The broker-agent relationship clearly defines agency. The broker is the principal who empowers the agent to act on his behalf to sell the office listings and procure listings for their customers. The agent must always act in the brokers best interest. The best way to remember agency is: do you work with someone or for someone? You work for your broker - you work with your fellow agents. To whom do you owe a fiduciary duty? And remember, if not a principal, the person you work with still deserves fair and honest treatment.

You should always discuss any information you have regarding a buyer's inquiry or an offer with the seller before responding. It is the seller's decision to make on how to respond to a buyer. A real estate salesperson is to provide guidance and assistance. The seller is the principal and you have a fiduciary responsibility to deal with them honestly and fairly with their best interests at the forefront. You would never instruct the cooperating agent to give the buyers direction without first consulting the seller. The agent should show the property and if interested, the buyers make their best offer.

The broker has a fiduciary responsibility to the seller, who has hired the broker to sell her house and will pay the broker when the house sells. A fiduciary owes trust, duty and confidence to her principal, the seller. In answer b, the agent is the fiduciary to the broker, his principal. In c, unless the buyer of the property bought the house through the listing broker, the broker does not have fiduciary responsibility to anyone except the seller.

A disclosed dual agent must be given permission in writing to act in that capacity before attempting to do so. Each buyer and seller must be given a Consumer Information Statement at first meeting and they can choose the way they would like their agent to represent them. When both the buyer and seller of a property are working with agents from the same office, it is a Disclosed Dual Agency and buyer and seller must be made aware of this, as well as making sure the agreement of sale reflects the disclosure in writing.

A limited power of attorney is a specific designation that is for a one time or limited use. A real estate closing is a perfect example, as it is limited to a one -time representation. Sometimes the real estate agent can also act on behalf of the buyer or seller with the proper documents. A limited POA expires when the task is completed. A general POA is a broad agreement that gives the recipient the power to act as the principal in all matters. A good example would be an aging parent who names a child their POA to assist them in a wide range of matters. A durable POA does the same thing as a general, but the general POA would end if the principal was no longer mentally capable to make decisions. The durable continues beyond the incapacity. A springing POA only takes effect after the principal becomes incapacitated. Persons granted the duties in a power of attorney should sign their name as follows: Jane Doe, by attorney-in-fact John Doe, and the POA is sometimes called the agent.

The Consumer Information Statement (CIS) is the first thing you should discuss with a prospective client or customer. Prior to discussing any business, the client must be made aware of how you will work with them and who you represent. If your first meeting with them is on the phone, you must explain the options they have before you get into specifics and go over the form and have them fill out and sign upon first meeting them. Up until the late 1990's, most consumers thought that the agent that they worked with represented their interests. But before the CIS, most agents working with buyers worked for the seller, because the seller would pay the agent's commission when the sale closed. The introduction of the CIS explained representation and gave consumers choices in how they were represented. Now buyers and sellers can both pay their agent if they choose to do so. Either way, both parties are informed.

You are working for Alice as a sub-agent. A sub-agent is a real estate agent or broker who represents a buyer in a sale, where the agent or broker is not the listing agent. In this case, you are the sub-agent to Alice, and agent to your broker at Alpha Realty. The principal is the seller, his agent is Alice, the broker. Mary is an agent to Alice, her principal.

Just because the seller is no longer your principal does not mean that there is no duty of confidentiality. A duty of confidentiality survives the expiration of the listing agreement. Even if you have a broker agreement with a buyer, you cannot divulge anything told to you in confidence under a principal-agent relationship. If anyone else had given you this information, or if the information came to the buyer through an independent means, it would be permissible to advise the buyer with the information to get the best possible deal.

There are six duties an agent has to a principal: 

1. Obedience - to take direction from the principal 
2. Loyalty - put the principal's interests first
3. Disclosure- disclose anything to the principal that could help or hurt them
4. Confidentiality - do not repeat anything that the principal told you in confidence
5. Account - keep the seller informed and safeguard any money they may entrust to you
6. Duty of reasonable care and diligence - use all skill to best of ability on behalf of principal 

Duties to third parties include fair and honest treatment, following the letter of the law, and giving someone information about something that could potentially hurt them, even if you don't represent them.

Choosing to switch to another broker will not terminate a listing agreement. The listing is a bilateral agreement entered into by mutual consent. The other three choices are some of the ways an exclusive right to sell listing agreement is terminated. A principal can ask a broker in writing to let him or her out of the contract but the broker is under no obligation to agree. If the seller were to go ahead and list with another broker without a written release, the seller may be liable to pay two commissions if the house sells before the first broker's contract has expired.

A licensee in New Jersey does not have to work as an "agent" in the fiduciary sense of the term in all relationships. They can work as a transaction broker, a different approach to working with buyers and sellers. Transaction brokers can find houses for buyers and buyers for sellers. They represent neither and have a loosely defined relationship with both. They simply help the transaction along, or help facilitate the completion of the sale, while treating both with equal care. There is no fiduciary relationship with the transaction broker. Transaction brokers have no confidentiality requirements but must be honest and fair with both parties. A consumer would be wise to draft an agreement for the broker to sign containing any agreed services they expect from the broker. The seller pays the broker in most circumstances and the terms should be in writing.

This booklet, introduced in 1976, remains the definitive tenant-landlord guide. It keeps agents, tenants and landlords informed on the issues involved in renting/leasing real estate. Available in English and Spanish, you can find information regarding security deposits, the ADA, public housing, mobile home parks, smoke detectors pets, etc. This pamphlet should be given to new tenants, is available online and can keep everyone informed and compliant. Truth in lending is given to consumers who are borrowing money and Consumer Briefs are published by the New jersey Division of Consumer Affairs.

The Mount Laurel decisions in 1975 changed the way the state became involved with local implantation of land use and zoning. Although compliance was at a minimum, causing secondary action to be taken, the decisions were far reaching and still apply today. Affordable housing is described as housing that requires thirty percent or less of the renter or owners' income. Municipalities are to use the guidelines of eight to one, one affordable unit for every eight higher priced units. They can also choose to use the affordable housing obligation to build senior housing, or to pay another town to take their allotted affordable housing responsibility.
Jenkins v. Morristown, the Supreme Court of New Jersey held that the state's education commissioner had the authority to mandate the of school district boundaries to foster racial balance in the educational system.
Clove Hill Swimming Club v. Goldsboro, the New Jersey Supreme court ruled a private swimming club could not base membership on race. Abbot v. Burke provided for funding for poorer school districts to ensure students receive an education in accordance with the state constitution.

It is the seller's responsibility to pay for the transfer fee at closing. The deed to the property cannot be recorded without the fee being paid, and the closing cannot be completed until the fee is paid, usually from the sellers' proceeds. The rates are calculated on a sliding scale and based on the sale price of the property that was on the recorded the deed. The profits of the fees are shared by every county in New Jersey.

The Pinelands Protection Act became law in 1979 after citizens, scientists, agriculturists and many others sought protection for what is possibly our states most precious resource. Built on the back of the Pinelands Preservation Act it became apparent that in addition to scores of plants, trees and wildlife that our forests and especially our water resources needed permanent protection. Safe from development are about a million acres of Pine Barrens and many underground aquifers containing an estimated trillion gallons of water.

This law was put in place to protect New Jersey residents when they are looking at property in other states. If you are dealing with someone in a state that does not have stringent laws in place to protect the buying public, New Jersey will make sure their residents will be given certain rights. For example, New Jersey has a 7- day rescission period to give the buyer time to get all the facts they need if buying a long way from home.

You must disclose the fire as soon as you are made aware of it. Leaving it to the buyers and their inspector to find it puts you in jeopardy for a non- disclosure/ fraud complaint. Once you know, everyone should know. Yes, you work for the seller - and protecting him from a lawsuit is your duty. You also owe the buyer fair and honest treatment. Reducing the purchase price and having the seller repair the damage is a possibility, but once disclosed, the buyers may want to handle it in a different way, like have the repairs done by someone of their choice and negotiating a credit amount from the seller.

Rebates to buyers must meet stringent guidelines to prevent misuse. Only a broker can offer a rebate, and only to a buyer. The buyer must be purchasing residential property, the rebate can only be given as a credit (never cash) and the buyer must be advised to contact their tax consultant to see what effect the rebate may have on their taxes. Finally, everyone involved in the sale must be made aware of the details of the rebate.

A broker is permitted to have an office in his or her own residence. The entrance must be separate from the residence but clearly marked and easily found. Signage noting the office should clearly state the entrance location. Note, a broker cannot have an office in the residence of another real estate agent, only his or her own.

You must submit every written offer to the seller within 24 hours. You can call the seller immediately to go over terms, but the contract itself should be presented in person or by fax or email within the 24- hour period. You may never take it upon yourself to accept or reject any offer. You have a fiduciary responsibility to the seller to work with all agents. Verbal offers do not fall under the 24- hour rule, and many agents will not accept or present verbal offers. Offers should be in writing and include an earnest money deposit.

To qualify for Farm Assessment, land actively used in agriculture or horticulture must be a minimum of five acres in size. In making the area calculation, land under a barn, shed and seasonal farm market are counted but the land under a farmhouse and other lands associated with the farmhouse are not counted. If the Farm Assessment is used, the qualifying land is assessed at its productivity value.
The official nickname of New Jersey is the "garden state". Once abundant with fruit and vegetable farms, it is believed that Abraham Browning of Camden stated on August 24th, 1876 on New Jersey Day, that "New Jersey is a barrel, filled with good things to eat and open at both ends, with Pennsylvanians grabbing from the bottom and New Yorkers from the other end." That led to the garden state theme and in 1954 the nickname became official and was added to license plates. We have more farms than some other states but we have a lot fewer than we used to have. Measures like the Farmland Assessment Act work to reduce the tax burden on farmed land and help preserve the open land.

A real estate broker must set up a business trust account for the safekeeping of customer deposits. Business and personal funds can never be mixed or co-mingled. The funds must be deposited within 5 business days and the banking institution must be approved by the New Jersey Real Estate Commission. Careful records must be kept and are subject to unannounced inspections by the Real Estate Commission.

As stated in statute 11:5-6.1, the Real Estate Commission has very clear guidelines for advertising that must be followed whether you are placing a newspaper ad, booking a radio commercial or even setting up the information for an open house handout. When including financial information such as monthly payment, buyers must know that any financial information is based on the qualifications of each specific buyer, and must also contain the words 'to a qualified buyer". Any calculations based on a down payment must include the amount or percentage of the down payment.

Most municipalities in New Jersey have a planning board. One of the duties of the planning board is to form a master plan. The planning board oversees the placement of such utilities as water and sewer lines and other facilities, and makes sure the zoning classifications are well placed and adhered to (residential, commercial, industrial and recreational). The planning board is typically made up of appointed citizens and a few elected or town officials.

It is very common and perfectly acceptable to offer a market analysis to anyone. The analysis is simply a grouping of homes for sale, and recent sold homes that are comparable to the customer's property. The agent will give pointers on how the properties compare to the subject property to give the customer an idea of what their home is worth. It is not an appraisal, which can only be done by a certified licensed appraiser. The difference between answer b and the others is that the other choices require that the consumer do or commit to something like a listing or closed sale. You cannot offer something that has strings attached just to conjure up business. The laws are very strict when it comes to advertising in the real estate business.

Estimated taxes are paid quarterly. You could pay each quarter as you go along based on your earnings the previous year. If you end up exceeding last year's income you can pay the balance by April 15th, even if you do not file at that time. Extensions are for the returns, not the money owed.
You will need to keep detailed records regarding your commissions and expenses. Expenses can include such things as signs, advertising, gas and mileage, gifts, business phone expenses and gifts. It would be wise to consult a tax professional for advice. They might suggest that you put an amount of each commission in an account to cover your tax payments. Although many deductions are no longer allowed, as a new agent should get in the habit of keeping track of them in case the law is changed.

A trust is created by a grantor either while they are living or in a will upon the death of a grantor. A bequest is an item left passed through a will after death. A trust is created to hold assets for the benefit of another person (beneficiary - the son in this scenario), and managed by someone else, the trustee. A trust can be revocable or irrevocable. To become irrevocable, the grantor gives up all rights to change or alter the trust. An irrevocable trust provides some protection from the grantor's creditors that a revocable trust does not. A revocable trust can be managed, changed or revoked while the grantor is alive. Once an irrevocable trust is created the grantor is out of the picture.

Inducements are frowned upon and most things, even if offered innocently, are forbidden. A free market analysis is the only item you can offer. There are no strings attached, the customer does not have to do anything to receive it and it is allowed in New jersey. Rebates are generally offered to buyers (if ever) and are loaded with conditions, disclosures and oversight. A market analysis is basically showing someone the general value of their home based on recent sales of like-kind properties.

Since Joe is a minor, the contract is voidable by him. He can change his mind at any time because he is a minor and cancel the contract. However, he can also hold John to the deal as the minor is the only party who can cancel. John is bound to fulfil his obligations and see the deal through. If Joe does decide to cancel, he can do so without penalty or repercussions. The contract is valid for John and voidable for Joe.

Bad credit is the only choice that is a legal reason to refuse to rent or lend money to someone. An applicant needs to show responsibility in paying their bills and taking care of the property.
New Jersey laws are based on federal discrimination laws and take a few steps further to close some loopholes and offer additional protections. New Jersey has some of the most stringent laws in the country. All children, as well as pregnant women, are covered against discrimination, as well as service men and women and people accepting public assistance. Children are an integral part of any family and nobody can be turned down because of a landlord or seller's preferences. You cannot refuse someone in the National Guard a rental apartment just because there is a chance they may be sent out of the country for a period of time. Unfortunately, the occupant remains liable for the rent while they are away, and some organizations have begun to offer some assistance to the deployed person, such as rental assistance and apartment sharing. And the source of a customer's income is not to be considered when screening an applicant. As long as the source is legal and can be confirmed, public assistance is not a reason to reject an applicant.

Although all of these answers protect waters in some form, it was the Freshwater Wetlands Protection Act that focused on freshwater protection. The flora of the wetlands helps filter our drinking water and the ability to store excess water for the future protects both nature and humans and must remain undisturbed. Prior to the New Jersey Wetlands Act 0f 1970, the father of the current Freshwater Wetlands Protection Act, there was dumping, dredging and ruination of plants and wildlife until the Department of Environmental Protection took control, realizing the importance of our groundwater supply and the habitat that protects it. The Highlands Act was more of a planning and growth plan to make sure this well populated area kept growth at a pace that would protect the area that provides water service to a major portion of the state. The Pinelands Protection Act covers a heavily wooded area unique to our state, that also has its own wildlife, fish and water supply and covers a broader area of protection of not just water and plant life but a way of life for people since the beginning of New Jersey as a state. And the Coastal Area Review Act is focused more on waterfront development and the impact it has on our waterways. All are important in keeping New Jersey a safe, healthy and beautiful place to live.

Not only must the agreement of sale disclose that Smith is an owner of the property, but the listing should have clearly stated the same, and Smith should have verbally informed the buyer before showing them the property. A real estate salesperson, with an interest in the property being sold, has a conflict of interest in the transactions as to the other parties. A real estate salesperson must disclose his or her interest because the other parties have a right to know if an agent will benefit in any way and where his or her loyalties lie. Although the other answers are all parts of a proper sales agreement, the ownership issue is what creates the conflict. Other examples of conflict of interest (without full written disclosure) include referring a friend or relative to furnish goods or services to your client, recommending a property that you stand to benefit from, purchasing your own listing, collecting more than one commission on a sale and helping a relative purchase your listing.

If a licensee should cause a customer loss of money by embezzlement, conversion or by any other unlawful means, the Guaranty Fund can replace those losses up to $20,000. Embezzlement is basically where someone who is entrusted with funds intentionally misappropriates them. The victim must file and win a civil law suit within 6 years of the crime. The money in the fund is collected from a one-time fee for new salesperson licensees and new broker licensees. The licensee committing the crime may also be financially liable, and their license would be revoked until the restitution has been paid. Errors and omissions insurance is a form of liability insurance for professionals that covers claims for negligence.

Both in state and out of state timeshares are governed by the New Jersey Real Estate Timeshare Act of 2007, regulated by the New Jersey Real Estate Commission. Formed from the original Real Estate Sales Full Disclosure Act, the new act protects consumers and their money as well. It requires developers to file public offering statements, allow for a mandatory 7- day rescission period and safeguard deposit money during that period. The commission also may inspect properties and oversee licensees and field customer complaints.

A joint venture (JV) is a business arrangement entered into by two or more business entities to accomplish a specific task or project. A JV can be made informally, by a handshake, or memorialized in a joint venture agreement. In some cases, the business parties will form a new business entity to carry out the project, like a corporation or a limited liability company. In other cases, the business entities will enter into a joint venture agreement, where the parties remain separate business entities. Members in a JV share in the management, costs, profits and losses of the project.

An encroachment is a trespass or intrusion over the boundary line of another property. Many encroachments are found by accident when one of the owners has work done, if they are found at all. The proper remedy is to have your neighbor move the fence to the correct borderline. A survey would establish the legal boundaries. If you allow a fence to stay on your property, the neighbor could eventually lay claim to your land on his side of the fence, stating that you knew it existed and chose to do nothing about it. An easement generally is someone using your land with your written permission, and an encumbrance is a cloud on the title. A restriction is a land use issue in a deed which may limit what you can do with the property.

Intestate means dying with no valid will. In that case, the estate will be dispersed as per state law. Escheat is when someone has no will and no heirs, and the property reverts to the state. A lis pendens is constructive notice of legal action pending, and eminent domain is the right of government to take private property if it will serve the greater good of the public. The act of taking the property is condemnation.

The status of trade fixtures change as the rental term begins and ends. They begin as Mary's personal property but become trade fixtures as soon as they are installed. Once the lease ends and Mary leaves, they become the landlord's personal property. For a commercial tenant to be able to remove a trade fixture, the trade fixture must be necessary for the tenant's business, be removable without damage to the landlord's property and must be removed within in the time of the lease. If you know you will not have everything removed, repaired and cleaned by the lease end date, you need to make written arrangements with the landlord as to when you will be finished. He is under no obligation to agree, and you should always make sure you are ready to leave when you are scheduled to go. The owner could have signed a new lease to start the next day and if you cause him any monetary loss it will be your responsibility to pay it.

A life estate begins when the grantor conveys the estate to the grantee. During the lifetime of the person's life to whom the life estate is based on, the occupant can use the property, lease the property or convey her life estate interest in the property. A life estate is often based on the life of the person granted the estate and occupying the property, but it can be based on the life of anyone. Before Tom passed away, he held a remainderman interest, meaning a future interest in a fee simple estate. If Tom dies before Aunt Betty, as the scenario indicates, the remainder interest will go to who is named in his will (Emma), but she must honor the life estate if it still exists.

Joint tenancy is a form of ownership with rights of survivorship. It is formed when the intent of the parties to own property as joint tenants is stated in the documents evidencing ownership, like in a deed. Joint tenants each own the entire property. In this scenario, if Jack dies, Karen will then own the entire property in severalty, meaning as one owner. When an interest in joint tenancy is sold by one of the owners, the ownership converts to tenancy in common. Tenants in common do not have survivorship rights. Further, unlike joint tenants, tenants in common can hold different amounts of interest in the property, like one party can own 25% and the other have 75% interest. Although, even in tenancy in common, the owners have a right to use the entire property. A tenancy by entireties is held by married couples and also has survivorship rights.

Even though it may seem odd, a property owner can sell or lease the air rights they own above their real estate. Simply put, air rights are a property owner's rights to the air above them, which is included as part of their property. If zoning laws permit, you could build as high as allowed, and you could sell the air rights as well. In Manhattan, air rights sell for an average of $225 per square foot, according to the planning department. Compare that to the national average building cost per square foot of $64.44, according to the census bureau. But do not put the sale sign up yet! Because of air traffic the government can regulate the air space just as our waterways are controlled. Navigable water is controlled by Congress, as our waterways were and still are an important necessity of commerce. You have no right to cross your neighbor's property without express written permission or easement. The sale of firearms is strictly enforced and laws vary by state, county and municipality.

This would be a zoning issue. Building codes regulate structures as to placement, setbacks, land use, materials, number of bedrooms and parking spaces, electrical and plumbing etc. Certain areas may have other codes determined by the weather patterns such as wind, flooding and earth quakes.

The only legal remedy is to use the power of eminent domain. The government has the power to seize private property by legal means and use it to benefit the public. The act of taking the property is called condemnation and the displaced owners must be given fair market value for their homes. It is very difficult to remove people from their homes. Towns and cities must weigh the benefit to the majority of the people in relation to disrupting people's lives. Originally used for governmental projects and utilities, eminent domain has started to be used to give property to private enterprise, reasoning that it will bring jobs, tax revenue and other benefits to a community. Taking private property for use by private enterprise has made eminent domain controversial.

A deed restriction is a limitation on the use of the property that is placed on the deed by its owner, typically when it is transferred by deed. The transferee or buyer voluntarily consents to the deed restriction and agrees to abide by it. It applies to all future land owners, except if limited by a time limit. An example of a deed restriction is a limit to build a house in a certain style or with a certain size. In this scenario, by putting a deed restriction in the deed, it will remain a single undivided parcel. Many homeowner associations of planned developments enforce deed restrictions, often called restrictive covenants, that the developer may have put in the master deed, such as pool size restrictions, vehicles, paint and roofing colors etc. A deed restriction cannot be for an illegal use. Many very old deeds contained restrictions against ethnicity, which were no longer valid as discrimination laws were formed.

Most municipalities have special assessments from time to time, usually to fund a repair or improvement not included in the municipal budget. A BID is similar, but works in different ways. As a business owner in a BID, the municipality may impose a special assessment for "the purpose of promoting the economic and general welfare of the district and municipality". The BID is controlled by a District Management Company (DMC) and the business owners may sit on the board of directors. The DMC determines spending. The DMC can be funded by assessments on commercial buildings who will benefit from the assessed funds as well as several other sources. A potential BID business may want to search for any upcoming assessments prior to moving.

Lead based paint (LBP) has been a hazard for many years. The use of LBP was halted in New Jersey in 1971, but not nationally until 1978. About 65 million houses built before 1978 are thought to contain some lead paint, and for that reason buyers and tenants need to know about the dangers involved and how to protect their family. Each buyer or tenant renting for a period over 100 days must be given a pamphlet by the seller or landlord and the agreement of sale or lease must contain an addendum that requires the signatures or initials of the buyers, sellers and salesperson. Sellers must disclose any prior knowledge of LBP and the results of any tests or inspections ever done on the property. Buyers are given a 10- day period in which they may have the home inspected for LBP. The danger of LBP lies in the chips or dust so remediation must be done professionally.

The basis of the income approach is using the income that is generated to establish the value of the property. In this method, the income must be enough to cover expenses and a profit margin for the remainder of the economic life of the property. The economic life is the time period in which the income produced remains higher than the value of the land it is built on. You also need to establish potential gross income - what a fully rented building would generate. You will use income, expenses and the capitalization rate to establish the property value. The cap rate is the percentage amount representing return on your investment. Sounds confusing but following the formula is not as difficult as it seems. The sales comparison is used mostly for residential properties and consists of taking like-kind houses, adjusting for any variations from the subject property. The cost approach can be used to calculate replacement cost or reproduction cost. Replacement cost is what the dollar amount would be to a property taking the place of the building you are appraising, similar in size, features and use. Reproduction cost would give you the cost of an exact duplicate at current prices. Both methods are used for buildings that have little or no comparables, such as historic buildings, museums, police stations etc.

In a CMA, a real estate agent typically considers lot size, how many bedrooms and baths, amenities, type of heat and air conditioning and condition of the homes. Most agents use 3 sales, sold within the last 6 months and are as similar as possible to the subject property. Then adjustments are made due to the differences between the subject property and the comparable sold homes. This approach is similar to one used by a certified licensed appraiser. But the appraiser's report goes much further. It is based on comparable sales, but also uses the principal of substitution, highest and best use of the property and other formulas to get the most accurate estimate of value. An appraisal is an estimate because the only way to know what a property is really worth is what a ready, willing and able buyer will pay for it. To find comparable properties, an appraiser would compare neighborhoods as well as certain features of the homes.

The cost approach to appraisal is typically used when none of the other methods would work, usually because the property is somewhat obscure. Simply put, it is based on land value plus the cost to duplicate the property minus depreciation, which can be wear and tear of the building or factors from the surroundings such as blight or a conflicting zoning change. It would be very difficult to find comparable sales for an old hospital. Other properties appraised by the cost approach would be sports arenas, schools and churches. Land value does not often change much except during municipality re-assessments. But building values change based on many factors. Is it in the best place for the use of the property? Would you place a nightclub next to a senior housing complex? Condition is important, a building in poor condition cannot be compared with the same building in excellent condition. The one that needs repairs must be depreciated, which means to deduct what it would cost to bring the dilapidated building up to the condition of the well- kept building.

Equity is the monetary difference between the appraised value of your home and any debts against the home like a mortgage or any other debt secured by the property. Here, the facts say the property is appraised at $325,000 with a mortgage balance of $160,000. If you minus the $160,000 from the appraised value of $325,000, it leaves you with $165,000 in equity. The other numbers involved in the question are red herrings.

External obsolescence is a loss in value caused by external factors such as an airport or sewage treatment plant nearby. Even though they are not a part of your property they can still affect the value due to noise, odor, traffic as well as other undesirable features. These things cannot be controlled by you as the owner and will remain as a deterrent to appreciation. This is one of the examples that an appraiser would use when depreciating a property using the cost approach, along with Functional Obsolescence and Physical Deterioration. Functional Obsolescence is a curable issue. It is based on a property that is outdated by the current standards such as small rooms, not enough bathrooms or parking spaces, etc. Fixing some of those problems could raise the value by making the property desirable to a larger group of potential buyers. Physical Deterioration is a loss in value due to excess wear and tear and lack of maintenance, also curable.

Appraisers sometimes work independently and others work for specific lenders. Appraisers now have guidelines that they follow too make sure the public does not overpay. The cost of an appraisal through a lender should be no more than an appraisal through a lender. Of course, some jobs will cost more, difference between a small house and a hi-rise building are immense. Time and expenses are also taken into consideration.

A house with a mortgage must be insured for the term of the mortgage. Together with principal, interest and taxes, insurance is part of the mortgage payment each month. When determining if a potential homeowner has the means to pay the mortgage, the bank will take the mortgage payment and add the other revolving debt payments the applicant has, and compare the debt to the applicant's monthly income to make sure the income can handle the debt. These are called qualifying ratios. If an applicant qualifies, the bank will consider the mortgage application.

There are many different types of mortgages and loans. One of those is the adjustable rate mortgage (ARM). Most loans are fixed rate, meaning the interest rate on your mortgage will stay the same during the life of the loan, usually 30 years. An ARM is flexible, with rate changes based on several factors. One is the margin, basically the lender's profit. Another is the Index, based on different financial markers, for example Treasury Bills, MTA's or LIBOR. The initial rate starts lower than the current rate and is fixed for a specific time. After that time period is over, the rates will change (often yearly) based on the market indicator the index was based on. The amount the rate can go up or down is capped at a certain percentage, and the amount the loan can change in its lifetime is capped as well. ARMs are popular in a climate of rising interest rates. Instead of being stuck with a higher rate for 30 years, you can benefit when the rates go down again without the time and expense of refinancing.

Points will be one of the things a borrower discusses during a mortgage application process. In times of low interest rates, or if the borrower is buying a starter home, points may not be needed. But in higher rate periods or if a borrower is buying a forever home it can make a big difference. A borrower can recoup the cost of the points in a relatively short period and the points are tax deductible in the year they are paid.

The TRID combined former disclosures contained in the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act, (RESPA). Now known as TRID, the TILA-RESPA Integrated Disclosures, it is also referred to as the "know before you owe" consumer financial education initiative. Introduced in October 2015 and revised in January of 2019, it serves as a settlement sheet and disclosure coverage. Since disclosures refer to most consumer credit transactions secured by real property, the above examples may not be bound by the current form. However, a balance sheet is helpful in noting debit and credit amounts for both parties. The HUD-1 showed money coming in and then dispersed out as well as prorations for taxes and utilities and made it easy to see what transpired in the process of transferring property.

When purchasing a property, most people will need to obtain a mortgage loan. Consumers are given disclosures to protect them and educate them about the lending process. The loan estimate describes in detail the features, costs and risks of the loan that is chosen. The consumer must receive the statement within 3 business days of submitting their mortgage application. The consumer will also receive a Closing Disclosure 3 days prior to settlement. This contains the closing costs, which were also given in the loan estimate and the customer should compare the two documents to make sure nothing has changed unknowingly.

The Loan to Value Ratio is used by lenders to understand how much liability they will have when processing a loan. It is the percentage of the price paid for the home divided into how much is mortgage and how much is the borrower's own money. The higher the down payment, the lower the risk for the lender and a higher commitment from the borrower. Some borrowers with lower credit scores or income ratios may only get a conventional loan if they put down a higher amount, which is why we had the need for the government insured loans. To arrive at the loan to value ratio, start by subtracting the down payment ($32,000) from the sale price ($160,000) to get the mortgage amount ($128,000). Then divide the mortgage amount by the sale price as a percent and that should give you the ratio - 80%.

A large part of determining what kind of loan a borrower qualifies for depends of his or her credit score. As with the down payment and total income, the credit score will show the lender what kind of risk the borrower is. According to Experian, scoring is based on 5 factors, each contributing different levels of importance to your total score. The most important is your payment history, which counts for about 35% of the total score. Next is utilization and keeping your credit balances low, which counts for about 30% of the total score. Next is length of credit history, the longer the better, which counts for about 15%. The fourth factor is recent activity. If a bank sees you attempting to borrow other money just before or during the current application, it's a red flag. Recent activity counts for 10%, as well as credit mix, meaning how diverse is your revolving debt. These five things can help you attain good if not great credit, and can open up a world of possibilities.

Before a borrower even thinks of looking at houses to purchase, he or she should visit a mortgage company or bank (or both) and find out what it takes to get financing. The borrower needs to know how the process works, and the first thing the lender will do is to see how much of a mortgage the borrower can qualify for. This is called mortgage pre-qualification. That will decide (depending how much money the borrower has for a down payment and closing costs) what price range the borrower is limited to.

Government Guaranteed Loans, commonly known as VA or GI loans, were established in 1944, to assist the men and women returning from World War II. In order to make it easier for veterans to buy a home, the Department of Veteran Affairs passed the GI bill, and a large part of that bill was the government guaranteed VA loan. The government would guarantee 25% of a veteran's mortgage (up to $36,000) on a property up to $144,000 and the guaranteed portion is called an entitlement. This allows the veteran's money to go much further. The amounts are set by the FHFA and can change over time depending on area and rising housing prices. In 2018 the average price of a home in the U.S. was $315,000, reinforcing the need for assistance to those who serve. There is also a secondary entitlement available in the amount of 85,067, when added to the first amount gives the veteran up to $121, 087.This could be used as a 25% guarantee of a more expensive home (as long as the buyer qualifies), or a second property when the first entitlement is still in use. The entitlements remain the same even if the buyer defaults on a loan. Other benefits of a VA loan include little to no down payment, no MIP (Mortgage Insurance Premium) utilization of both entitlements at the same time and the ability for qualified spouses and even children to retain a deceased veteran's benefits.

An encroachment is when one person's property extends over the property line of another. The issue is most commonly found with fences, and usually by accident. If a structure looks like it may be over the line, it should be disclosed. The best way to find out is to have the property surveyed. A professional surveyor can mark the boundaries and certify any encroachments. In the event that you do have an issue, it needs to be addressed. Fixing the problem will make the house more desirable to buyers who will not want to tackle the problem themselves. The best way to start might be to explore the situation with your municipality and speak with an attorney if necessary. If you do not feel it is a problem and decide to ignore the situation, it could cost you a sale or end up in court afterwards.

A variance is seeking permission for a non-conforming use while a building permit is applying for a permit to build on a conforming property. A variance request is filed with a zoning board. The zoning board will notify neighbors to ask for any objections to be raised at the zoning board meeting. After the case is heard, the board will take the information into consideration. If a variance is granted, the owner will still need a building permit to proceed. Building permits are obtained from a different office than zoning, typically from a local construction and building bureau.

The former owner disclosed that the tank had been replaced but not that the tank had leaked. He also did not have the tank removed properly as there was no soil testing during removal or installation. Soil must be tested and removed if oil is found. Even though it may be years later, the seller remains liable under environmental laws like the Resource Conservation and Recovery Act enforced by the EPA.

Every buyer and tenant must be given this pamphlet from the EPA regarding the risks of lead-based paint and lead from other sources. Aside from paint, lead can be found in soil from flaked outdoor paint or old leaded gasoline leaks. Lead can be found in water, old painted toys and glazing on pottery or porcelain. The pamphlet is available on the EPA's website and is for both state and federal lead notification requirements.

A latent defect is something that cannot be easily seen. The other answers are visible to the naked eye, while mold can be difficult to detect. Even a home inspector would not know of mold behind the drywall as the wall would have to be torn down for him to see. When you are buying a house, you need to protect your investment and have the home inspected by a certified home inspector. If mold is a concern you could hire a mold specialist to have the house checked. Homes near water or in a damp climate can certainly have mold. Any former leaks or flooding could cause a large mold problem if not treated right away.

All money has to be accounted for in a real estate transaction. You are required to sign a document at the settlement table stating that no money has changed hands outside of the contract. The buyer could be defrauding the lender and the seller would not be paying his share of the NJ Realty Transfer fee. Usually this would be accomplished by using two contracts, one between buyer and seller and one for the lender. Called a dual contract, it is illegal. A dual contract is void from the start. It is legal to buy and flip property, as well as use a straw buyer. However, there is a high potential for fraud in some straw buyer situations. Normally, a famous person or business owner may want to conceal their identity to assist in their negotiations, so they have another person put their name on the contract. The lender must be fully informed, and the straw buyer has no rights or interest in the agreement. And, parents can give money to their children in the form of a gift letter in certain circumstances, like some FHA loans.

A voidable contract is a contract that is binding on one party and the other party has the right to rescind it or legally avoid its contractual obligations. A void contract, on the other hand, lacks one of the requirements to form a contract and is binding on neither party. Only answer c involves a voidable contract. If the buyer can prove he or she was intoxicated and did not have the intent to be legally bound, the buyer can cancel the contract. The seller would be bound to the contract and would not have any right to rescind based on the buyer's condition. Answers a and b lack consideration needed for a valid contract, i.e. the seller must own the property in fee simple to convey it. Answer d involves a contract with an illegal purpose.

The contract is voidable due to the seller's unintentional misrepresentation of a material fact (consideration) with the buyer having the right of rescission. An unintentional or intentional misrepresentation of material fact results in a voidable contract. An unintentional misrepresentation is considered the result of negligence if the person making the misrepresentation should have known the truth of the material fact. An intentional misrepresentation is considered fraud. A material fact to a contract is a fact that a reasonable person would consider important when deciding to enter into a contract. Only the party negatively affected by the misrepresentation has the right of rescission. In this case, the buyer can either decide to keep the contract or rescind it. With the power of rescission, the buyer is in a position to renegotiate a lower price.

The contract is voidable. Voidable contracts are legal and valid. The voidable contract is binding on the seller, but the buyer can cancel it due to his status as a minor if he wants to get out of the contract. The terms of the contract cannot be enforced against him if he chooses to cancel the contract.

It is the delivery and acceptance that constitutes delivery of the deed. By signing the deed, the seller (grantor) shows his intent to pass the property to the buyer (grantee). By accepting the deed, the buyer has taken possession of the property. Delivery does not take place when the seller gives a signed deed to the seller's attorney, but if the seller gives the signed deed to buyer's attorney that could be considered delivery if authorized by the buyer.

Sometimes called the notice to buyers and sellers, the attorney review form must be attached to all real estate contracts in New Jersey and signed by both buyers and sellers. It informs them of who the agents represent and the reasons for being represented by an attorney. An attorney can assist in some or all of the buying and selling process from start to finish. New Jersey is unique in that the northern part of the state does business like New York (lawyers almost always are involved and handle the settlement) and the southern part like Philadelphia (title companies often conduct the settlement and not everyone uses an attorney). The notice informs all residents of the benefits of having an attorney. After the contracts have been fully signed and initialed by all parties and everyone has their copy, there is a 3- business day period where an attorney can review the contract and either approve or disapprove. If approved, the contract will move forward. If disapproved, the attorney may suggest some changes and negotiations begin. That can result in a new contract or a dead deal. The three days start on the first full business day after signatures and received copies.

Specific performance is a remedy that is typically sought by an aggrieved buyer when a seller wants to back out of a valid land sale contract. With specific performance, the court orders transfer of the land to the buyer and payment to the seller. Specific performance is suited to real estate transactions because land is unique and monetary damages may not fully compensate an aggrieved buyer.

A condition precedent to a contract is a condition that must be fulfilled before the obligations of the contract become binding on the parties. For example, a real estate contract will typically provide a contingency that the buyer must obtain financing in order to complete the transaction. Should the financing not be approved, the contract may be terminated by the buyer for failure of a condition precedent. When this occurs, it is not a breach of contract. Failure of a condition subsequent would refer to a condition after the formation of the contract.

The Uniform Electronic Transactions Act was enacted in New Jersey in 1999 "to facilitate the use of electronic records and signatures in interstate or foreign commerce." With this Act, companies, governments and private individuals have been able to streamline the process of doing business by ending the tedious distribution of documents by mail, courier or overnight services. A safe and speedy way to complete transactions, private sector electric commerce is crucial to the standing of the United States in the global market. When using electronic signatures, the signing parties should all agree in writing to do so, and e-signatures cannot be used for matters handled by courts such as wills, trusts etc. The UETA is used by most states.

The best way to remember the difference between bilateral and unilateral contracts are their prefixes, bi and uni. A bicycle has two wheels, a unicycle has one. A bilateral contract is a promise between two parties that requires each party to perform. A unilateral contract is a promise that one party must perform and the other party does not have an obligation to perform. An example of a unilateral contract is an option contract. In an option, the seller offers his property for sale at a certain price for a specific period of time and the buyer gives the seller a deposit to hold that agreement. The buyer can choose to purchase the property or refuse and forfeit his deposit. The seller must sell but the buyer is not bound to the purchase. Another example of a unilateral contract is a contract for insurance, where the insurer makes a promise to cover a loss by an insured if an event occurs, but if the event does not occur, it has no obligation to pay. An example of a bilateral contract is a land sale contract where a seller promises to sell and a buyer promises to buy real estate and the exchange depends on both parties performing.

There are a few differences between an amendment and an addendum. An amendment is made to terms that already exist in a contract, typically by crossing out and initialing the terms that are changed and adding additional language for the revised terms. An addendum, on the other hand, adds additional terms not covered by the original contract, by attaching a new document to the written contract. In answer c, an addendum will be needed to add a provision that was not previously addressed in the original contract. The other three answer options are changes to terms that already were covered in the original agreement.

A bilateral contract is a binding agreement between two people where each party has made a commitment to perform something in return for something else. The landlord promises to give the property to the tenant for the term of the lease and keep the property in good order, and the tenant promises to pay the rent on time and cause no harm to the property. The interest the tenant has during the next year is a leasehold estate or estate for years, an interest with a beginning and an end. The landlord has an estate in reversion, meaning that the property will revert back to them after the leasehold has expired.

Time is of the essence means that all parties to the contract will perform and complete their responsibilities by a certain date. Failing to perform on time results in a breach of the contract. Without a time is of the essence clause, contracts may be interpreted to allow a reasonable time to perform, and if and when a contract is breached is more indefinite. In this scenario, if Rachel's contract did not have a Time of the Essence clause, it would be advisable to include a Time is of the Essence clause into the contract with an agreement on an extension, so Steve will be motivated to be ready on time at the next closing date, and if he's not ready, Rachel can declare a breach if she so chooses.

When Carl made a counteroffer to John, it cancelled John's counteroffer. A counteroffer negates the previous offer. In the scenario, there is no offer left to accept as all offers were either cancelled by counteroffer or rejected.

Although there seems to be ethical issues with this action, it is the sellers right to handle the situation as they see fit. The National Association of Realtors Code of Ethics does not prohibit the disclosure of terms of other offers. You are bound to obey the sellers wishes even though you may disagree with them.
What happens when multiple offers are submitted on a property? There are several ways to handle this situation. It's not a good idea to have all the buyers fight it out as you run the risk of losing them all. That usually happens when you counter all of the offers at the same price. But the seller makes the decision how to handle the situation, you are there to assist and support their decision. One solution is to have each buyer present their highest and best final offer and the seller will choose the one that works for them. It may be the best price or the best terms or both. Sometimes this is done by sealed bids with a cutoff date when all the offers will be opened and one will be chosen. Sellers can also counter an offer that they find attractive except for one item and put the others aside for a day or two.

If you are going to hire someone who is related to you to perform a service for the building, it needs to be disclosed to the principal. It can be considered a conflict of interest and the decision must be the principals to make. It may be an asset to him to have someone you trust in the position, but it could also lead to favoritism, or worse. The other choices are minor things that may have been covered in the agreement, but are not necessarily a breach of duty unless something else had been agreed upon.

The tenant will pay most or all of the building expenses in a net lease. It is typically used in leasing commercial real estate. The fixed rent is usually lower than normal to compensate for the cost of the building expenses. Also called a triple net lease in New Jersey, the expenses cover whatever is in the lease including utilities, water and sewer, property taxes, repairs and insurance. In a gross lease, the seller pays for most of the building expenses, for example a residential lease.

The state of New Jersey limits the amount of a security deposit to one and a half month's rent. Any additional deposit such as a pet deposit is limited to no more that 10% of the security deposit.

A continuation or "run- down" is a last- minute update to the original title searches. Since the title company is insuring the title, they must make every effort to find anything that could cost them money. The examination of title is the title company or attorney studying the report prior to the title report or commitment being prepared. Schedule B-2 is the part of the ALTA settlement sheet that deals with liens. An exception is a summary of what the title insurance does not cover, such as governmental acts like condemnation and zoning issues.

Your county, or the county where the property is located, maintains public records of all sorts in the County Courthouse. There is a clerk or registrar who will record and maintain these records. Anyone can look at these records, sometimes for a fee. The ability of the public to have access to these records serves as public notice. In this manner, the deed recording gives constructive notice, meaning it is available to anyone who wishes to view it and establishes a reasonable person standard of notice. A buyer cannot claim to not have had notice of a deed if it was of public record and a reasonable person would have checked and known of the deed.

Water and sewer are paid in advance, sometimes yearly or bi-annually. It is likely that the seller would have money coming back to him. Sometimes, if the bill is due close to the settlement day, the seller will not pay it, the title company or attorney will charge you for it and the seller will reimburse you for the days he owned the property. Homeowner's insurance should be cancelled in advance for the day after closing and the insurance company will reimburse the seller. Electricity and cable will also be cancelled by the seller and any money due will be reimbursed to the seller by the companies.

A title is "marketable" if it is free and clear of from all defects. When a chain of title has defects and a title insurance company agrees to cover the defect in the event it becomes a problem to ownership or value down the road, is considered "insurable". Insurable title can be transferred as long as title insurance covers the defect. If there's a defect in the chain of title and no insurance, the owner will have to repair the problem before he or she can convey marketable title.

A home warranty is as service contract between the buyer and a home warranty company to repair or replace appliances, plumbing, HVAC systems and other covered systems. Home warranties are not typically used with new construction, which have current manufacturer warranties on new appliances and systems, but with older buildings where the appliances and other systems have not been updated by the seller. The offering of a home warranty can make a difference to a buyer having a hard time making a decision. The costs of the home warranties can differ from company to company and from what is covered. A seller will typically purchase a one- year contract which the buyer can renew on an annual basis.

The bargain and sale deed with covenants or special warranty deed only warrants the current owner of the property, so title insurance is absolutely necessary. The abstract and chain of title will help to make sure someone in the past has not compromised the title. The following are all used to convey property but with different levels of protection for the grantee:

Warranty Deed - it offers the most protection to the buyer, mainly because it guarantees the title before and during the grantor's ownership.
 
Bargain and Sale Deed - conveys the property with no warranties against encumbrances.
 
Bargain and Sale Deed with Covenants Against the Grantors acts warrants that the grantor, or seller did nothing to encumber the title while he owned the property.
 
Quitclaim deed - transfers any rights the grantor has, offering little protection to the grantee. But it has it's uses, often used to transfer property within families, or remove a cloud from a title.
 

The statute of frauds (NJ Rev Stat 25: 1-11 and 1-13) requires deeds and most real estate contracts to be in writing to prevent fraud and protect consumers. The affidavit of title is a sworn written document in which the seller attests that there are no encumbrances outside of what is in the title searches. The Habendum Clause is the description of what the grantor intends to convey, beginning with "to have and to hold". And the real estate sales full disclosure act was passed to protect New Jersey residents when buying property out of state.

TILA is the Truth in Lending Act, established to protect consumers from hidden fees when borrowing money. It was merged with RESPA, the Real Estate Settlement Procedures Act requiring buyers be provided with all the details of their mortgage loan. The statutes were similar but different, and the confusion led to the combining of the two, known as TRID, the TILA RESPA Integrated Disclosures. It still dictates that buyers must be given a written accounting of all the costs of the loan and loan process when the buyer applies for the loan, and includes loan amount, APR (annual percentage rate), payment schedule and other pertinent information. There is much less confusion and more transparency. Answer a is the affidavit of title, title pricing is regulated by the state and the lender will track where the money originates by requiring bank statements, etc.

A lending bank (mortgagee) on a mortgage loan will require the mortgagor (buyer) to carry lender's title insurance to cover the bank in the event there is a defect in the title that affects its first lien position. The buyer pays for the lender's title insurance. Lender's title insurance is different that homeowner's title insurance. Lender's title insurance only covers the lender. Homeowner's title insurance that covers the homeowner in case of defects in the chain of title is optional to the buyer.

The Sherman Antitrust Act prohibits acts like collusion in commerce that are meant to unfairly dominate a market on basis that they are anti-competitive. The collusion of brokers to fix commission rates in a geographical region would violate the law. Brokers may charge whatever they want and sellers have the right to negotiate commissions or shop around for the best service at the lowest rate, something they cannot do if the brokers stick together and freeze the commission rate. The term "trust" has a different meaning today than it did in the 19th century when the Act was passed. Today, a trust is a form of asset ownership that allows one to pass assets to another and have it managed by a trustee. In the 19th century, at the time the Act was enacted, the term trust related to collusion or conspiratorial conduct that led to unfair competition.

Sometimes a real estate agent, who is not a broker, will open a real estate office and for several reasons not be able to obtain a broker's license before opening. They may know someone who has a broker's license and ask them, or pay them to use their license until they can obtain one of their own. The reason we have a broker of record is to make sure the day to day operations are functioning properly and legally. A broker needs to review contracts, make sure money is handled and secured properly and conduct meetings to keep agents informed of new or changing laws and practices. When someone takes the classes and passes the broker's exam, they are ready to assume the duties of opening a real estate business, and not before.

The New Jersey Law Against Discrimination (LAD) prohibits certain real estate practices that are considered discriminatory. Some examples of discriminatory practices include redlining, blockbusting and steering.
Steering is something that still occurs, some with malice and others by just assuming that the buyers would be "more comfortable" in certain areas. It is ok to show someone homes in one specific area if that is the only place you can find listings in their price range. But every buyer has the right to live anywhere they can afford to live, and where that may be is their decision, not the real estate agents.
Redlining came about when insurance and mortgage companies literally took a red pen to outline the neighborhoods they refused to service because of race or ethnicity. As an agent, you should solicit listings in every neighborhood in your service area, and not exclude homes in ethnic neighborhoods when putting together a list of homes to show your buyers. Blockbusting is used to intimidate and panic owners in a neighborhood by telling them a minority group(s) is coming closer to their area and that they should sell now before prices go down.

The first three choices are covered by the ADA. However, current drug users are not covered.

Businesses involved in the selling or financing of real estate must display both the New Jersey Antidiscrimination poster and the federal Fair Housing poster all real estate related buildings. Failure to do so can cost a minimum of $100.

The money must be deposited in the approved broker's trust account within five business days. The financial institution must be approved by the New Jersey Real Estate Commission and the account number must be registered with the commission as well. Each deposit must be kept separately from other customer's deposits. Proper records must be kept as well.

The seller, for any reason, can stop any real estate office from coming to show his property. Although this sounds improbable, it can happen for a variety of reasons. Usually someone from that office has done something to hurt or offend the seller in the past. The listing broker is bound to let any licensed agent show the property unless the waiver has been signed to exclude them and the excluded party has the right to see the signed waiver. An Exclusive Right to Sell listing can be sold by any licensee and cannot be limited to the listing office. Brokers must always cooperate with each other.

Some real estate offices consider and treat their agents as employees. Whether an agent is an employee or an independent contractor comes down to certain factors, like how much control the office has over the agent's work and whether tax withholding is done. The more control an office exerts, the more likely it will be that the agent will be found to be an employee by the Internal Revenue Service. On the other hand, most real estate agents work as independent contractors. The agents pay their own taxes, receive no health benefits from the broker, pay for travel and business expanses and the agent builds their clients and customer base. When an independent contractor, the broker is not responsible to provide business opportunities for them.
The written agreement between agent and broker will establishes how an agent will work at a particular office. An employment agreement is mandatory in New Jersey. Like most other binding agreements, it must be signed and dated by both parties. It should clearly explain the relationships are, how the agent will be paid and what is expected of both parties.

New Jersey statutes (56:8-2) provides that "It is unlawful to, among other things to use deception, fraud, false promise or misrepresentation in connection with the sale or representation of any merchandise or real estate". A broker is not permitted to use the term "sold" on a property until after it has closed. To avoid violations of the statute, brokers must review any advertising written by anyone else, including the client. Ads must identify the brokerage firm and a firm cannot advertise another broker's listing. Ads for listed houses must include the town where the property is located.

A Net Listing is illegal in New Jersey. A Net Listing is a listing where a real estate broker gives the seller a listing price and keeps only the amount of money over and above the listed price when the house sells. It is illegal mainly because it can lead to serious misrepresentation and fraud. If you tell the seller the house is worth $80,000 and then sell it for $115,000, you will be taking $35,000 for your commission. This is in direct violation of the fiduciary responsibility and why we have these laws and practices. A real estate salesperson is to protect the principal and act in their best interests at all times.
The exclusive right to sell listing is a type of listing where the office that has the listing is the only office who can receive the listing end of the commission when the property sells. An open listing is available to any broker to sell, and that broker will earn the commission. An oral listing is a listing where nothing is in writing and is strictly a verbal agreement.

This represents a Tying Agreement, which ties the future listing of the property to the broker that represented the client in the initial transaction. This removes the ability of the homeowner to choose the broker who may be the best fit for them when they are ready to sell. It also can allow the broker to avoid negotiating commissions or to spend money on advertising since the clients are captive. Farming is ok, but if there's an agreement amongst brokers or agents to divide geographic areas with the intent of limiting competition it is illegal. A broker can always agree to limit commission rates that would not be profitable. Only advertising on one radio station does not prevent others from advertising with the radio station.

The New Jersey Do Not Call List prohibits telemarking to past clients where there is no continuing services being provided and the relationship has been terminated. As far as clients, calls can only be made to existing clients where there are pending obligations to perform and established clients where the agent previously provided continuing services and there's not been a termination of the relationship. Telemarking calls can also be made to other businesses. Businesses are not covered by the New Jersey Do Not Call List.

Familial status is concerned with families with children under 18. You cannot refuse to rent or sell to anyone because they have children, unless it is senior housing or the number of children would be over the limit of the municipality rental laws.

Since insurance will be a requirement of the lender, the buyers must obtain the proper insurance as soon as possible. Since an attorney is not mandatory, having one or not has no bearing on the contract or closing. The utilities and movers also do not affect the sale and as most sellers have the utilities turned off, it is necessary for the buyers to call to resume service and open the accounts after closing.

You must be at least 18 years of age in New Jersey to obtain a real estate license. If you have an out of state broker's license, New Jersey may waive the instruction requirements but passing the state exam is never waived.

Fingerprints are required. The applicant must download the proper forms from the Real Estate Commission's web site and follow the instructions carefully. A date and time must be scheduled and a copy must be obtained.

In New Jersey, you need a real estate license if you work as an auctioneer and auction real estate, even if only occasionally. If you are helping your friend negotiate the purchase of a home and mortgage you need a license. If you help out your landlord by renting apartments in your building and collecting rent, you need a license. Other jobs that require licensure include real estate instructor. In order to apply for a license to teach the pre-licensing course in New Jersey, you must have been licensed as a broker for the past two consecutive years or have a bachelor's degree.
Not all persons who work in a property management or real estate office need a license. You can work in a property management office without a license as long as you do not collect rent, show apartments or anything else done by a licensee. The same holds true for a real estate assistant. They can put up signs, drop off keys and paperwork and prepare a property for an open house by laying out information, opening curtains etc. without a license. A receptionist may also do those things but may not give any information about property, prices etc. on the phone or to a walk-in customer.

When John and Mary put 20% ($40,000) of the purchase price down on the house that amount became instant equity. The appreciation of 10% of their home they paid $200,000 for equals $20,000. The total of the down payment plus the amount of the appreciation equals $60,000. Very little equity would have resulted from paying down the mortgage since the payments in the early years are almost all interest.

The Loan to Value Ratio is used by lenders to understand how much liability they will have when processing a loan. It is the percentage of the price paid for the home divided into how much is mortgage and how much is the borrower's own money. To arrive at the loan to value ratio, divide the mortgage amount ($72,000) by the sale price ($90,000) as a percent and that should give you the ratio - 80%.

A borrower will pay 1% of the mortgage amount per point as way to buy down the mortgage rate. To determine how much the points cost, first find the mortgage amount and multiply that number by 2%.

Mortgage amount = $320,000 x .8 = $256,000
Two points = $256,000 x .02 = $5,120
 

In order to arrive at the lowest acceptable offer, take the desired amount and divide by 94% (.94). The quotient will be lowest possible selling price to allow for a six percent commission.

325,000 / .94 = $345,744
$345,744 x .06 = $20,744
$345,744 - $20,744 = $325,000
 

The seller owes October, November and the first two days of December. To determine the per diem, determine the number of days in the quarter: October (31), November (30) and December (31), which equals 92 days. Divide the total taxes due by the number of days in the quarter: $328 ÷ 92 = $3.57 per diem.

Next, multiply the per diem by the number of days seller will be in possession: $3.57 x 63 days = $224.91.

 

Before you start calculating, you need to remember there are two offices involved in this sale so the first thing you do is to find the total commission and divide it by 2 - half goes to the listing office and half to the selling office. The sale price of $400,000 x the 5.5% commission = $22,000. Each office will receive $11,000, and that will be split between broker and the agent based on their agreements. John is earning 70% of the $11,000 commission (11,000 x .7) which is $7,700. The broker retains the 30%, or $3,300.

The capitalization method is a way for investors to determine the current value of a property being considered for purchase. To determine value, the method multiplies an expected net operating income by a capitalization rate. The investor can estimate the net operating income (NOI) by determining the building rent less expenses. In this scenario, the investor has determined the potential NOI to be $40,000. Next, the investor must determine what capitalization rate to use. A similar property recently sold can be used if the NOI can be determined. In this case, the comparable sold for $250,000 with a NOI of $50,000. The cap rate is determined by dividing $50,000 by $250,000, which equals 20% or .2. To find the value of the property the investor is looking at, divide $40,000 by .2 to get the value - $200,000.