) to price the property correctly.

  • Keep clients informed about new listings and market trends.

3. Negotiation and Offer Management

  • Advise clients on crafting competitive offers or counteroffers.

  • Handle all communication with the opposing party and ensure favorable terms.

  • Strategize negotiations to maximize value and protect client interests.

4. Contract and Due Diligence

  • Ensure all documents are correctly drafted and legally compliant.

  • Guide clients through inspections, appraisals, and contingency removals.

  • Work closely with lenders, attorneys, and inspectors to ensure a smooth process.

5. Closing and Post-Sale Support

  • Review final documents and coordinate with escrow/title companies.

  • Ensure a seamless transaction by addressing last-minute issues.

  • Follow up post-closing for referrals and future business opportunities.

By following these five key steps, real estate agents can effectively represent their clients and ensure a smooth and successful transaction.

 

Here’s a quick guide to representing a Seller in Real Estate, outlining responsibilities and the necessary documents:

1. Listing the Property

  • Listing Agreement: Formal contract between the seller and agent, specifying terms of representation.
  • Seller’s Disclosure Agreement: Disclosure of any known defects, issues, or material facts about the property.
  • Photography/Media Release (if applicable): Agreement to allow photos and media marketing for listing.

2. Offer and Negotiation Stage

  • Offer to Purchase Agreement: Buyer’s formal offer including terms like price, contingencies, and closing date.
  • Pre-Approval Letter: Buyer’s proof of financial qualification from their lender.
  • Counteroffer (if applicable): Seller’s response with modified terms, conditions, or counter terms.
  • Amendment/Addendum to Purchase Agreement: Modifications to the original contract (e.g., inspection results or repair requests).

3. Home Inspection and Due Diligence

  • Contingency Agreement: Terms for inspections (home inspection, pest inspection, etc.) and deadlines.
  • Repair Addendum: Specifies repairs the seller agrees to make based on inspection findings.
  • Title Report: Confirms the property’s title is clear and free from liens or encumbrances.
  • Lead-Based Paint Disclosure (for homes built before 1978): Legal disclosure for potential lead hazards.

4. Financing and Mortgage Stage

  • Loan Application: Buyer’s application for financing (to be submitted to the lender).
  • Appraisal Contingency Agreement: Terms governing the buyer’s right to back out if the appraisal value is lower than the agreed purchase price.
  • Mortgage Commitment Letter: A formal document from the buyer’s lender confirming they are committed to the loan.
  • Financing Addendum: Details the buyer’s financing terms, including down payment and interest rate.

5. Closing and Transfer of Ownership

  • Purchase Agreement (Final): The final executed contract between buyer and seller.
  • Closing Disclosure: Detailed breakdown of final costs, including seller proceeds, buyer closing costs, and agent commissions.
  • Deed of Sale: Legal document that transfers ownership from the seller to the buyer.
  • Transfer Tax Form: Required to report the transfer of property and settle any taxes due.
  • Power of Attorney (if applicable): Authorizes a designated individual to sign documents on behalf of the seller if they cannot be present.
  • Final Walkthrough Agreement: Document acknowledging that the buyer has conducted their final inspection of the property before closing.

6. Commission and Fee Agreements

  • Agent Commission Agreement: Specifies the percentage and structure of commission for the seller’s agent (usually paid at closing).
  • Co-Broker Commission Agreement: Defines commission terms for the buyer’s agent.
  • Escrow Agreement: Outlines the responsibilities of the escrow company in holding and disbursing funds.

7. Post-Closing

  • Seller’s Final Settlement Statement: A statement outlining how the seller’s proceeds are calculated, including the payoff of any remaining mortgage and closing costs.
  • Post-Closing Occupancy Agreement (if applicable): If the seller remains in the property after closing, this agreement sets terms for their continued occupancy.

8. Additional Documents (if applicable)

  • Leaseback Agreement: If the seller needs to rent back the property after the sale.
  • Seller Financing Agreement: If the seller is financing the purchase for the buyer, terms will be outlined here.
  • Escrow Holdback Agreement: If there are unresolved issues or contingencies (like repairs), the escrow company may hold funds until completion.

Buy-Side Checklist

____ Contract

____ Brokerage Addendum

____ Seller’s Disclosures (If available)

____ Condo or HOA Disclosure Addendum (If applicable)

____ Lead Based Paint Addendum if built prior to 1978 (If applicable)

____ Various Other Addendum/Disclosures (Short Sale, Agent Interest, No brokerage relationship)

____ Firpta Disclosure (If Applicable)

____ Buyer’s Pre-qualification letter or proof of funds

____ Copy of Buyers Escrow Deposit Check

____ Commission Disbursement Authorization

Here’s a quick guide to representing a Buyer in Real Estate, outlining responsibilities and the necessary documents:

1. Buyer Representation and Initial Steps

  • Buyer Representation Agreement: Formalizes the relationship between the buyer and the agent, specifying the agent’s duties and compensation.
  • Buyer’s Acknowledgment of Disclosure: Confirms that the buyer has received disclosures such as the seller’s disclosure, lead-based paint disclosure (for homes built before 1978), and other required documents.
  • Property Search Agreement (if applicable): Outlines the process for finding suitable properties and may include any specific buyer preferences or search parameters.

2. Offer and Negotiation Stage

  • Offer to Purchase Agreement: The buyer’s formal written offer to the seller, including price, contingencies (financing, inspections), and the proposed closing date.
  • Pre-Approval Letter: A letter from the lender indicating the buyer’s pre-approved loan amount, typically required to submit with an offer.
  • Earnest Money Agreement: Specifies the earnest money deposit amount that the buyer provides to show good faith and commitment to the offer.
  • Counteroffer (if applicable): Buyer’s response to the seller’s counteroffer, outlining the buyer’s terms or changes.
  • Amendment/Addendum to Purchase Agreement: Any modifications to the original contract, such as adjustments after an inspection, financing terms, or negotiated repairs.

3. Home Inspection Due Diligence

  • Contingency Agreement: Terms under which the buyer can perform inspections (home, pest, or other inspections) and negotiate repairs or price adjustments.
  • Repair Addendum: If the buyer requests repairs after the inspection, this agreement outlines what the seller will fix or credit to the buyer.
  • Appraisal Contingency Agreement: Protects the buyer if the property appraises for less than the agreed purchase price, giving the buyer the option to renegotiate or back out.
  • Title Report (for review): Buyer’s acknowledgment of the title report provided by the title company, ensuring the property is free of any liens or issues.

4. Financing and Mortgage Stage

  • Loan Application: The buyer formally applies for financing with the lender, including all necessary documentation.
  • Mortgage Commitment Letter: A letter from the lender confirming that the buyer has been approved for the loan, subject to certain conditions.
  • Financing Addendum: Details any contingencies related to the buyer obtaining financing, including specific loan terms, down payment, or interest rates.
  • Loan Estimate: A document from the lender that outlines the anticipated costs of the loan, including the interest rate, monthly payments, and closing costs.
  • Closing Disclosure: Final document from the lender detailing the exact terms and costs of the loan, including loan amount, closing costs, and any adjustments.

5. Closing and Transfer of Ownership

  • Purchase Agreement (Final): The executed agreement between buyer and seller that legally commits both parties to the sale.
  • Closing Statement: A breakdown of all costs, credits, and debits for both buyer and seller, including escrow and agent commissions.
  • Deed of Sale: The document transferring ownership from the seller to the buyer.
  • Transfer Tax Form: Required for reporting the transfer of property, and paying any applicable taxes.
  • Final Walkthrough Agreement: Confirms that the buyer has completed a final inspection of the property before closing, ensuring the property’s condition matches the agreement.
  • Post-Closing Occupancy Agreement (if applicable): If the buyer is to occupy the property before closing, this document sets terms for temporary occupancy.

6. Commission and Fee Agreements

  • Agent Commission Agreement: Specifies how the buyer’s agent will be compensated, which is typically through the seller’s commission but can be negotiated.
  • Escrow Agreement: Outlines the escrow process and confirms where the buyer’s funds will be held until the closing is finalized.

7. Additional Documents (if applicable)

  • Escrow Holdback Agreement: If there are unresolved contingencies, such as repairs, the buyer may negotiate for a portion of the purchase price to be held in escrow.
  • Seller Financing Agreement: If the seller is providing financing for the buyer, this outlines the terms, including the loan amount, interest rate, and repayment schedule.
  • Leaseback Agreement: If the buyer is renting the property back to the seller after closing, this agreement outlines the lease terms and duration.
  • Co-Broker Commission Agreement: If a different agent represents the seller, this document specifies the commission arrangement between the buyer’s agent and the seller’s agent.

8. Post-Closing

  • Final Settlement Statement: The final statement showing the buyer’s payment, including loan amounts, down payment, closing costs, and any credits or adjustments.
  • Mortgage Note and Security Instrument: If financing is involved, the buyer signs a mortgage note and security instrument to secure the lender’s interest in the property.
  • Homeowner’s Insurance Policy: Confirmation of coverage for the property, often required by the lender before closing.

Sell-Side Checklist

____ Exclusive Right to Sell Listing Agreement

____ Broker Addendum (If applicable)

____ Seller’s Disclosures

____ Condo or HOA Disclosure Addendum (If applicable)

____ Lead Based Paint Addendum if built prior to 1978 (If applicable)

____ MLS Residential Entry Form // Seller initial MLS sheet // Depends on If Your Board Requires It

____ Various Other Addendum/Disclosures (Short Sale, Agent Interest, No brokerage relationship)

____ Firpta Disclosure (If applicable)

____ Buyer’s Pre-qualification letter or proof of funds

____ Copy of Buyers Escrow Deposit Check

____ Commission Disbursement Authorization

____ Final Closing Documents

Here’s a generalized guide for a realtor explaining important dates in a typical home purchase and sale transaction:

1. Purchase Price & Terms

Example Date: Agreement finalized by March 1, 2025
Meaning: The agreed-upon price and payment method (e.g., cash or financing) are finalized.
Action: Confirm that the buyer’s financing or cash offer is secure.

2. Effective Date

Example Date: March 1, 2025
Meaning: The purchase agreement officially takes effect, and all deadlines start from this date.
Action: Mark this as the official starting point for all subsequent timelines.

3. Escrow Deposit Due Date

Example Date: March 3, 2025
Meaning: The buyer needs to deposit the earnest money into escrow to show commitment to the purchase.
Action: Ensure the buyer has deposited the earnest money by this date.

4. Due Diligence Period Deadline

Example Date: March 17, 2025 (2 weeks from Effective Date)
Meaning: The buyer completes inspections, reviews the property condition, and can either negotiate repairs or cancel the deal.
Action: Ensure all inspections (home, pest, etc.) are completed, and any issues are resolved before this deadline.

5. Title Evidence Deadline

Example Date: March 24, 2025 (3 weeks from Effective Date)
Meaning: The seller must provide clear title to the buyer by this date.
Action: Review the title report for any issues or liens that could delay closing.

6. Closing Date

Example Date: March 31, 2025 (4 weeks from Effective Date)
Meaning: The official closing date when the buyer takes ownership of the property.
Action: Ensure all documents are in order, all funds are available, and both parties are prepared to sign the final paperwork.

Summary of Example Dates:

  • Purchase Price & Terms Finalized: March 1, 2025
  • Effective Date: March 1, 2025
  • Escrow Deposit Due: March 3, 2025
  • Due Diligence Deadline: March 17, 2025
  • Title Evidence Deadline: March 24, 2025
  • Closing Date: March 31, 2025

Here’s a generalized realtor’s guide to handling rental or lease transactions:

1. Listing the Rental Property

  • Action:
    • Get a rental listing agreement from the landlord.
    • List the property on MLS and rental platforms.
    • Market the property (photos, descriptions, rent price, terms).

2. Rental Application

  • Documents Needed:
    • Rental Application: Personal, employment, and rental history info.
    • Application Fee: For background and credit checks.
  • Action: Collect applications, review tenant info, and run background/credit checks.

3. Lease Agreement

  • Documents Needed:
    • Lease Agreement: Include rent, lease terms, security deposit, maintenance responsibilities.
    • Addendums: For pets, parking, etc.
  • Action: Review and ensure both landlord and tenant sign the lease agreement.

4. Security Deposit & Payments

  • Documents Needed:
    • Security Deposit Receipt: Confirm deposit amount.
    • Rent Payment Terms: Define due date, payment methods, and any late fees.
  • Action: Collect first month’s rent and security deposit before handing over keys.

5. Move-In Process

  • Action:
    • Conduct a move-in walkthrough with tenant to ensure property condition is agreed upon.
    • Tenant acknowledges condition to avoid disputes later.

6. Lease Renewal or Termination

  • Action:
    • Contact tenant about renewal before the lease ends.
    • If not renewing, ensure proper notice of termination is given.
    • Schedule move-out inspection if applicable.

7. Security Deposit Return

  • Action:
    • If applicable, return security deposit (with or without deductions).
    • Provide an itemized list of deductions if necessary, per local laws.

8. Ongoing Lease Compliance

  • Action:
    • Communicate regularly with landlord and tenant.
    • Address any lease violations or issues promptly.

Quick Checklist for Realtors:

  1. Listing: Get listing agreement, list property, and market.
  2. Application: Collect tenant applications and process background checks.
  3. Lease Agreement: Ensure lease is signed, including necessary addendums.
  4. Payments: Collect rent and security deposit, clarify payment terms.
  5. Move-In: Conduct move-in walkthrough with tenant.
  6. Renewal/Termination: Handle renewal offers or termination notices.
  7. Security Deposit: Refund or deduct from deposit as necessary.
  8. Compliance: Maintain communication and address any violations.

Here’s a guide on what to use the MLS (Multiple Listing Service) for as a realtor. The MLS is an essential tool that allows realtors to access, list, and share property information with other professionals in the industry.

1. Listing Properties for Sale

Purpose: The primary use of the MLS is to list properties for sale, ensuring they are widely accessible to other agents and potential buyers.
Action: As a realtor, you should input all property details, including the price, photos, descriptions, square footage, and any special features. Ensure the listing is complete, accurate, and professional.

2. Searching for Properties for Clients

Purpose: Use the MLS to find properties that match your client’s criteria (price range, location, amenities, etc.).
Action: Customize search filters to find the best possible matches, then share the results with your buyers. The MLS offers more detailed information than public listing sites.

3. Comparing Market Data (CMA – Comparative Market Analysis)

Purpose: Use the MLS to perform a CMA, which helps you determine a competitive and realistic listing price for a property or evaluate a fair price for an offer.
Action: Look at recently sold properties (comps), active listings, and properties that failed to sell. This analysis gives you insights into pricing trends in the area.

4. Tracking Market Trends

Purpose: The MLS provides access to market statistics, such as average sale prices, days on the market, and inventory levels.
Action: Monitor trends in your area to better understand the current market conditions (whether it’s a buyer’s or seller’s market) and guide your clients accordingly.

5. Managing Offers

Purpose: When you represent a seller, the MLS can be used to track incoming offers and manage the negotiation process.
Action: Input offer details and deadlines, and communicate with other agents through the MLS system to ensure smooth negotiations.

6. Access to Detailed Property Information

Purpose: The MLS provides more comprehensive property details than most public listing sites, including historical data, tax records, and detailed descriptions of the property.
Action: Use this information to answer client questions, confirm property details, and provide insights for making informed decisions.

7. Promoting Listings to a Wider Audience

Purpose: The MLS allows your listing to be visible to all other members, which increases the visibility of the property and potential buyer exposure.
Action: Make sure your listings are syndicated to third-party sites (such as Realtor.com, Zillow, etc.) via the MLS to reach a broader audience.

8. Collaboration with Other Agents

Purpose: The MLS allows you to collaborate and communicate with other agents who may have interested buyers or listings.
Action: Use the MLS to set up showings, share information, and work with other realtors to close deals more effectively.

9. Listing Updates and Changes

Purpose: You can update listing details through the MLS if there are any changes, such as price reductions, status changes (pending, under contract), or new offers.
Action: Make sure to keep your listings updated so other agents and buyers have the most accurate and current information.

10. Networking with Other Real Estate Professionals

Purpose: Many MLS systems include networking opportunities, such as agent directories, upcoming events, and referrals.
Action: Use the MLS to stay connected with other professionals in the industry, share recommendations, and increase your visibility among peers.

Here’s a guide for realtors on important contracts you need to learn how to use, along with when to use them and what they involve:

1. Buyer Broker Agreement

  • Purpose:
    • Establishes a formal relationship between the realtor and the buyer, outlining the realtor’s duties and the buyer’s obligations.
    • Ensures the realtor earns a commission when the buyer purchases a property, regardless of the listing agent.
  • When to Use:
    • Before showing properties to a potential buyer. It should be signed to make sure both parties are clear on the terms.
  • Key Components:
    • Duration of agreement.
    • Commission details.
    • Buyer’s responsibilities.
    • Disclosures of conflicts of interest (if any).

2. Listing Agreement

  • Purpose:
    • A contract between a property seller and a realtor, giving the realtor the right to sell the property on behalf of the seller.
    • Specifies commission, the listing price, duration of the agreement, and responsibilities of the seller and realtor.
  • When to Use:
    • When a seller hires you to represent them in the sale of their property.
  • Key Components:
    • Commission structure (percentage or flat rate).
    • Listing price.
    • Duration of agreement.
    • Marketing plan and property showing conditions.
    • Seller’s obligations (disclosure of property condition, access for showings).

3. “As-Is” Offer

  • Purpose:
    • Used when the buyer agrees to purchase a property in its current condition, without expecting repairs or negotiations on issues found during inspection.
  • When to Use:
    • When a seller is unwilling to make repairs or when the property is being sold in poor condition.
  • Key Components:
    • A clear statement that the property is being sold “as-is.”
    • Waiver of the buyer’s right to request repairs or price adjustments based on inspection findings.
    • Acknowledgement of property condition by the buyer.

4. Right to Lease Agreement

  • Purpose:
    • Gives a realtor the right to lease a property on behalf of the owner or property management.
  • When to Use:
    • When managing rental properties or when a seller or landlord wants the realtor to lease their property.
  • Key Components:
    • Duration of the lease agreement.
    • Terms of rent and lease conditions.
    • Owner’s rights and responsibilities.
    • Commission details.

5. Addendums

  • Purpose:
    • Additional documents that modify or clarify the terms of the main contract (e.g., listing agreement, sales agreement).
  • When to Use:
    • When changes are needed to the original agreement after it has been signed.
    • Common types: inspection addendums, repair addendums, financing addendums, and contingencies.
  • Key Components:
    • Clear description of the change or addition to the main agreement.
    • Date of the change and signatures from both parties.

6. Seller Financing Addendum

  • Purpose:
    • Used when a seller offers financing to the buyer, instead of the buyer obtaining a loan from a bank or financial institution.
  • When to Use:
    • When a seller is offering to finance the sale of their property directly to the buyer.
  • Key Components:
    • Terms of the loan (interest rate, payment schedule, down payment, etc.).
    • Consequences if the buyer defaults.

7. Contingency Clauses

  • Purpose:
    • Conditions that must be met for the sale to proceed, such as financing approval, home inspections, or appraisal.
  • When to Use:
    • When specific conditions need to be fulfilled before the transaction is complete (common in both buyer and seller contracts).
  • Key Components:
    • Clear description of the condition.
    • Timeframe to meet the condition (e.g., mortgage approval within 14 days).

8. Dual Agency Disclosure (if applicable)

  • Purpose:
    • Informs both parties (buyer and seller) that the agent represents both sides of the transaction and may have a conflict of interest.
  • When to Use:
    • When the agent represents both the buyer and the seller in a transaction, either directly or indirectly.
  • Key Components:
    • Clear disclosure of dual agency and potential conflicts of interest.
    • Both parties must sign acknowledging the dual agency.

9. Lease Agreement

  • Purpose:
    • Standard lease agreement between a landlord and a tenant for renting a property.
  • When to Use:
    • When finalizing a rental agreement for a tenant to occupy a property.
  • Key Components:
    • Rent amount and due date.
    • Duration of the lease.
    • Tenant and landlord responsibilities.
    • Terms of renewal or termination.

Summary Checklist for Realtors:

  1. Buyer Broker Agreement: Use when working with a buyer to secure commission and define roles.
  2. Listing Agreement: Use when representing a seller to list a property for sale.
  3. “As-Is” Offer: Use when the property is sold in its current condition without repair negotiations.
  4. Right to Lease: Use when representing a landlord or seller in leasing a property.
  5. Addendums: Use to modify the terms of the main agreement, such as inspection or financing terms.
  6. Seller Financing Addendum: Use when the seller offers to finance the buyer directly.
  7. Contingency Clauses: Use to set conditions for closing the sale (e.g., financing or inspection).
  8. Dual Agency Disclosure: Use when representing both the buyer and the seller in a transaction.
  9. Lease Agreement: Use when formalizing rental agreements between landlord and tenant.

Guide for Realtors: Understanding Mortgages and Financing in Property Purchases

1. Types of Mortgages

  • Fixed-Rate Mortgage:

    • Definition: The interest rate remains the same throughout the life of the loan.
    • When to Use: Ideal for buyers who want predictable monthly payments over the long term.

  • Adjustable-Rate Mortgage (ARM):

    • Definition: The interest rate can fluctuate after an initial fixed period, typically 5, 7, or 10 years.
    • When to Use: Best for buyers who plan to sell or refinance within a few years and can handle potential rate increases.

  • FHA Loan (Federal Housing Administration):

    • Definition: A government-backed loan with lower down payment requirements (usually 3.5%) and more lenient credit standards.
    • When to Use: Ideal for first-time buyers with lower credit scores or smaller down payments.

  • VA Loan (Veterans Affairs):

    • Definition: A loan for eligible veterans and active-duty service members with little or no down payment and no private mortgage insurance (PMI).
    • When to Use: For veterans, active-duty service members, and eligible spouses.

  • Conventional Loan:

    • Definition: A loan not insured or guaranteed by the government. Usually requires a higher credit score and down payment (typically 5-20%).
    • When to Use: For buyers with higher credit scores and stable financial history who want flexibility in loan terms.

  • Jumbo Loan:

    • Definition: A loan that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA).
    • When to Use: For buyers purchasing higher-priced properties that exceed the limits of conventional loans.

2. Pre-Approval and Pre-Qualification

  • Pre-Qualification:
    • Definition: A less formal process where a lender estimates how much a buyer can afford based on their income and debts.
    • When to Use: Pre-qualification is a good starting point for buyers, but it is not as reliable as pre-approval.
  • Pre-Approval:
    • Definition: A more detailed process where the lender checks the buyer’s credit, verifies income, and assesses their ability to repay the loan.
    • When to Use: It’s a stronger position for buyers when making offers, as it shows the seller that the buyer has secured financing up to a certain amount.

3. Down Payments

  • Definition: The upfront cash a buyer pays toward the purchase price of a property. Down payments can range from 3.5% (FHA) to 20% or more for conventional loans.
  • When to Consider:
    • Low down payment loans (FHA, VA) are great for first-time buyers or those without significant savings.
    • Higher down payments can help buyers avoid private mortgage insurance (PMI) and secure better interest rates.

4. Private Mortgage Insurance (PMI)

  • Definition: PMI is insurance required for conventional loans when the buyer puts down less than 20% of the property price.
  • When to Use:
    • For buyers with less than 20% down on a conventional loan. PMI helps protect the lender in case of default but increases the buyer’s monthly payments.

5. Closing Costs

  • Definition: Fees and expenses associated with the closing of a property sale, typically ranging from 2% to 5% of the home’s purchase price.
  • Components:
    • Lender fees (loan application, underwriting, etc.)
    • Appraisal fee (required by the lender)
    • Title search and insurance
    • Attorney fees (if applicable)
    • Inspection fees (optional but recommended)
  • When to Consider: Ensure buyers budget for closing costs on top of their down payment, as these costs can be substantial.

6. Interest Rates and Points

  • Interest Rate:

    • Definition: The percentage charged by the lender for borrowing money. This determines monthly mortgage payments.
    • Fixed vs. Adjustable: Fixed interest rates remain the same for the life of the loan, while adjustable rates can fluctuate over time.

  • Mortgage Points:

    • Definition: A point is equal to 1% of the loan amount. Buyers can pay points upfront to lower their interest rate.
    • When to Consider: If the buyer plans to stay in the home for a long time, paying points may save them money over the life of the loan.

7. Loan Terms

  • Definition: The length of time the buyer has to repay the loan, typically 15, 20, or 30 years.
  • When to Consider:
    • Shorter terms (15 or 20 years) result in higher monthly payments but less interest paid over the loan’s lifetime.
    • Longer terms (30 years) lower monthly payments but increase the total interest paid over the life of the loan.

8. Debt-to-Income (DTI) Ratio

  • Definition: A key metric lenders use to assess a buyer’s ability to repay a mortgage. It compares the buyer’s monthly debt payments to their gross monthly income.
  • When to Consider:
    • Most lenders prefer a DTI of 36% or lower. A higher DTI could limit loan options or interest rates.

9. Loan Approval Process

  • Pre-Approval: The lender evaluates the buyer’s financial situation.
  • Offer Letter: After review, the lender provides a formal loan offer.
  • Appraisal: The lender orders an appraisal to ensure the property’s value is in line with the loan amount.
  • Underwriting: The lender assesses the buyer’s financial stability and verifies documents.
  • Closing: The buyer signs loan documents, pays closing costs, and officially takes ownership.

10. Key Mortgage Documents

  • Loan Estimate:
    • A document provided by the lender detailing the terms of the loan, including interest rate, monthly payments, and closing costs.
  • Closing Disclosure:
    • A document given to the buyer before closing that details the final loan terms and costs.
  • Promissory Note:
    • The buyer’s promise to repay the loan, outlining the interest rate, loan amount, and repayment terms.
  • Deed of Trust or Mortgage:
    • Legal documents that outline the buyer’s agreement with the lender and the property being used as collateral.

Summary for Realtors:

  1. Understand loan types (FHA, VA, Conventional, Jumbo, etc.) to better assist buyers.
  2. Help buyers get pre-approved for a loan to strengthen their position in offers.
  3. Ensure buyers are aware of down payment requirements and private mortgage insurance (PMI).
  4. Educate buyers about closing costs and encourage them to budget for them.
  5. Explain interest rates, loan terms, and points to help buyers select the right loan.
  6. Guide buyers through the loan approval process, from pre-approval to closing.

Important Dates for Mortgages in an "As-Is" Purchase Contract:

1. Effective Date of Contract

  • What It Is: The day both parties sign the contract and it becomes legally binding.
  • When It Happens: Typically on the date both buyer and seller sign, but may be adjusted based on mutual agreement.
  • Realtor’s Role: Start tracking all the important deadlines from this date.

2. Mortgage Application Submission Date

  • What It Is: The date the buyer submits their mortgage application to the lender.
  • When It Happens: Usually within 5-7 days after the effective date of the contract.
  • Realtor’s Role: Ensure the buyer submits the mortgage application promptly to avoid delays.

3. Loan Estimate Delivery Date

  • What It Is: The lender must provide the buyer with a Loan Estimate (LE) within 3 business days after receiving the mortgage application.
  • When It Happens: Typically 3 business days after application submission.
  • Realtor’s Role: Confirm that the buyer has received and reviewed the Loan Estimate so they are aware of the terms and costs involved in their mortgage.

4. Due Diligence/Inspection Period Deadline

  • What It Is: The deadline by which the buyer needs to complete any inspections or due diligence. For an As-Is contract, this period is especially important to ensure the buyer understands the property’s condition.
  • When It Happens: This deadline is often 7-14 days from the effective contract date, depending on negotiation.
  • Realtor’s Role: Ensure the buyer completes their inspections and understands the implications of an “As-Is” property (no repairs will be made by the seller).

5. Appraisal Deadline

  • What It Is: The date by which the lender must complete the property appraisal. This step ensures the property’s value aligns with the loan amount.
  • When It Happens: Usually within 10-15 days after the mortgage application submission.
  • Realtor’s Role: Coordinate between the buyer, lender, and appraiser to ensure the appraisal happens on time.

6. Title Evidence Deadline

  • What It Is: The date by which the seller must provide title evidence, proving they have legal ownership of the property and that there are no legal claims against it.
  • When It Happens: Typically 15-20 days after the effective date.
  • Realtor’s Role: Ensure that the title company is on track to provide this information in time for closing.

7. Closing Date

  • What It Is: The date the property transaction is finalized, and ownership is transferred to the buyer.
  • When It Happens: Typically 30-45 days after the effective date of the contract, depending on the lender and any negotiated extensions.
  • Realtor’s Role: Ensure that all parties are aligned and that everything, including mortgage approval, is on track for closing.

8. Loan Approval Deadline

  • What It Is: The deadline by which the buyer must be approved for the mortgage by the lender.
  • When It Happens: Typically 21-30 days after the effective date of the contract.
  • Realtor’s Role: Track the buyer’s mortgage approval progress and ensure they provide necessary documents to the lender promptly.

9. Extensions of Mortgage-Related Deadlines

  • What It Is: Extensions for various timelines (loan approval, inspection, closing, etc.) can be requested if delays occur, but must be agreed upon by both parties (buyer and seller).
  • When It Happens: Extensions are usually requested prior to the deadline if any issues arise (e.g., appraisal delays, financing issues, or inspection complications).
  • Realtor’s Role:
    • Proactively monitor key dates and anticipate potential delays.
    • Communicate with the lender and the buyer’s attorney about any potential issues and negotiate reasonable extensions if needed.
    • Ensure any extension is documented in writing and signed by both parties.

10. Final Walkthrough

  • What It Is: The buyer’s final opportunity to inspect the property before closing to ensure its condition matches the terms of the contract.
  • When It Happens: Typically 1-3 days before the closing date.
  • Realtor’s Role: Schedule the final walkthrough and ensure that any issues are resolved before closing, even in an As-Is contract (e.g., property left clean and free of items).

Key Extension Scenarios

  • Appraisal Delays: If the appraisal doesn’t come back in time or there are issues with the appraised value, the contract may need to be extended.
  • Mortgage Approval Delays: If the lender needs additional time to approve the loan, an extension of the mortgage approval deadline may be necessary.
  • Inspection Contingencies: If the buyer requests repairs (even in an As-Is contract) or negotiates credits, the timeline for agreement and resolution may need to be extended.
  • Title Issues: If the title evidence is delayed or there are issues with the title, this could delay closing.

Summary for Realtors:

  • Stay on top of key dates: Effective Date, Loan Application Submission, Appraisal, Due Diligence, Title Evidence, Closing Date.
  • Monitor loan approval timelines: Ensure timely submission of documents for loan approval.
  • Manage extensions: Be prepared to negotiate and facilitate extensions if necessary, ensuring that all parties agree in writing.
  • Coordinate final walkthroughs: Ensure the buyer has the chance to inspect the property and confirm everything is as expected before closing.

Example of Key Dates:

  1. Mortgage Application Submission: 5-7 days after the effective date.
  2. Mortgage Pre-Approval: 7-10 days after contract date.
  3. Loan Estimate Delivery: 3 business days after application submission.
  4. Mortgage Approval Contingency Deadline: 21-30 days after the effective date.
  5. Appraisal Deadline: 10-15 days after the effective date.
  6. Title Evidence Deadline: 15-20 days after the effective date.
  7. Closing Date: 30-45 days after the effective date.
  8. Contingency Extension (Mortgage Approval): Before the original contingency deadline.
  9. Final Loan Approval Deadline: 5-7 days before closing.
  10. Closing Disclosure Delivery: 3 business days before closing.
  11. Final Walkthrough Deadline: 1-3 days before closing.

 

Top MLS Violations Guide for Realtors

1. Inaccurate Listing Information

  • Violation: Listing properties with incorrect or outdated information (e.g., price, square footage, number of bedrooms) can result in penalties.
  • How to Avoid: Always double-check the details of your listings, especially before submitting them to the MLS. Keep them updated if any changes occur (price changes, status updates, etc.).

2. Failure to Enter Listings Timely

  • Violation: Many MLS systems have rules requiring listings to be entered within a certain timeframe after they are signed. Failing to meet these deadlines may be penalized.
  • How to Avoid: Ensure that listings are entered into the MLS immediately after obtaining a signed agreement with the seller or client. Follow MLS guidelines for timely submissions.

3. “Coming Soon” Listings Not Properly Filed

  • Violation: Listing a property as “coming soon” without adhering to the MLS’s specific rules (e.g., market date, time limits) is a violation.
  • How to Avoid: If using a “coming soon” listing, check with your MLS about proper procedures and time restrictions. The listing must remain private until the official market date is reached.

4. Misleading or Deceptive Descriptions

  • Violation: Using misleading language or exaggerating property features can mislead potential buyers and violate MLS rules.
  • How to Avoid: Be truthful and precise in your property descriptions. Avoid embellishments and ensure that the information aligns with what is accurate and verifiable.

5. Duplicate Listings

  • Violation: Listing the same property multiple times under different agents or offices to gain more exposure is a breach of MLS rules.
  • How to Avoid: Ensure that each property is only listed once within the MLS, regardless of who holds the listing.

6. Exposing Listings Before the Agreement is Signed

  • Violation: Some agents may list a property before the seller has signed the agreement or has authorized the listing.
  • How to Avoid: Only submit properties to the MLS after receiving a fully executed listing agreement from the seller. This ensures the seller is on board and the agreement is legally binding.

7. Violation of Commission Disclosure Requirements

  • Violation: Not disclosing the commission structure clearly in MLS listings can be a violation.
  • How to Avoid: Always ensure that commission information is clear and in compliance with your MLS’s rules and any state laws regarding commission disclosure.

8. Listing a Property with an Expired Agreement

  • Violation: Keeping an expired listing active on the MLS is not allowed.
  • How to Avoid: Regularly monitor your listings to ensure that they are updated when the agreement expires. Remove or update expired listings promptly.

9. Unauthorized Use of Photos

  • Violation: Using photos without proper authorization or failing to credit the photographer can result in a violation.
  • How to Avoid: Always obtain proper rights to use images and ensure that they are correctly credited. If the photos are taken by a professional photographer, get permission before listing.

10. Not Updating Listing Status

  • Violation: Failing to update a listing’s status (e.g., from “Active” to “Under Contract” or “Sold”) can mislead other agents and potential buyers.
  • How to Avoid: Update listing statuses promptly as soon as a change occurs. Ensure that “Sold” listings are marked as such and that any pending or under-contract properties are updated immediately.

11. Ignoring MLS Syndication Guidelines

  • Violation: Using the MLS to distribute listings to third-party websites without following the MLS’s syndication rules can result in violations.
  • How to Avoid: Follow your MLS’s guidelines for syndicating listings to external sites. Be clear about which platforms your listings will appear on and confirm all rules and terms.

12. Ignoring Fair Housing Rules

  • Violation: Using discriminatory language or violating fair housing laws in MLS listings is a serious violation.
  • How to Avoid: Always adhere to fair housing laws. Avoid language that discriminates based on race, gender, religion, or other protected categories. Ensure your listings are inclusive and accessible.

13. Not Providing Required Disclosures

  • Violation: Failing to include necessary disclosures in MLS listings (e.g., lead-based paint disclosures, property condition reports) can lead to penalties.
  • How to Avoid: Always include any required disclosures in the listing details and attachments, especially for properties built before 1978, as federal law requires lead-based paint disclosures.

14. Failure to Submit Accurate Photos or Videos

  • Violation: Uploading photos or videos that are irrelevant, misleading, or violate MLS image guidelines.
  • How to Avoid: Ensure all photos or videos submitted are clear, accurate, and appropriate. They should show the property’s true condition and features, and follow any specific formatting or size restrictions set by the MLS.

Guide: Residential vs. Commercial Real Estate and Sales vs. Rentals

Residential vs. Commercial Real Estate

  1. Property Type and Use:

    • Residential: These properties are primarily for individuals or families to live in. They include single-family homes, condos, apartments, and townhomes.
    • Commercial: These properties are intended for business use. Examples include office buildings, retail spaces, industrial warehouses, and multi-family buildings that generate income.

  2. Market Size and Complexity:

    • Residential: The market is typically larger with more buyers and tenants. Transactions are often less complex but can be more frequent. Residential properties also tend to have shorter lease terms.
    • Commercial: The market is smaller and often more niche, with fewer buyers or tenants. Deals tend to be larger in value and may involve more due diligence, negotiations, and longer-term agreements (5-10 years).

  3. Financing and Investment:

    • Residential: Mortgages for residential properties are generally more accessible and involve simpler financing. Buyers can qualify for a range of mortgage products (e.g., FHA, conventional loans).
    • Commercial: Financing for commercial properties can be more complex, involving higher down payments, stricter eligibility requirements, and longer approval processes. Investors often seek long-term lease agreements to ensure a stable cash flow for financing.

  4. Appraisals and Valuation:

    • Residential: Property values are often based on comparable market sales (comps) in the area.
    • Commercial: Valuation may focus on income potential (income approach) and capitalization rates (cap rates), as well as comparable sales.

  5. Lease Terms and Duration:

    • Residential: Typically 1-year leases, though month-to-month arrangements are also common.
    • Commercial: Lease terms can range from 3 to 10 years or longer, with more complex clauses for rent increases, tenant improvements, and maintenance responsibilities.

Sales vs. Rentals

  1. Sales (Property Purchase):

    • Objective: The goal is to facilitate a property purchase where the buyer assumes ownership. It can be residential or commercial.
    • Documents/Contracts: Sales require contracts like the Purchase Agreement, Addendums, and financing-related documents (e.g., Mortgage Application, Title Evidence).
    • Realtor’s Role: A realtor’s role is to guide the buyer through the process, negotiate the best deal, and manage paperwork. Realtors must be well-versed in property valuations, appraisal processes, and the closing process.
    • Market Considerations: In sales, the market cycle is driven by supply and demand dynamics, financing availability, and economic factors.

  2. Rentals (Leasing):

    • Objective: The goal is to facilitate a lease agreement where the tenant rents the property for a specific period.
    • Documents/Contracts: Rentals require Lease Agreements, Rental Application Forms, and possibly Move-In/Move-Out Inspection Forms.
    • Realtor’s Role: A realtor’s role in rentals involves ensuring the lease is signed, coordinating move-in schedules, and addressing any concerns of either party.
    • Market Considerations: The rental market can be less volatile than the sales market, and lease terms are typically more short-term. Rental agreements may also involve negotiations around rent, deposit amounts, and property maintenance responsibilities.

How to Align with Experts Like the Jarbly Group

Whether you’re in residential or commercial real estate, or focused on sales or rentals, partnering with a strategic expert like the Jarbly Group can provide crucial support and guidance. Here’s how:

  1. Expert Market Insights:

    • Residential: The Jarbly Group can provide guidance on trends in local housing markets, ideal locations for investment, and approaches to sales that maximize value.
    • Commercial: For commercial real estate, Jarbly offers expertise in identifying profitable investment properties, understanding cap rates, and optimizing lease terms for long-term cash flow.

  2. Financing and Funding Guidance:

    • Residential Sales: Whether you’re helping a buyer secure a mortgage or guiding a seller on how to present their home for a sale, the Jarbly Group can advise on competitive financing options and help align clients with trusted lenders.
    • Commercial Sales and Rentals: The Jarbly Group specializes in business financing and has connections to lenders and partners who can assist with complex commercial deals and ensure that investments are financially sustainable.

  3. Strategic Negotiations:

    • Whether it’s negotiating sale prices for residential properties or complex lease terms for commercial rentals, the Jarbly Group can provide negotiation strategies that maximize financial outcomes, saving time and money.

  4. Comprehensive Services:

    • The Jarbly Group offers full-service solutions, from property valuations to contract negotiations and closing coordination. They streamline processes, reduce risk, and help close deals efficiently.
    • For commercial properties, the group specializes in investment strategy, helping clients identify properties with the potential for high returns, whether through purchases or leases.

  5. Networking and Partnerships:

    • Whether in residential or commercial real estate, having access to Jarbly’s network of lenders, brokers, contractors, and legal advisors can significantly improve your transaction success rate and reduce delays.

Conclusion:

  • Residential vs. Commercial: The distinction lies primarily in the property’s intended use, financing structures, and market dynamics.
  • Sales vs. Rentals: Sales involve ownership transfer, while rentals involve lease agreements and tenant management.
  • Expert Alignment: The Jarbly Group can assist in all stages of the process, from financing and negotiations to providing strategic insights and full-service support, ensuring your success in both residential and commercial real estate endeavors.

By aligning yourself with industry experts like the Jarbly Group, you gain access to a wealth of knowledge, experience, and tools to navigate the complexities of any real estate transaction.