1 / 106

Avery Yarbrough & Associates Real Estate License Cram Course Review Thursday & Friday 9 till 4 with an hour for

Avery Yarbrough & Associates Real Estate License Cram Course Review Thursday & Friday 9 till 4 with an hour for lunch. House Keeping Rules Cell Phones -Off Computers - Off Breaks – each hour -Be back at 10 minutes Restrooms are in break room

eliot
Download Presentation

Avery Yarbrough & Associates Real Estate License Cram Course Review Thursday & Friday 9 till 4 with an hour for

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Avery Yarbrough & Associates Real Estate License Cram Course Review Thursday & Friday 9 till 4 with an hour for lunch

  2. House Keeping Rules • Cell Phones -Off • Computers - Off • Breaks – each hour -Be back at 10 minutes • Restrooms are in break room • No smoking at front door – go to end of building • Mindful of your classmates • We have a lot of material to cover • Hold questions till breaks

  3. Welcome • Everyone, classroom students, online, other schools • Materials • Green Book • Law Booklet & Law Test • Handout Packet • Handouts • We need your contact information • Fill out at break

  4. Lots of different material to cover in 2 days • Acres to Zoning • Need to know about acres and zoning to pass test • 140 questions – can miss 42 and still pass • 100 general & 40 Alabama Law • More than one answer may look right • Test taking anxiety • Think long, think wrong • Analytical personalities think too hard • Don’t read anything into question • Any test you don’t study for will be hard

  5. 6 sections 100 Questions & 40 on Alabama law • 1 Listing Property 31% of general knowledge test • 2 Selling Property 21% • 3 Property Management 14% • 4 Settlement/ Transfer of Ownership 14% • 5 Financing 10% • 6 Professional Responsibilities 10% • Law is 28% of total test • We will have lecture then short test • Do better with this method

  6. 65% to &70% pass test on first try • Only about 60% online pass on first try • About 80% of our students pass on first try • Second test try – pass rates drop • And drops even more on third try, only 20% pass • Test should be difficult • Dealing with important subjects • Do it right the first time • $71 per test • It is important that you take this seriously

  7. Look at the packet on the right • Outline of class • Words – Know vocabulary • Nerd Words on test • Obscure words Reliction, Riparian, Reentry, Remainderman, Recording, Range, Reconciliation, Rectangular System, Redlining, Regression • The way we studied as children is the way to learn • Read, Study, Test • Our other classes • Post License, Broker, CE

  8. Test taking tips • 80% of those that fail get between 65 to 69 • Only 1 point between success and failure • Listen to lecture • Make notes

  9. Schedule a morning test • Anxiety is less in AM – no time to worry • Brain sharper in AM • Review night before • Eat fruit night before – brain food - 12 hours • Don’t study past 9PM • Go to sleep early and let your brain rest

  10. On the day of test • Get up early and be relaxed , not rushed • Don’t read paper or listen to news • Eat a good breakfast • No more studying • Get to test site early – • 15 minutes late and you can’t take test

  11. At test site • Have photo ID and 1 more with signature • Do practice questions on computer • Maintain pace throughout exam • Don’t wrestle with a question • Read question twice • Read answers twice • You will know answer in your brain • If you don’t know, then bookmark and move on • Bookmark math and skip -- work them last • DO NOT GO BACK AND CHANGE AN ANSWER • Will usually get it wrong

  12. Finance has 10 questions • Most students have trouble with real estate math • We go over math, but don’t teach math • We will help as much as you need • Having Trouble? • Call us for extra help – this is what we do • No extra charge for this • We want you to do well on the test

  13. Power Point Handout is your Outline • Take notes on handout • Study them later • More important to listen to lecture • Story about Finance • Elementary concept

  14. 1934 Mortgage industry began under FDR • Horrible economy – end of Depression • Housing - the way to make economy grow • 50% down payment at that time • FHA created 3% down payment • More likely to default • Walk away if times get tough • Insures lender

  15. FHA insures loans – • Does not loan money or build homes • FHA mortgage defaults - FHA pays • FHA set maximum loan amounts • People started buying homes • Economy began to recover • Lenders ran out of money • What could they do?

  16. Secondary market created to buy mortgages • Primary lenders sold pools of mortgages • Fanny Mae bought these mortgages • Primary lenders collected payments • Escrow for taxes and insurance • Service loan for a fee • Lenders also charged closing cost to make money • Origination, Discount, Service fee • Fanny Mae sold mortgage backed securities to investors

  17. I950’s more buyers wanted a piece of the pie • Private Mortgage Insurance – PMI • 5% down payment on larger loans • Saving & Loan Banks needed secondary source • Freddie Mac created • Today they both buy the same loans • 1960’s government realized it was in trouble • Turned into private companies • Didn’t want risky mortgages • Ginnie Mae came about to buy risky loans • Government owned • Guarantees loans

  18. 3 Financial Intermediaries • Primary Lenders • Institutional Retail Banker • Loan their own money - Fiduciary • Non- Institutional Wholesale Broker • Loan money that is not their own • Insurance companies and pension plans • Have lots of money to invest • Alabama retirement fund

  19. Mortgage Brokers • Not their money • Get it from non - institutional source • They know someone who has money • Insurers • FHA , VA, PMI • Secondary Market • FAMA, FRMAC, GNMA

  20. Loan products • Blanket Mortgage – think of a quilt with patches • Developer buys land, puts lien on entire development • When house is built on one parcel and sold • Partial release clause – releases lien on that parcel (patch) • Package Mortgage – Real and Personal property • Includes Appliances, Furniture • Popular at beach (condo and furniture) • Farm Equipment

  21. Open end mortgage – Like credit card • Leave mortgage open to add to in future • Graduated payment mortgage (FHA245) • Goes up about 5% each year for 5 years • Negative Amortization • Adds to principle – will owe more than borrowed for years • Reverse Annuity Mortgage • Senior Citizen gets check for part of equity each month • Upon death, home is sold by family and debt paid

  22. Adjustable Rate Mortgage • Protects lender from interest rate changes • Changes Each year (up or down) • Principle • Plus • Margin – profit to lender - Fixed during life of loan • Plus • Index- measure of change such as Consumer Price Index • Cap per year/life 2/6

  23. Amortized Loan –Equal payments until note dies • Also called - direct reduction loan - Includes: • Principle – the amount borrowed • Interest - Rate remains constant through life of loan • Mortgage payment also will include: • Escrow for Taxes & Insurance • PITI Principle, Interest, Taxes, Insurance • Interest is paid in arrears – ( at end of period when ) • Straight loan – pay (interest only) each year (rare) • Loan would renew each year • Pay off principle later • Balloon – Amortized over 30 years, but • Balance is paid off with a big lump payment at 5 years • * Most owner financing is Balloon

  24. Acceleration Clause (like accelerator petal on car) • Miss 3 payments and lender speeds up loan • Foreclosure starts and borrower (mortgagor) has: • Equitable Right of Redemption • Pay off loan before foreclosure sale • Statutory Right of Redemption • Pay back loan plus cost of sale within one year • Don’t ignore lender- work with them • They don’t want the house • Short Sale – Bank agrees to take less than owed

  25. Defeasance Clause • Clause says lender must record satisfaction of mortgage • Alienation Clause • Clause says mortgage must be paid off at time of sale • Acknowledgement = Notarize • Necessary for recording • Record in county where property located

  26. OR • Gives • EE • Gets • Confusing --- Mortgagor & Mortgagee • Mortgage is a promise backed by security instrument • Mortgagor (Borrower) gives promise to pay • Mortgagee (Lender) gets promise

  27. Title Theory - Alabama • Lender has legal title • Borrower has equitable title • Lien Theory • Lender has equitable title • Borrower has legal title • Title record shows evidence of ownership • Not a piece of paper

  28. Mortgages -- local Alabama custom • Negotiable Instrument – will be sold • Two parties • Lender and borrower • Trust Deed • Three parties • Trustor – Lender • Trustee – Holds title • Beneficiary -- Borrower • Usury Law – Limits the amount of interest charged

  29. Priority of liens first to record, first to collect • Constructive notice (recorded) • Actual notice (actual knowledge) • Primary – gets first money from foreclosure • Secondary – may not get any money • Subordinate or junior • Prefix sub- means beneath • Alabama is a deficiency state • Lender will get judgment claim against borrower • Property taxes always have first priority

  30. Title • Chain of ownership on property • Marketable Title – 40 years – no challenges • Seller makes promise to deliver marketable title • Cloud on Title • Break in chain of title • Forgery • Title Insurance – insures chain against defects • Will have exclusions not covered – easements • ALTA – unrecorded liens – materialman

  31. Points - 1 point is 1 % of loan • Origination – Bank commission for selling loan • Discount - % of upfront $ paid to reduce rate on loan • Builder buy down for a couple of years • Permanent buy-down for length of loan • 1 point increases yield to bank about 1/8% • Assumptions of Mortgage • Rules vary by loan type • Assume – Seller still responsible for debt • Subject to – Seller not responsible for debt • Novation – new note

  32. Owner Finance • Purchase Money Mortgage 2nd Mortgage • Purchaser has title • Owner Finance • Seller keeps legal title until paid off • Bond for title • Land sale contract • Contract of deed • Installment Contract

  33. FHA insures (% upfront + % each month) • Ends when principle < 80% of original appraisal • VA guarantees (government) • CRV Certificate of reasonable value • Same as appraisal • Veteran must qualify & property must qualify • Can substitute another’s guarantee • Conventional – PMI (private mortgage insurance) • On amount more than 80% of appraisal value

  34. Sale- Lease Back • Owner needs money to expand operations • Will sell building to investor and lease back • Owner Finance • Vendor - Seller (retains title) • Vendee – Purchaser (gets equitable title)

  35. Test on page 146 • About an hour • You must be comfortable with the way test is worded • In front of green book are pages with confusing words • Except, Not, Least, Best, Difference, Most Likely, ect. • Put exam answers on separate page • Later highlight correct answers to use as review

  36. Alabama License Law • 40 of the 140 -- 29% of test • Know the violations! Page 16 – 18 • AREC can suspend or revoke license • Fines $100 to $2500 • Straight forward information – memorize • Concepts of common law • Know fees

  37. RECAD Real Estate Consumer Agency Disclosure • 4 ways to have relationship with consumer • Written disclosure to consumer to alleviate distrust • Single Agent -- Agency with one party work For - Advise • Limited Consensual Dual Agent -- • Agency for both Seller & Buyer • Transaction Broker -- Non Agency work With - Assist • Sub-Agent -- Pre-RECAD way things worked • All agents worked for the seller • All relationships start as Transaction Broker • Until: • A written agreement is signed with consumer

  38. RECAD • Must be presented at first contact with consumer, before any confidential information is disclosed to another • Must be signed by agent and kept in file for 3 years • Consumer not required to sign • Keep all real estate contracts, listings, ect. for 3 Years

  39. Consumers are either: • Customer NON-client / NON-Agent • No advice • Working With • Transaction Broker • Client - Agency Relationship • Give Advice • Working For • Fiduciary

  40. Agency Duties - Fiduciary • Drive clients in OLD CAR • Obedience - Obey lawful commands • Loyalty - Put clients interest above your own • Disclosure – Everything you know about transaction • Confidentiality - Keep confidential information confidential • Accounting – Account for all funds • Reasonable Care – Use reasonable care

  41. Customers – Non Agency – No fiduciary Must answer their HARD? • Honesty • Accountable • Reasonable Care • Disclosure • ? Questions must be answered truthfully

  42. Law Test • Go over even # questions • Answer on separate paper then later: • Highlight correct answers to use as study guide

  43. Lunch 1 Hour – Please be back on time • Nearby Restaurants • Mexican – at end of this building • Green Valley Drug Store – On down hill from here • Subway - In parking lot across from Outback • Salvador's - Next to Subway • Golden Rule - Across Highway form Salvador’s • McAlister’s - On Hwy on right ½ mile to the left • McDonald’s - Just past McAlister’s • Burger King Just before McAlister’s • Chinese - Shopping center across from McAlister’s • Krystal – Across from Burger King

  44. Review Alabama Law Test • Know the violations!

  45. Easements • Right of one person to use the property of another • Necessity – was necessary to get to property • Appurtenant – legally attached – runs with the land - deeded • Commercial easements in gross • Utility easements look “gross” • Prescription used for a length of time – 20 years • Adverse Possession • Servient tenement– Serves another property • Dominant tenement – Property that benefits from easement • Ingress & Egress from landlocked property • Personal easement terminates upon death of either party • Encroachment – Illegal extension on another’s property

  46. Life Estate – use for the life of a person • Reversion – goes back to original grantor • Remainderman – goes to another at termination • In either case • Can not waste property • Can do anything else in bundle of rights UPEED • All rights under life estate are limited by someone’s life • Pur Autre Vie – Based on the life of another

  47. Deed – To transfer title • Must have: • In writing • Identify parties and property • Conveyance language • Consideration – something for something • Amount not necessary to state • Grantor’s signature • Grantee (buyer) signature not needed • Must be delivered during grantor’s lifetime

  48. Condominium • Fee simple (absolutely best ownership – all rights) • Own interior of unit fee simple • Own common area as tenants in common • Swimming in the condo pool with the common people • Developer must record condominium declaration • Includes: • Legal Description • Bylaws • Covenants & Restrictions and bylaws • Survey

  49. Co-operative • Apartment converted to ownership • Building owned as a corporation • Own stock in corporation • May get loan to buy this stock, secured by lease • Proprietary lease on apartment

  50. Co- ownership • Joint Tenancy (Husband and wife joined together at the arm PITT) • Usually family • Right of survivorship – • At death interest goes to other party • PITTPossession, Interest, Time, Title • If ownership changes, • PITT doesn’t change – new owner is a tenant in common • Tenants in Common(In the condo pool with the common people) • Usually investment • Interest % may be different • If ownership changes nothing else changes • At death of owner, their ownership goes to heirs

More Related