Important Points

1. Important Points

2. Important Points • In order to obtain a temporary license, you need to pass all three phases and enrol with a Brokerage. (The papers are sent to RECO and are completed by the Brokerage). • 3 three courses entitle- Property Law, Commercial/Residential, 1 Elective • You have 24 months after completing the 3rd phase to complete these articulating courses that were mentioned above. • After you enrolled with a Brokerage, you are employed under them and can be employed as a employee or independent contractor depending on your preference.

3. Important Points • RECO issues your license once you are done your application which includes a registration fee and insurance. • You must have insurance because you will not be able to have a license without it and you must carry it at all times. • Before you start practicing in Real Estate, you renew your license and it becomes permanent.  • After you have about 2 years of experience and have completed the articling period, you than are able to obtain the broker qualification.

4. Important Points • After becoming a Broker, you are able to be hired as a Broker of Record because all Brokerages have a designated Broker of Record and It is the highest authority. • All Salespeople and Brokers have to complete 24 credits to renew their license from Temporary to Permanent. • This entitles 6 RECO and 18 Other.

5. Important Points • Salespeople or Brokers can charge commission in two ways: • Commission • Flat Rate You cannot charge both, it is either one or the other when charging for services. All commission has tobe paid to the brokerage by the client but the client can never pay directly to you! The process is : • Seller pays commission to listing brokerage —> listing brokerage pays to co-operating brokerage —> which is than paid to salespeople.

6. Important Points • In order for salespeople to make it in the market they require: • Skills • Knowledge • Ethics • Morals • Strategy

7. Important Points • You can have many licenses as long as it is not Home & Auto • The following are exempted from REBBA 2002- • A full time employee of a builder • Trust nominee • Lawyers working from their own firm • Auctioneers working out of own firm • A person who trades in Real Estate

8. Important Points • CREA represents Canadian Real Estate on a national and international level as well as CREA owns Realtor and MLS Logos • RECO deals with licensing, insurance, any legal matters and public complaints • OREA deals with education and prepared legal forms • Local Boards maintain MLS and also collect dues from sales, representatives/brokers and arbitrates. • Once you have officially become a member of local boards you are also a member of OREA and CREA instantly. • All members of local boards are members of RECO as well. • You can become a member of RECO without being a member of Local Board BUT you can not be a member of a Local Board without being a member of RECO.

9. Important Points • Remember that when a seller lists with a salesperson, they are listing it at market value and that market prices is the price that the market is willing to stand with. • When a buyer purchases a property through a sales person they are paying market price. • Extra paid only because of external reasons which would be value in exchange or extra paid only because of internal reasons which would be value in use. • All responsibilities of Salespeople/Brokers/Brokerages are in Real Estate Business Brokers Act (REBBA Act 2002).

10. Important Terms to Remember • Crown Corporations- Owned and operated corporations by government on behalf of the Crown  • Competition-If there are more than 2 comparable competing properties that decreases value • Odd House- Odd orientation on house that reduces the property value due to lack of conformity  • Buyer/Sellers Market- Caused by supply and demand  When there are more buyers = sellers market when there are more sellers= buyers market

11. Important Terms to Remember 5. Consistent Use- values only apply to land when the government makes changes to zoning  6. Highest and Best Use- you sell your property for more value when you change your zoning  7. Contribution-Profit of loss when the seller is involved in renovations  8. Increasing and Decreasing Returns- The builder is involved in making changes to a property 9. Balance- reduce in property value when parking problems occur

12. Important Terms to Remember 10. Progression-A small house that is set in a big neighbourhood that has bigger houses 11. Regression-  The opposite of progression, bigger houses living in a neighbourhood with smaller houses 12. Surplus Productivity- More profit is created due to more sales and production  Net Income - Expenses = Surplus Productivity states in Real Estate that if the expenses of ownership are subtracted from net income, the money that remains is surplus. 13. Encumbrances- Liens on property. Lawyers do title searches to make sure there are no liens on property 14. BOMA- Building Owners and Managers Association – standard method of floor measurement for office buildings

13. Important Terms to Remember 14. The principle of Substitution- The property that would give more value to the dollar 15. The Principle of Exchange- The value goes down when the local economy is also down low which concerns the value 16. The Principle of External Factor- Any factors such as local crime or others that concern any external factor regardless of any other factor  17. Easement- Right of way on property over another property 18. Property Tax Rate- Municipality divides for lots of other services 19. Expropriation- Taking private property by government for public use

14. Important Terms to Remember 20. Split – Between salesperson/Broker and Brokerage • Ability to create word strategy to create interest (AIDA Formula) Attention- Get attention with a unique heading Interest-Outline property benefits or features that can help gain interest Desire- If you show a fantasy new way of life that gives desire for people to live in that property Action- Make buyers want to take action by calling you or the brokerage you work for 22. Distribution/Allocation- Between listing and Co-Operating Brokerage

15. Important Points • Condominium’s - 2 legal documents are registered by the city • Declaration- Proportionate share interests, rules/by laws etc…  • Description - Diagrammatic representation of the condo which is survey, plan etc…  • Condo’s have common elements, maintenance fees, and reserve funds  • Special Assessment- Low reserve fund induces. • These special assessments have boilers break and new boilers cost $160,000 and that means that this money will be billed to all unit owners collectively.

16. Important Points • A status certificate must be acquired by the Buyer from the Seller or condo corporation directly. • Unit owners of condominiums are responsible for any condo debt. • Co-operative Buildings are not condominiums = Blanket Mortgage. • A Housing Cooperative- Legal entity, corporation, owns Real Estate which is one type of housing that is distinctive type of home ownership. • This corporation is membership based and is granted when individual buys a share in the cooperative. • Condominium by laws can be changed by a majority vote. • 10 day cooling period is used for new construction only.

17. Important Points • High Ratio Mortgages- Mortgages that are acquired with less than 20% down. • High Ratio Mortgages- Must be insured. • Mortgage Insurance companies include Canadian Mortgage and Housing Corporation (CMHC) and Genworth (GE) • Conventional Mortgages- Acquired with more than 20% down.These types of mortgages do not require insurance. • Assuming Mortgage- Seller is transferring. His/her mortgage to the buyer. • Blended monthly mortgage payments = Principle + Interest • New homes rebate + homes purchased for owner occupancy still applies

18. Important Points • Mortgage interest consists of a term (i.e. 8 year term) and also consists of an amortization period – new rule says no more than 25 years. • Interests rates can be fixed, variable, closed or open. • Open Mortgage= No rules, can pay back money you borrowed anytime. • Closed Mortgage= Agreeing to a term that can range from 6 months – 10 years. Also if a closed mortgage is paid off early, the mortgagor will have a pay penalty. • Mortgage Rates are controlled by Bank of Canada.

19. Important Points • If a new housing development has been constructed but not 100% sold then the housing has been not absorbed. • If the builder sells out the properties before the construction has even been completed then it is absorbed but the housing isn’t complete. • When builder receives permission from the City and the lender but the construction has not yet started then the project is a pending start. • When the builder has dug the foundation and the footing is done, then housing starts. • New housing developments are future revenue for the government – property/land taxes. • All construction of homes/renovations have to be within zoning by laws, buildings codes, fire codes and electrical codes.

20. Important Points • Client = The “Principal” • Company= The “Agent” • Relationship between Principal + Agent = “Principal-Agent Agency” • Once Agency Agreement is signed, becomes a client. • Considered a Customer if Agency Agreement has not been signed yet. • It is not allowed to force a Client to enter into a Contract. • Do not make false promises or false advertisement. • It is a must to disclose all material facts that can have any impact on your Client. • Fiduciary Duty = You must protect your Clients interests.

21. Important Points • Registrar = An officer of high authority at RECO and has the power to revoke or take any other legal actions against Salespeople/Brokers and the Registrar has the authority to suspended your license without any notice. • Market Equilibrium- When supply meets demand • Market Bubble- Sudden increase/decrease in value • Ripple Effect- Construction & Real Estate creates a ripple which flows in economy • CPI- Consumer Price Index – tracks 600 items • GDP- Gross Domestic Product • GNP- Gross National Product – International/National

22. Important Points • All economics require: • Land • Capital • Labour • Entrepreneurial Skills to produce services and goods to grow • Appraisals estimate property value

23. Important Points • Housing construction researches first – • Demography • Income • Age • Needs • Income group • Economy & others

24. Important Points • Having open houses = Good Marketing • Every listing and buyer agency agreement has a holdover period. • Closing Day = Buyers Day. • Title is ownership - Transfer/Deed, charge, discharge document, general and scheduled documents registered on title. • 10% maximum voting share. • Main Structures for Brokerages – Sole Proprietorship and partnership. • CVA- Property assessment in Ontario. • The buyer always pays if house is purchased in middle of the year and has a oil tank.

25. Important Points • The Real Estate Brokerage – Maintains Real Estate Trust Account. • RIBO – Regulates the licensing, ethical conduct, insurance related financial obligations. • Advertisements must be approved by Broker of Record. • Large cash transactions can be a sign of money laundering. • Rules relating to HST- • Complicated • Number of exceptions apply • Resale home may attract HST if renovated