Real Estate Brokerage Dec6

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REAL ESTATE
BROKERAGE
by Maya Bandolon-Cartojano, REC, REA, REB
Maya Bandolon-Cartojano, REC, REA, REB www.cartojanorealty.com
12/6/2015
Real Estate as a Business

connotes trading in
real estate where the
principal invests his
own money and / or
avails of financing in
the acquisition and/or
improvement of real
estate for subsequent
sale, lease or other
income.
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Real Estate as a Practice

refers to the rendition of
professional service for or in
behalf of
seller/buyer
lessor/lessee
financier/borrower
user or investor
or other clients
in the acquisition, utilization,
disposition, and/or development
of real estate.
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Real Estate Professionals & Businesses

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Real Estate Professionals
Real Estate Consultants (REC)
Real Estate Appraiser (REA)
Real Estate Broker (REB)
Real Estate Salespersons (RES)
RE Businessmen/Entrepreneurs
Real Estate Developer
Real Estate Dealer
Real Estate Lessor

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Real Estate Brokerage
Contract of Agency
Real estate brokerage is a

contract of agency. Agency,
in general, is a contract
wherein a person binds
himself to render service to
do something
in representation of or on
behalf of another, with the
consent or authority of the
latter.
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Essential Elements of Agency
Mutual consent of parties to
establish a relationship
Object is the execution of a

juridical act
Agent acts for the principal
and not for himself.
Agent acts within the scope of
his authority.
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Modes of Extinguishing Agency
Expiration of the period
Death of principal or agent
Withdrawal of agent
Accomplishment of purpose
Revocation
Dissolution of a firm which
granted or accepted
agency
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Roles of Real Estate Brokers

o Buying
o Selling
o Leasing
o Financing
o Developing
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Kinds of Real Estate Brokerage

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Sales - residential, commercial,

industrial, agricultural,
investments (condominium,
proprietary shares, others)
Lease - residential,
commercial, industrial,
agricultural, investments
(condominiums, proprietary
shares, others)
Mortgage or loan brokerage
Real Estate Exchange (Trading)
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Concepts of Real Estate Brokerage

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AS TO FUNCTION OF BROKERS
Sales Agency
Purchase Agency
Lease Agency
Exchange Agency
Loan Agency
Joint Venture Development
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Scope of Real Estate Brokerage

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Purchase Agency - authority to look for a property.

Lease Agency - authority given by the owner of a rental property for
the broker to secure tenants, or authority given by a prospective
tenant of the broker to look for a space to be rented.
Exchange Agency - negotiation for exchange of properties

Loan Agency - authority given by a borrower for the broker to secure
a loan to be collateralized by real estate, or authority given by a
financial institution for the broker to procure borrowers.
Joint Venture Development Agency - authority given by a landowner
or developer for the broker to negotiate a joint venture agreement or
development.
Sales Agency - authority given by the seller for the broker to look for a
buyer and negotiate the sale.
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Essential Elements of Real Estate Brokerage

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Employment of the Broker as

an agent.
Functions to be performed
by the Broker must be
specific.
Performance of service
The services rendered by the

Broker are for a fee,
commission, compensation
or any other valuable
consideration
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Concepts of Real Estate Brokerage

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AS TO BASIS OF COMMISSION
Percentage listing - one

wherein the commission of
the broker is based on
stipulated percentage of the
price or consideration.
Net listing - one wherein the
compensation of the broker
is the amount
obtained
over and
above the price quoted by
the seller.
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General Steps of Real Estate Brokerage

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A. SECURE LISTING - look for

real estate for sale, lease,
mortgage and exchange
to be listed by the broker.
B. SECURE PROSPECTS - look for
persons who are interested
to buy, lease, mortgage
and exchange to be listed
by the broker.
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PROCURING PROSPECTS
A prospect is a person who is in
need and can afford to buy.
A person who has the willingness
but without capacity or one who
has capacity but without
willingness is only a suspect.
One with willingness without
capacity but has willingness to
have the capacity is a future
prospect.
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Sources of Prospects
Adjacent and neighbour owners
Tenants of the property
Previous clients
Referrals
Fellow brokers
Advertisements
Club membership
Newspaper announcements
Apartment dwellers
Companies with provident housing

benefits for employees
Social media
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FACTORS TO CONSIDER IN
QUALIFYING PROSPECTS
Need of the prospect
Cash position or capacity to
secure financing
Verification whether or not
prospect is authentic and not only
a window shopper
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REASONS WHY PEOPLE BUY

REAL ESTATE
a. For occupancy and use for rental
purpose
b. For investment
c. For speculation
Note: People in the first group will
usually pay more that those in the
second group, and the lowest price
of all is paid by the speculator who is
interested in quick turnover or profit.
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C. PRESENTATION AND
DEMONSTRATION
Showing of pictures,
brochures, price, site,
To arouse interest
To create desire
which could lead him to
act and buy the
property.
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PRESENTATION
it is the orderly written / oral explanation of facts and figures that make a
given property attractive to a prospective purchaser.
Scope of coverage:
a. Property identification - location (street, house, number, city); lot area
and dimensions; type of property; description of improvements; zoning
classification; price and terms;
b. Advantages and benefits - quality of neighborhood, availability of
public transportation, proximity to public market/ malls/ schools/ hospitals;
reasonableness of price.
c. For income properties - present and potential

income, durability of income stream, return on investment.
d. Lot and vicinity plan and pictures of property
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DEMONSTRATION
-it is the process of showing the property and pointing out its physical
utilities and other advantages and benefits to arouse the desire to
possess or own it.
Preparing for demonstration:
Preparation of checklist of the physical attributes and other data
which may be the object of prospects inquiry.
Organization of selling points to be emphasized.
Anticipation of possible objections.
Selection of ideal route to create favourable
impression of the neighborhood.
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D. NEGOTIATION
involves transmittal of
purchase offers,
counteroffers and
conciliation of parties as to
the price and terms.
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NEGOTIATION
-it is the process of reconciling the

opposing views of the parties to a
and terms.
transaction as to price
Items which should be covered in negotiation.

Price and terms
Expenses for execution and registration of sale
Date of delivery of property
Pro-rating of income or rental from the property.
Pro-rating of insurance premiums and utilities

Items included or excluded in sale such as telephone, cable,
furnitures, etc.
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NEGOTIATION
Common Difficulties
Hesitancy of prospect to express
his objection,thereby depriving the broker the
opportunity to answer or overcome it.
Presence of supposed advisers of the prospect who give
negative remarks which tend to undermine the transaction.
Prejudice on either both parties because of differences in religion,
political beliefs, superstition, etc.
d. Failure or inability to analyze prospects affordability.
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E. CLOSING &
CONSUMATION
the process effecting the
meeting of minds of the
parties in the transaction.
The execution and signing
of the documents,
payment of the
consideration, delivery and
the registration of the
property in the name of the
buyer.
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CLOSING -it is the process when , thru the mediation of the broker,
the minds of the parties meet where the buyers offer of price, terms,
and other conditions become acceptable to the seller, or vice versa.
General Steps
Persuading the prospect to submit

a written offer to purchase,
preferably with earnest money.
Securing the acceptance of the
offer to purchase, or assisting the
seller is preparing a counter offer.
Preparation of drafts of agreements for consideration of the parties.
Arrangement of appointment between parties for contract signing

and payment.
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CLOSING
Earnest Money - the amount

accompanying an offer to
purchase to manifest good faith
or genuine desire of the buyer to
purchase the property. If the
offer is accepted by the seller,
the earnest money forms part of
the purchase price; otherwise it
must be returned immediately
to the buyer.
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CLOSING
Escrow - an agreement wherein the consideration of a

contract or a portion thereof is deposited with a third party
known as escrow agent who is authorized to release payment
upon fulfillment or performance of some act or condition.
Applicability of escrow may occur in the following cases:
When the property is occupied by squatters and the seller assumes

the responsibility to eject them.
When the title to the property has certain annotations which the seller
assumes cancellation of.
When the seller is given time to vacate the premises and escrow is
provided to ensure delivery within the stipulated period.
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CLOSING
Option - a contract between the seller and the buyer

where the former, for a consideration known as option
money, binds himself to reserve the property for the
latter purchase within a stipulated period of time and at
a specified price and terms.
Option money is the consideration of an
option contract without which the option is
not binding. Generally option money is
separate and distinct from the purchase
price.
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CLOSING
Reason for Option:

1. Buyer does not have sufficient cash or still has to raise
financing.
2. Buyers money is tied up with the money market or
time deposit and the buyer oes not want to withdraw
the placement before maturity because
of the interest income, etc.
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CLOSING
Listing & Option

Listing is generally a contact between the seller and the broker, while option
is contract between the seller and the buyer. Listing generally refers to the
authority to sell, while option refers to reservation to buy.
Earnest Money & Option Money:
Earnest money is the amount accompanying
an offer to buy, while option money is generally
separate and distinct from the price.
Lease Agency & Property Management:
The function of the lease broker is only to secure

tenants. The function of the property manage include: determining rental
rate, securing tenants, rent collection, property maintenance, and handling
owner-tenant relationship.
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F. REGISTRATION
is the cancellation of the
sellers title and issuance of
new title in the buyers
name, or annotation of the
mortgage or lease at the
back of the title.
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COMMISSION
Rate - There is no law prescribing

the rate of commission. Rather,
it is determined by agreement
between the principal and the
broker.
Requisites for commission:
Broker must be duly authorized by the principal
Broker must procure a ready, willing and able buyer.
Broker must be the procuring cause, that is, he must be instrumental in
effecting a meeting of minds between the parties.
Broker must close the transaction during the period of his authority.
Broker must close at the price and terms authorized.
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COMMISSION
Rate - There is no law prescribing

the rate of commission. Rather,
it is determined by agreement
between the principal and the
broker.
Hold-over clause in listing - a provision in a listing which entitles the broker
commission even the sale was closed after the period of his authority,
provided the buyer is a party whom he has negotiated during the period of
his authority.
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Concepts of Real Estate Listings

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Listings are otherwise known as STOCK IN

TRADE or inventory. They may be residential,
commercial, industrial, agricultural, beach
resort, or other investment properties
Listing - is the authority

given by the seller /
buyer, lessor / lessee,
financier / borrower, or
landowner / developer
for the broker to
negotiate the sale,
purchase, lease,
exchange, mortgage,
development joint
venture of real estate,
for a certain period of
time, at certain price
and terms, for a
stipulated rate of
commission.
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KINDS OF LISTING:
I. AS TO FORM
Oral Listing - one

where the authority to
sell is verbally given.
Written Listing - one

where the authority to
sell is given in writing
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KINDS OF LISTING:
I. AS TO EXCLUSIVENESS
Open, None Exclusive,

or First Come First
Serve
Exclusive Listing
Multiple Listing
Restricted Listing
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A. Open, None Exclusive, or

First Come First Serve
- authority given to two or
more brokers. The sale made
by one of the brokers
automatically terminates the
contract of all brokers
concerned. The broker who is
the procuring cause of sale
receives the commission. If the
owner sells or leases the
property directly, he needs not
to pay any broker.
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B. Exclusive Listing
a listing wherein only one broker
is authorized to negotiate.
Exclusive Agency Contract
an exclusive listing wherein the
listing broker is not entitled to a
commission if the owner
negotiates the sale of the
property.
Exclusive Right To Sell

a listing where the solely
authorized broker is entitles to
commission even if the principal
closes the transaction.
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C. Multiple Listing
the Broker who holds the Exclusive
Contract to Sell re-lists it to a
multiple listing service (MLS). The
MLS is usually available from the
real estate organizations and /or
boards. The real estate org or
board, after accepting the listing,
provides copies of necessary
sketches, location maps, and lot
plans, pictures and other
pertinent data about the
property, and distributes these to
the participating members.
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D. RESTRICTED LISTING
the owner, for some special

reasons, may want the
authority to sell he gave the
broker to be treated as strictly
confidential. He may
impose conditions such as:
Restricted listings are usually practiced by big

corporations and influential persons where
information or news of their selling certain
properties may adversely affect their business
and / or standing in the community.
It must not be advertised nor

placed in a multiple listing.
It must be handled by the
broker himself and his office
staff should not know about it.
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D. RESTRICTED LISTING
the owner, for some special

reasons, may want the
authority to sell he gave the
broker to be treated as strictly
confidential. He may
impose conditions such as:
Whenever the property is offered to
prospective buyers, it must be presented
in such a manner that it would appear
that the broker is not offering the
property for sale but is merely informing
the buyer that if he is interested to buy,
he may be able to persuade the owner to
sell the property.
It must not be advertised nor

placed in a multiple listing.
It must be handled by the
broker himself and his office
staff should not know about it.
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CONTENTS OF LISTING
Name, address, and signature

of principal and broker
Description of property;
Lot/Block/Plan/Title No.,
Location, Area,
Improvements,
Mortgages (if any), Utilities
and facilities
Period of authority
Price and terms
Rate of commission
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SOURCE OF LISTING
Personal contacts
Referrals
Multiple listing and fellow brokers

Memberships in clubs and
associations
Foreclosure notices
Banks and financing institutions
Classified ads and newspaper
advertisements
For sale signboards of owners

Adjoining owner of the property
which is for sale, etc.
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FACTORS TO CONSIDE IN LISTING

1. Price quotation of owner is within
the realm of the market value.
2. Title is free from any condition or
annotation which may pose legal
obstacle to is disposition.
3. Person giving authority is the owner
or duly authorized representative.
4. Verification whether the property

or portion thereof will be
expropriated.
5. Verification, in case of agricultural,
wether disposition is feasible under
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agrarian reform law.
Essential Attributes of Real Estate Brokers

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AMIABILITY - having a pleasant

and friendly disposition, coupled
with an easygoing temperament
and a genuine interest in people.
CREATIVITY - having or
characterized by imagination,
originality, productivity, an artistic
skill, etc. No formula work twice;
each formula is simply a solution
to a particular problem that
occurred in the past. Every new
problem requires a new solution or
a fresh approach depending on
circumstances surrounding it.
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DEPENDABILITY - ability to keep

promises since customers want to
know that the broker will be there
when he says hell be there.
EMPATHY Empathy- a liking and
understanding of people coupled
with the ability to involve
themselves in the problems and
decisions of others.
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ENTHUSIASM & OPTIMISM -the

broker must have a positive
outlook in his daily undertaking
and should treat his profession as
something that both enjoyable
and rewarding to do.
HONESTY - being trustworthy,
honorable, upright. As the Proverb
says, Honesty is the best policy,
being honest in every transaction
clears away all doubts if any, in
the minds of all the parties
involved and as a result, further
boosts the credibility of the broker.
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INDUSTRIOUS - having an earnest,

steady effort in following up even
the smallest details in every
transaction.
INTELLIGENCE - a recognition of all
the facts pertinent to every
transaction and maintaining a
high quality of salesmanship.
PATIENCE - an invaluable asset

that is a pre-requisite in any type
of transaction.
TACK & DIPLOMACY - an ability to
appreciate delicate situations
and to act accordingly.
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COMMON PITFALLS IN BROKERAGE

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ARISING FROM PRINCIPAL- BROKER RELATIONSHIP
The principal is averse to giving written authority and the broker is hard put in proving his
verbal authority.
Seller and buyer collude with each other by postponing consummation after expiration
of brokers listing which does not contain a hold-over clause.
After broker has spent time, effort and money is photocopying documents, and follow
ups, spending gasoline, etc., the buyer purchases the property thru another broker who
happens to be his relative or friend.
After the broker has registered his buyer with the seller, the buyer purchases the property
not in his name but in that of his company; thus buyer is no longer the person registered
by the broker.
The authority of the broker is a net-selling, and the seller accepts an offer to buy at the
listed price or lower, thereby depriving the broker of the overprice compensation.
With the effectiveness presentation of the broker, or after the broker has prepared a
feasibility study, the seller realized new values on the property and decides not to sell.
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ARISING FROM BROKER- BROKER RELATIONSHIP
The listing broker extends his authority to another broker who

then goes directly to the owner-seller to secure a listing in his
own name.
In a cooperative transaction, the selling broker obtains an
extension of authority from the listing broker, only to find out
that the supposed listing broker himself does not have the
authority from the seller.
In a cooperative transaction, the listing broker who receives
the full commission refuses or fails to remit the share of the
selling broker.
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ARISING FROM BROKER- BROKER RELATIONSHIP
The listing broker extends his authority to another broker who

then goes directly to the owner-seller to secure a listing in his
own name.
In a cooperative transaction, the selling broker obtains an
extension of authority from the listing broker, only to find out
that the supposed listing broker himself does not have the
authority from the seller.
In a cooperative transaction, the listing broker who receives
the full commission refuses or fails to remit the share of the
selling broker.
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Real Estate Brokerage Dec6

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Maya Bandolon-Cartojano, REC, REA, REB www.cartojanorealty.com

Real Estate as a Business

Real Estate as a Practice

Real Estate Professionals & Businesses

Real Estate Professionals

Real Estate Consultants (REC)

Real Estate Appraiser (REA)

Real Estate Broker (REB)

Real Estate Salespersons (RES)

Maya Bandolon-Cartojano, REC, REA, REB www.cartojanorealty.com

Real Estate Developer

Real Estate Dealer

Real Estate Lessor

Maya Bandolon-Cartojano, REC, REA, REB www.cartojanorealty.com

Maya Bandolon-Cartojano, REC, REA, REB www.cartojanorealty.com