CRS flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Fiduciary duties acronym
- Obedience, Loyalty, Disclosure, Confidentiality, Accounting, and Reasonable care. These six duties are owed exclusively to the client, never to customers or opposing parties.
- Code of Ethics enforcement body
- Local REALTOR® association professional standards committees hear ethics complaints and may sanction members; state real estate commissions separately enforce licensing statutes.
- Procuring cause
- The broker whose uninterrupted efforts started the chain of events that produced the sale, which supports that broker's claim to the cooperating compensation.
- RESPA Section 8
- Prohibits giving or accepting any fee, kickback, or thing of value in exchange for referring settlement service business in a federally related mortgage transaction.
- Protected classes under Fair Housing
- Federal law bars discrimination by race, color, religion, sex, national origin, familial status, and disability; state and local ordinances often add classes such as age or source of income.
- Antitrust and commission rates
- Competitors agreeing on commission rates, splits, or dividing territory violates antitrust law; commissions are always negotiable between one broker and one client.
- Ethics complaint filing deadline
- A complaint must be filed within 180 days after the facts constituting the alleged violation became known or reasonably should have been known.
- Exclusive right to sell
- The seller owes the broker compensation no matter who procures the buyer, including when the seller finds the buyer without any broker assistance.
- Exclusive agency listing
- The seller may sell the property unrepresented and owe nothing; the broker earns a fee only if the broker or a cooperating broker produces the buyer.
- Dual agency consent
- Representing both buyer and seller requires informed written consent from both and limits the broker to neutrality, disclosure of material facts, and no advocacy.
- Designated agency
- One brokerage assigns a different agent to represent the buyer and another to represent the seller, avoiding dual agency in states that permit this structure.
- Buyer representation agreement
- A written contract stating the term, geographic area, and compensation owed to the buyer's broker; it converts the buyer from a customer into a client.
- MLS cooperating compensation
- The listing broker's unilateral offer of compensation to a buyer's broker; it is negotiable and is not fixed by MLS rules or association policy.
- Months of inventory
- Active listings divided by average monthly closed sales. Roughly six months is a balanced market; lower favors sellers, higher favors buyers.
- Adjusting a comparable
- Add value when the comparable is inferior to the subject and subtract when superior, always moving the comparable's price toward the subject's indicated value.
- Capitalization rate
- Net operating income divided by price. Rearranged, value equals net operating income divided by the cap rate; used for income-producing property.
- Gross rent multiplier
- Price divided by gross monthly rent. It is a fast screening tool for rentals but ignores vacancy, operating expenses, and financing terms.
- Paired sales analysis
- Two nearly identical sales that differ in a single feature; the price difference approximates the contributory value of that feature to the market.
- Sales comparison approach
- Estimate value by adjusting recent closed comparables to the subject. It is the primary approach for owner-occupied residential property and most lender appraisals.
- Elements of a valid contract
- Offer, acceptance, consideration, capacity of the parties, and lawful purpose; real property contracts must also be written under the Statute of Frauds.
- Statute of Frauds
- An agreement for the sale of real property is enforceable only if it is in writing and signed by the party against whom enforcement is sought.
- Counteroffer effect
- A counteroffer rejects and terminates the original offer; the original offer can no longer be accepted unless the offeror later revives it.
- Earnest money deposit
- The buyer's consideration held in escrow, credited to the buyer at closing, and possibly retained by the seller under a liquidated damages clause if the buyer defaults.
- Contingency deadlines
- Inspection, financing, and appraisal contingencies must be satisfied, waived, or released in writing by the stated date, or the contract may be terminated.
- TRID three-day rule
- The Closing Disclosure must reach the borrower at least three business days before consummation; changes to the APR, loan product, or prepayment penalty restart the three days.
- Zone of possible agreement
- The overlap between the buyer's maximum price and the seller's minimum price. Without overlap there is no bargain, only a need for new terms.
- Loan-to-value ratio
- Loan amount divided by the lesser of purchase price or appraised value. Above 80% usually requires mortgage insurance; lower ratios earn better pricing.
- Debt-to-income ratio
- Total monthly debt payments divided by gross monthly income. Qualified mortgages generally cap the back-end ratio near 43%, though some programs allow up to 50%.
- 1031 exchange deadlines
- The investor has 45 days after closing to identify replacement property and 180 days to complete the purchase; capital gains tax is deferred, not forgiven.
- Net commission to agent
- Sale price times the commission rate times the agent's split, minus desk fees, franchise fees, and transaction fees charged by the brokerage.
- Cost per acquired client
- Total marketing spend divided by the number of closed transactions that the spend produced; compare it against average commission per closing.
- Lead conversion rate
- Closed transactions divided by total leads, multiplied by 100. Track it by channel and quarter to decide where marketing dollars belong.