Flat Fee MLS!

Closing: Closing (or settlement as it is known in some parts of the US) represents the final stage when transferring title to real property from one person to another. The closing date is set forth in the real estate contract, executed by both parties, and usually takes place several weeks subsequent to the contractual effective date. At closing, the parties will execute a number of documents, prepared by their closing agent, including the deed (a.k.a the instrument of conveyance). The deed is a legal instrument used to convey certain rights an individual has to property to someone else. Deeds come in various forms. The most commonly used deed is the warranty deed. With this type of conveyance, the grantor (seller) fully warrants that the title to the real property is free and clear of all liens and encumbrances and will defend against the lawful claims of all persons whomsoever. Ownership is officially transferred when the fully executed (and notarized) deed is delivered to the buyer and recorded in the official records in the office of the County Recorder of the county in which the property is located. The closing will be conducted in accordance with instructions provided by the parties (the real estate purchase and sales agreement) and the lender, if there is one. Both state law and custom dictate the methodology and process of closing.

Commission: Payment to a broker for services rendered, such as in the sale or purchase of real property; usually a percentage of the selling price of the property.

Comparables: Properties listed in an appraisal report that are substantially equivalent to the subject property.

Cooperating Broker: A real estate broker who agrees to a commission split with another broker. MLS Rules require that its members offer compensation to other members who bring them contractual offers that result in a successful closing. The selling broker (buyer’s agent) who secured the purchaser is referred to as the cooperating broker that assists the listing broker in selling the property. The cooperating broker must look to the listing broker for a commission. The brokers agree to a commission split. The fee paid to the buyer’s broker (cooperating broker) is usually 2 to 3.5 percent of the contract sales price. The title agent conducting the closing will be be instructed, pursuant to the purchase and sales agreement (or listing agreement), to disburse any fees due to the cooperating Broker.

Cooperating Brokerage Fee: A fee that is paid to a real estate broker for producing a bidder or purchaser. The fee is usually paid when the submitted offer results in a successful sale and closing of the property. The fee is usually 2 to 3.5% of the sales price.

Counter Offer: A rejection to all or part of a purchase offer that negotiates different terms to reach an acceptable sales contract.

Deed A written instrument that, when executed and delivered, conveys title to or an interest in Real Estate.

Earnest Money: Money put down by a potential buyer to show that they are serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal. During the contingency period the money may be returned to the buyer if the contingencies are not met to the buyer’s satisfaction.

Exclusive right-to-sell Listing Agreement: An exclusive right-to-sell listing is the most commonly utilized instrument. It gives the broker the exclusive right to earn a commission by representing the owner and bringing a buyer, either through another brokerage or directly. The owner pays both the listing and selling broker fees. The owner cannot sell the property herself without paying a commission, unless an exception is noted in the contract.

Exclusive-Agency Listing: A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner’s stated terms, for a commission. The owner reserves the right to sell without paying anyone a commission if he or she sells to a prospect who has not been introduced or claimed by the broker. Exclusive-Agency listing agreements are the most commonly utilized by Flat Fee MLS brokers.

Executory Period: The time between the contract is entered into and the performance is made.

Fair Housing Act: Landmark federal law passed in 1965 and amended in 1988 that makes it illegal to deny rent or refuse to sell to anyone based on race, color, religion, sex or national origin. The 1988 amendment expanded the protections to include family status and disability.

Fair Market Value: The hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

Fannie Mae: Federal National Mortgage Association (FNMA); a federally-chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities for sale to investors; by purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential homebuyers. Also known as a Government Sponsored Enterprise (GSE).

Federally Related Mortgage Transaction: is a loan (1) made in whole or in part, or issued, supplemented or assisted in any way by the Secretary of the Department of Housing and Urban Development (“Secretary”) or any other officer of the Federal government or under or in connection with a housing or urban development program administered by the Secretary or a housing or related program administered by any other such officer or agency; or (2) made according to loan terms which, at the time of closing, comply with loan program approved for purchase by the Federal National Mortgage Association (“Fannie Mae”), the Government National Mortgage Association (“Ginnie Mae”), or the Federal Home Loan Mortgage Corporation (“Freddie Mac”).

Fee For Service: Traditional brokers face increasing competition from fee-for-service brokers who charge only for those services the consumer actually buys. Consumers with the option of choosing a fee-for-service broker can save thousands of dollars by purchasing only those services they need. A number of states have enacted laws that require consumers to purchase brokerage services they may not want, with no option to waive the extra items. These so-called “minimum service” laws diminish consumer choice and raise the cost of selling a home.

Flat Fee MLS: Flat fee MLS is a term used to describe a practice in the real estate industry in which realtors place pertinent information about a property for sale into the database of the local Multiple Listing Service (MLS) for a set fee or dollar amount as opposed to a commission based on the contract selling price of the property. The arrangement between the real estate broker and the property owner (“seller”) typically requires that the parties enter into an exclusive-agency listing agreement, a listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner’s stated terms. The owner reserves the right to sell without paying anyone a commission if he or she sells to a prospect who has not been introduced or claimed by the broker. In return, the seller will be required to pay the listing broker a flat fee for his/her limited services provided. This essentially reduces contractual risks between the seller and the listing broker, since the seller is free to sell (or otherwise transfer title to the real property) to any person procured by the seller (i.e. someone who is not represented by a “Buyer’s Broker”) without having to pay a brokerage commission or penalty. The net effect is to limit brokerage services provided, thereby giving the seller greater control and flexibility at significantly reduced costs.

Flat Fee MLS Broker: A real estate broker who charges a one time fee (or flat fee) for listing property in a Multiple Listing Service (MLS). Real estate brokers who charge for only those services actually purchased by the consumer are referred to as fee-for-service (or flat fee mls) brokers. The downside to using this service is that the seller must represent himself in the sale of his/her property. Therefore, Flat fee MLS may not be suitable for everyone. The seller is advised to seek competent legal advice when selling real property using a flat fee MLS listing service.

Freddie Mac: Freddie Mac’s mission is to provide liquidity, stability and affordability to the housing market. Congress defined this mission in our 1970 charter [PDF 54K], which lays the foundation of our business and the ideals that power our goals.

Ginnie Mae: Government National Mortgage Association (GNMA); a government-owned corporation overseen by the U.S. Department of Housing and Urban Development, Ginnie Mae pools FHA-insured and VA-guaranteed loans to back securities for private investment; as With Fannie Mae and Freddie Mac, the investment income provides funding that may then be lent to eligible borrowers by lenders.

Grantee: An individual to whom an interest in real property is conveyed.

Grantor: An individual conveying an interest in real property.

Johnson v. Davis: Supreme Court of Florida, 1985 480 So. 2d 625 Brief Fact Summary Davis (plaintiff) contracts to buy home from Johnson (defendant) and makes a $5,000 down payment installment. Before making the additional $26,000 down payment, Davis notices that roof is problematic. Further investigation reveals that roof needs major work, which was not disclosed by Johnson. Davis sues for rescission and return of $5,000 and Johnson counterclaims for the $26,000. Rule of Law and Holding: Seller has a duty to disclose when she knows of facts that affect the value of the home AND are NOT readily observable.

Lead-Based Paint Disclosure Program Sect: Recognizing that families have a right to know about lead-based paint and potential lead hazards in their homes, Congress directed EPA and HUD to work together to develop disclosure requirements for sales and leases of older housing. These requirements became effective in 1996. EPA has established hazard standards for paint, dust, and soil in most pre-1978 housing and child-occupied facilities. These requirements became effective in 2001.

Lease: A written agreement between a property owner and a tenant (resident) that stipulates the payment and conditions under which the tenant may occupy a home or apartment and states a specified period of time.

Lender’s Policy: This is sometimes called a loan policy and it is issued only to mortgage lenders. Generally speaking, it follows the assignment of the mortgage loan, meaning that the policy benefits the purchaser of the loan if the loan is sold. For this reason, these policies greatly facilitate the sale of mortgages into the secondary market. That market is made up of high volume purchasers such as Fannie Mae and the Federal Home Loan Mortgage Corporation as well as private institutions.

Limited Service Agreement: A limited service listing agreement is an agreement by which a broker provides fewer services than those services provided for in a traditional real estate listing agreement. A limited service agreement may provide for a menu of services, such as only listing the real estate in the MLS for a flat fee, rather than a full commission for the complete range of brokerage services generally found in a traditional real estate agency relationship.

Limited Service Laws: Real estate brokers who charge a one time fee (or flat fee) for only those services actually purchased by the consumer are referred to as fee-for-service (or limited service) brokers. State mandated “minimum service” laws dictate to what extent the full service can be stripped into individual components. Consumers who choose this option can realize savings of up to thousands of dollars. A number of states have enacted laws that require consumers to purchase brokerage services they may not need or want, with no option to waive the extra items. These so-called “minimum service” laws diminish consumer choice and raise the cost of selling a home. Also see “flat fee mls“.

Listing Agreement: A contract between a landowner (as principal) and a licensed Real Estate broker (as agent) by which the broker is employed as agent to sell Real Estate on the owner’s terms within a given time, for whose service the landowner agrees to pay a commission. Generally, two types: 1) Exclusive right-to-sell Listing Agreement: An exclusive right-to-sell listing is the most commonly utilized instrument. It gives the broker the exclusive right to earn a commission by representing the owner and bringing a buyer, either through another brokerage or directly. The owner pays both the listing and selling broker fees. The owner cannot sell the property herself without paying a commission, unless an exception is noted in the contract. 2) Exclusive-Agency Listing: A listing contract under which the owner appoints a real estate broker as his or her exclusive agent for a designated period of time to sell the property, on the owner’s stated terms, for a commission. The owner reserves the right to sell without paying anyone a commission if he or she sells to a prospect who has not been introduced or claimed by the broker. Most commonly used with Flat fee MLS listings.

Listing Broker: The broker in a multiple-listing situation from whose office a listing agreement is initiated, as opposed to the selling broker, from whose office negotiations leading up to a sale are initiated. The listing broker and the selling broker may be the same person. See also Multiple listing.

Local MLS: Pertains to locality. For example, Realtors place real property MLS Listings in MLSs that fall within jurisdictional boundaries created by the MLSs themselves.

Multiple Listing Service: The MLS (Multiple Listing Service) is a computerized database that enables realtors to display real time real property listing information, so that authorized participants, as well as the public, can view and evaluate listings. The MLS serves as a means by which authorized participants (listing brokers representing sellers) make blanket unilateral offers of cooperation and compensation to other authorized participants (co-operating brokers representing buyers). MLS participants actively show and sell homes that are listed by other participants (member realtors). This process provides the basis upon which the Broker, who is working with the buyer and referred to as the Cooperating Broker, earns a commission. A cooperating broker’s entitlement to compensation is determined by the broker’s performance as procuring cause of sale or lease. 75% of all properties sold are sold through the MLS.

National Association of Realtors: NAR is a Self Regulatory Organization (SRO) for the real estate brokerage industry as well as North America’s largest trade organization, representing over 1.2 million members.

No Brokerage Relationship Notice (Florida Law): FLORIDA LAW REQUIRES THAT REAL ESTATE LICENSEES WHO HAVE NO BROKERAGE RELATIONSHIP WITH A POTENTIAL SELLER OR BUYER DISCLOSE THEIR DUTIES TO SELLERS AND BUYERS.

Disclosure requirements.–Duties of a licensee who has no brokerage relationship with a buyer or seller must be fully described and disclosed in writing to the buyer or seller. The disclosure must be made before the showing of property. When incorporated into other documents, the required notice must be of the same size type, or larger, as other provisions of the document and must be conspicuous in its placement so as to advise customers of the duties of a licensee that has no brokerage relationship with a buyer or seller, except that the first sentence of the information identified in paragraph (c) must be printed in uppercase bold type.

Owner’s Title Insurance Policy: The owner’s policy assures a purchaser that the title to the property is vested in that purchaser and that it is free from all defects, liens and encumbrances except those which are listed as exceptions in the policy or are excluded from the scope of the policy’s coverage. It also covers losses and damages suffered if the title is unmarketable The policy also provides coverage for loss if there is no right of access to the land. Although these are the basic coverages, expanded forms of residential owner’s policy exist that cover additional items of loss.

Real Estate Broker: Any person, partnership, association, or corporation who sells (or offers to sell), buys (or offers to buy), or negotiates the purchase, sale, or exchange of Real Estate or who leases (or offers to lease) or rents (or offers to rent) any Real Estate or the improvements thereon for others for a compensation or valuable consideration. A Real Estate broker may not conduct business without a Real Estate broker’s license.

Real Estate Settlement Procedures Act: RESPA stands for the Real Estate Settlement Services Procedures Act. RESPA is about closing costs and settlement procedures. RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD. RESPA’s purpose is twofold: * to provide consumers with information about the real estate mortgage transaction and the costs associated with it * to prohibit certain practices, such as referral fees between settlement service providers, that result in higher costs and reduced quality to consumers.

Realtor: A registered trademark term reserved for the sole use of active members of local Realtor boards affiliated with the National Association of Realtors.

Sales Agreement: A detailed, written document that makes an offer to purchase a property, and that may be amended several times in the process of negotiations. When signed by all parties involved in the sale, the purchase offer becomes a legally binding contract, sometimes called the Sales Contract.

Single Agent: A broker who represents, as a fiduciary, either the buyer or seller but not both in the same transaction.

Special Warranty Deed: A deed in which the grantor warrants, or guarantees, the title only against defects arising during the period of his or her tenure and ownership of the property and not against defects existing before that time, generally using the language, “by, through, or under the grantor but not otherwise.”

Survey: The process by which boundaries are measured and land areas are determined; the on-site measurement of lot lines, dimensions, and position of a house on a lot, including the determination of any existing encroachments or easements.

Title Company: A company that specializes in examining and insuring titles to real estate.

Title Insurance: Title insurance in the United States is indemnity insurance that protects against financial loss due to defects in title to real property and from the invalidity or unenforceability of mortgage liens. Title insurance is defined by s. 624.608, F.S., as “insurance of owners of real property or others having an interest in real property or contractual interest derived therefrom, or liens or encumbrances on real property, against loss by encumbrance, or defective titles, or invalidity, or adverse claim to title.” Title insurance is a policy issued by a title insurer that, after performing a search of the title, represents the state of that title and insures the accuracy of its search against claims of title defects. Title insurance is usually taken out by the purchaser of property or an entity that is loaning money on a mortgage. Purchasers of real property and lenders utilize title insurance to protect themselves against claims by others that claim to be the rightful owner of the property. Most lenders require title insurance when they underwrite loans for real property. Title insurance provides a duty to defend related to an adverse claim against the title, and also promises to indemnify the policyholder for damage to the lender’s security interest created by a cloud on the title, unmarketable title, or adverse title that was not discovered by the title insurer. In most states, the title insurer charges a premium for title insurance that includes the charge for performance of primary title services by a title insurer or title insurance agent or agency, and incurring the risks incident to such policy. The title insurer must receive at least 30% of the premium to cover the risks and insure insurer solvency.

Transaction Broker: A broker who provides limited representation to a buyer, a seller, or both, in a real estate transaction, but does not represent either in a fiduciary capacity or as a single agent. In a transaction broker relationship, a buyer or seller is not responsible for the acts of a licensee. Additionally, the parties to a real estate transaction are giving up their rights to the undivided loyalty of a licensee. This aspect of limited representation allows a licensee to facilitate a real estate transaction by assisting both the buyer and the seller, but a licensee will not work to represent one party to the detriment of the other party when acting as a transaction broker to both parties.

Transfer of Ownership: Any means by which ownership of a property changes hands. These include purchase of a property, assumption of mortgage debt, exchange of possession of a property via a land sales contract or any other land trust device.

Uniform Settlement Statement: The form (a.k.a. the HUD-1)prescribed by the Real Estate Settlement Procedures Act for Federally Related Mortgage transactions, which must be prepared by the person handling the real estate closing (either a title agent or attorney). The HUD-1 statement must contain certain relevant closing information with copies furnished to both buyer and seller.

Your Local MLS: Pertains to locality. For example, Realtors place real property MLS Listings in MLSs that fall within jurisdictional boundaries created by the MLSs themselves.