2 RE posts - Due Oct. 25

POST #1

While some sellers are knowledgable enough to list, advertise, or sell their property, it is always better idea to have more help from licensed individuals like brokers. Real estate brokers are certified and licensed individuals who provide services on basis of compensation. Real estate sales process involves many steps, listing, marketing, qualifying buyers, presentations, negotiations,, contracts, closings. The relationship between the seller and the real estate broker is defined by a contract which is called listing agreement. The listing agreement authorizes the broker to perform all the steps of real estate sales process. Listing agreement specifies the offering price, the compensation of the broker, the length of time of finding a buyer and more details. Even though there are many forms of listing agreements, the more common used types are exclusive brokerage/exclusive agency listing, exclusive right to sell listing, and open listing. 

In open listing type of agreement the broker is entitled to compensation if the broker sales and closes the transaction. The seller is able to have many brokers and even sell the house himself. There are some advantages and disadvantages to this type of agreement. They have flexibility. One of the disadvantages is that the broker might not be dedicated fully to sell the property, because other broker might sell it and they will use the compensation. Brokers prefer not to engage in this type of agreement. By exclusive brokerage/agency listing agreement the seller is obligated to pay compensation to original broker even if another broker finds a buyer. If the owner sell the property then the owner is not liable for the compensation. In an exclusive right to sell listing agreement the owner is liable to pay the commission even if the seller finds a buyer. Of course brokers prefer this type of agreement. 

Generally appraisers estimate the market value of the real estate. Market value is the amount of the real estate that is sold in a market. It is the amount which the property brings in a competitive and fair market. The highest and best se analysis is very important because it produces the highest value for a property. Market value is the price at which the property sells in its current condition within certain period of time ( Vaughan, J.) 

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POST #2

With an open listing agreement, a seller is entitled to authorize multiple brokers to find a potential buyer for a piece of real estate. Whichever broker seals the real estate transaction first collects the commission on the sale. Although the multiple brokers may seem like a plus for a seller, it can be a fall back because a broker will not concentrate as hard on selling the property due to the possibility of losing the sale to another broker.

In an exclusive-brokerage listing, a seller is only authorized to have one broker sell the real estate without the legal obligation of having to pay the original broker commission on the sale if another broker is to sell the property. That being said, the owner still retains the legal right to sell the property themselves without becoming obliged to pay the broker commission on the sale.

Finally, an exclusive-right to sell listing authorizes one single broker to find a potential buyer for a real estate listing and the seller agrees to pay the original broker a commission even if it is sold by another broker throughout the duration of the listing. In this form of listing, even if the seller finds a buyer themselves, they are still required to pay the sole broker commission on the sale. For this reason, a broker would certainly prefer this type of listing due to the higher possibility of them receiving commission on the real estate transaction. 

Highest and best use analysis is defined as determining the "use that is legally permissible, physically possible, financially feasible, and maximally productive" (Floyd & Allen, 2011). Due to the assumption that any average, reasonable buyer would maximize the possibilities of their property and use it in the most efficient way possible, highest and best use analysis is critical in determining the market value of a piece of real estate.