Listing Agreements. Learning Objectives

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1 Listing Agreements Learning Objectives Upon completion of this section you should: List and describe the different types of listing agreements. Describe the key provisions in a listing agreement. Identify the ways a listing agreement can be terminated. Describe the remedies for breach of a listing agreement. Identify various methods for determining broker s compensation. Describe the broker s entitlement to a commission. Explain the necessity for disclosure of material facts and material defects and explain the elements of a Seller Property Condition Disclosure Form.

2 Listing Agreements The listing agreement and the attached addenda are the contract between the brokerage and the seller. There are many important terms and conditions stated within the contract such as the commission rate, the length or duration of the listing, the consequences of a breach by the seller, the terms under which dual agency is handled, seller s disclosures, cancellation of a listing, ownership of a listing, and other terms which are of extreme importance. The listing agreement is the first contract in what can be a long process to the sale and closing of a property. We ll explore the many intricacies of this agreement since they will be used throughout your real estate career. Types of Listing Agreements Listing agreements come in different forms which set the obligations of the parties involved, the principal and the agent. The agreements are: 1. Exclusive Right to Sell Listing Agreement 2. Exclusive Agency Listing Agreement 3. Open Listing Agreement 4. Net Listing Agreement All of the agreements are the property of the firm, not the affiliated licensee. The affiliated licensee as we learned in our discussion of agency is acting as a subagent of the firm. A broker is always acting on behalf of the brokerage firm and the representative of any listings and purchase contracts is actually the firm. This affects how a broker might move from one brokerage to another. If a real estate broker leaves his/her brokerage at any time during an Exclusive Right to Sell Agreement or any other type of agreement, the agreements originated by that broker belong to the brokerage. The broker will need to obtain permission from the designated broker or appointed managing broker to take any of their listings to their new brokerage. Example: A real estate broker, Brian is working for the Honest Real Estate Company. He has 2 current listings. If he chooses to switch brokerages to another company during the term of those 2 listings, the listings will remain with Honest Real Estate Company.

3 Exclusive Right to Sell Listing Agreement In an exclusive right to sell listing, the brokerage firm will be paid a commission when the transaction closes regardless of who secured the buyer for the property. It represents an agency contract between the listing broker and the seller, for which the broker s firm will receive compensation if a buyer is found through any possible avenue. If a broker wants to be guaranteed to earn a listing office commission, no matter who procures the buyer, then an exclusive right to sell agreement is the way to go. If the broker finds a ready, willing and able buyer who provides an offer the seller accepts in writing, they are entitled to a commission even if the seller changes their mind and backs out at a later time. This is true for all types of listing agreements and ensures the brokerage will be paid for performing their services as stated in the contract. Exclusive Agency Listing Agreement The Exclusive Agency listing agreement is different in what must happen for the brokerage firm to receive a commission on the sale of the property. When using an Exclusive Agency listing agreement, a listing broker does not earn a listing office commission if the seller procures a buyer. This is in contrast to an exclusive right to sell agreement which stipulates if a buyer is found by anyone, including the seller, the brokerage will be paid a commission. If a broker is willing to forego a listing office commission when the seller procures a buyer, a form such as the Exclusive Agency listing agreement should be used as the contract between the broker and the seller. Some sellers want this type of listing because they may have already marketed the property and don t want to pay a commission to the brokerage for efforts they have put in. It also can be the case when the seller has been communicating with a potential buyer already and they don t want to pay a commission if the brokerage was not the procuring cause of the buyer. A procuring cause is the reason a set of events occurred. What this means in a real estate context is the reason for a buyer to have been led to a particular property (procured), which eventually results in a closed sale. Many listing agents will not enter into a listing agreement using an exclusive agency listing for the following reasons: They may not get reimbursed for their efforts even if the home sells. There is a possibility that there could be some confusion over who procured the purchaser. If there were multiple offers, and one of those buyers was procured by the seller, the seller may favor that offer over others to avoid paying a commission.

4 Open Listing Agreement When using an Open listing agreement, the seller is only obligated to pay if the broker brings them a ready, willing and able buyer, and the broker is the procuring cause. To be a procuring cause, the broker must have had to be primarily responsible for bringing the parties together. The seller is free to grant open listings simultaneously to multiple brokers. The simultaneous nature and lack of exclusivity of any kind is what makes this an open listing. As a result, it is considered a nonexclusive listing. Only the broker who procures the buyer gets paid a commission. An open listing is considered a unilateral contract because the seller has promised to pay a commission if the broker procures a buyer, but the broker is not contractually liable to do so. If the broker puts forth no effort at all to sell the property, they haven t breached the contract. Net Listing Agreement In a Net listing agreement, the seller specifies the amount that they would like to receive in net proceeds from the sale. The broker is allowed to keep, as compensation, any amount over the net proceeds. Please note that because a net listing does not specify the amount of compensation due the broker it is illegal in Washington State. Pocket Listing A pocket listing is not in the list of listing agreements, because it is not a listing agreement. However, pocket listing is a term you will likely encounter in your time as a real estate professional. A pocket listing is a listing a broker has that they don t put on the multiple listing service or out to the public through advertising. The broker will have an agreement with the owner to sell through an exclusive right to sell or exclusive agency listing, but is not advertising it generally, instead the broker will inquire selectively with those they feel are qualified and interested. It is also referred to as a vest pocket listing because the listing isn t out in the open, but in the broker s pocket. Some firms are not supportive of vest pocket listings as they cause problems of cooperation within the office. Key Parts of a Listing Agreement Listing Agreements are contracts that confer a number of important obligations and clarify possible misunderstandings. It is designed to cover all of the possible issues that can come up during seller agency and give clear instructions as to the terms of

5 agreement. It is a document you will get from either your brokerage firm or from your local Multiple Listing Service. The document usually consists of a lot of legal language that has already been drafted by lawyers and will include blank spaces for the real estate broker to fill in. As a real estate broker, it is important to operate only within your area of expertise, which includes not engaging in the unauthorized practice of law. The unauthorized practice of law would be if a broker wrote their own contractual provisions. As a broker, we ll stay in our own lane and stick to filling in the blanks. Those blanks provide more than enough flexibility to handle the situations which come up when listing a property for sale. There are four requirements for a listing agreement to be enforceable in Washington State. They are: 1. The listing must be in writing. 2. The listing must be signed by the broker and the seller(s). 3. It must identify the property to be sold. 4. It must state the compensation for the brokerage and a promise to pay the brokerage. These requirements are the essential elements of a valid contract, just in a real estate listing context. Listing agreements are contracts that are binding to both parties under the terms that are agreed to. What this means is that a broker cannot request more commission at a later time if they put in a lot of extra work. The same is true for the Seller, who cannot pay a lower commission rate if the property sells for less than they expected. In both situations the commission remains the same, unless both parties agree to amend the contract.

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8 Filling Out the Blanks For our purposes, we ll be working with the most common type of listing agreement, an exclusive sale and listing agreement. While there are a lot of important parts to the listing agreement we ll focus first on the blank portions that the broker needs to fill in. They are: 1. Names of the seller and the real estate brokerage 2. The duration of the contract 3. The property address and it s legal description 4. Listing price 5. The broker who will be representing the Firm 6. Total commission and portion paid to the selling office 7. Date and signatures on the agreement Parties to the Contract The names of the seller and the real estate brokerage establish who this contract is between. Remember, this is between the brokerage and the seller, not the broker and the seller. The broker will fill in their information where it asks who is representing the firm and also sign the agreement on behalf of the firm. It s possible for the broker to sign on behalf of the firm because the broker is a subagent of the firm. All owners of the property must sign the agreement, regardless of the percentage of ownership. Tenancy in common would be a situation where multiple parties would need to sign. Real Property Identification Even though there is a property address location on the contract that should be filled in, it still requires a legal description. From what we learned about legal descriptions it is a required part of the contract to establish which piece of real property this contract pertains to. The easiest way to fill in the legal description is to obtain the legal from a Title Company and then cross out the lot block, division, volume and page and then insert the phrase, See attached Exhibit A. If a broker chooses to do this they must make sure the legal description is labeled Exhibit A. The reason we use the term Exhibit A is it is common that legal descriptions generated for the use in title reports are labeled Exhibit A. Price Listing price is of course a key provision of the listing agreement that needs to be filled in. What this represents is the price that the seller would accept to sell their home. They

9 are not contractually bound to sell the home at that price, but may owe a commission if they are given a full price, all terms met offer and choose to reject that offer. Commission While it is likely mildly interesting to discover the key contract points a broker needs to fill in, let s get to the fun part, the commission. The commission can be in the form of a flat amount or more common a percentage of the sales price. Contract language gives the option for either and then you strike (cross out) the other. Importantly, this portion of the contract has language to protect the brokerage from not being compensated if they are able to put a deal together and the seller defaults on the contract. Also, for six months after the expiration of the listing if a buyer purchases the property and they were made aware of the property for sale through the listing and marketing of the property the brokerage is due a commission. This is an example of procuring cause. If the listing makes a potential buyer aware of its availability and leads to a sale at a later time, it would be the listing that set in motion the chain of events to sell the property. Other key provisions in this agreement deal with the following: Keybox In order to properly market the real property, access should be provided if at all possible. The way brokers can view properties that are not their listings is through a keybox. A keybox is a lockbox that hangs easily on a doorknob and cannot be removed without a code. The keybox requires that brokers input their own personal password into their own key, or smartphone application, which is used to open the keybox. This allows the keybox to record which brokers have accessed the keys and therefore the property. Logging who has entered and exited the property provides security and a chain of custody for the keys much like brokers need to keep a chain of custody for any earnest money. Multiple Listing Service As discussed the multiple listing service publishes the data from all of its participating brokers to the public as well as to all the participating brokers. It is one of the main reasons it is so desirable to list a property, since it is widely marketed to people within the industry as well as the public. The clause allows for publication of the information about the property including its final sales price to the public and its members. Members is what the MLS calls the firms who belong to it. Cooperation is a written contract provision so the firm must cooperate with other brokerages and brokers in the sale of the property and if they bring a buyer, must pay the selling office commission stated in the agreement.

10 Warranties and Representations Sellers (who sign this document) are representing they are the owners of the property and have the right to sell. Remember our bundle of rights? One of those is the right to sell the property. It could be the property is a life estate and the person occupying the property does not have the right to sell. Included in the warranties and representations is there are no structures or boundaries (usually fences in this case) which encroach on neighboring properties. The purpose of this warranty is to clear the potential hurdles to transfer and full enjoyment of the property when it s conveyed (sold) to the new owner. New owners don t want to find out later the property they purchased has a structure that is actually on the neighbor's land. It could lead to court battles and even removal of the structure. Protection is provided to the firm and the other MLS members if the seller is misrepresenting the facts. Closing Costs When a transaction is being completed it usually requires the seller to provide an insurance policy to the buyer to protect the buyer against any other claims to the property. This means the seller owns the property and has the right to sell and is going to pay a fee to insure that fact. Other costs include paying the property taxes up until the day they no longer own the property and items such as rent, reserves, ongoing fees and insurance should be prorated to the day of closing. As noted in our chapter regarding the government, excise tax must be paid when property is transferred in Washington State, and this cost is the responsibility of the seller. Loss or Damages The provision is designed to protect members of the MLS and the MLS itself from any loss or damages that may occur such as theft or property damage that could arise from the listing of the home. It protects against the access given through the keybox since many people will likely be going through the home that are not the owners of the property. Seller Disclosure Statement In Washington state it is required of the seller unless they meet one of the few exemptions to provide a seller disclosure statement to a buyer prior to transfer. The statement is intended to heighten the duty of the seller to disclose potentially hazardous and unseen conditions regarding the property. It is required of owners who are transferring all types of property including commercial, residential and vacant land. Each has different minimum requirements for response but all include some basic information

11 regarding the seller's right to transfer the property and include an environmental section. In the listing agreement the clause regarding the disclosure statement is designed to indemnify (legally release and protect from damages) the brokerage firm. If a seller is attempting to cover up harmful information about their property, the firm will want to be legally protected from the seller s deception. Damages in the Event of Buyer s Breach Damages in the event of a buyer s breach is a clause meant to help the brokerage recover expenses incurred while marketing a property for sale. If the buyer walks away from a contract while breaking it s agreed upon provisions, it is a breach and the seller is in most cases entitled to what is called liquidated damages. As we discussed earlier, the earnest money is what is used as liquidated damages. Therefore, if the buyer breaches the contract, this states the brokerage has a right to first deduct their expenses on the seller s behalf and the remaining balance is split equally between the seller and the firm. This reduces the amount of money the seller receives in the result of a breach, but gives the brokerage a payment for the fact they were able to provide a ready, willing, and able buyer who met all of the conditions of sale required by the seller. Attorney Fees If there is a dispute between the firm and the seller, the winner in court will be entitled to receive money to cover the cost of the lawyers they hired to represent them. This is a common contractual provision which is designed to dissuade potential litigants from suing without a reasonable cause. It s less likely a party will sue or take a dispute to court if they don t believe they have the legal backing to win since they will be liable for the other party's legal expenses. The other side effect of this type of clause is it increases the possibility of an out of court settlement so both parties can avoid the cost of trial. Ways a Listing Can be Terminated A listing can be terminated by many means. The following are some ways in which listings can be terminated: Mutual consent of both parties Performance by the broker Expiration of a listing Abandonment by the broker

12 Death, insanity, or bankruptcy of either party Destruction of the property Mutual Consent of Both Parties In this situation, both parties agree to terminate the listing. The listing may be terminated with or without conditions. The conditional release of a listing is another common contract that residential brokerages use. In essence, it rescinds the listing agreement with the condition that the seller will still pay the broker a commission if a future buyer purchases the property and identified the property through means of the broker s advertising or showing within six months of the agreement. Note: A licensee cannot cancel a listing without a designated broker s signature and the seller s signature. Performance by the Broker By far the best way to terminate a listing agreement. Performance by the broker indicates the property has been successfully sold and ownership transferred, or in the case of a rental, the property successfully rented. Hopefully this is how all of your listings are terminated. Expiration of a Listing At the end of the listing term, known as the expiration date, the listing expires and is in effect cancelled. Note that there is some verbiage in a listing agreement which could cause a commission to be paid after the expiration date. Usually it states that if the brokerage or their advertising and efforts are the procuring cause of the buyer, they are still entitled to a commission if it happens within 6 months of the listing expiration. Abandonment by the Broker In a situation where the broker makes no effort to sell the property the seller may be able to end the listing. The broker may be liable for breach of contract, depending on the terms of the agreement. Death, Insanity, or Bankruptcy of Either Party In the event of the death of the seller during a listing agreement, the agreement is cancelled. If there was more than one seller, the surviving seller would be required to

13 enter into a new listing agreement with the broker. Termination of the listing can occur through the death, incapacity, or bankruptcy of either party (brokerage or seller). Destruction of the Property If the structure on a piece of property is destroyed the listing is automatically cancelled. The property value is drastically affected along with what will be many other problems since in part, it no longer exists. Remedies For a Breach of a Listing When a party to the contract fails to perform as promised in the contract, this is known as a breach. If a seller cancels a listing agreement with a brokerage prior to the expiration of the listing, the seller may be in breach of the contract. The brokerage may be able to sue for damages and/or commission. There are also circumstances where a broker may be entitled to a commission after the expiration date which we discussed earlier regarding the verbiage of the listing agreement. It allows for the payment of a commission within six months after the listing expiration if a purchaser s attention was brought to a property through the efforts of the brokerage or broker. Example: Bill, an agent with at XYZ Realty, had a listing with Mr. and Mrs. Morgan. The total commission that Bill charged the Morgans was 6%. Bill showed the home to Mr. and Mrs. Rutley. The Rutleys loved the home, but felt that it was too small since Mr. and Mrs. Rutley s granddaughter was planning on living with them when she got accepted to the University of Washington. The Rutleys decided to wait to buy a home until they could afford something larger. The listing expired and the Morgans listed For Sale By Owner. Three months later, Mr. and Mrs. Rutley s granddaughter chose a different college and decided to move to the east coast. The Rutley's no longer needed the extra square footage and were again interested in purchasing the Morgan's home. The Morgan s would be liable to pay the original listing commission of 6%. Commissions Real estate commissions are negotiated between the seller and their broker. It is perfectly acceptable for a broker to refuse to take a listing if they are not willing to work for a given dollar amount or certain percentage of the list price. What is not acceptable is to conspire with others to fix prices, offer imbalanced commission splits and to boycott another brokerage which violates antitrust law. Some

14 brokerages will individually, not collectively, suggest that their licensees charge a specific minimum amount of commission for the listings that they take. Listing commissions can come in the form of a flat fee or as a percentage of the sale price. The percentage of the sale price method is by far the most common. Let s look at how we calculate the commission due. Calculating Commission Paid to a Brokerage The total commission paid is often referred to as the listing commission since the listing firm signs the contract with the seller. The listing firm will also have a cooperating agreement or a stipulation in the listing contract that states they will share or split the commission with any brokerage that brings a buyer for the property. Reminder: The office that brings the buyer is known as the selling office. It is easy to get tripped up by questions regarding commission splits because of the language used, so it is vital to make sure you have all of the details correct. Remember, a listing commision is paid on the amount the property sells for, not it s listing price. Quick notes: 1. A listing commission is synonymous with the total commission. 2. The listing firm s share of the commission is determined by subtracting the amount they agree to share with the buyer s brokerage firm. This is often a 50/50 split. Calculations: Total Commission = Listing Commission (Commission in Listing agreement) Listing Firms Payment = Listing Commission - Buyer s Brokerage Firm Share Let s look at a problem involving the calculation of commision. A firm signs a contract with a seller to list their property. The listing commission is 6%, with 3% to be paid to the selling office (who represents the buyer). The home is listed for $750,000 and sells for $742,000. To determine the amount of commission to be paid to either the listing firm or the selling firm we must first determine the overall commission. Total commission = $742,000 *.06 Total commission = $44,520

15 The commission paid to the listing firm is not the listing commission, since it doesn t account for the amount owed to the selling office. Selling office commissions need to be deducted from the listing commission to determine the amount owed to the listing firm as compensation. Commission paid to listing firm = $44,520 - ($742,000 *.03) Commission paid to listing firm = $22,260 The shortcut for this would be recognizing the commission is split evenly at 3% for each firm, allowing us to calculate the amount owed to the listing firm like this: Commission paid to the listing firm = $44,520 / 2 Commission paid to the listing firm = $22,260 After determining the listing firms payment, the selling brokerage is easier. Commission paid to buyer s brokerage firm = $742,000 *.03 Calculating Commission Paid to a Broker Much like the commision being shared between the listing firm and buyer s brokerage firm, the commission is shared between the buyer s broker and the buyer s brokerage firm. The same is true for the listing broker and the listing brokerage.

16 The figure illustrates an important concept. Commissions are paid to the brokerage, not the broker. The broker can only be paid by the brokerage they are affiliated with. How much the broker gets paid is determined by the contractual commission split the broker has signed, such as 60/40 split (60% to the broker and 40% to the brokerage office). In order to calculate the amount that is owed to the listing broker (not the firm) you would need to know the total listing commission, the listing brokerage firm s share and what type of commission split the listing broker received from the listing brokerage. Continuing the above example: Commission paid to listing firm = ($742,000 *.06) / 2 Commission paid to listing broker = Commission paid to listing firm *.6 Commission Formula Commission = Sale Price x Rate The formula can be switched around to calculate the other variables:

17 Sale Price = Commission Rate Rate = Commission Sale Price Residential Seller Property Disclosure Statement Washington state requires that sellers provide purchasers with a disclosure statement regarding material facts or material defects about a property. This applies to real estate purchases and also property transfers. This information is based on the seller s actual knowledge of the property when completing the form. Only the seller of the property can complete the statement. It is important to note that real estate brokers or any other third party are prohibited from completing the statement for the sellers. While the seller is responsible for completing the form, it is important to note that there is liability for the licensee as well. The licensee is responsible for what they know or should have known. Broker s are bound by agency law to disclose all material facts. Note: The purchaser may not waive their right to receive a seller s disclosure statement if the seller answered yes to any one of the questions in the environmental section on the form Exemptions Exemptions to providing a seller s disclosure statement applies to the following: A foreclosure or deed-in-lieu of foreclosure. A gift or other transfer to a parent, spouse, or child. A transfer between spouses in connection with a divorce. A transfer where a buyer had an ownership interest in the property within two years of the date of the transfer including, but not limited to, an ownership interest as a partner in a partnership, a limited partner in a limited partnership, a shareholder in a corporation, a leasehold interest, or transfers to and from a facilitator pursuant to a tax deferred exchange. A transfer of an interest that is less than fee simple. A transfer made by the personal representative of an estate or by a trustee in bankruptcy. A transfer in which the buyer has expressly waived the receipt of the seller disclosure statement. However, if the answer to any of the questions in the section entitled "Environmental" would be "yes," the buyer may not waive the receipt of the "Environmental" section of the seller disclosure statement.

18 Note: A seller who has not occupied the property is not exempt from providing a disclosure statement unless they meet one of the criteria just mentioned. Sections of the Seller Property Disclosure Statement - Improved Property There are ten sections which comprise the Seller Disclosure Statement for improved property. A broker is prohibited from filling out the form for the seller. The seller must fill out the form and disclose all that they know about the property. If a broker knows of a defect, he or she must encourage the seller to include it in the statement. If the seller does not disclose a defect known to the broker, the broker is under an obligation to disclose the defect, as it would be considered a material fact. Timelines Delivery of the seller s disclosure statement must occur no later than five (5) business days, unless otherwise agreed, after mutual acceptance of a written purchase and sale agreement. The buyer has three (3) business days to rescind their contract after receiving the disclosure statement. There is also a section which states that the disclosures are not the representations of any real estate agents or any other party. Lastly, the buyer is advised to hire the services of qualified experts to obtain more specifics about the property. There are 10 main sections in a residential property disclosure form, which are: 1. Title - This section deals with issues which affect title such as the legal authority to sell. Also title issues such as encroachments, easements, joint maintenance agreements, covenants, conditions or restrictions and surveys for the property are included in this section.. 2. Water - This has three sections (household water, irrigation and outdoor sprinkler systems). 3. Sewer/On-Site Sewage Systems - This section deals with an on-site sewage system known as a septic system. 4. Structural Issues - This section deals with any structural defects to the property. 5. Systems and Fixtures - Questions in this section pertain to the major systems of the home (plumbing, electrical, heating and cooling systems, sump pumps,

19 appliances, security systems and leased equipment). 6. Homeowner s Association/Common Interests - This section does not always pertain to condominiums only. There are many single family developments which have monthly or yearly assessments (dues), CC&R s and common areas. 7. Environmental Issues - This section deals with environmental factors involving the property and again cannot be waived by the purchaser. 8. Lead Based Paint - This section is only applicable if the structure was built prior to The seller should disclose if they know of any lead based paint in the structure and if they have any records or reports on lead based paint in the home. 9. Manufactured and Mobile Homes - This section deals with questions related only to manufactured homes. 10. Full Disclosure By Sellers - This section allows the seller to have the opportunity to disclose any other material defects to the property. More on Environmental Issues Environmental issues are highly regulated and cleanup can be a huge expenditure. The existence of hazards can cause major problems to the homeowner. Here are a few examples: Could prohibit how the property is used May affect the type and size of structure that can be built May require extra reinforcements to a structure Could affect the health and well-being of the inhabitants May affect protected wildlife May affect natural growth plant life May affect the quality and quantity of the drinking water

20 Note: If any one answer in this section has a yes answer, then a buyer cannot waive their right to receive a copy of the disclosure statement. Types of Construction When listing a property a question that comes up is what type of construction was used to build the building. The differences can indicate quality and therefore the useful life of the structure. Also, each type of construction has different features which are likely to fail first, and allows the broker, client and inspector the opportunity to determine what they will be looking out for. Let s take a look at some of the common types of construction: Wood Frame Construction using wood framing is the most common construction type for residential properties. It is also known as stick built. The property is built using wood beams for it s frame with wood in between, often referred to as studs. The home is built on the lot where it sits and is as customizable as engineering stability will allow. Wood Panels A foundation floor is poured first and then sections of the wall are placed. The panels are prefabricated, meaning they were put together elsewhere, typically a factory, and then pieced together to create the building structure. The advantage to this type of construction is the cost savings of prefabrication. Also, the prefabricated panels should be precise since they were built in a factory. Modular Homes Modular homes are prefabricated and then assembled on site. They are more complete when they arrive than panel construction, since they come in modules. The modules are essentially pre-built blocks that are placed onto the foundation on the site. Modules are then joined together and can be used to make large structures. Often used in locations where frame construction is difficult or the need for a temporary structure is necessary. There is cost savings because of the prefabrication. Some modular structures are made of steel and are used to create large commercial facilities. Manufactured Home A manufactured home is also known as a mobile home. It is prefabricated and mostly built off site. Manufactured homes are transported near complete to the site and then

21 installed. They will be hooked up to all utilities after arriving on site. You may have seen a manufactured home on the freeway heading to it s destination. It s a fully assembled home that is on a truck sporting many oversize load warnings. The key difference between a manufactured home and a modular home is the existence of a permanent chassis is installed on a manufactured home, thus its other name, mobile home. Steel Steel construction is much like wood frame construction except the beams and the other portions of the framing are steel. This is very popular for commercial construction. It is very stable and is meant to be extremely durable. Properties built with steel construction methods are typically more expensive and are therefore at the higher end when it comes to commercial rent pricing.

22 Listing Agreements Key Terms Exclusive Right to Sell Listing Agreement - In an exclusive right to sell listing, the brokerage firm will be paid a commission when the transaction closes regardless of who secured the buyer for the property. Exclusive Agency Listing Agreement - The Exclusive Agency listing agreement is different in what must happen for the brokerage firm to receive a commission on the sale of the property. Procuring Cause - is the reason a set of events occurred. What this means in a real estate context is the reason for a buyer to have been led to a particular property (procured), which eventually results in a closed sale. Open Listing Agreement - When using an Open listing agreement, the seller is only obligated to pay if the broker brings them a ready, willing and able buyer, and the broker is the procuring cause. Net Listing Agreement - In a Net listing agreement, the seller specifies the amount that they would like to receive in net proceeds from the sale. The broker is allowed to keep, as compensation, any amount over the net proceeds. Pocket Listing - A pocket listing is a listing a broker has that they don t put on the multiple listing service or out to the public through advertising. Mutual Consent - Both parties in a transaction agree to all terms. Commission - Real estate commissions are negotiated between the seller and their broker. It is perfectly acceptable for a broker to refuse to take a listing if they are not willing to work for a given dollar amount or certain percentage of the list price. Keybox - A keybox is a lockbox that hangs easily on a doorknob and cannot be removed without a code. Modular Homes - Modular homes are prefabricated and then assembled on site.

23 Manufactured Home - A manufactured home is also known as a mobile home. It is prefabricated and mostly built off site.