• Direct Sales

• FSBO

• Builders

• Resort Properties

• Sales by Brokers

•Realtors

• Sales by Dealers

• Portfolio

• Flipping

Sale of Real EstateSale of Real Estate

Two Types of AgentsTwo 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 LicenseMissouri 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 Where Do Buyers Come From? 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 PropertyFor 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%

AgencyAgency

• Designated Agency Law

• Sept 1st 1997

• Allows different types of agency

• Agent can be:

• Buyers Agent

• Sellers Agent

• Dual Agent

• Transaction Agent

Brokers ObligationsBrokers 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 1968Fair 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 CommissionsBroker 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 ContractsListing Contracts

• Open Listing

• Exclusive Agency

• Exclusive Right to Sell

• Net Listing

• Net Profit = Price – Commission(Price) – Closing Cost

• Auction

Mortgage FinancingMortgage 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 – 3rd 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.Mortgages Cont.

Mortgage ControversiesMortgage 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 CovenantsFNMA Covenants

• Escrow Deposit

• Borrower Must Insure Property

• Borrower Must Maintain Property

• Inspections

• Negotiated Covenants

Types of MortgagesTypes of Mortgages

• Conventional

• Open-end

• Package

• Blanket

• Budget

• Government Sponsored

• FHA

• VA

FHA CharacteristicsFHA 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 CharacteristicsVA Characteristics

• Guaranteed by Veterans Administration

• Created in 1944

• Guaranteed no Insured

• No Insurance Premiums

• No Down Payment

• Fixed Rate and ARMs

• Entitlement Capped

PMIPMI

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 MortgagesSpecial 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 TerminationMortgage Termination

• Mortgage Satisfaction

• Mortgage Default

• Lender Options

• Refinance

• Voluntary Sale

• Deed in Lieu

• Foreclosure

Mortgage MarketsMortgage Markets• Mortgage Banker

• Mortgage Broker

Markets

• Primary

• Secondary

Transaction Types

• Direct Sale Program

• Mortgage Backed Securities