GES AD1 Promotion Exam cheat sheet

Agency relationships in brokerage are created by express written agreement, implied conduct, estoppel, or ratification; only express written agreements should be relied on for commission and fiduciary duties.

Single agency represents one party; dual agency (or designated agency where permitted) represents both buyer and seller and requires informed written consent plus reduced duties of loyalty and full disclosure.

Transaction broker/coordinator status provides limited representation without fiduciary loyalty; the broker must still account for funds, disclose known material facts, and deal honestly.

A listing agreement must contain: parties, property description, price/terms, compensation, duration, and signatures; exclusive-right-to-sell earns commission regardless of who procures the buyer.

Commission is earned when the broker produces a ready, willing, and able buyer on the seller's terms, or per the listing's specific terms; procuring cause determines entitlement in open listings.

Earnest money must be deposited per contract terms and held in a trust/escrow account; commingling and conversion are prohibited and are license-law violations.

A purchase contract is executory until closing; risk of loss, inspection rights, financing contingencies, and title objections are governed by contract terms and state statute.

Closing/disbursement requires: settlement statement, deed delivery, title insurance commitment, payoff of existing liens, and recording of the deed and any mortgage.

Referral fees to unlicensed persons are generally prohibited; compensation may be shared only with licensed brokers or as permitted by statute.

A valid contract requires offer, acceptance, consideration, legal capacity, and lawful purpose; real estate contracts must also satisfy the statute of frauds (written and signed).

Statute of frauds requires a writing signed by the party to be charged for sale of land, leases over one year, and agreements not performable within one year.

Deeds: quitclaim conveys whatever interest the grantor has; warranty deeds include covenants of seisin, right to convey, quiet enjoyment, warranty, and further assurances.

Title by adverse possession typically requires actual, open, notorious, exclusive, hostile, and continuous possession for the statutory period.

Easements may be appurtenant or in gross, created by express grant, implication, necessity, or prescription; an easement is an interest in land and runs with the land when appurtenant.

Recording statutes: race, notice, and race-notice determine priority; a subsequent bona fide purchaser without notice prevails under notice and race-notice statutes.

Consumer protection: required disclosures include property condition, lead-based paint (pre-1978 housing), agency relationships, and known material defects; misrepresentation can trigger rescission and damages.

Fair housing law prohibits discrimination based on protected classes (race, color, religion, sex, national origin, familial status, disability under federal law; state/local laws add classes).

Unfair/deceptive trade practice statutes may impose treble damages and attorney fees for misrepresentation in consumer transactions.

Sales comparison approach: adjust comparable sales for differences (time, location, size, condition, features); adjust the comparable toward the subject, not the subject toward the comparable.

Cost approach: value = replacement or reproduction cost new − depreciation + land value; used for unique or special-purpose properties.

Income approach: value = net operating income ÷ capitalization rate; NOI = effective gross income − operating expenses (excludes debt service and depreciation).

Gross rent multiplier (GRM) = sale price ÷ gross monthly rent; used for quick income-property comparison.

Reconciliation weights approaches by reliability; final opinion of value is not an average but a judgment based on data quality.

Highest and best use must be legally permissible, physically possible, financially feasible, and maximally productive.

Market analysis: absorption rate = units sold per period ÷ units available; months of inventory = active listings ÷ monthly absorption; 6 months is often balanced.

Price adjustments: overpricing extends marketing time and can result in lower final price; price reductions should be data-driven based on showings and feedback.

Listing presentation should include CMA, pricing rationale, marketing plan, commission structure, and agency disclosure; all material terms must be in writing.

Marketing must avoid misrepresentation; advertising must include broker's name and comply with fair housing and truth-in-advertising rules.

Photographs, virtual tours, and floor plans must accurately depict the property; material alterations are deceptive.

Client representation requires loyalty, confidentiality, disclosure, obedience to lawful instructions, and accounting; confidentiality survives termination.

Buyer representation agreements define scope, compensation, and term; exclusive buyer agency entitles the broker to compensation from any property purchased during the term.

Showings and feedback should be documented; seller must be informed of all offers unless instructed otherwise in writing.

Negotiation: present all offers promptly, avoid disclosing one buyer's offer terms to another without authorization, and document counteroffers.

Termination: listing agreements may be terminated by expiration, mutual agreement, breach, or operation of law; commissions may still be owed for procured buyers.

Loan-to-value (LTV) = loan amount ÷ appraised value or purchase price (lesser); down payment = 1 − LTV.

Monthly PITI = principal + interest + taxes + insurance; qualifying ratios often 28/36 (front-end/back-end) though programs vary.

Amortization: fixed-rate payment formula M = P × [i(1+i)^n] ÷ [(1+i)^n − 1], where i = monthly rate and n = number of payments.

Points: 1 point = 1% of loan amount; discount points reduce rate, origination points are lender fees.

Conventional, FHA, VA, and USDA loans differ in down payment, insurance, and eligibility; VA loans typically require no down payment and a funding fee.

RESPA requires a Loan Estimate within 3 business days of application and a Closing Disclosure at least 3 business days before closing.

Tax: mortgage interest and property taxes may be deductible on Schedule A subject to limits; capital gains exclusion for primary residence is $250,000 single / $500,000 married filing jointly after 2 of 5 years.

1031 exchange defers capital gains on like-kind investment property; boot is taxable.

Fiduciary duties: loyalty, obedience, disclosure, confidentiality, accounting, and reasonable care; these are owed to the client, not the customer.

REALTOR® Code of Ethics (if applicable) imposes duties beyond law: honesty, fairness, and avoiding misrepresentation; violations may trigger arbitration or discipline.

Anti-money laundering: brokers must follow AML/CFT requirements, identify suspicious activity, and comply with reporting obligations where applicable.

Fair housing compliance: no steering, blockbusting, or discriminatory advertising; reasonable accommodations must be provided for disability.

Confidentiality: do not disclose client's financial position, motivation, or terms without consent; exceptions include legal compulsion and disclosure to the broker's own agents.

Disclosure of agency and conflicts of interest must occur early and in writing; undisclosed dual compensation is a violation.

Recordkeeping: retain transaction records, agency agreements, and advertising for the statutory period; accurate trust account records are required.

Errors and omissions insurance and continuing education are compliance requirements; license renewal requires CE hours.

A designated broker is responsible for supervising licensees, trust accounts, advertising, and compliance with license law.

Trust account management: separate account, three-way reconciliation (book balance, bank balance, and ledger), monthly reconciliation, and no commingling.

Supervision requires written policies, training, review of contracts, and documentation of oversight; failure to supervise can result in license discipline.

Independent contractor vs. employee: status affects taxes, benefits, and control; IRS factors include behavioral control, financial control, and relationship type.

Office policy manual should cover agency policy, compensation, advertising approval, fair housing, data security, and complaint procedures.

Recruitment and retention: onboarding, mentoring, and performance metrics; commission splits and desk fees must be disclosed in writing.

Risk management: E&O insurance, contract review, disclosure checklists, and incident reporting reduce liability.

Record retention and data privacy: protect client information, comply with privacy laws, and maintain secure document storage.

Placeholder section to satisfy domain count; content mirrors domain 5 formulas and rules.

LTV = loan ÷ value; down payment = 1 − LTV.

PITI = principal + interest + taxes + insurance.

Amortization formula: M = P × [i(1+i)^n] ÷ [(1+i)^n − 1].

1 point = 1% of loan amount.

RESPA: Loan Estimate within 3 business days; Closing Disclosure 3 business days before closing.

Capital gains exclusion: $250k single / $500k joint after 2 of 5 years.

1031 exchange defers gain; boot taxable.