Download - Approaches to Appraisals
Approaches to Appraisals
David Del Priore CopyrightcopyJanuary 2019
Market Data Approach Cost Approach Income Approach Cap Rate Income Approach Gross
Multiplier
Comparable
Pick 3 to 5 Sold and listed
Within 6 months to a year
Within one mile of subject
property
Replacement Reproduction Cost
Square Foot Method (Sq Ft of
the house multiple by value of
area)
Cubic Foot Method
(Warehouses)
Unit in Place Method
(Everything in its place
ceiling fans and so on)
Quantity Survey Method
(Everything down to the
individual nails and bricks)
Capitalization Rate
If the Cap Rate goes
up the value will go
down
If the Cap Rate goes
down the value will go
up
Gross Rent Multiplier
(GRM)
The comparable
sales price divided
by month rent equal
GRM
The subject
property times the
GRM equals subject
property value
CIA= Comparable inferior add
If the comparable property
doesnrsquot have something
your subject property does
you add to the value
Less Depreciation (Subtract
depreciation from estimate)
Potential Gross Income
Minus Vacancy and
Collections equals effective
gross income
Gross Income Multiplier
(GIM)
Comparable sale price
dived by gross annual
income equals GIM
The Subject Property
times the GIM equals
the subject property
value CBS= Comparable better Subtract
If the comparable property
has something your subject
property does not you
subtract from the value
Add Land Value (Add land to
estimate)
Effective gross income minus
operating expense equals Net
Operating Income (NOI)
$191100$1300 Rent =
147 GRM
$1500 Rent 147 =
$220500 Subject property
Sales Prices
Never Adjust the Subject
Property
Value of Subject Property NOIValue gives you cap rate
NOICap Rate gives you
value
Refer to T-Chart
$20000$50000 Gross =
4 GRM
$55000 Rent 4 =
$220000 Subject property
Sales Prices
Del Priore Realty Academy Copyright January 2021
How do I calculatehellip
Number of days for Interest adjustment
Formula Number of days in month ndash day before closing (to count the day of closing) = Total number of
days
For example If the closing date is March 6 what is the number of days for the interest adjustment 26
HOW
March has 31 days Closing is on March 6 31-5= 26
Interest Adjustment
Formula Loan amount x rate= Annual Interest
Annual interest number of days in banking fiscal year (360) =daily rate
Daily rate x number of days= interest adjustment
For example If the loan amount is $55000 the rate is 115 and the closing date is April 15 what is the
interest adjustment on the buyerrsquos new loan when using a 360-day financial calendar year $26354
HOW
$55 000 x 115= $6 325
$6 325360= $175694
$17 5694 x 15= $26354
Private Mortgage Insurance (PMI)
Formula sales price x LTV= Loan Amount
Loan x PMI RATE= annual PMI
Annual PMI 12 (months)= monthly PMI
For example A buyer purchases a home for $210 000 with a 90 LTV The lender has quoted a rate of
065 annually for PMI What is the buyerrsquos monthly PMI obligation $10238
HOW
$210 000 x 90= $189000
$189000 x 065= $1 22850
$12285012= $102375 $10238
Del Priore Realty Academy Copyright January 2021
Mortgage insurance premium (MIP) upfront
Formula Sales price x LTV = Loan Amount
Loan Amount x UFMIP rate= Answer
For example A buyer is purchasing a $220 000 home with an FHA loan THE LTV is 965 and the
upfront MIP rate is 175 How much MIP will be added to the loan amount $3 716
HOW
$220 000 x 965= $212 300
$212 300 x 175= $371525 (round Up)
$3716
MIP Monthly
Formula SALES PRICE x LTV= Loan Amount
Loan Amount + upfront MIP (found in previous question) = New Loan Amount
New Loan x annual MIP rate= annual MIP
Annual MIP12= Monthly MIP (rounded up to second decimal place)
For example Using the information from the previous question if the annual MIP rate is 135 then
how much MIP will be added to the monthly payment $24302
HOW
$220 000 x 965= $212 300
$212 300 +$3716= $216 01600
$216 016 x 135= $2 916216
$2 91621612= $243018= $24302
Transfer tax
Formula sales price- assumed loan (if any) = Taxable Amount
Taxable Amount100= Answer
Always round up to nearest whole dollar
Rounded answer x $010= Transfer Tax amount
For example If the sales price is $45000 $0 for a new loan and $32 873 loan assumed what is the
transfer tax $1220
HOW
$45000-$32873= $12127
$12 227100= $12127= $122
$122 x 10= $1220
Del Priore Realty Academy Copyright January 2021
With No loan Assumed
$250000 Sales Price
$225000 New Loan
What is the Transfer Tax $250
$250000-$0= $250000
$250000100= 2500
2500$010=$250
Intangibles Tax
Formula sales price x LTV= Loan Amount
Loan Amount500= Answer
Always round up to nearest whole dollar
Answer x $150= Intangible Tac
For example If the sales price is $148000 and the loan type is 95 conventional what is the intangibles
tax $42300
HOW
$148000 x 95= $140600
$140 600 500= $28120= $28200
$28200 x 15= $42300
Del Priore Realty Academy Copyright January 2021 Page 1 of 12
Study Guide
Key Real Estate Terms Land Earthrsquos center (subsurface rights) through the surface amp up
into infinity (air rights) + natural attachments (Fructus
Naturales)
Real Estate Land + Improvements (man-made additions that are attached)
Real Property Real Estate + Ownership Rights (Bundle of Rights)
Bundle of Rights Possession Control Exclusion Peaceful enjoyment
Encumber (lien) amp Disposition (convey)
Personal Property
(Chattels)
Mobile
Fixture Personal Property that becomes Real Property
Trade Fixture Lesseersquos Personal Property for commercial purposes If it
remains after the Lease it becomes the Lessorrsquos through
Accession
Fixture Test (ldquoMARIArdquo) Method Is the item custom (built-in bookshelves) or was the building modified
for the item
Adaptation Permanently or legally (garage door remote belongs to the attached
garage door opener) attached
Relationship to
Parties
The relationship of the person installing to the property
Intentions of
Annexing Party
Did the owner intend permanency
Agreement If there is a contractual agreement the tests no longer matter
Real Estate Characteristics Physical Economic (ldquoSPAMrdquo)
Immobility Scarcity
Non-Homogeneity (ldquoUniquenessrdquo) Performance of Investment (or Fixed
Investment)
Indestructibility Area Preference (Situs)
Modifications (Improvements)
The Economic Life determines the worth of an investment in land amp improvements
Situs is the most important Economic Characteristic
Del Priore Realty Academy Copyright January 2021 Page 2 of 12
Private Ownership Bundle of Rights ldquoPUTEErdquo
Possession Right to occupy amp have ingressegress
Use or Control Improve lease lien exclude others
Transferability Sell gift or Devise (through Last Will amp Testament)
Enjoyment (Peaceful) Without interference of others or Title challenges
Exclusion Keep those without an ownership interest out
External Influences that may Impact the Bundle of Rights
Private Rights (Another
personrsquos)
Easements Encroachments Liens Restrictions
Easement by
Prescription (Can lead to Adverse
Possession-involuntary
transfer of ownership)
bull Actual
bull Hostile
bull Open
bull Notorious
bull Exclusive
bull Continuous for a Statutory period of time
Public Rights
(Government)
Police Power Escheat Eminent Domain amp Taxation
Government Powers (ldquoPETErdquo)
Police Power Zoning building code Master Plan
Police Power= laws that regulate private property use to ensure the publicrsquos safety health
morals amp general well-being
Eminent Domain Land is taken through the process of Condemnation Owner has
the right to ensure it is for the required public use amp gets ldquoJust
Compensationrdquo
Taxation Real Property taxes (Ad Valorem)
Escheat State takes ownership when property has been abandoned or
owner was Intestate (Will doesnrsquot exist)
Easement Creation (ldquoPOPCORNrdquo) Private Grant
On Agreement
Prescription
Condemnation
Operation of Law
Reservation (in the Deed)
Necessity
Del Priore Realty Academy Copyright January 2021 Page 3 of 12
Forms of Ownership Severalty One individual or Corporation
Tenants in Common 2+ individuals (Co-Ownership) or Corporations Each holds
individual Title amp interests can be unequal Conveyed through
Devise (Last Will amp Testament)
Joint Tenancy Right of Survivorship One Title amp equal interests Must have 4
unities Possession Interest Time amp Title (ldquoPITTrdquo)
Tenancy by the Entirety
(NOT in GA)
Joint Tenancy for Married Couples
Right of Survivorship
Commonalities
Tenants in Common amp Joint Tenancy share Possession
Joint Tenancy amp Tenancy by the Entirety share Right of Survivorship
Community Property
(NOT in GA)
Property acquired by either before marriage or inheritedgifted
during is NOT considered ONLY for spouses Divorce they
become TIC Viewed as equal partners
Condominium Unit + Air Lot (block of air from inside wall to inside wall)= Fee
Simple Common elements=Tenants in Common
Applies to offices amp parking lots
Cooperative Personal Property Buys Corporate shares amp has a proprietary
lease
Timeshare
ldquoResort areasrdquo
Personal Property Interval Ownership in a Membership Plan
(typically 1 week a year) Tenants in Common
Corporation Single entity
General Partnership Full liability amp managing authority
Limited Partnership No management authority Only liable for investment
Limited Liability Co
(ldquoLLCrdquo)
Owner=Member Some protections of a Corporation
Syndication Usually a RE partnership Subject to security laws
Joint Tenancy (ldquoPITTrdquo) All four unities must exist
bull Possession (undivided)
bull Interests (equal)
bull Time (Title acquired at the same time)
bull Title (One regardless of the number of parties)
Del Priore Realty Academy Copyright January 2021 Page 4 of 12
Agency The Broker is always the Agent of the Principal
Fiduciary Relationship= implies loyalty trust amp confidence
Compensation= does not create an Agency relationship To be eligible for consideration of a
fee you must i) be an actively licensed Agent amp ii) Prove to be the Procuring Cause
Appropriate Licensure is Required for (ldquoBARSALErdquo)
Buy
Appraise
Rent
Sell
Auction
Lease
Exchange
Agentrsquos Duty to a Principal (ldquoPOLANDrdquo)
Performance Skills amp standards to the best of your abilities
Obedience Follow a Principalrsquos orders within the limits of the law
Loyalty Principalrsquos interests must be placed above everyonersquos
including your own
Accountability
(not Accounting)
You must account for all transactional documentation amp funds
Notice amp Disclosure Full disclosure of any matter that may affect the business at
hand Verification from public record is part of this duty
Due Care Exercise care competence amp skill
Principalrsquos Duties to the Agent (ldquoCRIPrdquo)
Compensation Upon performance as established in the Agency agreement
Reimbursement For things outside of the Agency agreement scope (repairs
lawn maintenance)
Indemnification For any loss that is not the Agentrsquos fault
Performance Cooperation amp assistance
Termination of Agency (ldquoREADIESrdquo)
Revocation By Broker Principal may pursue breach if there isnrsquot a
justifiable reason
Expiration Termination date in the Agency agreement
Agreement Mutual Rescission
Death Of Principal or Broker A Salespersonrsquos death will not impact
the Agreement
Incapacity If either party is deemed legally incompetent or declares
bankruptcy
Extinction Destruction of property
Subject of Law Change in law that could make the Agentrsquos tasks illegal
(listing is acquired through Eminent Domain)
Del Priore Realty Academy Copyright January 2021 Page 5 of 12
Illegal Practices of Federal Fair Housing
Blockbusting (Agents)
Encouraging owners to sell due to a protected classrsquo influx into
the area They must be shown the widest possible variety if
preferences arenrsquot expressed
Steering (Agents)
Limiting a ClientrsquosCustomerrsquos choices based on protected
categories
Redlining (Lenders) Denying a qualified borrower purely on the basis of the
particular neighborhood
Agentrsquos Duty to a Customer (ldquoHADrdquo) (Agency does not exist)
Honesty Provide accurate factual information free of fraud or
misrepresentation
Accountability (not accounting)
Account for and care for monies amp valuables
Due Care Care amp competency
Since the Broker isnrsquot an Agent of the Customer this lacks Performance Obedience Loyalty
amp the higher standard of care
Contracts
Expressed In writing
Implied Verbal agreement
Unilateral One party makes a promise
Bilateral Two parties A promise for a promise
Executory Contract is signed but there are unfulfilled promises
Executed Promises have been fulfilled amp Title has transferred
Valid Legal and binding
Void Illegal amp not binding The contract will not be legally
recognized so it never existed
Voidable
One+ essential elements are missing The injured party is the
only one that can rescind or honor the terms
Fraud Mutual Mistake Innocent Misrepresentation Duress or
Undue Influence It lacks Genuine Assent
Enforceable Legal and binding written contract
Unenforceable Cannot be supported in a court of law Possibly a verbal
agreement
Del Priore Realty Academy Copyright January 2021 Page 6 of 12
Essential Elements of a Contract (ldquoCOMICrdquo) Competent Parties All parties must be legally competent amp have the authority to
act Grantor must be of legal age
Objective
(Lawful Purpose)
Not intended for illegal purposes Property can be legally
conveyed
Mutual Assent Through the Offer and Acceptance process Both parties must
agree to every single contract detail
In Writing Except for Leases of one year or less all contracts must be in
writing (Statute of Fraud)
Consideration Valuable Consideration or Good Consideration for a Gift Deed
(ldquoLove amp Affection)
Remedies for Breach of Contract Contractual Liquidated damages Mediation or Arbitration
Law Suit for damages
Suit for Specific Performance
Recession (If the Plaintiff was pressured forced
misrepresented or under duress)
Listing Agreements Exclusive Agency One Agency contract for the listing The Broker responsible
for securing a ready willing amp able buyer (ldquoProcuring
Causerdquo) is eligible for the fee However if the Seller is the
Procuring Cause (ldquoFSBOrdquo) payment is not due to anyone
Exclusive Right to Sell
(Most Common)
One Agency contract for the listing Regardless of whorsquos the
Procuring Cause including the Seller the listing Broker is due
a fee
Open Listing non-Exclusive Agency contracts with multiple Brokers The
first to be the Procuring Cause is eligible for the fee However
if the Seller is the Procuring Cause (ldquoFSBOrdquo) payment is not
due to anyone
Net Listing
(Illegal in GA)
Seller dictates a minimum net price (Sales Price-closing costs-
commissions) necessary to consider an offer Any monies
over that net price is considered the Brokerrsquos fee (Commission
could equate to 3 or 60)
Marketing Listings
Multiple Listing Service
(ldquoMLSrdquo)
This is one industry source widely used to share listing
information with other Licensees
Del Priore Realty Academy Copyright January 2021 Page 7 of 12
Termination of a Leasehold Estate (ldquoDECAFrdquo) Death of Lessee
Eviction of Lessee
Condemnation of Real Property
Agreement (Mutual Rescission)
Foreclosure
Lending Loan Instruments
Promissory Note Evidence of debt used in all Security Instruments
Lien-theory (non-Judicial) States
Mortgage 2 parties Mortgagor (Borrower) amp Mortgagee (Lender)
Title-theory (Judicial) States
Security Deed (used in
GA)
2 parties Grantor (Borrower) amp Grantee (Lender)
Deed of Trust 3 parties Trustor (Borrower) Beneficiary (Lender) amp Trustee
(neutral 3rd party holding Bare Title)
Security Instrument Clauses
Prepayment Penalty Fee based on a of remaining Principal for paying-off the loan
before maturity
Acceleration (ldquoDue on
Defaultrdquo)
For any Contract breach
Alienation (ldquoDue on
Salerdquo)
Title cannot be conveyed or assumed unless the Lender pre-
approves
Defeasance When the loan is paid in full borrower is released from liability
amp gains Legal Title
Also protects Buyer if Lender accepts less than the Principal
balance at Foreclosure
Foreclosure
Judicial (Lien-theory) Strict Foreclosure Sale Must go through the court system
Non-Judicial (Title-
theory) (Georgia)
Power of Sale clause in Security Instrument allows Lender to re-
gain the property without the court process However to do so
they must advertise the property beforehand In GA itrsquos currently
4 weeks
Deed in Lieu of
Foreclosure (ldquoFriendly
Foreclosurerdquo)
Defaulted borrower may willingly surrender Title before
Foreclosure proceedings to minimize credit damage The caveat
being the Lender must be willing to do so
Secondary Mortgage Market Federal National Mortgage Association (ldquoFNMArdquo) Fannie Mae
Federal Home Loan Mortgage Corporation (ldquoFHLMCrdquo) Freddie Mac
Government National Mortgage Association (ldquoGNMArdquo)
Ginnie Mae
GNMA is the only Government agency Purchases low-income loans
Del Priore Realty Academy Copyright January 2021 Page 8 of 12
Protected Classes Law Existing Category Added Category
Civil Rights Act of 1866 NA Race
Federal Civil Rights Act of
1968
(ldquoFederal Fair Housing
Actrdquo)
Race Color Religion amp National
Origin of Birth
Prohibits discrimination in the Real Estate industry of the protected classes
Fair Housing Act of 1974 Race Color Religion amp
National Origin of Birth
Sex
Fair Housing Act of 1988 Race Color Religion
National Origin of Birth amp
Sex
Familial Status amp
Handicapped (one with a record of mental or
physical impairment to include
alcoholism cancer or AIDS)
Americans with Disabilities
Act (ldquoADArdquo)
Prohibits discrimination based on disability amp allows for
reasonable accommodation or modification(s)
Except for Race a private homeowner who occupies a 1-4-unit property may discriminate if
advertising does not contain discriminatory content (ldquoMs Murphy Lawrdquo)
Fair Housing
(ldquoRealtors Can Really Sell Houses Fast Nowrdquo)
Race
Color
Religion
Sex
Handicap
Familial Status
National Origin
Valuation amp Appraisal Definitions
Appraisal= Unbiased opinion of Market Value by an Appraiser Sets the upper limits of
Value
Appraisal Fee= Based on the amount of work amp time
Market Value= the most probable selling price in an Armrsquos-length Transaction
Market Price= Fact The actual Sales Price
Parties are objective and unrelated with unrelated motivations The 4 requirements of an
Armrsquos-length Transaction are
bull Valuable Consideration (cash) is exchanged
bull Property was on the open market for a reasonable time for the market conditions
bull Parties were under no undue pressure
Del Priore Realty Academy Copyright January 2021 Page 9 of 12
bull Parties were well-informed amp acting in their own best interests
Appraisal Process Steps
1 Define the problem 4 Analyze data through i) Market Data
Approach ii) Cost Approach or iii) Income
Approach
2 Make preliminary study 5 Reconciliation amp Final Estimate
3 Gather Data 6 Prepare Appraisal Report
Four (4) Necessary Components of Value (ldquoDUSTrdquo)
Demand Actual need or desire + the ability to pay for it Desired by most
Utility More use more Value
Scarcity Short supply relative to demand
Transferability Ability to convey Title with relative ease
Economic Principals of Value (leads to the development of a credible appraisal)
Supply amp Demand Limited inventoryhigh demand= higher Market Price
Highest amp Best Use Legal use that will likely produce greatest net return
1 Legally allowable 2 Physically possible 3 Financially feasible
amp 4 Maximum utility
Substitution Applies to all three (3) approaches Sets the upper limit on Value
Conformity Cookie cutter neighborhoods Property consistency helps Value
Change Economic amp social forces can impact Value more than the
property itself
Development phase growing amp developing
Equilibrium phase growth ends amp value levels off
Decline phase deterioration sets in amp values fall
Progression amp
Regression
Regression Most expensive property loses value because of
lesser homes around it
Progression Least expensive gains value because of nicer homes
around it
Competition If the market is flooded with listings value drops
Increasing amp Decreasing
(Diminishing) Returns
Increasing Returns a dollar spent will add dollars to value
Decreasing Returns a dollar spent will not even return that
dollar in value
Contribution How an improvement adds or detracts from the whole property
Anticipation (Basis of
Income Approach)
Positive or negative impact due to expectation of a future event
(Current value + expected income amp benefits)
Influencing Factors on Value
Situs (location) Or area preference Most important factor
Size amp Shape Of a lot
Depth Tables The front of a lot has more value than the back Ties to Size amp Shape
Soil Characteristics Considered for basements septic systems erosion
Key Lots Irregular lot that may become valuable in Assemblage
Del Priore Realty Academy Copyright January 2021 Page 10 of 12
Assemblage Process of combining 2+ individual adjoining lots Plottage= resulting
increase in value
Approaches to Value
1 Market Data or Sales Comparison Approach
Value is based on the Principal of Substitution for residential properties amp vacant land
Fair Market Value= SOLD Comparable Properties by Adjusting for Differences
Adjustments
Comps should be
sold within the last 3-
6 months
Preferably within 1
mile of the Subject
NEVER adjust the
subject property
ldquoCIArdquo If Comp is
inferior ADD to the
Comp for that itemrsquos
value
ldquoCBSrdquo If Subject is
better SUBTRACT
from the Comp for
that itemrsquos value
Reconciliation Comp with the fewest adjustments to Subject gets the highest emphasis
(highest percentage) Less reliable in slow or unstable markets
Comparative Market Analysis (ldquoCMArdquo) is used by Licensees to evaluate Fair Market
Value for a listing price or offer 3-5 comparable properties is an acceptable ldquoNrdquo Unlike the
Market Data Approach that uses sold properties a CMA uses sold amp actively listed properties
2 Cost Approach (only method where land is evaluated separately)
Value is based on the Principal of Substitution Used for special purpose amp new construction
It is also used to evaluate Hazard Insurance
Fair Market Value= (Replacement Cost ndash ldquoStraight-Linerdquo or ldquoAge-Liferdquo Depreciation +
Land Value)
Land NEVER depreciates
Reproduction Cost= Cost to produce an
exact replica using a Comparative Unit
Method Olderhistorical buildings
Replacement Cost= Cost using similar
materials to produce a satisfactory substitute
using a Comparative Unit Method Special
purpose amp new buildings
Square Foot Method Single-family homes Measures exterior
dimensions of
Improvement
1 (L W)= Sq Ft
2 (Sq Ft Price per
Sq Ft)= Cost
Cubic Foot Method Warehouses Measures volume of
Improvement
1 (L W H)=
Cubic Feet
2 (Cu Ft Price per
Cu Ft)= Cost
Unit in Place
Method
Used in Hazard Ins Cost of each assembled amp installed
component
Quantity Survey
Method
Best for new
construction
Detailed cost of every
single thing (nails
bricks etc)
Detailed breakdown
Del Priore Realty Academy Copyright January 2021 Page 11 of 12
Accrued Depreciation
Depreciation= re-capturing the cost of a purchase over a certain time period as allowed by
IRS regulations
Curable= Cure costs less than resulting
value
Incurable= Cure costs exceed the value of
the correction Doesnrsquot make sense
Physical Deterioration= normal wear amp tear exposure to weather lack of proper
maintenance
Functional Obsolescence= obsolete amp doesnrsquot meet current expectations EX outdated floor
plan old systems unorthodox architecture (For test this applies to appliances other than
black white or SS)
Economic Obsolescence= Incurable since external to property amp beyond control EX high
taxes crime unemployment flight patterns factory railroad
Actual Age= Improvementrsquos historical age Effective Age= Condition updates amp utility
that may make it less than Actual Age
Land Value= May be based on a CMA or i) Sq feet ii) front footage or iii) acreage
1 Acreage= (Sq Ft 43560) 2 (Acreage Price per Acre)= Land Value
3 Income or Capitalization Approach
The Appraiser looks at 3 things relative to the propertyrsquos income i) Quantity ii) Quality
(how safe is it) and iii) Durability (how long can the income be sustained)
Cap Rate (ldquoCRrdquo) = Rate of Return on
Investment (ldquoROIrdquo) Direct correlation to CR
amp investment risk Lower the CR the higher
the value
Commercial
Uses net vs gross income amp converts income
into Value
CR Steps
1 (Potential Gross Income ndash Vacancy ndash
Collections) = Effective Gross Income
(ldquoEGIrdquo)
2 (EGI ndash Operating Expenses) = Net
Operating Income (ldquoNOIrdquo)
3 (NOI Price) = CR
4 (NOI CR) = Fair Market Value
1 (100 CR)= Full Capitalization ( of years
it will pay for itself)
4 Capitalization Approach (ldquoGRMrdquo amp ldquoGIMrdquo)
Like the Income Approach the Appraiser looks at 3 things relative to the propertyrsquos income i)
Quantity ii) Quality (how safe is it) and iii) Durability (how long can the income be
sustained)
Gross Rent Multiplier (ldquoGRMrdquo) Residential
rentals 1-4 units
Ratio between price amp annual rental income
before expenses
The lower the GRM the more attractive
investment
GRM Steps
1 (Comp Sold $ monthly rent) = GRM
2 (Subjectrsquos monthly rent GRM) =Fair
Market Value
Gross Income Multiplier (ldquoGIMrdquo) Small
commercial + residential 5+ units
GIM includes annual rent + income from
other sources
GIM Steps
1 (Comp Sold $ Gross annual income) =
GIM
2 (Subject gross annual income GIM) =Fair
Market Value
Del Priore Realty Academy Copyright January 2021 Page 12 of 12
Appraisal Reports
Letter of Opinion Informal report thatrsquos not recognized or accepted
Short Form Summary of such is the most common format Used by lending
institutions amp Government agencies (Fannie Mae amp Freddie
Mac)
Narrative Report Most encompassing Usually required for appraising
commercial property or legal cases (Condemnation under
Eminent Domain settling Estates in probate etc)
Letrsquos Look at Math Key Formulas
1 Acre= 43560 sq ft Township= 36 Sq Miles
Government Rectangular Survey
Principal Meridian Lines run N-S
Base Lines run E-W
Section= 1 sq mile amp 640 acres
Taxes amp Interest
Transfer Tax = (Sales Price 500) $150 Intangible Tax= (Loan Amount 100) 010
Upfront Mortgage Insurance Premium (ldquoUFMIPrdquo)= 175 (0175)
Closing Calculations
Jan=31 April= 30 June= 30 Sept= 30
Feb= 28 May= 31 July= 31 Oct= 31
March= 31 June = 30 August= 31 Nov= 30 amp Dec= 31
Seller (ldquoSACrdquo) = Seller Accrual Closing
Date (goes to Seller)
Buyer (ldquoBADrdquo) = Buyer Add Days
Interest= Divide annual interest by 360 days
then multiply by the actual calendar days
EX (annual interest 360) actual calendar
days
Taxes= Use 365 days
EXrdquo (annual taxes 365) = Daily Tax
Del Priore Realty Academy Copyright January 2021
TimeLine Triggers
GA License Law and Georgia Real Estate Commission (ldquoGARECrdquo) Rules amp Regulations
The last revision to this document is notated in the footnotes below
State legislature passes License law whereas under the authority of such GAREC passes Rules amp
Regulations (ldquoRampRrdquo) relating to the professional conduct of Georgia Licensees
License law is designed to protect the public from dishonest or incompetent Agents
Since all the aforementioned are fluid refer to wwwgrecstategaus for all current license law amp
GAREC RampRs
Unless specifically noted below other notification timelines amp time triggers are thirty (30) days This also
includes standard GAREC meetings (whereas the Chairman or Vice Chairman must attend)
Immediately
bull Copies of transactional documents must be given to all signatory parties
bull An executory Purchase amp Sale Agreement must be given to all signatory parties plus all involved
Brokerage firms
bull A Licensee that has a Trust Account(s) and is filing for bankruptcy must notify the GAREC
PromptlyAs Soon as Possible
bull All funds a Licensee receives from a Client or Customer must be placed with hisher Qualifying
Broker or designated Associate Broker
bull A Listing Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoSellerrdquo)
bull A Selling Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoBuyerrdquo)
One (1) Business Day
bull If a Broker comes into possession of anotherrsquos funds and does not have an existing Trust
Account they must open one
Ten (10) Days
bull Removing the Brokerrsquos ldquoFor Salerdquo sign from a former Clientrsquos yard after a successful closing or
listing expiration
bull Must notify GAREC (regardless of whether the Licensee is found innocent or guilty) (i) after an
administrative civil or criminal court action or (ii) a final court disposition All court
documentation must be included in the notification This is the only exception to the thirty (30)
day notification rules
bull A Fidelity Bond (required for a Broker hired to provide Community Association Management
services amp handles $60000+ at any one time) must have a minimum of ten (10) days cancellation
notice from the insurance company for non-payment
Sixty (60) Days
bull Candidates must submit a certified criminal history report (a GCIC Background Check can be
obtained for a fee from your local Sheriffrsquos Department) with a new license application At the
time of submission the report cannot be sixty-one (61) days old
bull Applicants must appeal a GREC notice of rejection within
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021
How do I calculatehellip
Number of days for Interest adjustment
Formula Number of days in month ndash day before closing (to count the day of closing) = Total number of
days
For example If the closing date is March 6 what is the number of days for the interest adjustment 26
HOW
March has 31 days Closing is on March 6 31-5= 26
Interest Adjustment
Formula Loan amount x rate= Annual Interest
Annual interest number of days in banking fiscal year (360) =daily rate
Daily rate x number of days= interest adjustment
For example If the loan amount is $55000 the rate is 115 and the closing date is April 15 what is the
interest adjustment on the buyerrsquos new loan when using a 360-day financial calendar year $26354
HOW
$55 000 x 115= $6 325
$6 325360= $175694
$17 5694 x 15= $26354
Private Mortgage Insurance (PMI)
Formula sales price x LTV= Loan Amount
Loan x PMI RATE= annual PMI
Annual PMI 12 (months)= monthly PMI
For example A buyer purchases a home for $210 000 with a 90 LTV The lender has quoted a rate of
065 annually for PMI What is the buyerrsquos monthly PMI obligation $10238
HOW
$210 000 x 90= $189000
$189000 x 065= $1 22850
$12285012= $102375 $10238
Del Priore Realty Academy Copyright January 2021
Mortgage insurance premium (MIP) upfront
Formula Sales price x LTV = Loan Amount
Loan Amount x UFMIP rate= Answer
For example A buyer is purchasing a $220 000 home with an FHA loan THE LTV is 965 and the
upfront MIP rate is 175 How much MIP will be added to the loan amount $3 716
HOW
$220 000 x 965= $212 300
$212 300 x 175= $371525 (round Up)
$3716
MIP Monthly
Formula SALES PRICE x LTV= Loan Amount
Loan Amount + upfront MIP (found in previous question) = New Loan Amount
New Loan x annual MIP rate= annual MIP
Annual MIP12= Monthly MIP (rounded up to second decimal place)
For example Using the information from the previous question if the annual MIP rate is 135 then
how much MIP will be added to the monthly payment $24302
HOW
$220 000 x 965= $212 300
$212 300 +$3716= $216 01600
$216 016 x 135= $2 916216
$2 91621612= $243018= $24302
Transfer tax
Formula sales price- assumed loan (if any) = Taxable Amount
Taxable Amount100= Answer
Always round up to nearest whole dollar
Rounded answer x $010= Transfer Tax amount
For example If the sales price is $45000 $0 for a new loan and $32 873 loan assumed what is the
transfer tax $1220
HOW
$45000-$32873= $12127
$12 227100= $12127= $122
$122 x 10= $1220
Del Priore Realty Academy Copyright January 2021
With No loan Assumed
$250000 Sales Price
$225000 New Loan
What is the Transfer Tax $250
$250000-$0= $250000
$250000100= 2500
2500$010=$250
Intangibles Tax
Formula sales price x LTV= Loan Amount
Loan Amount500= Answer
Always round up to nearest whole dollar
Answer x $150= Intangible Tac
For example If the sales price is $148000 and the loan type is 95 conventional what is the intangibles
tax $42300
HOW
$148000 x 95= $140600
$140 600 500= $28120= $28200
$28200 x 15= $42300
Del Priore Realty Academy Copyright January 2021 Page 1 of 12
Study Guide
Key Real Estate Terms Land Earthrsquos center (subsurface rights) through the surface amp up
into infinity (air rights) + natural attachments (Fructus
Naturales)
Real Estate Land + Improvements (man-made additions that are attached)
Real Property Real Estate + Ownership Rights (Bundle of Rights)
Bundle of Rights Possession Control Exclusion Peaceful enjoyment
Encumber (lien) amp Disposition (convey)
Personal Property
(Chattels)
Mobile
Fixture Personal Property that becomes Real Property
Trade Fixture Lesseersquos Personal Property for commercial purposes If it
remains after the Lease it becomes the Lessorrsquos through
Accession
Fixture Test (ldquoMARIArdquo) Method Is the item custom (built-in bookshelves) or was the building modified
for the item
Adaptation Permanently or legally (garage door remote belongs to the attached
garage door opener) attached
Relationship to
Parties
The relationship of the person installing to the property
Intentions of
Annexing Party
Did the owner intend permanency
Agreement If there is a contractual agreement the tests no longer matter
Real Estate Characteristics Physical Economic (ldquoSPAMrdquo)
Immobility Scarcity
Non-Homogeneity (ldquoUniquenessrdquo) Performance of Investment (or Fixed
Investment)
Indestructibility Area Preference (Situs)
Modifications (Improvements)
The Economic Life determines the worth of an investment in land amp improvements
Situs is the most important Economic Characteristic
Del Priore Realty Academy Copyright January 2021 Page 2 of 12
Private Ownership Bundle of Rights ldquoPUTEErdquo
Possession Right to occupy amp have ingressegress
Use or Control Improve lease lien exclude others
Transferability Sell gift or Devise (through Last Will amp Testament)
Enjoyment (Peaceful) Without interference of others or Title challenges
Exclusion Keep those without an ownership interest out
External Influences that may Impact the Bundle of Rights
Private Rights (Another
personrsquos)
Easements Encroachments Liens Restrictions
Easement by
Prescription (Can lead to Adverse
Possession-involuntary
transfer of ownership)
bull Actual
bull Hostile
bull Open
bull Notorious
bull Exclusive
bull Continuous for a Statutory period of time
Public Rights
(Government)
Police Power Escheat Eminent Domain amp Taxation
Government Powers (ldquoPETErdquo)
Police Power Zoning building code Master Plan
Police Power= laws that regulate private property use to ensure the publicrsquos safety health
morals amp general well-being
Eminent Domain Land is taken through the process of Condemnation Owner has
the right to ensure it is for the required public use amp gets ldquoJust
Compensationrdquo
Taxation Real Property taxes (Ad Valorem)
Escheat State takes ownership when property has been abandoned or
owner was Intestate (Will doesnrsquot exist)
Easement Creation (ldquoPOPCORNrdquo) Private Grant
On Agreement
Prescription
Condemnation
Operation of Law
Reservation (in the Deed)
Necessity
Del Priore Realty Academy Copyright January 2021 Page 3 of 12
Forms of Ownership Severalty One individual or Corporation
Tenants in Common 2+ individuals (Co-Ownership) or Corporations Each holds
individual Title amp interests can be unequal Conveyed through
Devise (Last Will amp Testament)
Joint Tenancy Right of Survivorship One Title amp equal interests Must have 4
unities Possession Interest Time amp Title (ldquoPITTrdquo)
Tenancy by the Entirety
(NOT in GA)
Joint Tenancy for Married Couples
Right of Survivorship
Commonalities
Tenants in Common amp Joint Tenancy share Possession
Joint Tenancy amp Tenancy by the Entirety share Right of Survivorship
Community Property
(NOT in GA)
Property acquired by either before marriage or inheritedgifted
during is NOT considered ONLY for spouses Divorce they
become TIC Viewed as equal partners
Condominium Unit + Air Lot (block of air from inside wall to inside wall)= Fee
Simple Common elements=Tenants in Common
Applies to offices amp parking lots
Cooperative Personal Property Buys Corporate shares amp has a proprietary
lease
Timeshare
ldquoResort areasrdquo
Personal Property Interval Ownership in a Membership Plan
(typically 1 week a year) Tenants in Common
Corporation Single entity
General Partnership Full liability amp managing authority
Limited Partnership No management authority Only liable for investment
Limited Liability Co
(ldquoLLCrdquo)
Owner=Member Some protections of a Corporation
Syndication Usually a RE partnership Subject to security laws
Joint Tenancy (ldquoPITTrdquo) All four unities must exist
bull Possession (undivided)
bull Interests (equal)
bull Time (Title acquired at the same time)
bull Title (One regardless of the number of parties)
Del Priore Realty Academy Copyright January 2021 Page 4 of 12
Agency The Broker is always the Agent of the Principal
Fiduciary Relationship= implies loyalty trust amp confidence
Compensation= does not create an Agency relationship To be eligible for consideration of a
fee you must i) be an actively licensed Agent amp ii) Prove to be the Procuring Cause
Appropriate Licensure is Required for (ldquoBARSALErdquo)
Buy
Appraise
Rent
Sell
Auction
Lease
Exchange
Agentrsquos Duty to a Principal (ldquoPOLANDrdquo)
Performance Skills amp standards to the best of your abilities
Obedience Follow a Principalrsquos orders within the limits of the law
Loyalty Principalrsquos interests must be placed above everyonersquos
including your own
Accountability
(not Accounting)
You must account for all transactional documentation amp funds
Notice amp Disclosure Full disclosure of any matter that may affect the business at
hand Verification from public record is part of this duty
Due Care Exercise care competence amp skill
Principalrsquos Duties to the Agent (ldquoCRIPrdquo)
Compensation Upon performance as established in the Agency agreement
Reimbursement For things outside of the Agency agreement scope (repairs
lawn maintenance)
Indemnification For any loss that is not the Agentrsquos fault
Performance Cooperation amp assistance
Termination of Agency (ldquoREADIESrdquo)
Revocation By Broker Principal may pursue breach if there isnrsquot a
justifiable reason
Expiration Termination date in the Agency agreement
Agreement Mutual Rescission
Death Of Principal or Broker A Salespersonrsquos death will not impact
the Agreement
Incapacity If either party is deemed legally incompetent or declares
bankruptcy
Extinction Destruction of property
Subject of Law Change in law that could make the Agentrsquos tasks illegal
(listing is acquired through Eminent Domain)
Del Priore Realty Academy Copyright January 2021 Page 5 of 12
Illegal Practices of Federal Fair Housing
Blockbusting (Agents)
Encouraging owners to sell due to a protected classrsquo influx into
the area They must be shown the widest possible variety if
preferences arenrsquot expressed
Steering (Agents)
Limiting a ClientrsquosCustomerrsquos choices based on protected
categories
Redlining (Lenders) Denying a qualified borrower purely on the basis of the
particular neighborhood
Agentrsquos Duty to a Customer (ldquoHADrdquo) (Agency does not exist)
Honesty Provide accurate factual information free of fraud or
misrepresentation
Accountability (not accounting)
Account for and care for monies amp valuables
Due Care Care amp competency
Since the Broker isnrsquot an Agent of the Customer this lacks Performance Obedience Loyalty
amp the higher standard of care
Contracts
Expressed In writing
Implied Verbal agreement
Unilateral One party makes a promise
Bilateral Two parties A promise for a promise
Executory Contract is signed but there are unfulfilled promises
Executed Promises have been fulfilled amp Title has transferred
Valid Legal and binding
Void Illegal amp not binding The contract will not be legally
recognized so it never existed
Voidable
One+ essential elements are missing The injured party is the
only one that can rescind or honor the terms
Fraud Mutual Mistake Innocent Misrepresentation Duress or
Undue Influence It lacks Genuine Assent
Enforceable Legal and binding written contract
Unenforceable Cannot be supported in a court of law Possibly a verbal
agreement
Del Priore Realty Academy Copyright January 2021 Page 6 of 12
Essential Elements of a Contract (ldquoCOMICrdquo) Competent Parties All parties must be legally competent amp have the authority to
act Grantor must be of legal age
Objective
(Lawful Purpose)
Not intended for illegal purposes Property can be legally
conveyed
Mutual Assent Through the Offer and Acceptance process Both parties must
agree to every single contract detail
In Writing Except for Leases of one year or less all contracts must be in
writing (Statute of Fraud)
Consideration Valuable Consideration or Good Consideration for a Gift Deed
(ldquoLove amp Affection)
Remedies for Breach of Contract Contractual Liquidated damages Mediation or Arbitration
Law Suit for damages
Suit for Specific Performance
Recession (If the Plaintiff was pressured forced
misrepresented or under duress)
Listing Agreements Exclusive Agency One Agency contract for the listing The Broker responsible
for securing a ready willing amp able buyer (ldquoProcuring
Causerdquo) is eligible for the fee However if the Seller is the
Procuring Cause (ldquoFSBOrdquo) payment is not due to anyone
Exclusive Right to Sell
(Most Common)
One Agency contract for the listing Regardless of whorsquos the
Procuring Cause including the Seller the listing Broker is due
a fee
Open Listing non-Exclusive Agency contracts with multiple Brokers The
first to be the Procuring Cause is eligible for the fee However
if the Seller is the Procuring Cause (ldquoFSBOrdquo) payment is not
due to anyone
Net Listing
(Illegal in GA)
Seller dictates a minimum net price (Sales Price-closing costs-
commissions) necessary to consider an offer Any monies
over that net price is considered the Brokerrsquos fee (Commission
could equate to 3 or 60)
Marketing Listings
Multiple Listing Service
(ldquoMLSrdquo)
This is one industry source widely used to share listing
information with other Licensees
Del Priore Realty Academy Copyright January 2021 Page 7 of 12
Termination of a Leasehold Estate (ldquoDECAFrdquo) Death of Lessee
Eviction of Lessee
Condemnation of Real Property
Agreement (Mutual Rescission)
Foreclosure
Lending Loan Instruments
Promissory Note Evidence of debt used in all Security Instruments
Lien-theory (non-Judicial) States
Mortgage 2 parties Mortgagor (Borrower) amp Mortgagee (Lender)
Title-theory (Judicial) States
Security Deed (used in
GA)
2 parties Grantor (Borrower) amp Grantee (Lender)
Deed of Trust 3 parties Trustor (Borrower) Beneficiary (Lender) amp Trustee
(neutral 3rd party holding Bare Title)
Security Instrument Clauses
Prepayment Penalty Fee based on a of remaining Principal for paying-off the loan
before maturity
Acceleration (ldquoDue on
Defaultrdquo)
For any Contract breach
Alienation (ldquoDue on
Salerdquo)
Title cannot be conveyed or assumed unless the Lender pre-
approves
Defeasance When the loan is paid in full borrower is released from liability
amp gains Legal Title
Also protects Buyer if Lender accepts less than the Principal
balance at Foreclosure
Foreclosure
Judicial (Lien-theory) Strict Foreclosure Sale Must go through the court system
Non-Judicial (Title-
theory) (Georgia)
Power of Sale clause in Security Instrument allows Lender to re-
gain the property without the court process However to do so
they must advertise the property beforehand In GA itrsquos currently
4 weeks
Deed in Lieu of
Foreclosure (ldquoFriendly
Foreclosurerdquo)
Defaulted borrower may willingly surrender Title before
Foreclosure proceedings to minimize credit damage The caveat
being the Lender must be willing to do so
Secondary Mortgage Market Federal National Mortgage Association (ldquoFNMArdquo) Fannie Mae
Federal Home Loan Mortgage Corporation (ldquoFHLMCrdquo) Freddie Mac
Government National Mortgage Association (ldquoGNMArdquo)
Ginnie Mae
GNMA is the only Government agency Purchases low-income loans
Del Priore Realty Academy Copyright January 2021 Page 8 of 12
Protected Classes Law Existing Category Added Category
Civil Rights Act of 1866 NA Race
Federal Civil Rights Act of
1968
(ldquoFederal Fair Housing
Actrdquo)
Race Color Religion amp National
Origin of Birth
Prohibits discrimination in the Real Estate industry of the protected classes
Fair Housing Act of 1974 Race Color Religion amp
National Origin of Birth
Sex
Fair Housing Act of 1988 Race Color Religion
National Origin of Birth amp
Sex
Familial Status amp
Handicapped (one with a record of mental or
physical impairment to include
alcoholism cancer or AIDS)
Americans with Disabilities
Act (ldquoADArdquo)
Prohibits discrimination based on disability amp allows for
reasonable accommodation or modification(s)
Except for Race a private homeowner who occupies a 1-4-unit property may discriminate if
advertising does not contain discriminatory content (ldquoMs Murphy Lawrdquo)
Fair Housing
(ldquoRealtors Can Really Sell Houses Fast Nowrdquo)
Race
Color
Religion
Sex
Handicap
Familial Status
National Origin
Valuation amp Appraisal Definitions
Appraisal= Unbiased opinion of Market Value by an Appraiser Sets the upper limits of
Value
Appraisal Fee= Based on the amount of work amp time
Market Value= the most probable selling price in an Armrsquos-length Transaction
Market Price= Fact The actual Sales Price
Parties are objective and unrelated with unrelated motivations The 4 requirements of an
Armrsquos-length Transaction are
bull Valuable Consideration (cash) is exchanged
bull Property was on the open market for a reasonable time for the market conditions
bull Parties were under no undue pressure
Del Priore Realty Academy Copyright January 2021 Page 9 of 12
bull Parties were well-informed amp acting in their own best interests
Appraisal Process Steps
1 Define the problem 4 Analyze data through i) Market Data
Approach ii) Cost Approach or iii) Income
Approach
2 Make preliminary study 5 Reconciliation amp Final Estimate
3 Gather Data 6 Prepare Appraisal Report
Four (4) Necessary Components of Value (ldquoDUSTrdquo)
Demand Actual need or desire + the ability to pay for it Desired by most
Utility More use more Value
Scarcity Short supply relative to demand
Transferability Ability to convey Title with relative ease
Economic Principals of Value (leads to the development of a credible appraisal)
Supply amp Demand Limited inventoryhigh demand= higher Market Price
Highest amp Best Use Legal use that will likely produce greatest net return
1 Legally allowable 2 Physically possible 3 Financially feasible
amp 4 Maximum utility
Substitution Applies to all three (3) approaches Sets the upper limit on Value
Conformity Cookie cutter neighborhoods Property consistency helps Value
Change Economic amp social forces can impact Value more than the
property itself
Development phase growing amp developing
Equilibrium phase growth ends amp value levels off
Decline phase deterioration sets in amp values fall
Progression amp
Regression
Regression Most expensive property loses value because of
lesser homes around it
Progression Least expensive gains value because of nicer homes
around it
Competition If the market is flooded with listings value drops
Increasing amp Decreasing
(Diminishing) Returns
Increasing Returns a dollar spent will add dollars to value
Decreasing Returns a dollar spent will not even return that
dollar in value
Contribution How an improvement adds or detracts from the whole property
Anticipation (Basis of
Income Approach)
Positive or negative impact due to expectation of a future event
(Current value + expected income amp benefits)
Influencing Factors on Value
Situs (location) Or area preference Most important factor
Size amp Shape Of a lot
Depth Tables The front of a lot has more value than the back Ties to Size amp Shape
Soil Characteristics Considered for basements septic systems erosion
Key Lots Irregular lot that may become valuable in Assemblage
Del Priore Realty Academy Copyright January 2021 Page 10 of 12
Assemblage Process of combining 2+ individual adjoining lots Plottage= resulting
increase in value
Approaches to Value
1 Market Data or Sales Comparison Approach
Value is based on the Principal of Substitution for residential properties amp vacant land
Fair Market Value= SOLD Comparable Properties by Adjusting for Differences
Adjustments
Comps should be
sold within the last 3-
6 months
Preferably within 1
mile of the Subject
NEVER adjust the
subject property
ldquoCIArdquo If Comp is
inferior ADD to the
Comp for that itemrsquos
value
ldquoCBSrdquo If Subject is
better SUBTRACT
from the Comp for
that itemrsquos value
Reconciliation Comp with the fewest adjustments to Subject gets the highest emphasis
(highest percentage) Less reliable in slow or unstable markets
Comparative Market Analysis (ldquoCMArdquo) is used by Licensees to evaluate Fair Market
Value for a listing price or offer 3-5 comparable properties is an acceptable ldquoNrdquo Unlike the
Market Data Approach that uses sold properties a CMA uses sold amp actively listed properties
2 Cost Approach (only method where land is evaluated separately)
Value is based on the Principal of Substitution Used for special purpose amp new construction
It is also used to evaluate Hazard Insurance
Fair Market Value= (Replacement Cost ndash ldquoStraight-Linerdquo or ldquoAge-Liferdquo Depreciation +
Land Value)
Land NEVER depreciates
Reproduction Cost= Cost to produce an
exact replica using a Comparative Unit
Method Olderhistorical buildings
Replacement Cost= Cost using similar
materials to produce a satisfactory substitute
using a Comparative Unit Method Special
purpose amp new buildings
Square Foot Method Single-family homes Measures exterior
dimensions of
Improvement
1 (L W)= Sq Ft
2 (Sq Ft Price per
Sq Ft)= Cost
Cubic Foot Method Warehouses Measures volume of
Improvement
1 (L W H)=
Cubic Feet
2 (Cu Ft Price per
Cu Ft)= Cost
Unit in Place
Method
Used in Hazard Ins Cost of each assembled amp installed
component
Quantity Survey
Method
Best for new
construction
Detailed cost of every
single thing (nails
bricks etc)
Detailed breakdown
Del Priore Realty Academy Copyright January 2021 Page 11 of 12
Accrued Depreciation
Depreciation= re-capturing the cost of a purchase over a certain time period as allowed by
IRS regulations
Curable= Cure costs less than resulting
value
Incurable= Cure costs exceed the value of
the correction Doesnrsquot make sense
Physical Deterioration= normal wear amp tear exposure to weather lack of proper
maintenance
Functional Obsolescence= obsolete amp doesnrsquot meet current expectations EX outdated floor
plan old systems unorthodox architecture (For test this applies to appliances other than
black white or SS)
Economic Obsolescence= Incurable since external to property amp beyond control EX high
taxes crime unemployment flight patterns factory railroad
Actual Age= Improvementrsquos historical age Effective Age= Condition updates amp utility
that may make it less than Actual Age
Land Value= May be based on a CMA or i) Sq feet ii) front footage or iii) acreage
1 Acreage= (Sq Ft 43560) 2 (Acreage Price per Acre)= Land Value
3 Income or Capitalization Approach
The Appraiser looks at 3 things relative to the propertyrsquos income i) Quantity ii) Quality
(how safe is it) and iii) Durability (how long can the income be sustained)
Cap Rate (ldquoCRrdquo) = Rate of Return on
Investment (ldquoROIrdquo) Direct correlation to CR
amp investment risk Lower the CR the higher
the value
Commercial
Uses net vs gross income amp converts income
into Value
CR Steps
1 (Potential Gross Income ndash Vacancy ndash
Collections) = Effective Gross Income
(ldquoEGIrdquo)
2 (EGI ndash Operating Expenses) = Net
Operating Income (ldquoNOIrdquo)
3 (NOI Price) = CR
4 (NOI CR) = Fair Market Value
1 (100 CR)= Full Capitalization ( of years
it will pay for itself)
4 Capitalization Approach (ldquoGRMrdquo amp ldquoGIMrdquo)
Like the Income Approach the Appraiser looks at 3 things relative to the propertyrsquos income i)
Quantity ii) Quality (how safe is it) and iii) Durability (how long can the income be
sustained)
Gross Rent Multiplier (ldquoGRMrdquo) Residential
rentals 1-4 units
Ratio between price amp annual rental income
before expenses
The lower the GRM the more attractive
investment
GRM Steps
1 (Comp Sold $ monthly rent) = GRM
2 (Subjectrsquos monthly rent GRM) =Fair
Market Value
Gross Income Multiplier (ldquoGIMrdquo) Small
commercial + residential 5+ units
GIM includes annual rent + income from
other sources
GIM Steps
1 (Comp Sold $ Gross annual income) =
GIM
2 (Subject gross annual income GIM) =Fair
Market Value
Del Priore Realty Academy Copyright January 2021 Page 12 of 12
Appraisal Reports
Letter of Opinion Informal report thatrsquos not recognized or accepted
Short Form Summary of such is the most common format Used by lending
institutions amp Government agencies (Fannie Mae amp Freddie
Mac)
Narrative Report Most encompassing Usually required for appraising
commercial property or legal cases (Condemnation under
Eminent Domain settling Estates in probate etc)
Letrsquos Look at Math Key Formulas
1 Acre= 43560 sq ft Township= 36 Sq Miles
Government Rectangular Survey
Principal Meridian Lines run N-S
Base Lines run E-W
Section= 1 sq mile amp 640 acres
Taxes amp Interest
Transfer Tax = (Sales Price 500) $150 Intangible Tax= (Loan Amount 100) 010
Upfront Mortgage Insurance Premium (ldquoUFMIPrdquo)= 175 (0175)
Closing Calculations
Jan=31 April= 30 June= 30 Sept= 30
Feb= 28 May= 31 July= 31 Oct= 31
March= 31 June = 30 August= 31 Nov= 30 amp Dec= 31
Seller (ldquoSACrdquo) = Seller Accrual Closing
Date (goes to Seller)
Buyer (ldquoBADrdquo) = Buyer Add Days
Interest= Divide annual interest by 360 days
then multiply by the actual calendar days
EX (annual interest 360) actual calendar
days
Taxes= Use 365 days
EXrdquo (annual taxes 365) = Daily Tax
Del Priore Realty Academy Copyright January 2021
TimeLine Triggers
GA License Law and Georgia Real Estate Commission (ldquoGARECrdquo) Rules amp Regulations
The last revision to this document is notated in the footnotes below
State legislature passes License law whereas under the authority of such GAREC passes Rules amp
Regulations (ldquoRampRrdquo) relating to the professional conduct of Georgia Licensees
License law is designed to protect the public from dishonest or incompetent Agents
Since all the aforementioned are fluid refer to wwwgrecstategaus for all current license law amp
GAREC RampRs
Unless specifically noted below other notification timelines amp time triggers are thirty (30) days This also
includes standard GAREC meetings (whereas the Chairman or Vice Chairman must attend)
Immediately
bull Copies of transactional documents must be given to all signatory parties
bull An executory Purchase amp Sale Agreement must be given to all signatory parties plus all involved
Brokerage firms
bull A Licensee that has a Trust Account(s) and is filing for bankruptcy must notify the GAREC
PromptlyAs Soon as Possible
bull All funds a Licensee receives from a Client or Customer must be placed with hisher Qualifying
Broker or designated Associate Broker
bull A Listing Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoSellerrdquo)
bull A Selling Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoBuyerrdquo)
One (1) Business Day
bull If a Broker comes into possession of anotherrsquos funds and does not have an existing Trust
Account they must open one
Ten (10) Days
bull Removing the Brokerrsquos ldquoFor Salerdquo sign from a former Clientrsquos yard after a successful closing or
listing expiration
bull Must notify GAREC (regardless of whether the Licensee is found innocent or guilty) (i) after an
administrative civil or criminal court action or (ii) a final court disposition All court
documentation must be included in the notification This is the only exception to the thirty (30)
day notification rules
bull A Fidelity Bond (required for a Broker hired to provide Community Association Management
services amp handles $60000+ at any one time) must have a minimum of ten (10) days cancellation
notice from the insurance company for non-payment
Sixty (60) Days
bull Candidates must submit a certified criminal history report (a GCIC Background Check can be
obtained for a fee from your local Sheriffrsquos Department) with a new license application At the
time of submission the report cannot be sixty-one (61) days old
bull Applicants must appeal a GREC notice of rejection within
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021
Mortgage insurance premium (MIP) upfront
Formula Sales price x LTV = Loan Amount
Loan Amount x UFMIP rate= Answer
For example A buyer is purchasing a $220 000 home with an FHA loan THE LTV is 965 and the
upfront MIP rate is 175 How much MIP will be added to the loan amount $3 716
HOW
$220 000 x 965= $212 300
$212 300 x 175= $371525 (round Up)
$3716
MIP Monthly
Formula SALES PRICE x LTV= Loan Amount
Loan Amount + upfront MIP (found in previous question) = New Loan Amount
New Loan x annual MIP rate= annual MIP
Annual MIP12= Monthly MIP (rounded up to second decimal place)
For example Using the information from the previous question if the annual MIP rate is 135 then
how much MIP will be added to the monthly payment $24302
HOW
$220 000 x 965= $212 300
$212 300 +$3716= $216 01600
$216 016 x 135= $2 916216
$2 91621612= $243018= $24302
Transfer tax
Formula sales price- assumed loan (if any) = Taxable Amount
Taxable Amount100= Answer
Always round up to nearest whole dollar
Rounded answer x $010= Transfer Tax amount
For example If the sales price is $45000 $0 for a new loan and $32 873 loan assumed what is the
transfer tax $1220
HOW
$45000-$32873= $12127
$12 227100= $12127= $122
$122 x 10= $1220
Del Priore Realty Academy Copyright January 2021
With No loan Assumed
$250000 Sales Price
$225000 New Loan
What is the Transfer Tax $250
$250000-$0= $250000
$250000100= 2500
2500$010=$250
Intangibles Tax
Formula sales price x LTV= Loan Amount
Loan Amount500= Answer
Always round up to nearest whole dollar
Answer x $150= Intangible Tac
For example If the sales price is $148000 and the loan type is 95 conventional what is the intangibles
tax $42300
HOW
$148000 x 95= $140600
$140 600 500= $28120= $28200
$28200 x 15= $42300
Del Priore Realty Academy Copyright January 2021 Page 1 of 12
Study Guide
Key Real Estate Terms Land Earthrsquos center (subsurface rights) through the surface amp up
into infinity (air rights) + natural attachments (Fructus
Naturales)
Real Estate Land + Improvements (man-made additions that are attached)
Real Property Real Estate + Ownership Rights (Bundle of Rights)
Bundle of Rights Possession Control Exclusion Peaceful enjoyment
Encumber (lien) amp Disposition (convey)
Personal Property
(Chattels)
Mobile
Fixture Personal Property that becomes Real Property
Trade Fixture Lesseersquos Personal Property for commercial purposes If it
remains after the Lease it becomes the Lessorrsquos through
Accession
Fixture Test (ldquoMARIArdquo) Method Is the item custom (built-in bookshelves) or was the building modified
for the item
Adaptation Permanently or legally (garage door remote belongs to the attached
garage door opener) attached
Relationship to
Parties
The relationship of the person installing to the property
Intentions of
Annexing Party
Did the owner intend permanency
Agreement If there is a contractual agreement the tests no longer matter
Real Estate Characteristics Physical Economic (ldquoSPAMrdquo)
Immobility Scarcity
Non-Homogeneity (ldquoUniquenessrdquo) Performance of Investment (or Fixed
Investment)
Indestructibility Area Preference (Situs)
Modifications (Improvements)
The Economic Life determines the worth of an investment in land amp improvements
Situs is the most important Economic Characteristic
Del Priore Realty Academy Copyright January 2021 Page 2 of 12
Private Ownership Bundle of Rights ldquoPUTEErdquo
Possession Right to occupy amp have ingressegress
Use or Control Improve lease lien exclude others
Transferability Sell gift or Devise (through Last Will amp Testament)
Enjoyment (Peaceful) Without interference of others or Title challenges
Exclusion Keep those without an ownership interest out
External Influences that may Impact the Bundle of Rights
Private Rights (Another
personrsquos)
Easements Encroachments Liens Restrictions
Easement by
Prescription (Can lead to Adverse
Possession-involuntary
transfer of ownership)
bull Actual
bull Hostile
bull Open
bull Notorious
bull Exclusive
bull Continuous for a Statutory period of time
Public Rights
(Government)
Police Power Escheat Eminent Domain amp Taxation
Government Powers (ldquoPETErdquo)
Police Power Zoning building code Master Plan
Police Power= laws that regulate private property use to ensure the publicrsquos safety health
morals amp general well-being
Eminent Domain Land is taken through the process of Condemnation Owner has
the right to ensure it is for the required public use amp gets ldquoJust
Compensationrdquo
Taxation Real Property taxes (Ad Valorem)
Escheat State takes ownership when property has been abandoned or
owner was Intestate (Will doesnrsquot exist)
Easement Creation (ldquoPOPCORNrdquo) Private Grant
On Agreement
Prescription
Condemnation
Operation of Law
Reservation (in the Deed)
Necessity
Del Priore Realty Academy Copyright January 2021 Page 3 of 12
Forms of Ownership Severalty One individual or Corporation
Tenants in Common 2+ individuals (Co-Ownership) or Corporations Each holds
individual Title amp interests can be unequal Conveyed through
Devise (Last Will amp Testament)
Joint Tenancy Right of Survivorship One Title amp equal interests Must have 4
unities Possession Interest Time amp Title (ldquoPITTrdquo)
Tenancy by the Entirety
(NOT in GA)
Joint Tenancy for Married Couples
Right of Survivorship
Commonalities
Tenants in Common amp Joint Tenancy share Possession
Joint Tenancy amp Tenancy by the Entirety share Right of Survivorship
Community Property
(NOT in GA)
Property acquired by either before marriage or inheritedgifted
during is NOT considered ONLY for spouses Divorce they
become TIC Viewed as equal partners
Condominium Unit + Air Lot (block of air from inside wall to inside wall)= Fee
Simple Common elements=Tenants in Common
Applies to offices amp parking lots
Cooperative Personal Property Buys Corporate shares amp has a proprietary
lease
Timeshare
ldquoResort areasrdquo
Personal Property Interval Ownership in a Membership Plan
(typically 1 week a year) Tenants in Common
Corporation Single entity
General Partnership Full liability amp managing authority
Limited Partnership No management authority Only liable for investment
Limited Liability Co
(ldquoLLCrdquo)
Owner=Member Some protections of a Corporation
Syndication Usually a RE partnership Subject to security laws
Joint Tenancy (ldquoPITTrdquo) All four unities must exist
bull Possession (undivided)
bull Interests (equal)
bull Time (Title acquired at the same time)
bull Title (One regardless of the number of parties)
Del Priore Realty Academy Copyright January 2021 Page 4 of 12
Agency The Broker is always the Agent of the Principal
Fiduciary Relationship= implies loyalty trust amp confidence
Compensation= does not create an Agency relationship To be eligible for consideration of a
fee you must i) be an actively licensed Agent amp ii) Prove to be the Procuring Cause
Appropriate Licensure is Required for (ldquoBARSALErdquo)
Buy
Appraise
Rent
Sell
Auction
Lease
Exchange
Agentrsquos Duty to a Principal (ldquoPOLANDrdquo)
Performance Skills amp standards to the best of your abilities
Obedience Follow a Principalrsquos orders within the limits of the law
Loyalty Principalrsquos interests must be placed above everyonersquos
including your own
Accountability
(not Accounting)
You must account for all transactional documentation amp funds
Notice amp Disclosure Full disclosure of any matter that may affect the business at
hand Verification from public record is part of this duty
Due Care Exercise care competence amp skill
Principalrsquos Duties to the Agent (ldquoCRIPrdquo)
Compensation Upon performance as established in the Agency agreement
Reimbursement For things outside of the Agency agreement scope (repairs
lawn maintenance)
Indemnification For any loss that is not the Agentrsquos fault
Performance Cooperation amp assistance
Termination of Agency (ldquoREADIESrdquo)
Revocation By Broker Principal may pursue breach if there isnrsquot a
justifiable reason
Expiration Termination date in the Agency agreement
Agreement Mutual Rescission
Death Of Principal or Broker A Salespersonrsquos death will not impact
the Agreement
Incapacity If either party is deemed legally incompetent or declares
bankruptcy
Extinction Destruction of property
Subject of Law Change in law that could make the Agentrsquos tasks illegal
(listing is acquired through Eminent Domain)
Del Priore Realty Academy Copyright January 2021 Page 5 of 12
Illegal Practices of Federal Fair Housing
Blockbusting (Agents)
Encouraging owners to sell due to a protected classrsquo influx into
the area They must be shown the widest possible variety if
preferences arenrsquot expressed
Steering (Agents)
Limiting a ClientrsquosCustomerrsquos choices based on protected
categories
Redlining (Lenders) Denying a qualified borrower purely on the basis of the
particular neighborhood
Agentrsquos Duty to a Customer (ldquoHADrdquo) (Agency does not exist)
Honesty Provide accurate factual information free of fraud or
misrepresentation
Accountability (not accounting)
Account for and care for monies amp valuables
Due Care Care amp competency
Since the Broker isnrsquot an Agent of the Customer this lacks Performance Obedience Loyalty
amp the higher standard of care
Contracts
Expressed In writing
Implied Verbal agreement
Unilateral One party makes a promise
Bilateral Two parties A promise for a promise
Executory Contract is signed but there are unfulfilled promises
Executed Promises have been fulfilled amp Title has transferred
Valid Legal and binding
Void Illegal amp not binding The contract will not be legally
recognized so it never existed
Voidable
One+ essential elements are missing The injured party is the
only one that can rescind or honor the terms
Fraud Mutual Mistake Innocent Misrepresentation Duress or
Undue Influence It lacks Genuine Assent
Enforceable Legal and binding written contract
Unenforceable Cannot be supported in a court of law Possibly a verbal
agreement
Del Priore Realty Academy Copyright January 2021 Page 6 of 12
Essential Elements of a Contract (ldquoCOMICrdquo) Competent Parties All parties must be legally competent amp have the authority to
act Grantor must be of legal age
Objective
(Lawful Purpose)
Not intended for illegal purposes Property can be legally
conveyed
Mutual Assent Through the Offer and Acceptance process Both parties must
agree to every single contract detail
In Writing Except for Leases of one year or less all contracts must be in
writing (Statute of Fraud)
Consideration Valuable Consideration or Good Consideration for a Gift Deed
(ldquoLove amp Affection)
Remedies for Breach of Contract Contractual Liquidated damages Mediation or Arbitration
Law Suit for damages
Suit for Specific Performance
Recession (If the Plaintiff was pressured forced
misrepresented or under duress)
Listing Agreements Exclusive Agency One Agency contract for the listing The Broker responsible
for securing a ready willing amp able buyer (ldquoProcuring
Causerdquo) is eligible for the fee However if the Seller is the
Procuring Cause (ldquoFSBOrdquo) payment is not due to anyone
Exclusive Right to Sell
(Most Common)
One Agency contract for the listing Regardless of whorsquos the
Procuring Cause including the Seller the listing Broker is due
a fee
Open Listing non-Exclusive Agency contracts with multiple Brokers The
first to be the Procuring Cause is eligible for the fee However
if the Seller is the Procuring Cause (ldquoFSBOrdquo) payment is not
due to anyone
Net Listing
(Illegal in GA)
Seller dictates a minimum net price (Sales Price-closing costs-
commissions) necessary to consider an offer Any monies
over that net price is considered the Brokerrsquos fee (Commission
could equate to 3 or 60)
Marketing Listings
Multiple Listing Service
(ldquoMLSrdquo)
This is one industry source widely used to share listing
information with other Licensees
Del Priore Realty Academy Copyright January 2021 Page 7 of 12
Termination of a Leasehold Estate (ldquoDECAFrdquo) Death of Lessee
Eviction of Lessee
Condemnation of Real Property
Agreement (Mutual Rescission)
Foreclosure
Lending Loan Instruments
Promissory Note Evidence of debt used in all Security Instruments
Lien-theory (non-Judicial) States
Mortgage 2 parties Mortgagor (Borrower) amp Mortgagee (Lender)
Title-theory (Judicial) States
Security Deed (used in
GA)
2 parties Grantor (Borrower) amp Grantee (Lender)
Deed of Trust 3 parties Trustor (Borrower) Beneficiary (Lender) amp Trustee
(neutral 3rd party holding Bare Title)
Security Instrument Clauses
Prepayment Penalty Fee based on a of remaining Principal for paying-off the loan
before maturity
Acceleration (ldquoDue on
Defaultrdquo)
For any Contract breach
Alienation (ldquoDue on
Salerdquo)
Title cannot be conveyed or assumed unless the Lender pre-
approves
Defeasance When the loan is paid in full borrower is released from liability
amp gains Legal Title
Also protects Buyer if Lender accepts less than the Principal
balance at Foreclosure
Foreclosure
Judicial (Lien-theory) Strict Foreclosure Sale Must go through the court system
Non-Judicial (Title-
theory) (Georgia)
Power of Sale clause in Security Instrument allows Lender to re-
gain the property without the court process However to do so
they must advertise the property beforehand In GA itrsquos currently
4 weeks
Deed in Lieu of
Foreclosure (ldquoFriendly
Foreclosurerdquo)
Defaulted borrower may willingly surrender Title before
Foreclosure proceedings to minimize credit damage The caveat
being the Lender must be willing to do so
Secondary Mortgage Market Federal National Mortgage Association (ldquoFNMArdquo) Fannie Mae
Federal Home Loan Mortgage Corporation (ldquoFHLMCrdquo) Freddie Mac
Government National Mortgage Association (ldquoGNMArdquo)
Ginnie Mae
GNMA is the only Government agency Purchases low-income loans
Del Priore Realty Academy Copyright January 2021 Page 8 of 12
Protected Classes Law Existing Category Added Category
Civil Rights Act of 1866 NA Race
Federal Civil Rights Act of
1968
(ldquoFederal Fair Housing
Actrdquo)
Race Color Religion amp National
Origin of Birth
Prohibits discrimination in the Real Estate industry of the protected classes
Fair Housing Act of 1974 Race Color Religion amp
National Origin of Birth
Sex
Fair Housing Act of 1988 Race Color Religion
National Origin of Birth amp
Sex
Familial Status amp
Handicapped (one with a record of mental or
physical impairment to include
alcoholism cancer or AIDS)
Americans with Disabilities
Act (ldquoADArdquo)
Prohibits discrimination based on disability amp allows for
reasonable accommodation or modification(s)
Except for Race a private homeowner who occupies a 1-4-unit property may discriminate if
advertising does not contain discriminatory content (ldquoMs Murphy Lawrdquo)
Fair Housing
(ldquoRealtors Can Really Sell Houses Fast Nowrdquo)
Race
Color
Religion
Sex
Handicap
Familial Status
National Origin
Valuation amp Appraisal Definitions
Appraisal= Unbiased opinion of Market Value by an Appraiser Sets the upper limits of
Value
Appraisal Fee= Based on the amount of work amp time
Market Value= the most probable selling price in an Armrsquos-length Transaction
Market Price= Fact The actual Sales Price
Parties are objective and unrelated with unrelated motivations The 4 requirements of an
Armrsquos-length Transaction are
bull Valuable Consideration (cash) is exchanged
bull Property was on the open market for a reasonable time for the market conditions
bull Parties were under no undue pressure
Del Priore Realty Academy Copyright January 2021 Page 9 of 12
bull Parties were well-informed amp acting in their own best interests
Appraisal Process Steps
1 Define the problem 4 Analyze data through i) Market Data
Approach ii) Cost Approach or iii) Income
Approach
2 Make preliminary study 5 Reconciliation amp Final Estimate
3 Gather Data 6 Prepare Appraisal Report
Four (4) Necessary Components of Value (ldquoDUSTrdquo)
Demand Actual need or desire + the ability to pay for it Desired by most
Utility More use more Value
Scarcity Short supply relative to demand
Transferability Ability to convey Title with relative ease
Economic Principals of Value (leads to the development of a credible appraisal)
Supply amp Demand Limited inventoryhigh demand= higher Market Price
Highest amp Best Use Legal use that will likely produce greatest net return
1 Legally allowable 2 Physically possible 3 Financially feasible
amp 4 Maximum utility
Substitution Applies to all three (3) approaches Sets the upper limit on Value
Conformity Cookie cutter neighborhoods Property consistency helps Value
Change Economic amp social forces can impact Value more than the
property itself
Development phase growing amp developing
Equilibrium phase growth ends amp value levels off
Decline phase deterioration sets in amp values fall
Progression amp
Regression
Regression Most expensive property loses value because of
lesser homes around it
Progression Least expensive gains value because of nicer homes
around it
Competition If the market is flooded with listings value drops
Increasing amp Decreasing
(Diminishing) Returns
Increasing Returns a dollar spent will add dollars to value
Decreasing Returns a dollar spent will not even return that
dollar in value
Contribution How an improvement adds or detracts from the whole property
Anticipation (Basis of
Income Approach)
Positive or negative impact due to expectation of a future event
(Current value + expected income amp benefits)
Influencing Factors on Value
Situs (location) Or area preference Most important factor
Size amp Shape Of a lot
Depth Tables The front of a lot has more value than the back Ties to Size amp Shape
Soil Characteristics Considered for basements septic systems erosion
Key Lots Irregular lot that may become valuable in Assemblage
Del Priore Realty Academy Copyright January 2021 Page 10 of 12
Assemblage Process of combining 2+ individual adjoining lots Plottage= resulting
increase in value
Approaches to Value
1 Market Data or Sales Comparison Approach
Value is based on the Principal of Substitution for residential properties amp vacant land
Fair Market Value= SOLD Comparable Properties by Adjusting for Differences
Adjustments
Comps should be
sold within the last 3-
6 months
Preferably within 1
mile of the Subject
NEVER adjust the
subject property
ldquoCIArdquo If Comp is
inferior ADD to the
Comp for that itemrsquos
value
ldquoCBSrdquo If Subject is
better SUBTRACT
from the Comp for
that itemrsquos value
Reconciliation Comp with the fewest adjustments to Subject gets the highest emphasis
(highest percentage) Less reliable in slow or unstable markets
Comparative Market Analysis (ldquoCMArdquo) is used by Licensees to evaluate Fair Market
Value for a listing price or offer 3-5 comparable properties is an acceptable ldquoNrdquo Unlike the
Market Data Approach that uses sold properties a CMA uses sold amp actively listed properties
2 Cost Approach (only method where land is evaluated separately)
Value is based on the Principal of Substitution Used for special purpose amp new construction
It is also used to evaluate Hazard Insurance
Fair Market Value= (Replacement Cost ndash ldquoStraight-Linerdquo or ldquoAge-Liferdquo Depreciation +
Land Value)
Land NEVER depreciates
Reproduction Cost= Cost to produce an
exact replica using a Comparative Unit
Method Olderhistorical buildings
Replacement Cost= Cost using similar
materials to produce a satisfactory substitute
using a Comparative Unit Method Special
purpose amp new buildings
Square Foot Method Single-family homes Measures exterior
dimensions of
Improvement
1 (L W)= Sq Ft
2 (Sq Ft Price per
Sq Ft)= Cost
Cubic Foot Method Warehouses Measures volume of
Improvement
1 (L W H)=
Cubic Feet
2 (Cu Ft Price per
Cu Ft)= Cost
Unit in Place
Method
Used in Hazard Ins Cost of each assembled amp installed
component
Quantity Survey
Method
Best for new
construction
Detailed cost of every
single thing (nails
bricks etc)
Detailed breakdown
Del Priore Realty Academy Copyright January 2021 Page 11 of 12
Accrued Depreciation
Depreciation= re-capturing the cost of a purchase over a certain time period as allowed by
IRS regulations
Curable= Cure costs less than resulting
value
Incurable= Cure costs exceed the value of
the correction Doesnrsquot make sense
Physical Deterioration= normal wear amp tear exposure to weather lack of proper
maintenance
Functional Obsolescence= obsolete amp doesnrsquot meet current expectations EX outdated floor
plan old systems unorthodox architecture (For test this applies to appliances other than
black white or SS)
Economic Obsolescence= Incurable since external to property amp beyond control EX high
taxes crime unemployment flight patterns factory railroad
Actual Age= Improvementrsquos historical age Effective Age= Condition updates amp utility
that may make it less than Actual Age
Land Value= May be based on a CMA or i) Sq feet ii) front footage or iii) acreage
1 Acreage= (Sq Ft 43560) 2 (Acreage Price per Acre)= Land Value
3 Income or Capitalization Approach
The Appraiser looks at 3 things relative to the propertyrsquos income i) Quantity ii) Quality
(how safe is it) and iii) Durability (how long can the income be sustained)
Cap Rate (ldquoCRrdquo) = Rate of Return on
Investment (ldquoROIrdquo) Direct correlation to CR
amp investment risk Lower the CR the higher
the value
Commercial
Uses net vs gross income amp converts income
into Value
CR Steps
1 (Potential Gross Income ndash Vacancy ndash
Collections) = Effective Gross Income
(ldquoEGIrdquo)
2 (EGI ndash Operating Expenses) = Net
Operating Income (ldquoNOIrdquo)
3 (NOI Price) = CR
4 (NOI CR) = Fair Market Value
1 (100 CR)= Full Capitalization ( of years
it will pay for itself)
4 Capitalization Approach (ldquoGRMrdquo amp ldquoGIMrdquo)
Like the Income Approach the Appraiser looks at 3 things relative to the propertyrsquos income i)
Quantity ii) Quality (how safe is it) and iii) Durability (how long can the income be
sustained)
Gross Rent Multiplier (ldquoGRMrdquo) Residential
rentals 1-4 units
Ratio between price amp annual rental income
before expenses
The lower the GRM the more attractive
investment
GRM Steps
1 (Comp Sold $ monthly rent) = GRM
2 (Subjectrsquos monthly rent GRM) =Fair
Market Value
Gross Income Multiplier (ldquoGIMrdquo) Small
commercial + residential 5+ units
GIM includes annual rent + income from
other sources
GIM Steps
1 (Comp Sold $ Gross annual income) =
GIM
2 (Subject gross annual income GIM) =Fair
Market Value
Del Priore Realty Academy Copyright January 2021 Page 12 of 12
Appraisal Reports
Letter of Opinion Informal report thatrsquos not recognized or accepted
Short Form Summary of such is the most common format Used by lending
institutions amp Government agencies (Fannie Mae amp Freddie
Mac)
Narrative Report Most encompassing Usually required for appraising
commercial property or legal cases (Condemnation under
Eminent Domain settling Estates in probate etc)
Letrsquos Look at Math Key Formulas
1 Acre= 43560 sq ft Township= 36 Sq Miles
Government Rectangular Survey
Principal Meridian Lines run N-S
Base Lines run E-W
Section= 1 sq mile amp 640 acres
Taxes amp Interest
Transfer Tax = (Sales Price 500) $150 Intangible Tax= (Loan Amount 100) 010
Upfront Mortgage Insurance Premium (ldquoUFMIPrdquo)= 175 (0175)
Closing Calculations
Jan=31 April= 30 June= 30 Sept= 30
Feb= 28 May= 31 July= 31 Oct= 31
March= 31 June = 30 August= 31 Nov= 30 amp Dec= 31
Seller (ldquoSACrdquo) = Seller Accrual Closing
Date (goes to Seller)
Buyer (ldquoBADrdquo) = Buyer Add Days
Interest= Divide annual interest by 360 days
then multiply by the actual calendar days
EX (annual interest 360) actual calendar
days
Taxes= Use 365 days
EXrdquo (annual taxes 365) = Daily Tax
Del Priore Realty Academy Copyright January 2021
TimeLine Triggers
GA License Law and Georgia Real Estate Commission (ldquoGARECrdquo) Rules amp Regulations
The last revision to this document is notated in the footnotes below
State legislature passes License law whereas under the authority of such GAREC passes Rules amp
Regulations (ldquoRampRrdquo) relating to the professional conduct of Georgia Licensees
License law is designed to protect the public from dishonest or incompetent Agents
Since all the aforementioned are fluid refer to wwwgrecstategaus for all current license law amp
GAREC RampRs
Unless specifically noted below other notification timelines amp time triggers are thirty (30) days This also
includes standard GAREC meetings (whereas the Chairman or Vice Chairman must attend)
Immediately
bull Copies of transactional documents must be given to all signatory parties
bull An executory Purchase amp Sale Agreement must be given to all signatory parties plus all involved
Brokerage firms
bull A Licensee that has a Trust Account(s) and is filing for bankruptcy must notify the GAREC
PromptlyAs Soon as Possible
bull All funds a Licensee receives from a Client or Customer must be placed with hisher Qualifying
Broker or designated Associate Broker
bull A Listing Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoSellerrdquo)
bull A Selling Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoBuyerrdquo)
One (1) Business Day
bull If a Broker comes into possession of anotherrsquos funds and does not have an existing Trust
Account they must open one
Ten (10) Days
bull Removing the Brokerrsquos ldquoFor Salerdquo sign from a former Clientrsquos yard after a successful closing or
listing expiration
bull Must notify GAREC (regardless of whether the Licensee is found innocent or guilty) (i) after an
administrative civil or criminal court action or (ii) a final court disposition All court
documentation must be included in the notification This is the only exception to the thirty (30)
day notification rules
bull A Fidelity Bond (required for a Broker hired to provide Community Association Management
services amp handles $60000+ at any one time) must have a minimum of ten (10) days cancellation
notice from the insurance company for non-payment
Sixty (60) Days
bull Candidates must submit a certified criminal history report (a GCIC Background Check can be
obtained for a fee from your local Sheriffrsquos Department) with a new license application At the
time of submission the report cannot be sixty-one (61) days old
bull Applicants must appeal a GREC notice of rejection within
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021
With No loan Assumed
$250000 Sales Price
$225000 New Loan
What is the Transfer Tax $250
$250000-$0= $250000
$250000100= 2500
2500$010=$250
Intangibles Tax
Formula sales price x LTV= Loan Amount
Loan Amount500= Answer
Always round up to nearest whole dollar
Answer x $150= Intangible Tac
For example If the sales price is $148000 and the loan type is 95 conventional what is the intangibles
tax $42300
HOW
$148000 x 95= $140600
$140 600 500= $28120= $28200
$28200 x 15= $42300
Del Priore Realty Academy Copyright January 2021 Page 1 of 12
Study Guide
Key Real Estate Terms Land Earthrsquos center (subsurface rights) through the surface amp up
into infinity (air rights) + natural attachments (Fructus
Naturales)
Real Estate Land + Improvements (man-made additions that are attached)
Real Property Real Estate + Ownership Rights (Bundle of Rights)
Bundle of Rights Possession Control Exclusion Peaceful enjoyment
Encumber (lien) amp Disposition (convey)
Personal Property
(Chattels)
Mobile
Fixture Personal Property that becomes Real Property
Trade Fixture Lesseersquos Personal Property for commercial purposes If it
remains after the Lease it becomes the Lessorrsquos through
Accession
Fixture Test (ldquoMARIArdquo) Method Is the item custom (built-in bookshelves) or was the building modified
for the item
Adaptation Permanently or legally (garage door remote belongs to the attached
garage door opener) attached
Relationship to
Parties
The relationship of the person installing to the property
Intentions of
Annexing Party
Did the owner intend permanency
Agreement If there is a contractual agreement the tests no longer matter
Real Estate Characteristics Physical Economic (ldquoSPAMrdquo)
Immobility Scarcity
Non-Homogeneity (ldquoUniquenessrdquo) Performance of Investment (or Fixed
Investment)
Indestructibility Area Preference (Situs)
Modifications (Improvements)
The Economic Life determines the worth of an investment in land amp improvements
Situs is the most important Economic Characteristic
Del Priore Realty Academy Copyright January 2021 Page 2 of 12
Private Ownership Bundle of Rights ldquoPUTEErdquo
Possession Right to occupy amp have ingressegress
Use or Control Improve lease lien exclude others
Transferability Sell gift or Devise (through Last Will amp Testament)
Enjoyment (Peaceful) Without interference of others or Title challenges
Exclusion Keep those without an ownership interest out
External Influences that may Impact the Bundle of Rights
Private Rights (Another
personrsquos)
Easements Encroachments Liens Restrictions
Easement by
Prescription (Can lead to Adverse
Possession-involuntary
transfer of ownership)
bull Actual
bull Hostile
bull Open
bull Notorious
bull Exclusive
bull Continuous for a Statutory period of time
Public Rights
(Government)
Police Power Escheat Eminent Domain amp Taxation
Government Powers (ldquoPETErdquo)
Police Power Zoning building code Master Plan
Police Power= laws that regulate private property use to ensure the publicrsquos safety health
morals amp general well-being
Eminent Domain Land is taken through the process of Condemnation Owner has
the right to ensure it is for the required public use amp gets ldquoJust
Compensationrdquo
Taxation Real Property taxes (Ad Valorem)
Escheat State takes ownership when property has been abandoned or
owner was Intestate (Will doesnrsquot exist)
Easement Creation (ldquoPOPCORNrdquo) Private Grant
On Agreement
Prescription
Condemnation
Operation of Law
Reservation (in the Deed)
Necessity
Del Priore Realty Academy Copyright January 2021 Page 3 of 12
Forms of Ownership Severalty One individual or Corporation
Tenants in Common 2+ individuals (Co-Ownership) or Corporations Each holds
individual Title amp interests can be unequal Conveyed through
Devise (Last Will amp Testament)
Joint Tenancy Right of Survivorship One Title amp equal interests Must have 4
unities Possession Interest Time amp Title (ldquoPITTrdquo)
Tenancy by the Entirety
(NOT in GA)
Joint Tenancy for Married Couples
Right of Survivorship
Commonalities
Tenants in Common amp Joint Tenancy share Possession
Joint Tenancy amp Tenancy by the Entirety share Right of Survivorship
Community Property
(NOT in GA)
Property acquired by either before marriage or inheritedgifted
during is NOT considered ONLY for spouses Divorce they
become TIC Viewed as equal partners
Condominium Unit + Air Lot (block of air from inside wall to inside wall)= Fee
Simple Common elements=Tenants in Common
Applies to offices amp parking lots
Cooperative Personal Property Buys Corporate shares amp has a proprietary
lease
Timeshare
ldquoResort areasrdquo
Personal Property Interval Ownership in a Membership Plan
(typically 1 week a year) Tenants in Common
Corporation Single entity
General Partnership Full liability amp managing authority
Limited Partnership No management authority Only liable for investment
Limited Liability Co
(ldquoLLCrdquo)
Owner=Member Some protections of a Corporation
Syndication Usually a RE partnership Subject to security laws
Joint Tenancy (ldquoPITTrdquo) All four unities must exist
bull Possession (undivided)
bull Interests (equal)
bull Time (Title acquired at the same time)
bull Title (One regardless of the number of parties)
Del Priore Realty Academy Copyright January 2021 Page 4 of 12
Agency The Broker is always the Agent of the Principal
Fiduciary Relationship= implies loyalty trust amp confidence
Compensation= does not create an Agency relationship To be eligible for consideration of a
fee you must i) be an actively licensed Agent amp ii) Prove to be the Procuring Cause
Appropriate Licensure is Required for (ldquoBARSALErdquo)
Buy
Appraise
Rent
Sell
Auction
Lease
Exchange
Agentrsquos Duty to a Principal (ldquoPOLANDrdquo)
Performance Skills amp standards to the best of your abilities
Obedience Follow a Principalrsquos orders within the limits of the law
Loyalty Principalrsquos interests must be placed above everyonersquos
including your own
Accountability
(not Accounting)
You must account for all transactional documentation amp funds
Notice amp Disclosure Full disclosure of any matter that may affect the business at
hand Verification from public record is part of this duty
Due Care Exercise care competence amp skill
Principalrsquos Duties to the Agent (ldquoCRIPrdquo)
Compensation Upon performance as established in the Agency agreement
Reimbursement For things outside of the Agency agreement scope (repairs
lawn maintenance)
Indemnification For any loss that is not the Agentrsquos fault
Performance Cooperation amp assistance
Termination of Agency (ldquoREADIESrdquo)
Revocation By Broker Principal may pursue breach if there isnrsquot a
justifiable reason
Expiration Termination date in the Agency agreement
Agreement Mutual Rescission
Death Of Principal or Broker A Salespersonrsquos death will not impact
the Agreement
Incapacity If either party is deemed legally incompetent or declares
bankruptcy
Extinction Destruction of property
Subject of Law Change in law that could make the Agentrsquos tasks illegal
(listing is acquired through Eminent Domain)
Del Priore Realty Academy Copyright January 2021 Page 5 of 12
Illegal Practices of Federal Fair Housing
Blockbusting (Agents)
Encouraging owners to sell due to a protected classrsquo influx into
the area They must be shown the widest possible variety if
preferences arenrsquot expressed
Steering (Agents)
Limiting a ClientrsquosCustomerrsquos choices based on protected
categories
Redlining (Lenders) Denying a qualified borrower purely on the basis of the
particular neighborhood
Agentrsquos Duty to a Customer (ldquoHADrdquo) (Agency does not exist)
Honesty Provide accurate factual information free of fraud or
misrepresentation
Accountability (not accounting)
Account for and care for monies amp valuables
Due Care Care amp competency
Since the Broker isnrsquot an Agent of the Customer this lacks Performance Obedience Loyalty
amp the higher standard of care
Contracts
Expressed In writing
Implied Verbal agreement
Unilateral One party makes a promise
Bilateral Two parties A promise for a promise
Executory Contract is signed but there are unfulfilled promises
Executed Promises have been fulfilled amp Title has transferred
Valid Legal and binding
Void Illegal amp not binding The contract will not be legally
recognized so it never existed
Voidable
One+ essential elements are missing The injured party is the
only one that can rescind or honor the terms
Fraud Mutual Mistake Innocent Misrepresentation Duress or
Undue Influence It lacks Genuine Assent
Enforceable Legal and binding written contract
Unenforceable Cannot be supported in a court of law Possibly a verbal
agreement
Del Priore Realty Academy Copyright January 2021 Page 6 of 12
Essential Elements of a Contract (ldquoCOMICrdquo) Competent Parties All parties must be legally competent amp have the authority to
act Grantor must be of legal age
Objective
(Lawful Purpose)
Not intended for illegal purposes Property can be legally
conveyed
Mutual Assent Through the Offer and Acceptance process Both parties must
agree to every single contract detail
In Writing Except for Leases of one year or less all contracts must be in
writing (Statute of Fraud)
Consideration Valuable Consideration or Good Consideration for a Gift Deed
(ldquoLove amp Affection)
Remedies for Breach of Contract Contractual Liquidated damages Mediation or Arbitration
Law Suit for damages
Suit for Specific Performance
Recession (If the Plaintiff was pressured forced
misrepresented or under duress)
Listing Agreements Exclusive Agency One Agency contract for the listing The Broker responsible
for securing a ready willing amp able buyer (ldquoProcuring
Causerdquo) is eligible for the fee However if the Seller is the
Procuring Cause (ldquoFSBOrdquo) payment is not due to anyone
Exclusive Right to Sell
(Most Common)
One Agency contract for the listing Regardless of whorsquos the
Procuring Cause including the Seller the listing Broker is due
a fee
Open Listing non-Exclusive Agency contracts with multiple Brokers The
first to be the Procuring Cause is eligible for the fee However
if the Seller is the Procuring Cause (ldquoFSBOrdquo) payment is not
due to anyone
Net Listing
(Illegal in GA)
Seller dictates a minimum net price (Sales Price-closing costs-
commissions) necessary to consider an offer Any monies
over that net price is considered the Brokerrsquos fee (Commission
could equate to 3 or 60)
Marketing Listings
Multiple Listing Service
(ldquoMLSrdquo)
This is one industry source widely used to share listing
information with other Licensees
Del Priore Realty Academy Copyright January 2021 Page 7 of 12
Termination of a Leasehold Estate (ldquoDECAFrdquo) Death of Lessee
Eviction of Lessee
Condemnation of Real Property
Agreement (Mutual Rescission)
Foreclosure
Lending Loan Instruments
Promissory Note Evidence of debt used in all Security Instruments
Lien-theory (non-Judicial) States
Mortgage 2 parties Mortgagor (Borrower) amp Mortgagee (Lender)
Title-theory (Judicial) States
Security Deed (used in
GA)
2 parties Grantor (Borrower) amp Grantee (Lender)
Deed of Trust 3 parties Trustor (Borrower) Beneficiary (Lender) amp Trustee
(neutral 3rd party holding Bare Title)
Security Instrument Clauses
Prepayment Penalty Fee based on a of remaining Principal for paying-off the loan
before maturity
Acceleration (ldquoDue on
Defaultrdquo)
For any Contract breach
Alienation (ldquoDue on
Salerdquo)
Title cannot be conveyed or assumed unless the Lender pre-
approves
Defeasance When the loan is paid in full borrower is released from liability
amp gains Legal Title
Also protects Buyer if Lender accepts less than the Principal
balance at Foreclosure
Foreclosure
Judicial (Lien-theory) Strict Foreclosure Sale Must go through the court system
Non-Judicial (Title-
theory) (Georgia)
Power of Sale clause in Security Instrument allows Lender to re-
gain the property without the court process However to do so
they must advertise the property beforehand In GA itrsquos currently
4 weeks
Deed in Lieu of
Foreclosure (ldquoFriendly
Foreclosurerdquo)
Defaulted borrower may willingly surrender Title before
Foreclosure proceedings to minimize credit damage The caveat
being the Lender must be willing to do so
Secondary Mortgage Market Federal National Mortgage Association (ldquoFNMArdquo) Fannie Mae
Federal Home Loan Mortgage Corporation (ldquoFHLMCrdquo) Freddie Mac
Government National Mortgage Association (ldquoGNMArdquo)
Ginnie Mae
GNMA is the only Government agency Purchases low-income loans
Del Priore Realty Academy Copyright January 2021 Page 8 of 12
Protected Classes Law Existing Category Added Category
Civil Rights Act of 1866 NA Race
Federal Civil Rights Act of
1968
(ldquoFederal Fair Housing
Actrdquo)
Race Color Religion amp National
Origin of Birth
Prohibits discrimination in the Real Estate industry of the protected classes
Fair Housing Act of 1974 Race Color Religion amp
National Origin of Birth
Sex
Fair Housing Act of 1988 Race Color Religion
National Origin of Birth amp
Sex
Familial Status amp
Handicapped (one with a record of mental or
physical impairment to include
alcoholism cancer or AIDS)
Americans with Disabilities
Act (ldquoADArdquo)
Prohibits discrimination based on disability amp allows for
reasonable accommodation or modification(s)
Except for Race a private homeowner who occupies a 1-4-unit property may discriminate if
advertising does not contain discriminatory content (ldquoMs Murphy Lawrdquo)
Fair Housing
(ldquoRealtors Can Really Sell Houses Fast Nowrdquo)
Race
Color
Religion
Sex
Handicap
Familial Status
National Origin
Valuation amp Appraisal Definitions
Appraisal= Unbiased opinion of Market Value by an Appraiser Sets the upper limits of
Value
Appraisal Fee= Based on the amount of work amp time
Market Value= the most probable selling price in an Armrsquos-length Transaction
Market Price= Fact The actual Sales Price
Parties are objective and unrelated with unrelated motivations The 4 requirements of an
Armrsquos-length Transaction are
bull Valuable Consideration (cash) is exchanged
bull Property was on the open market for a reasonable time for the market conditions
bull Parties were under no undue pressure
Del Priore Realty Academy Copyright January 2021 Page 9 of 12
bull Parties were well-informed amp acting in their own best interests
Appraisal Process Steps
1 Define the problem 4 Analyze data through i) Market Data
Approach ii) Cost Approach or iii) Income
Approach
2 Make preliminary study 5 Reconciliation amp Final Estimate
3 Gather Data 6 Prepare Appraisal Report
Four (4) Necessary Components of Value (ldquoDUSTrdquo)
Demand Actual need or desire + the ability to pay for it Desired by most
Utility More use more Value
Scarcity Short supply relative to demand
Transferability Ability to convey Title with relative ease
Economic Principals of Value (leads to the development of a credible appraisal)
Supply amp Demand Limited inventoryhigh demand= higher Market Price
Highest amp Best Use Legal use that will likely produce greatest net return
1 Legally allowable 2 Physically possible 3 Financially feasible
amp 4 Maximum utility
Substitution Applies to all three (3) approaches Sets the upper limit on Value
Conformity Cookie cutter neighborhoods Property consistency helps Value
Change Economic amp social forces can impact Value more than the
property itself
Development phase growing amp developing
Equilibrium phase growth ends amp value levels off
Decline phase deterioration sets in amp values fall
Progression amp
Regression
Regression Most expensive property loses value because of
lesser homes around it
Progression Least expensive gains value because of nicer homes
around it
Competition If the market is flooded with listings value drops
Increasing amp Decreasing
(Diminishing) Returns
Increasing Returns a dollar spent will add dollars to value
Decreasing Returns a dollar spent will not even return that
dollar in value
Contribution How an improvement adds or detracts from the whole property
Anticipation (Basis of
Income Approach)
Positive or negative impact due to expectation of a future event
(Current value + expected income amp benefits)
Influencing Factors on Value
Situs (location) Or area preference Most important factor
Size amp Shape Of a lot
Depth Tables The front of a lot has more value than the back Ties to Size amp Shape
Soil Characteristics Considered for basements septic systems erosion
Key Lots Irregular lot that may become valuable in Assemblage
Del Priore Realty Academy Copyright January 2021 Page 10 of 12
Assemblage Process of combining 2+ individual adjoining lots Plottage= resulting
increase in value
Approaches to Value
1 Market Data or Sales Comparison Approach
Value is based on the Principal of Substitution for residential properties amp vacant land
Fair Market Value= SOLD Comparable Properties by Adjusting for Differences
Adjustments
Comps should be
sold within the last 3-
6 months
Preferably within 1
mile of the Subject
NEVER adjust the
subject property
ldquoCIArdquo If Comp is
inferior ADD to the
Comp for that itemrsquos
value
ldquoCBSrdquo If Subject is
better SUBTRACT
from the Comp for
that itemrsquos value
Reconciliation Comp with the fewest adjustments to Subject gets the highest emphasis
(highest percentage) Less reliable in slow or unstable markets
Comparative Market Analysis (ldquoCMArdquo) is used by Licensees to evaluate Fair Market
Value for a listing price or offer 3-5 comparable properties is an acceptable ldquoNrdquo Unlike the
Market Data Approach that uses sold properties a CMA uses sold amp actively listed properties
2 Cost Approach (only method where land is evaluated separately)
Value is based on the Principal of Substitution Used for special purpose amp new construction
It is also used to evaluate Hazard Insurance
Fair Market Value= (Replacement Cost ndash ldquoStraight-Linerdquo or ldquoAge-Liferdquo Depreciation +
Land Value)
Land NEVER depreciates
Reproduction Cost= Cost to produce an
exact replica using a Comparative Unit
Method Olderhistorical buildings
Replacement Cost= Cost using similar
materials to produce a satisfactory substitute
using a Comparative Unit Method Special
purpose amp new buildings
Square Foot Method Single-family homes Measures exterior
dimensions of
Improvement
1 (L W)= Sq Ft
2 (Sq Ft Price per
Sq Ft)= Cost
Cubic Foot Method Warehouses Measures volume of
Improvement
1 (L W H)=
Cubic Feet
2 (Cu Ft Price per
Cu Ft)= Cost
Unit in Place
Method
Used in Hazard Ins Cost of each assembled amp installed
component
Quantity Survey
Method
Best for new
construction
Detailed cost of every
single thing (nails
bricks etc)
Detailed breakdown
Del Priore Realty Academy Copyright January 2021 Page 11 of 12
Accrued Depreciation
Depreciation= re-capturing the cost of a purchase over a certain time period as allowed by
IRS regulations
Curable= Cure costs less than resulting
value
Incurable= Cure costs exceed the value of
the correction Doesnrsquot make sense
Physical Deterioration= normal wear amp tear exposure to weather lack of proper
maintenance
Functional Obsolescence= obsolete amp doesnrsquot meet current expectations EX outdated floor
plan old systems unorthodox architecture (For test this applies to appliances other than
black white or SS)
Economic Obsolescence= Incurable since external to property amp beyond control EX high
taxes crime unemployment flight patterns factory railroad
Actual Age= Improvementrsquos historical age Effective Age= Condition updates amp utility
that may make it less than Actual Age
Land Value= May be based on a CMA or i) Sq feet ii) front footage or iii) acreage
1 Acreage= (Sq Ft 43560) 2 (Acreage Price per Acre)= Land Value
3 Income or Capitalization Approach
The Appraiser looks at 3 things relative to the propertyrsquos income i) Quantity ii) Quality
(how safe is it) and iii) Durability (how long can the income be sustained)
Cap Rate (ldquoCRrdquo) = Rate of Return on
Investment (ldquoROIrdquo) Direct correlation to CR
amp investment risk Lower the CR the higher
the value
Commercial
Uses net vs gross income amp converts income
into Value
CR Steps
1 (Potential Gross Income ndash Vacancy ndash
Collections) = Effective Gross Income
(ldquoEGIrdquo)
2 (EGI ndash Operating Expenses) = Net
Operating Income (ldquoNOIrdquo)
3 (NOI Price) = CR
4 (NOI CR) = Fair Market Value
1 (100 CR)= Full Capitalization ( of years
it will pay for itself)
4 Capitalization Approach (ldquoGRMrdquo amp ldquoGIMrdquo)
Like the Income Approach the Appraiser looks at 3 things relative to the propertyrsquos income i)
Quantity ii) Quality (how safe is it) and iii) Durability (how long can the income be
sustained)
Gross Rent Multiplier (ldquoGRMrdquo) Residential
rentals 1-4 units
Ratio between price amp annual rental income
before expenses
The lower the GRM the more attractive
investment
GRM Steps
1 (Comp Sold $ monthly rent) = GRM
2 (Subjectrsquos monthly rent GRM) =Fair
Market Value
Gross Income Multiplier (ldquoGIMrdquo) Small
commercial + residential 5+ units
GIM includes annual rent + income from
other sources
GIM Steps
1 (Comp Sold $ Gross annual income) =
GIM
2 (Subject gross annual income GIM) =Fair
Market Value
Del Priore Realty Academy Copyright January 2021 Page 12 of 12
Appraisal Reports
Letter of Opinion Informal report thatrsquos not recognized or accepted
Short Form Summary of such is the most common format Used by lending
institutions amp Government agencies (Fannie Mae amp Freddie
Mac)
Narrative Report Most encompassing Usually required for appraising
commercial property or legal cases (Condemnation under
Eminent Domain settling Estates in probate etc)
Letrsquos Look at Math Key Formulas
1 Acre= 43560 sq ft Township= 36 Sq Miles
Government Rectangular Survey
Principal Meridian Lines run N-S
Base Lines run E-W
Section= 1 sq mile amp 640 acres
Taxes amp Interest
Transfer Tax = (Sales Price 500) $150 Intangible Tax= (Loan Amount 100) 010
Upfront Mortgage Insurance Premium (ldquoUFMIPrdquo)= 175 (0175)
Closing Calculations
Jan=31 April= 30 June= 30 Sept= 30
Feb= 28 May= 31 July= 31 Oct= 31
March= 31 June = 30 August= 31 Nov= 30 amp Dec= 31
Seller (ldquoSACrdquo) = Seller Accrual Closing
Date (goes to Seller)
Buyer (ldquoBADrdquo) = Buyer Add Days
Interest= Divide annual interest by 360 days
then multiply by the actual calendar days
EX (annual interest 360) actual calendar
days
Taxes= Use 365 days
EXrdquo (annual taxes 365) = Daily Tax
Del Priore Realty Academy Copyright January 2021
TimeLine Triggers
GA License Law and Georgia Real Estate Commission (ldquoGARECrdquo) Rules amp Regulations
The last revision to this document is notated in the footnotes below
State legislature passes License law whereas under the authority of such GAREC passes Rules amp
Regulations (ldquoRampRrdquo) relating to the professional conduct of Georgia Licensees
License law is designed to protect the public from dishonest or incompetent Agents
Since all the aforementioned are fluid refer to wwwgrecstategaus for all current license law amp
GAREC RampRs
Unless specifically noted below other notification timelines amp time triggers are thirty (30) days This also
includes standard GAREC meetings (whereas the Chairman or Vice Chairman must attend)
Immediately
bull Copies of transactional documents must be given to all signatory parties
bull An executory Purchase amp Sale Agreement must be given to all signatory parties plus all involved
Brokerage firms
bull A Licensee that has a Trust Account(s) and is filing for bankruptcy must notify the GAREC
PromptlyAs Soon as Possible
bull All funds a Licensee receives from a Client or Customer must be placed with hisher Qualifying
Broker or designated Associate Broker
bull A Listing Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoSellerrdquo)
bull A Selling Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoBuyerrdquo)
One (1) Business Day
bull If a Broker comes into possession of anotherrsquos funds and does not have an existing Trust
Account they must open one
Ten (10) Days
bull Removing the Brokerrsquos ldquoFor Salerdquo sign from a former Clientrsquos yard after a successful closing or
listing expiration
bull Must notify GAREC (regardless of whether the Licensee is found innocent or guilty) (i) after an
administrative civil or criminal court action or (ii) a final court disposition All court
documentation must be included in the notification This is the only exception to the thirty (30)
day notification rules
bull A Fidelity Bond (required for a Broker hired to provide Community Association Management
services amp handles $60000+ at any one time) must have a minimum of ten (10) days cancellation
notice from the insurance company for non-payment
Sixty (60) Days
bull Candidates must submit a certified criminal history report (a GCIC Background Check can be
obtained for a fee from your local Sheriffrsquos Department) with a new license application At the
time of submission the report cannot be sixty-one (61) days old
bull Applicants must appeal a GREC notice of rejection within
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021 Page 1 of 12
Study Guide
Key Real Estate Terms Land Earthrsquos center (subsurface rights) through the surface amp up
into infinity (air rights) + natural attachments (Fructus
Naturales)
Real Estate Land + Improvements (man-made additions that are attached)
Real Property Real Estate + Ownership Rights (Bundle of Rights)
Bundle of Rights Possession Control Exclusion Peaceful enjoyment
Encumber (lien) amp Disposition (convey)
Personal Property
(Chattels)
Mobile
Fixture Personal Property that becomes Real Property
Trade Fixture Lesseersquos Personal Property for commercial purposes If it
remains after the Lease it becomes the Lessorrsquos through
Accession
Fixture Test (ldquoMARIArdquo) Method Is the item custom (built-in bookshelves) or was the building modified
for the item
Adaptation Permanently or legally (garage door remote belongs to the attached
garage door opener) attached
Relationship to
Parties
The relationship of the person installing to the property
Intentions of
Annexing Party
Did the owner intend permanency
Agreement If there is a contractual agreement the tests no longer matter
Real Estate Characteristics Physical Economic (ldquoSPAMrdquo)
Immobility Scarcity
Non-Homogeneity (ldquoUniquenessrdquo) Performance of Investment (or Fixed
Investment)
Indestructibility Area Preference (Situs)
Modifications (Improvements)
The Economic Life determines the worth of an investment in land amp improvements
Situs is the most important Economic Characteristic
Del Priore Realty Academy Copyright January 2021 Page 2 of 12
Private Ownership Bundle of Rights ldquoPUTEErdquo
Possession Right to occupy amp have ingressegress
Use or Control Improve lease lien exclude others
Transferability Sell gift or Devise (through Last Will amp Testament)
Enjoyment (Peaceful) Without interference of others or Title challenges
Exclusion Keep those without an ownership interest out
External Influences that may Impact the Bundle of Rights
Private Rights (Another
personrsquos)
Easements Encroachments Liens Restrictions
Easement by
Prescription (Can lead to Adverse
Possession-involuntary
transfer of ownership)
bull Actual
bull Hostile
bull Open
bull Notorious
bull Exclusive
bull Continuous for a Statutory period of time
Public Rights
(Government)
Police Power Escheat Eminent Domain amp Taxation
Government Powers (ldquoPETErdquo)
Police Power Zoning building code Master Plan
Police Power= laws that regulate private property use to ensure the publicrsquos safety health
morals amp general well-being
Eminent Domain Land is taken through the process of Condemnation Owner has
the right to ensure it is for the required public use amp gets ldquoJust
Compensationrdquo
Taxation Real Property taxes (Ad Valorem)
Escheat State takes ownership when property has been abandoned or
owner was Intestate (Will doesnrsquot exist)
Easement Creation (ldquoPOPCORNrdquo) Private Grant
On Agreement
Prescription
Condemnation
Operation of Law
Reservation (in the Deed)
Necessity
Del Priore Realty Academy Copyright January 2021 Page 3 of 12
Forms of Ownership Severalty One individual or Corporation
Tenants in Common 2+ individuals (Co-Ownership) or Corporations Each holds
individual Title amp interests can be unequal Conveyed through
Devise (Last Will amp Testament)
Joint Tenancy Right of Survivorship One Title amp equal interests Must have 4
unities Possession Interest Time amp Title (ldquoPITTrdquo)
Tenancy by the Entirety
(NOT in GA)
Joint Tenancy for Married Couples
Right of Survivorship
Commonalities
Tenants in Common amp Joint Tenancy share Possession
Joint Tenancy amp Tenancy by the Entirety share Right of Survivorship
Community Property
(NOT in GA)
Property acquired by either before marriage or inheritedgifted
during is NOT considered ONLY for spouses Divorce they
become TIC Viewed as equal partners
Condominium Unit + Air Lot (block of air from inside wall to inside wall)= Fee
Simple Common elements=Tenants in Common
Applies to offices amp parking lots
Cooperative Personal Property Buys Corporate shares amp has a proprietary
lease
Timeshare
ldquoResort areasrdquo
Personal Property Interval Ownership in a Membership Plan
(typically 1 week a year) Tenants in Common
Corporation Single entity
General Partnership Full liability amp managing authority
Limited Partnership No management authority Only liable for investment
Limited Liability Co
(ldquoLLCrdquo)
Owner=Member Some protections of a Corporation
Syndication Usually a RE partnership Subject to security laws
Joint Tenancy (ldquoPITTrdquo) All four unities must exist
bull Possession (undivided)
bull Interests (equal)
bull Time (Title acquired at the same time)
bull Title (One regardless of the number of parties)
Del Priore Realty Academy Copyright January 2021 Page 4 of 12
Agency The Broker is always the Agent of the Principal
Fiduciary Relationship= implies loyalty trust amp confidence
Compensation= does not create an Agency relationship To be eligible for consideration of a
fee you must i) be an actively licensed Agent amp ii) Prove to be the Procuring Cause
Appropriate Licensure is Required for (ldquoBARSALErdquo)
Buy
Appraise
Rent
Sell
Auction
Lease
Exchange
Agentrsquos Duty to a Principal (ldquoPOLANDrdquo)
Performance Skills amp standards to the best of your abilities
Obedience Follow a Principalrsquos orders within the limits of the law
Loyalty Principalrsquos interests must be placed above everyonersquos
including your own
Accountability
(not Accounting)
You must account for all transactional documentation amp funds
Notice amp Disclosure Full disclosure of any matter that may affect the business at
hand Verification from public record is part of this duty
Due Care Exercise care competence amp skill
Principalrsquos Duties to the Agent (ldquoCRIPrdquo)
Compensation Upon performance as established in the Agency agreement
Reimbursement For things outside of the Agency agreement scope (repairs
lawn maintenance)
Indemnification For any loss that is not the Agentrsquos fault
Performance Cooperation amp assistance
Termination of Agency (ldquoREADIESrdquo)
Revocation By Broker Principal may pursue breach if there isnrsquot a
justifiable reason
Expiration Termination date in the Agency agreement
Agreement Mutual Rescission
Death Of Principal or Broker A Salespersonrsquos death will not impact
the Agreement
Incapacity If either party is deemed legally incompetent or declares
bankruptcy
Extinction Destruction of property
Subject of Law Change in law that could make the Agentrsquos tasks illegal
(listing is acquired through Eminent Domain)
Del Priore Realty Academy Copyright January 2021 Page 5 of 12
Illegal Practices of Federal Fair Housing
Blockbusting (Agents)
Encouraging owners to sell due to a protected classrsquo influx into
the area They must be shown the widest possible variety if
preferences arenrsquot expressed
Steering (Agents)
Limiting a ClientrsquosCustomerrsquos choices based on protected
categories
Redlining (Lenders) Denying a qualified borrower purely on the basis of the
particular neighborhood
Agentrsquos Duty to a Customer (ldquoHADrdquo) (Agency does not exist)
Honesty Provide accurate factual information free of fraud or
misrepresentation
Accountability (not accounting)
Account for and care for monies amp valuables
Due Care Care amp competency
Since the Broker isnrsquot an Agent of the Customer this lacks Performance Obedience Loyalty
amp the higher standard of care
Contracts
Expressed In writing
Implied Verbal agreement
Unilateral One party makes a promise
Bilateral Two parties A promise for a promise
Executory Contract is signed but there are unfulfilled promises
Executed Promises have been fulfilled amp Title has transferred
Valid Legal and binding
Void Illegal amp not binding The contract will not be legally
recognized so it never existed
Voidable
One+ essential elements are missing The injured party is the
only one that can rescind or honor the terms
Fraud Mutual Mistake Innocent Misrepresentation Duress or
Undue Influence It lacks Genuine Assent
Enforceable Legal and binding written contract
Unenforceable Cannot be supported in a court of law Possibly a verbal
agreement
Del Priore Realty Academy Copyright January 2021 Page 6 of 12
Essential Elements of a Contract (ldquoCOMICrdquo) Competent Parties All parties must be legally competent amp have the authority to
act Grantor must be of legal age
Objective
(Lawful Purpose)
Not intended for illegal purposes Property can be legally
conveyed
Mutual Assent Through the Offer and Acceptance process Both parties must
agree to every single contract detail
In Writing Except for Leases of one year or less all contracts must be in
writing (Statute of Fraud)
Consideration Valuable Consideration or Good Consideration for a Gift Deed
(ldquoLove amp Affection)
Remedies for Breach of Contract Contractual Liquidated damages Mediation or Arbitration
Law Suit for damages
Suit for Specific Performance
Recession (If the Plaintiff was pressured forced
misrepresented or under duress)
Listing Agreements Exclusive Agency One Agency contract for the listing The Broker responsible
for securing a ready willing amp able buyer (ldquoProcuring
Causerdquo) is eligible for the fee However if the Seller is the
Procuring Cause (ldquoFSBOrdquo) payment is not due to anyone
Exclusive Right to Sell
(Most Common)
One Agency contract for the listing Regardless of whorsquos the
Procuring Cause including the Seller the listing Broker is due
a fee
Open Listing non-Exclusive Agency contracts with multiple Brokers The
first to be the Procuring Cause is eligible for the fee However
if the Seller is the Procuring Cause (ldquoFSBOrdquo) payment is not
due to anyone
Net Listing
(Illegal in GA)
Seller dictates a minimum net price (Sales Price-closing costs-
commissions) necessary to consider an offer Any monies
over that net price is considered the Brokerrsquos fee (Commission
could equate to 3 or 60)
Marketing Listings
Multiple Listing Service
(ldquoMLSrdquo)
This is one industry source widely used to share listing
information with other Licensees
Del Priore Realty Academy Copyright January 2021 Page 7 of 12
Termination of a Leasehold Estate (ldquoDECAFrdquo) Death of Lessee
Eviction of Lessee
Condemnation of Real Property
Agreement (Mutual Rescission)
Foreclosure
Lending Loan Instruments
Promissory Note Evidence of debt used in all Security Instruments
Lien-theory (non-Judicial) States
Mortgage 2 parties Mortgagor (Borrower) amp Mortgagee (Lender)
Title-theory (Judicial) States
Security Deed (used in
GA)
2 parties Grantor (Borrower) amp Grantee (Lender)
Deed of Trust 3 parties Trustor (Borrower) Beneficiary (Lender) amp Trustee
(neutral 3rd party holding Bare Title)
Security Instrument Clauses
Prepayment Penalty Fee based on a of remaining Principal for paying-off the loan
before maturity
Acceleration (ldquoDue on
Defaultrdquo)
For any Contract breach
Alienation (ldquoDue on
Salerdquo)
Title cannot be conveyed or assumed unless the Lender pre-
approves
Defeasance When the loan is paid in full borrower is released from liability
amp gains Legal Title
Also protects Buyer if Lender accepts less than the Principal
balance at Foreclosure
Foreclosure
Judicial (Lien-theory) Strict Foreclosure Sale Must go through the court system
Non-Judicial (Title-
theory) (Georgia)
Power of Sale clause in Security Instrument allows Lender to re-
gain the property without the court process However to do so
they must advertise the property beforehand In GA itrsquos currently
4 weeks
Deed in Lieu of
Foreclosure (ldquoFriendly
Foreclosurerdquo)
Defaulted borrower may willingly surrender Title before
Foreclosure proceedings to minimize credit damage The caveat
being the Lender must be willing to do so
Secondary Mortgage Market Federal National Mortgage Association (ldquoFNMArdquo) Fannie Mae
Federal Home Loan Mortgage Corporation (ldquoFHLMCrdquo) Freddie Mac
Government National Mortgage Association (ldquoGNMArdquo)
Ginnie Mae
GNMA is the only Government agency Purchases low-income loans
Del Priore Realty Academy Copyright January 2021 Page 8 of 12
Protected Classes Law Existing Category Added Category
Civil Rights Act of 1866 NA Race
Federal Civil Rights Act of
1968
(ldquoFederal Fair Housing
Actrdquo)
Race Color Religion amp National
Origin of Birth
Prohibits discrimination in the Real Estate industry of the protected classes
Fair Housing Act of 1974 Race Color Religion amp
National Origin of Birth
Sex
Fair Housing Act of 1988 Race Color Religion
National Origin of Birth amp
Sex
Familial Status amp
Handicapped (one with a record of mental or
physical impairment to include
alcoholism cancer or AIDS)
Americans with Disabilities
Act (ldquoADArdquo)
Prohibits discrimination based on disability amp allows for
reasonable accommodation or modification(s)
Except for Race a private homeowner who occupies a 1-4-unit property may discriminate if
advertising does not contain discriminatory content (ldquoMs Murphy Lawrdquo)
Fair Housing
(ldquoRealtors Can Really Sell Houses Fast Nowrdquo)
Race
Color
Religion
Sex
Handicap
Familial Status
National Origin
Valuation amp Appraisal Definitions
Appraisal= Unbiased opinion of Market Value by an Appraiser Sets the upper limits of
Value
Appraisal Fee= Based on the amount of work amp time
Market Value= the most probable selling price in an Armrsquos-length Transaction
Market Price= Fact The actual Sales Price
Parties are objective and unrelated with unrelated motivations The 4 requirements of an
Armrsquos-length Transaction are
bull Valuable Consideration (cash) is exchanged
bull Property was on the open market for a reasonable time for the market conditions
bull Parties were under no undue pressure
Del Priore Realty Academy Copyright January 2021 Page 9 of 12
bull Parties were well-informed amp acting in their own best interests
Appraisal Process Steps
1 Define the problem 4 Analyze data through i) Market Data
Approach ii) Cost Approach or iii) Income
Approach
2 Make preliminary study 5 Reconciliation amp Final Estimate
3 Gather Data 6 Prepare Appraisal Report
Four (4) Necessary Components of Value (ldquoDUSTrdquo)
Demand Actual need or desire + the ability to pay for it Desired by most
Utility More use more Value
Scarcity Short supply relative to demand
Transferability Ability to convey Title with relative ease
Economic Principals of Value (leads to the development of a credible appraisal)
Supply amp Demand Limited inventoryhigh demand= higher Market Price
Highest amp Best Use Legal use that will likely produce greatest net return
1 Legally allowable 2 Physically possible 3 Financially feasible
amp 4 Maximum utility
Substitution Applies to all three (3) approaches Sets the upper limit on Value
Conformity Cookie cutter neighborhoods Property consistency helps Value
Change Economic amp social forces can impact Value more than the
property itself
Development phase growing amp developing
Equilibrium phase growth ends amp value levels off
Decline phase deterioration sets in amp values fall
Progression amp
Regression
Regression Most expensive property loses value because of
lesser homes around it
Progression Least expensive gains value because of nicer homes
around it
Competition If the market is flooded with listings value drops
Increasing amp Decreasing
(Diminishing) Returns
Increasing Returns a dollar spent will add dollars to value
Decreasing Returns a dollar spent will not even return that
dollar in value
Contribution How an improvement adds or detracts from the whole property
Anticipation (Basis of
Income Approach)
Positive or negative impact due to expectation of a future event
(Current value + expected income amp benefits)
Influencing Factors on Value
Situs (location) Or area preference Most important factor
Size amp Shape Of a lot
Depth Tables The front of a lot has more value than the back Ties to Size amp Shape
Soil Characteristics Considered for basements septic systems erosion
Key Lots Irregular lot that may become valuable in Assemblage
Del Priore Realty Academy Copyright January 2021 Page 10 of 12
Assemblage Process of combining 2+ individual adjoining lots Plottage= resulting
increase in value
Approaches to Value
1 Market Data or Sales Comparison Approach
Value is based on the Principal of Substitution for residential properties amp vacant land
Fair Market Value= SOLD Comparable Properties by Adjusting for Differences
Adjustments
Comps should be
sold within the last 3-
6 months
Preferably within 1
mile of the Subject
NEVER adjust the
subject property
ldquoCIArdquo If Comp is
inferior ADD to the
Comp for that itemrsquos
value
ldquoCBSrdquo If Subject is
better SUBTRACT
from the Comp for
that itemrsquos value
Reconciliation Comp with the fewest adjustments to Subject gets the highest emphasis
(highest percentage) Less reliable in slow or unstable markets
Comparative Market Analysis (ldquoCMArdquo) is used by Licensees to evaluate Fair Market
Value for a listing price or offer 3-5 comparable properties is an acceptable ldquoNrdquo Unlike the
Market Data Approach that uses sold properties a CMA uses sold amp actively listed properties
2 Cost Approach (only method where land is evaluated separately)
Value is based on the Principal of Substitution Used for special purpose amp new construction
It is also used to evaluate Hazard Insurance
Fair Market Value= (Replacement Cost ndash ldquoStraight-Linerdquo or ldquoAge-Liferdquo Depreciation +
Land Value)
Land NEVER depreciates
Reproduction Cost= Cost to produce an
exact replica using a Comparative Unit
Method Olderhistorical buildings
Replacement Cost= Cost using similar
materials to produce a satisfactory substitute
using a Comparative Unit Method Special
purpose amp new buildings
Square Foot Method Single-family homes Measures exterior
dimensions of
Improvement
1 (L W)= Sq Ft
2 (Sq Ft Price per
Sq Ft)= Cost
Cubic Foot Method Warehouses Measures volume of
Improvement
1 (L W H)=
Cubic Feet
2 (Cu Ft Price per
Cu Ft)= Cost
Unit in Place
Method
Used in Hazard Ins Cost of each assembled amp installed
component
Quantity Survey
Method
Best for new
construction
Detailed cost of every
single thing (nails
bricks etc)
Detailed breakdown
Del Priore Realty Academy Copyright January 2021 Page 11 of 12
Accrued Depreciation
Depreciation= re-capturing the cost of a purchase over a certain time period as allowed by
IRS regulations
Curable= Cure costs less than resulting
value
Incurable= Cure costs exceed the value of
the correction Doesnrsquot make sense
Physical Deterioration= normal wear amp tear exposure to weather lack of proper
maintenance
Functional Obsolescence= obsolete amp doesnrsquot meet current expectations EX outdated floor
plan old systems unorthodox architecture (For test this applies to appliances other than
black white or SS)
Economic Obsolescence= Incurable since external to property amp beyond control EX high
taxes crime unemployment flight patterns factory railroad
Actual Age= Improvementrsquos historical age Effective Age= Condition updates amp utility
that may make it less than Actual Age
Land Value= May be based on a CMA or i) Sq feet ii) front footage or iii) acreage
1 Acreage= (Sq Ft 43560) 2 (Acreage Price per Acre)= Land Value
3 Income or Capitalization Approach
The Appraiser looks at 3 things relative to the propertyrsquos income i) Quantity ii) Quality
(how safe is it) and iii) Durability (how long can the income be sustained)
Cap Rate (ldquoCRrdquo) = Rate of Return on
Investment (ldquoROIrdquo) Direct correlation to CR
amp investment risk Lower the CR the higher
the value
Commercial
Uses net vs gross income amp converts income
into Value
CR Steps
1 (Potential Gross Income ndash Vacancy ndash
Collections) = Effective Gross Income
(ldquoEGIrdquo)
2 (EGI ndash Operating Expenses) = Net
Operating Income (ldquoNOIrdquo)
3 (NOI Price) = CR
4 (NOI CR) = Fair Market Value
1 (100 CR)= Full Capitalization ( of years
it will pay for itself)
4 Capitalization Approach (ldquoGRMrdquo amp ldquoGIMrdquo)
Like the Income Approach the Appraiser looks at 3 things relative to the propertyrsquos income i)
Quantity ii) Quality (how safe is it) and iii) Durability (how long can the income be
sustained)
Gross Rent Multiplier (ldquoGRMrdquo) Residential
rentals 1-4 units
Ratio between price amp annual rental income
before expenses
The lower the GRM the more attractive
investment
GRM Steps
1 (Comp Sold $ monthly rent) = GRM
2 (Subjectrsquos monthly rent GRM) =Fair
Market Value
Gross Income Multiplier (ldquoGIMrdquo) Small
commercial + residential 5+ units
GIM includes annual rent + income from
other sources
GIM Steps
1 (Comp Sold $ Gross annual income) =
GIM
2 (Subject gross annual income GIM) =Fair
Market Value
Del Priore Realty Academy Copyright January 2021 Page 12 of 12
Appraisal Reports
Letter of Opinion Informal report thatrsquos not recognized or accepted
Short Form Summary of such is the most common format Used by lending
institutions amp Government agencies (Fannie Mae amp Freddie
Mac)
Narrative Report Most encompassing Usually required for appraising
commercial property or legal cases (Condemnation under
Eminent Domain settling Estates in probate etc)
Letrsquos Look at Math Key Formulas
1 Acre= 43560 sq ft Township= 36 Sq Miles
Government Rectangular Survey
Principal Meridian Lines run N-S
Base Lines run E-W
Section= 1 sq mile amp 640 acres
Taxes amp Interest
Transfer Tax = (Sales Price 500) $150 Intangible Tax= (Loan Amount 100) 010
Upfront Mortgage Insurance Premium (ldquoUFMIPrdquo)= 175 (0175)
Closing Calculations
Jan=31 April= 30 June= 30 Sept= 30
Feb= 28 May= 31 July= 31 Oct= 31
March= 31 June = 30 August= 31 Nov= 30 amp Dec= 31
Seller (ldquoSACrdquo) = Seller Accrual Closing
Date (goes to Seller)
Buyer (ldquoBADrdquo) = Buyer Add Days
Interest= Divide annual interest by 360 days
then multiply by the actual calendar days
EX (annual interest 360) actual calendar
days
Taxes= Use 365 days
EXrdquo (annual taxes 365) = Daily Tax
Del Priore Realty Academy Copyright January 2021
TimeLine Triggers
GA License Law and Georgia Real Estate Commission (ldquoGARECrdquo) Rules amp Regulations
The last revision to this document is notated in the footnotes below
State legislature passes License law whereas under the authority of such GAREC passes Rules amp
Regulations (ldquoRampRrdquo) relating to the professional conduct of Georgia Licensees
License law is designed to protect the public from dishonest or incompetent Agents
Since all the aforementioned are fluid refer to wwwgrecstategaus for all current license law amp
GAREC RampRs
Unless specifically noted below other notification timelines amp time triggers are thirty (30) days This also
includes standard GAREC meetings (whereas the Chairman or Vice Chairman must attend)
Immediately
bull Copies of transactional documents must be given to all signatory parties
bull An executory Purchase amp Sale Agreement must be given to all signatory parties plus all involved
Brokerage firms
bull A Licensee that has a Trust Account(s) and is filing for bankruptcy must notify the GAREC
PromptlyAs Soon as Possible
bull All funds a Licensee receives from a Client or Customer must be placed with hisher Qualifying
Broker or designated Associate Broker
bull A Listing Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoSellerrdquo)
bull A Selling Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoBuyerrdquo)
One (1) Business Day
bull If a Broker comes into possession of anotherrsquos funds and does not have an existing Trust
Account they must open one
Ten (10) Days
bull Removing the Brokerrsquos ldquoFor Salerdquo sign from a former Clientrsquos yard after a successful closing or
listing expiration
bull Must notify GAREC (regardless of whether the Licensee is found innocent or guilty) (i) after an
administrative civil or criminal court action or (ii) a final court disposition All court
documentation must be included in the notification This is the only exception to the thirty (30)
day notification rules
bull A Fidelity Bond (required for a Broker hired to provide Community Association Management
services amp handles $60000+ at any one time) must have a minimum of ten (10) days cancellation
notice from the insurance company for non-payment
Sixty (60) Days
bull Candidates must submit a certified criminal history report (a GCIC Background Check can be
obtained for a fee from your local Sheriffrsquos Department) with a new license application At the
time of submission the report cannot be sixty-one (61) days old
bull Applicants must appeal a GREC notice of rejection within
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021 Page 2 of 12
Private Ownership Bundle of Rights ldquoPUTEErdquo
Possession Right to occupy amp have ingressegress
Use or Control Improve lease lien exclude others
Transferability Sell gift or Devise (through Last Will amp Testament)
Enjoyment (Peaceful) Without interference of others or Title challenges
Exclusion Keep those without an ownership interest out
External Influences that may Impact the Bundle of Rights
Private Rights (Another
personrsquos)
Easements Encroachments Liens Restrictions
Easement by
Prescription (Can lead to Adverse
Possession-involuntary
transfer of ownership)
bull Actual
bull Hostile
bull Open
bull Notorious
bull Exclusive
bull Continuous for a Statutory period of time
Public Rights
(Government)
Police Power Escheat Eminent Domain amp Taxation
Government Powers (ldquoPETErdquo)
Police Power Zoning building code Master Plan
Police Power= laws that regulate private property use to ensure the publicrsquos safety health
morals amp general well-being
Eminent Domain Land is taken through the process of Condemnation Owner has
the right to ensure it is for the required public use amp gets ldquoJust
Compensationrdquo
Taxation Real Property taxes (Ad Valorem)
Escheat State takes ownership when property has been abandoned or
owner was Intestate (Will doesnrsquot exist)
Easement Creation (ldquoPOPCORNrdquo) Private Grant
On Agreement
Prescription
Condemnation
Operation of Law
Reservation (in the Deed)
Necessity
Del Priore Realty Academy Copyright January 2021 Page 3 of 12
Forms of Ownership Severalty One individual or Corporation
Tenants in Common 2+ individuals (Co-Ownership) or Corporations Each holds
individual Title amp interests can be unequal Conveyed through
Devise (Last Will amp Testament)
Joint Tenancy Right of Survivorship One Title amp equal interests Must have 4
unities Possession Interest Time amp Title (ldquoPITTrdquo)
Tenancy by the Entirety
(NOT in GA)
Joint Tenancy for Married Couples
Right of Survivorship
Commonalities
Tenants in Common amp Joint Tenancy share Possession
Joint Tenancy amp Tenancy by the Entirety share Right of Survivorship
Community Property
(NOT in GA)
Property acquired by either before marriage or inheritedgifted
during is NOT considered ONLY for spouses Divorce they
become TIC Viewed as equal partners
Condominium Unit + Air Lot (block of air from inside wall to inside wall)= Fee
Simple Common elements=Tenants in Common
Applies to offices amp parking lots
Cooperative Personal Property Buys Corporate shares amp has a proprietary
lease
Timeshare
ldquoResort areasrdquo
Personal Property Interval Ownership in a Membership Plan
(typically 1 week a year) Tenants in Common
Corporation Single entity
General Partnership Full liability amp managing authority
Limited Partnership No management authority Only liable for investment
Limited Liability Co
(ldquoLLCrdquo)
Owner=Member Some protections of a Corporation
Syndication Usually a RE partnership Subject to security laws
Joint Tenancy (ldquoPITTrdquo) All four unities must exist
bull Possession (undivided)
bull Interests (equal)
bull Time (Title acquired at the same time)
bull Title (One regardless of the number of parties)
Del Priore Realty Academy Copyright January 2021 Page 4 of 12
Agency The Broker is always the Agent of the Principal
Fiduciary Relationship= implies loyalty trust amp confidence
Compensation= does not create an Agency relationship To be eligible for consideration of a
fee you must i) be an actively licensed Agent amp ii) Prove to be the Procuring Cause
Appropriate Licensure is Required for (ldquoBARSALErdquo)
Buy
Appraise
Rent
Sell
Auction
Lease
Exchange
Agentrsquos Duty to a Principal (ldquoPOLANDrdquo)
Performance Skills amp standards to the best of your abilities
Obedience Follow a Principalrsquos orders within the limits of the law
Loyalty Principalrsquos interests must be placed above everyonersquos
including your own
Accountability
(not Accounting)
You must account for all transactional documentation amp funds
Notice amp Disclosure Full disclosure of any matter that may affect the business at
hand Verification from public record is part of this duty
Due Care Exercise care competence amp skill
Principalrsquos Duties to the Agent (ldquoCRIPrdquo)
Compensation Upon performance as established in the Agency agreement
Reimbursement For things outside of the Agency agreement scope (repairs
lawn maintenance)
Indemnification For any loss that is not the Agentrsquos fault
Performance Cooperation amp assistance
Termination of Agency (ldquoREADIESrdquo)
Revocation By Broker Principal may pursue breach if there isnrsquot a
justifiable reason
Expiration Termination date in the Agency agreement
Agreement Mutual Rescission
Death Of Principal or Broker A Salespersonrsquos death will not impact
the Agreement
Incapacity If either party is deemed legally incompetent or declares
bankruptcy
Extinction Destruction of property
Subject of Law Change in law that could make the Agentrsquos tasks illegal
(listing is acquired through Eminent Domain)
Del Priore Realty Academy Copyright January 2021 Page 5 of 12
Illegal Practices of Federal Fair Housing
Blockbusting (Agents)
Encouraging owners to sell due to a protected classrsquo influx into
the area They must be shown the widest possible variety if
preferences arenrsquot expressed
Steering (Agents)
Limiting a ClientrsquosCustomerrsquos choices based on protected
categories
Redlining (Lenders) Denying a qualified borrower purely on the basis of the
particular neighborhood
Agentrsquos Duty to a Customer (ldquoHADrdquo) (Agency does not exist)
Honesty Provide accurate factual information free of fraud or
misrepresentation
Accountability (not accounting)
Account for and care for monies amp valuables
Due Care Care amp competency
Since the Broker isnrsquot an Agent of the Customer this lacks Performance Obedience Loyalty
amp the higher standard of care
Contracts
Expressed In writing
Implied Verbal agreement
Unilateral One party makes a promise
Bilateral Two parties A promise for a promise
Executory Contract is signed but there are unfulfilled promises
Executed Promises have been fulfilled amp Title has transferred
Valid Legal and binding
Void Illegal amp not binding The contract will not be legally
recognized so it never existed
Voidable
One+ essential elements are missing The injured party is the
only one that can rescind or honor the terms
Fraud Mutual Mistake Innocent Misrepresentation Duress or
Undue Influence It lacks Genuine Assent
Enforceable Legal and binding written contract
Unenforceable Cannot be supported in a court of law Possibly a verbal
agreement
Del Priore Realty Academy Copyright January 2021 Page 6 of 12
Essential Elements of a Contract (ldquoCOMICrdquo) Competent Parties All parties must be legally competent amp have the authority to
act Grantor must be of legal age
Objective
(Lawful Purpose)
Not intended for illegal purposes Property can be legally
conveyed
Mutual Assent Through the Offer and Acceptance process Both parties must
agree to every single contract detail
In Writing Except for Leases of one year or less all contracts must be in
writing (Statute of Fraud)
Consideration Valuable Consideration or Good Consideration for a Gift Deed
(ldquoLove amp Affection)
Remedies for Breach of Contract Contractual Liquidated damages Mediation or Arbitration
Law Suit for damages
Suit for Specific Performance
Recession (If the Plaintiff was pressured forced
misrepresented or under duress)
Listing Agreements Exclusive Agency One Agency contract for the listing The Broker responsible
for securing a ready willing amp able buyer (ldquoProcuring
Causerdquo) is eligible for the fee However if the Seller is the
Procuring Cause (ldquoFSBOrdquo) payment is not due to anyone
Exclusive Right to Sell
(Most Common)
One Agency contract for the listing Regardless of whorsquos the
Procuring Cause including the Seller the listing Broker is due
a fee
Open Listing non-Exclusive Agency contracts with multiple Brokers The
first to be the Procuring Cause is eligible for the fee However
if the Seller is the Procuring Cause (ldquoFSBOrdquo) payment is not
due to anyone
Net Listing
(Illegal in GA)
Seller dictates a minimum net price (Sales Price-closing costs-
commissions) necessary to consider an offer Any monies
over that net price is considered the Brokerrsquos fee (Commission
could equate to 3 or 60)
Marketing Listings
Multiple Listing Service
(ldquoMLSrdquo)
This is one industry source widely used to share listing
information with other Licensees
Del Priore Realty Academy Copyright January 2021 Page 7 of 12
Termination of a Leasehold Estate (ldquoDECAFrdquo) Death of Lessee
Eviction of Lessee
Condemnation of Real Property
Agreement (Mutual Rescission)
Foreclosure
Lending Loan Instruments
Promissory Note Evidence of debt used in all Security Instruments
Lien-theory (non-Judicial) States
Mortgage 2 parties Mortgagor (Borrower) amp Mortgagee (Lender)
Title-theory (Judicial) States
Security Deed (used in
GA)
2 parties Grantor (Borrower) amp Grantee (Lender)
Deed of Trust 3 parties Trustor (Borrower) Beneficiary (Lender) amp Trustee
(neutral 3rd party holding Bare Title)
Security Instrument Clauses
Prepayment Penalty Fee based on a of remaining Principal for paying-off the loan
before maturity
Acceleration (ldquoDue on
Defaultrdquo)
For any Contract breach
Alienation (ldquoDue on
Salerdquo)
Title cannot be conveyed or assumed unless the Lender pre-
approves
Defeasance When the loan is paid in full borrower is released from liability
amp gains Legal Title
Also protects Buyer if Lender accepts less than the Principal
balance at Foreclosure
Foreclosure
Judicial (Lien-theory) Strict Foreclosure Sale Must go through the court system
Non-Judicial (Title-
theory) (Georgia)
Power of Sale clause in Security Instrument allows Lender to re-
gain the property without the court process However to do so
they must advertise the property beforehand In GA itrsquos currently
4 weeks
Deed in Lieu of
Foreclosure (ldquoFriendly
Foreclosurerdquo)
Defaulted borrower may willingly surrender Title before
Foreclosure proceedings to minimize credit damage The caveat
being the Lender must be willing to do so
Secondary Mortgage Market Federal National Mortgage Association (ldquoFNMArdquo) Fannie Mae
Federal Home Loan Mortgage Corporation (ldquoFHLMCrdquo) Freddie Mac
Government National Mortgage Association (ldquoGNMArdquo)
Ginnie Mae
GNMA is the only Government agency Purchases low-income loans
Del Priore Realty Academy Copyright January 2021 Page 8 of 12
Protected Classes Law Existing Category Added Category
Civil Rights Act of 1866 NA Race
Federal Civil Rights Act of
1968
(ldquoFederal Fair Housing
Actrdquo)
Race Color Religion amp National
Origin of Birth
Prohibits discrimination in the Real Estate industry of the protected classes
Fair Housing Act of 1974 Race Color Religion amp
National Origin of Birth
Sex
Fair Housing Act of 1988 Race Color Religion
National Origin of Birth amp
Sex
Familial Status amp
Handicapped (one with a record of mental or
physical impairment to include
alcoholism cancer or AIDS)
Americans with Disabilities
Act (ldquoADArdquo)
Prohibits discrimination based on disability amp allows for
reasonable accommodation or modification(s)
Except for Race a private homeowner who occupies a 1-4-unit property may discriminate if
advertising does not contain discriminatory content (ldquoMs Murphy Lawrdquo)
Fair Housing
(ldquoRealtors Can Really Sell Houses Fast Nowrdquo)
Race
Color
Religion
Sex
Handicap
Familial Status
National Origin
Valuation amp Appraisal Definitions
Appraisal= Unbiased opinion of Market Value by an Appraiser Sets the upper limits of
Value
Appraisal Fee= Based on the amount of work amp time
Market Value= the most probable selling price in an Armrsquos-length Transaction
Market Price= Fact The actual Sales Price
Parties are objective and unrelated with unrelated motivations The 4 requirements of an
Armrsquos-length Transaction are
bull Valuable Consideration (cash) is exchanged
bull Property was on the open market for a reasonable time for the market conditions
bull Parties were under no undue pressure
Del Priore Realty Academy Copyright January 2021 Page 9 of 12
bull Parties were well-informed amp acting in their own best interests
Appraisal Process Steps
1 Define the problem 4 Analyze data through i) Market Data
Approach ii) Cost Approach or iii) Income
Approach
2 Make preliminary study 5 Reconciliation amp Final Estimate
3 Gather Data 6 Prepare Appraisal Report
Four (4) Necessary Components of Value (ldquoDUSTrdquo)
Demand Actual need or desire + the ability to pay for it Desired by most
Utility More use more Value
Scarcity Short supply relative to demand
Transferability Ability to convey Title with relative ease
Economic Principals of Value (leads to the development of a credible appraisal)
Supply amp Demand Limited inventoryhigh demand= higher Market Price
Highest amp Best Use Legal use that will likely produce greatest net return
1 Legally allowable 2 Physically possible 3 Financially feasible
amp 4 Maximum utility
Substitution Applies to all three (3) approaches Sets the upper limit on Value
Conformity Cookie cutter neighborhoods Property consistency helps Value
Change Economic amp social forces can impact Value more than the
property itself
Development phase growing amp developing
Equilibrium phase growth ends amp value levels off
Decline phase deterioration sets in amp values fall
Progression amp
Regression
Regression Most expensive property loses value because of
lesser homes around it
Progression Least expensive gains value because of nicer homes
around it
Competition If the market is flooded with listings value drops
Increasing amp Decreasing
(Diminishing) Returns
Increasing Returns a dollar spent will add dollars to value
Decreasing Returns a dollar spent will not even return that
dollar in value
Contribution How an improvement adds or detracts from the whole property
Anticipation (Basis of
Income Approach)
Positive or negative impact due to expectation of a future event
(Current value + expected income amp benefits)
Influencing Factors on Value
Situs (location) Or area preference Most important factor
Size amp Shape Of a lot
Depth Tables The front of a lot has more value than the back Ties to Size amp Shape
Soil Characteristics Considered for basements septic systems erosion
Key Lots Irregular lot that may become valuable in Assemblage
Del Priore Realty Academy Copyright January 2021 Page 10 of 12
Assemblage Process of combining 2+ individual adjoining lots Plottage= resulting
increase in value
Approaches to Value
1 Market Data or Sales Comparison Approach
Value is based on the Principal of Substitution for residential properties amp vacant land
Fair Market Value= SOLD Comparable Properties by Adjusting for Differences
Adjustments
Comps should be
sold within the last 3-
6 months
Preferably within 1
mile of the Subject
NEVER adjust the
subject property
ldquoCIArdquo If Comp is
inferior ADD to the
Comp for that itemrsquos
value
ldquoCBSrdquo If Subject is
better SUBTRACT
from the Comp for
that itemrsquos value
Reconciliation Comp with the fewest adjustments to Subject gets the highest emphasis
(highest percentage) Less reliable in slow or unstable markets
Comparative Market Analysis (ldquoCMArdquo) is used by Licensees to evaluate Fair Market
Value for a listing price or offer 3-5 comparable properties is an acceptable ldquoNrdquo Unlike the
Market Data Approach that uses sold properties a CMA uses sold amp actively listed properties
2 Cost Approach (only method where land is evaluated separately)
Value is based on the Principal of Substitution Used for special purpose amp new construction
It is also used to evaluate Hazard Insurance
Fair Market Value= (Replacement Cost ndash ldquoStraight-Linerdquo or ldquoAge-Liferdquo Depreciation +
Land Value)
Land NEVER depreciates
Reproduction Cost= Cost to produce an
exact replica using a Comparative Unit
Method Olderhistorical buildings
Replacement Cost= Cost using similar
materials to produce a satisfactory substitute
using a Comparative Unit Method Special
purpose amp new buildings
Square Foot Method Single-family homes Measures exterior
dimensions of
Improvement
1 (L W)= Sq Ft
2 (Sq Ft Price per
Sq Ft)= Cost
Cubic Foot Method Warehouses Measures volume of
Improvement
1 (L W H)=
Cubic Feet
2 (Cu Ft Price per
Cu Ft)= Cost
Unit in Place
Method
Used in Hazard Ins Cost of each assembled amp installed
component
Quantity Survey
Method
Best for new
construction
Detailed cost of every
single thing (nails
bricks etc)
Detailed breakdown
Del Priore Realty Academy Copyright January 2021 Page 11 of 12
Accrued Depreciation
Depreciation= re-capturing the cost of a purchase over a certain time period as allowed by
IRS regulations
Curable= Cure costs less than resulting
value
Incurable= Cure costs exceed the value of
the correction Doesnrsquot make sense
Physical Deterioration= normal wear amp tear exposure to weather lack of proper
maintenance
Functional Obsolescence= obsolete amp doesnrsquot meet current expectations EX outdated floor
plan old systems unorthodox architecture (For test this applies to appliances other than
black white or SS)
Economic Obsolescence= Incurable since external to property amp beyond control EX high
taxes crime unemployment flight patterns factory railroad
Actual Age= Improvementrsquos historical age Effective Age= Condition updates amp utility
that may make it less than Actual Age
Land Value= May be based on a CMA or i) Sq feet ii) front footage or iii) acreage
1 Acreage= (Sq Ft 43560) 2 (Acreage Price per Acre)= Land Value
3 Income or Capitalization Approach
The Appraiser looks at 3 things relative to the propertyrsquos income i) Quantity ii) Quality
(how safe is it) and iii) Durability (how long can the income be sustained)
Cap Rate (ldquoCRrdquo) = Rate of Return on
Investment (ldquoROIrdquo) Direct correlation to CR
amp investment risk Lower the CR the higher
the value
Commercial
Uses net vs gross income amp converts income
into Value
CR Steps
1 (Potential Gross Income ndash Vacancy ndash
Collections) = Effective Gross Income
(ldquoEGIrdquo)
2 (EGI ndash Operating Expenses) = Net
Operating Income (ldquoNOIrdquo)
3 (NOI Price) = CR
4 (NOI CR) = Fair Market Value
1 (100 CR)= Full Capitalization ( of years
it will pay for itself)
4 Capitalization Approach (ldquoGRMrdquo amp ldquoGIMrdquo)
Like the Income Approach the Appraiser looks at 3 things relative to the propertyrsquos income i)
Quantity ii) Quality (how safe is it) and iii) Durability (how long can the income be
sustained)
Gross Rent Multiplier (ldquoGRMrdquo) Residential
rentals 1-4 units
Ratio between price amp annual rental income
before expenses
The lower the GRM the more attractive
investment
GRM Steps
1 (Comp Sold $ monthly rent) = GRM
2 (Subjectrsquos monthly rent GRM) =Fair
Market Value
Gross Income Multiplier (ldquoGIMrdquo) Small
commercial + residential 5+ units
GIM includes annual rent + income from
other sources
GIM Steps
1 (Comp Sold $ Gross annual income) =
GIM
2 (Subject gross annual income GIM) =Fair
Market Value
Del Priore Realty Academy Copyright January 2021 Page 12 of 12
Appraisal Reports
Letter of Opinion Informal report thatrsquos not recognized or accepted
Short Form Summary of such is the most common format Used by lending
institutions amp Government agencies (Fannie Mae amp Freddie
Mac)
Narrative Report Most encompassing Usually required for appraising
commercial property or legal cases (Condemnation under
Eminent Domain settling Estates in probate etc)
Letrsquos Look at Math Key Formulas
1 Acre= 43560 sq ft Township= 36 Sq Miles
Government Rectangular Survey
Principal Meridian Lines run N-S
Base Lines run E-W
Section= 1 sq mile amp 640 acres
Taxes amp Interest
Transfer Tax = (Sales Price 500) $150 Intangible Tax= (Loan Amount 100) 010
Upfront Mortgage Insurance Premium (ldquoUFMIPrdquo)= 175 (0175)
Closing Calculations
Jan=31 April= 30 June= 30 Sept= 30
Feb= 28 May= 31 July= 31 Oct= 31
March= 31 June = 30 August= 31 Nov= 30 amp Dec= 31
Seller (ldquoSACrdquo) = Seller Accrual Closing
Date (goes to Seller)
Buyer (ldquoBADrdquo) = Buyer Add Days
Interest= Divide annual interest by 360 days
then multiply by the actual calendar days
EX (annual interest 360) actual calendar
days
Taxes= Use 365 days
EXrdquo (annual taxes 365) = Daily Tax
Del Priore Realty Academy Copyright January 2021
TimeLine Triggers
GA License Law and Georgia Real Estate Commission (ldquoGARECrdquo) Rules amp Regulations
The last revision to this document is notated in the footnotes below
State legislature passes License law whereas under the authority of such GAREC passes Rules amp
Regulations (ldquoRampRrdquo) relating to the professional conduct of Georgia Licensees
License law is designed to protect the public from dishonest or incompetent Agents
Since all the aforementioned are fluid refer to wwwgrecstategaus for all current license law amp
GAREC RampRs
Unless specifically noted below other notification timelines amp time triggers are thirty (30) days This also
includes standard GAREC meetings (whereas the Chairman or Vice Chairman must attend)
Immediately
bull Copies of transactional documents must be given to all signatory parties
bull An executory Purchase amp Sale Agreement must be given to all signatory parties plus all involved
Brokerage firms
bull A Licensee that has a Trust Account(s) and is filing for bankruptcy must notify the GAREC
PromptlyAs Soon as Possible
bull All funds a Licensee receives from a Client or Customer must be placed with hisher Qualifying
Broker or designated Associate Broker
bull A Listing Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoSellerrdquo)
bull A Selling Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoBuyerrdquo)
One (1) Business Day
bull If a Broker comes into possession of anotherrsquos funds and does not have an existing Trust
Account they must open one
Ten (10) Days
bull Removing the Brokerrsquos ldquoFor Salerdquo sign from a former Clientrsquos yard after a successful closing or
listing expiration
bull Must notify GAREC (regardless of whether the Licensee is found innocent or guilty) (i) after an
administrative civil or criminal court action or (ii) a final court disposition All court
documentation must be included in the notification This is the only exception to the thirty (30)
day notification rules
bull A Fidelity Bond (required for a Broker hired to provide Community Association Management
services amp handles $60000+ at any one time) must have a minimum of ten (10) days cancellation
notice from the insurance company for non-payment
Sixty (60) Days
bull Candidates must submit a certified criminal history report (a GCIC Background Check can be
obtained for a fee from your local Sheriffrsquos Department) with a new license application At the
time of submission the report cannot be sixty-one (61) days old
bull Applicants must appeal a GREC notice of rejection within
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021 Page 3 of 12
Forms of Ownership Severalty One individual or Corporation
Tenants in Common 2+ individuals (Co-Ownership) or Corporations Each holds
individual Title amp interests can be unequal Conveyed through
Devise (Last Will amp Testament)
Joint Tenancy Right of Survivorship One Title amp equal interests Must have 4
unities Possession Interest Time amp Title (ldquoPITTrdquo)
Tenancy by the Entirety
(NOT in GA)
Joint Tenancy for Married Couples
Right of Survivorship
Commonalities
Tenants in Common amp Joint Tenancy share Possession
Joint Tenancy amp Tenancy by the Entirety share Right of Survivorship
Community Property
(NOT in GA)
Property acquired by either before marriage or inheritedgifted
during is NOT considered ONLY for spouses Divorce they
become TIC Viewed as equal partners
Condominium Unit + Air Lot (block of air from inside wall to inside wall)= Fee
Simple Common elements=Tenants in Common
Applies to offices amp parking lots
Cooperative Personal Property Buys Corporate shares amp has a proprietary
lease
Timeshare
ldquoResort areasrdquo
Personal Property Interval Ownership in a Membership Plan
(typically 1 week a year) Tenants in Common
Corporation Single entity
General Partnership Full liability amp managing authority
Limited Partnership No management authority Only liable for investment
Limited Liability Co
(ldquoLLCrdquo)
Owner=Member Some protections of a Corporation
Syndication Usually a RE partnership Subject to security laws
Joint Tenancy (ldquoPITTrdquo) All four unities must exist
bull Possession (undivided)
bull Interests (equal)
bull Time (Title acquired at the same time)
bull Title (One regardless of the number of parties)
Del Priore Realty Academy Copyright January 2021 Page 4 of 12
Agency The Broker is always the Agent of the Principal
Fiduciary Relationship= implies loyalty trust amp confidence
Compensation= does not create an Agency relationship To be eligible for consideration of a
fee you must i) be an actively licensed Agent amp ii) Prove to be the Procuring Cause
Appropriate Licensure is Required for (ldquoBARSALErdquo)
Buy
Appraise
Rent
Sell
Auction
Lease
Exchange
Agentrsquos Duty to a Principal (ldquoPOLANDrdquo)
Performance Skills amp standards to the best of your abilities
Obedience Follow a Principalrsquos orders within the limits of the law
Loyalty Principalrsquos interests must be placed above everyonersquos
including your own
Accountability
(not Accounting)
You must account for all transactional documentation amp funds
Notice amp Disclosure Full disclosure of any matter that may affect the business at
hand Verification from public record is part of this duty
Due Care Exercise care competence amp skill
Principalrsquos Duties to the Agent (ldquoCRIPrdquo)
Compensation Upon performance as established in the Agency agreement
Reimbursement For things outside of the Agency agreement scope (repairs
lawn maintenance)
Indemnification For any loss that is not the Agentrsquos fault
Performance Cooperation amp assistance
Termination of Agency (ldquoREADIESrdquo)
Revocation By Broker Principal may pursue breach if there isnrsquot a
justifiable reason
Expiration Termination date in the Agency agreement
Agreement Mutual Rescission
Death Of Principal or Broker A Salespersonrsquos death will not impact
the Agreement
Incapacity If either party is deemed legally incompetent or declares
bankruptcy
Extinction Destruction of property
Subject of Law Change in law that could make the Agentrsquos tasks illegal
(listing is acquired through Eminent Domain)
Del Priore Realty Academy Copyright January 2021 Page 5 of 12
Illegal Practices of Federal Fair Housing
Blockbusting (Agents)
Encouraging owners to sell due to a protected classrsquo influx into
the area They must be shown the widest possible variety if
preferences arenrsquot expressed
Steering (Agents)
Limiting a ClientrsquosCustomerrsquos choices based on protected
categories
Redlining (Lenders) Denying a qualified borrower purely on the basis of the
particular neighborhood
Agentrsquos Duty to a Customer (ldquoHADrdquo) (Agency does not exist)
Honesty Provide accurate factual information free of fraud or
misrepresentation
Accountability (not accounting)
Account for and care for monies amp valuables
Due Care Care amp competency
Since the Broker isnrsquot an Agent of the Customer this lacks Performance Obedience Loyalty
amp the higher standard of care
Contracts
Expressed In writing
Implied Verbal agreement
Unilateral One party makes a promise
Bilateral Two parties A promise for a promise
Executory Contract is signed but there are unfulfilled promises
Executed Promises have been fulfilled amp Title has transferred
Valid Legal and binding
Void Illegal amp not binding The contract will not be legally
recognized so it never existed
Voidable
One+ essential elements are missing The injured party is the
only one that can rescind or honor the terms
Fraud Mutual Mistake Innocent Misrepresentation Duress or
Undue Influence It lacks Genuine Assent
Enforceable Legal and binding written contract
Unenforceable Cannot be supported in a court of law Possibly a verbal
agreement
Del Priore Realty Academy Copyright January 2021 Page 6 of 12
Essential Elements of a Contract (ldquoCOMICrdquo) Competent Parties All parties must be legally competent amp have the authority to
act Grantor must be of legal age
Objective
(Lawful Purpose)
Not intended for illegal purposes Property can be legally
conveyed
Mutual Assent Through the Offer and Acceptance process Both parties must
agree to every single contract detail
In Writing Except for Leases of one year or less all contracts must be in
writing (Statute of Fraud)
Consideration Valuable Consideration or Good Consideration for a Gift Deed
(ldquoLove amp Affection)
Remedies for Breach of Contract Contractual Liquidated damages Mediation or Arbitration
Law Suit for damages
Suit for Specific Performance
Recession (If the Plaintiff was pressured forced
misrepresented or under duress)
Listing Agreements Exclusive Agency One Agency contract for the listing The Broker responsible
for securing a ready willing amp able buyer (ldquoProcuring
Causerdquo) is eligible for the fee However if the Seller is the
Procuring Cause (ldquoFSBOrdquo) payment is not due to anyone
Exclusive Right to Sell
(Most Common)
One Agency contract for the listing Regardless of whorsquos the
Procuring Cause including the Seller the listing Broker is due
a fee
Open Listing non-Exclusive Agency contracts with multiple Brokers The
first to be the Procuring Cause is eligible for the fee However
if the Seller is the Procuring Cause (ldquoFSBOrdquo) payment is not
due to anyone
Net Listing
(Illegal in GA)
Seller dictates a minimum net price (Sales Price-closing costs-
commissions) necessary to consider an offer Any monies
over that net price is considered the Brokerrsquos fee (Commission
could equate to 3 or 60)
Marketing Listings
Multiple Listing Service
(ldquoMLSrdquo)
This is one industry source widely used to share listing
information with other Licensees
Del Priore Realty Academy Copyright January 2021 Page 7 of 12
Termination of a Leasehold Estate (ldquoDECAFrdquo) Death of Lessee
Eviction of Lessee
Condemnation of Real Property
Agreement (Mutual Rescission)
Foreclosure
Lending Loan Instruments
Promissory Note Evidence of debt used in all Security Instruments
Lien-theory (non-Judicial) States
Mortgage 2 parties Mortgagor (Borrower) amp Mortgagee (Lender)
Title-theory (Judicial) States
Security Deed (used in
GA)
2 parties Grantor (Borrower) amp Grantee (Lender)
Deed of Trust 3 parties Trustor (Borrower) Beneficiary (Lender) amp Trustee
(neutral 3rd party holding Bare Title)
Security Instrument Clauses
Prepayment Penalty Fee based on a of remaining Principal for paying-off the loan
before maturity
Acceleration (ldquoDue on
Defaultrdquo)
For any Contract breach
Alienation (ldquoDue on
Salerdquo)
Title cannot be conveyed or assumed unless the Lender pre-
approves
Defeasance When the loan is paid in full borrower is released from liability
amp gains Legal Title
Also protects Buyer if Lender accepts less than the Principal
balance at Foreclosure
Foreclosure
Judicial (Lien-theory) Strict Foreclosure Sale Must go through the court system
Non-Judicial (Title-
theory) (Georgia)
Power of Sale clause in Security Instrument allows Lender to re-
gain the property without the court process However to do so
they must advertise the property beforehand In GA itrsquos currently
4 weeks
Deed in Lieu of
Foreclosure (ldquoFriendly
Foreclosurerdquo)
Defaulted borrower may willingly surrender Title before
Foreclosure proceedings to minimize credit damage The caveat
being the Lender must be willing to do so
Secondary Mortgage Market Federal National Mortgage Association (ldquoFNMArdquo) Fannie Mae
Federal Home Loan Mortgage Corporation (ldquoFHLMCrdquo) Freddie Mac
Government National Mortgage Association (ldquoGNMArdquo)
Ginnie Mae
GNMA is the only Government agency Purchases low-income loans
Del Priore Realty Academy Copyright January 2021 Page 8 of 12
Protected Classes Law Existing Category Added Category
Civil Rights Act of 1866 NA Race
Federal Civil Rights Act of
1968
(ldquoFederal Fair Housing
Actrdquo)
Race Color Religion amp National
Origin of Birth
Prohibits discrimination in the Real Estate industry of the protected classes
Fair Housing Act of 1974 Race Color Religion amp
National Origin of Birth
Sex
Fair Housing Act of 1988 Race Color Religion
National Origin of Birth amp
Sex
Familial Status amp
Handicapped (one with a record of mental or
physical impairment to include
alcoholism cancer or AIDS)
Americans with Disabilities
Act (ldquoADArdquo)
Prohibits discrimination based on disability amp allows for
reasonable accommodation or modification(s)
Except for Race a private homeowner who occupies a 1-4-unit property may discriminate if
advertising does not contain discriminatory content (ldquoMs Murphy Lawrdquo)
Fair Housing
(ldquoRealtors Can Really Sell Houses Fast Nowrdquo)
Race
Color
Religion
Sex
Handicap
Familial Status
National Origin
Valuation amp Appraisal Definitions
Appraisal= Unbiased opinion of Market Value by an Appraiser Sets the upper limits of
Value
Appraisal Fee= Based on the amount of work amp time
Market Value= the most probable selling price in an Armrsquos-length Transaction
Market Price= Fact The actual Sales Price
Parties are objective and unrelated with unrelated motivations The 4 requirements of an
Armrsquos-length Transaction are
bull Valuable Consideration (cash) is exchanged
bull Property was on the open market for a reasonable time for the market conditions
bull Parties were under no undue pressure
Del Priore Realty Academy Copyright January 2021 Page 9 of 12
bull Parties were well-informed amp acting in their own best interests
Appraisal Process Steps
1 Define the problem 4 Analyze data through i) Market Data
Approach ii) Cost Approach or iii) Income
Approach
2 Make preliminary study 5 Reconciliation amp Final Estimate
3 Gather Data 6 Prepare Appraisal Report
Four (4) Necessary Components of Value (ldquoDUSTrdquo)
Demand Actual need or desire + the ability to pay for it Desired by most
Utility More use more Value
Scarcity Short supply relative to demand
Transferability Ability to convey Title with relative ease
Economic Principals of Value (leads to the development of a credible appraisal)
Supply amp Demand Limited inventoryhigh demand= higher Market Price
Highest amp Best Use Legal use that will likely produce greatest net return
1 Legally allowable 2 Physically possible 3 Financially feasible
amp 4 Maximum utility
Substitution Applies to all three (3) approaches Sets the upper limit on Value
Conformity Cookie cutter neighborhoods Property consistency helps Value
Change Economic amp social forces can impact Value more than the
property itself
Development phase growing amp developing
Equilibrium phase growth ends amp value levels off
Decline phase deterioration sets in amp values fall
Progression amp
Regression
Regression Most expensive property loses value because of
lesser homes around it
Progression Least expensive gains value because of nicer homes
around it
Competition If the market is flooded with listings value drops
Increasing amp Decreasing
(Diminishing) Returns
Increasing Returns a dollar spent will add dollars to value
Decreasing Returns a dollar spent will not even return that
dollar in value
Contribution How an improvement adds or detracts from the whole property
Anticipation (Basis of
Income Approach)
Positive or negative impact due to expectation of a future event
(Current value + expected income amp benefits)
Influencing Factors on Value
Situs (location) Or area preference Most important factor
Size amp Shape Of a lot
Depth Tables The front of a lot has more value than the back Ties to Size amp Shape
Soil Characteristics Considered for basements septic systems erosion
Key Lots Irregular lot that may become valuable in Assemblage
Del Priore Realty Academy Copyright January 2021 Page 10 of 12
Assemblage Process of combining 2+ individual adjoining lots Plottage= resulting
increase in value
Approaches to Value
1 Market Data or Sales Comparison Approach
Value is based on the Principal of Substitution for residential properties amp vacant land
Fair Market Value= SOLD Comparable Properties by Adjusting for Differences
Adjustments
Comps should be
sold within the last 3-
6 months
Preferably within 1
mile of the Subject
NEVER adjust the
subject property
ldquoCIArdquo If Comp is
inferior ADD to the
Comp for that itemrsquos
value
ldquoCBSrdquo If Subject is
better SUBTRACT
from the Comp for
that itemrsquos value
Reconciliation Comp with the fewest adjustments to Subject gets the highest emphasis
(highest percentage) Less reliable in slow or unstable markets
Comparative Market Analysis (ldquoCMArdquo) is used by Licensees to evaluate Fair Market
Value for a listing price or offer 3-5 comparable properties is an acceptable ldquoNrdquo Unlike the
Market Data Approach that uses sold properties a CMA uses sold amp actively listed properties
2 Cost Approach (only method where land is evaluated separately)
Value is based on the Principal of Substitution Used for special purpose amp new construction
It is also used to evaluate Hazard Insurance
Fair Market Value= (Replacement Cost ndash ldquoStraight-Linerdquo or ldquoAge-Liferdquo Depreciation +
Land Value)
Land NEVER depreciates
Reproduction Cost= Cost to produce an
exact replica using a Comparative Unit
Method Olderhistorical buildings
Replacement Cost= Cost using similar
materials to produce a satisfactory substitute
using a Comparative Unit Method Special
purpose amp new buildings
Square Foot Method Single-family homes Measures exterior
dimensions of
Improvement
1 (L W)= Sq Ft
2 (Sq Ft Price per
Sq Ft)= Cost
Cubic Foot Method Warehouses Measures volume of
Improvement
1 (L W H)=
Cubic Feet
2 (Cu Ft Price per
Cu Ft)= Cost
Unit in Place
Method
Used in Hazard Ins Cost of each assembled amp installed
component
Quantity Survey
Method
Best for new
construction
Detailed cost of every
single thing (nails
bricks etc)
Detailed breakdown
Del Priore Realty Academy Copyright January 2021 Page 11 of 12
Accrued Depreciation
Depreciation= re-capturing the cost of a purchase over a certain time period as allowed by
IRS regulations
Curable= Cure costs less than resulting
value
Incurable= Cure costs exceed the value of
the correction Doesnrsquot make sense
Physical Deterioration= normal wear amp tear exposure to weather lack of proper
maintenance
Functional Obsolescence= obsolete amp doesnrsquot meet current expectations EX outdated floor
plan old systems unorthodox architecture (For test this applies to appliances other than
black white or SS)
Economic Obsolescence= Incurable since external to property amp beyond control EX high
taxes crime unemployment flight patterns factory railroad
Actual Age= Improvementrsquos historical age Effective Age= Condition updates amp utility
that may make it less than Actual Age
Land Value= May be based on a CMA or i) Sq feet ii) front footage or iii) acreage
1 Acreage= (Sq Ft 43560) 2 (Acreage Price per Acre)= Land Value
3 Income or Capitalization Approach
The Appraiser looks at 3 things relative to the propertyrsquos income i) Quantity ii) Quality
(how safe is it) and iii) Durability (how long can the income be sustained)
Cap Rate (ldquoCRrdquo) = Rate of Return on
Investment (ldquoROIrdquo) Direct correlation to CR
amp investment risk Lower the CR the higher
the value
Commercial
Uses net vs gross income amp converts income
into Value
CR Steps
1 (Potential Gross Income ndash Vacancy ndash
Collections) = Effective Gross Income
(ldquoEGIrdquo)
2 (EGI ndash Operating Expenses) = Net
Operating Income (ldquoNOIrdquo)
3 (NOI Price) = CR
4 (NOI CR) = Fair Market Value
1 (100 CR)= Full Capitalization ( of years
it will pay for itself)
4 Capitalization Approach (ldquoGRMrdquo amp ldquoGIMrdquo)
Like the Income Approach the Appraiser looks at 3 things relative to the propertyrsquos income i)
Quantity ii) Quality (how safe is it) and iii) Durability (how long can the income be
sustained)
Gross Rent Multiplier (ldquoGRMrdquo) Residential
rentals 1-4 units
Ratio between price amp annual rental income
before expenses
The lower the GRM the more attractive
investment
GRM Steps
1 (Comp Sold $ monthly rent) = GRM
2 (Subjectrsquos monthly rent GRM) =Fair
Market Value
Gross Income Multiplier (ldquoGIMrdquo) Small
commercial + residential 5+ units
GIM includes annual rent + income from
other sources
GIM Steps
1 (Comp Sold $ Gross annual income) =
GIM
2 (Subject gross annual income GIM) =Fair
Market Value
Del Priore Realty Academy Copyright January 2021 Page 12 of 12
Appraisal Reports
Letter of Opinion Informal report thatrsquos not recognized or accepted
Short Form Summary of such is the most common format Used by lending
institutions amp Government agencies (Fannie Mae amp Freddie
Mac)
Narrative Report Most encompassing Usually required for appraising
commercial property or legal cases (Condemnation under
Eminent Domain settling Estates in probate etc)
Letrsquos Look at Math Key Formulas
1 Acre= 43560 sq ft Township= 36 Sq Miles
Government Rectangular Survey
Principal Meridian Lines run N-S
Base Lines run E-W
Section= 1 sq mile amp 640 acres
Taxes amp Interest
Transfer Tax = (Sales Price 500) $150 Intangible Tax= (Loan Amount 100) 010
Upfront Mortgage Insurance Premium (ldquoUFMIPrdquo)= 175 (0175)
Closing Calculations
Jan=31 April= 30 June= 30 Sept= 30
Feb= 28 May= 31 July= 31 Oct= 31
March= 31 June = 30 August= 31 Nov= 30 amp Dec= 31
Seller (ldquoSACrdquo) = Seller Accrual Closing
Date (goes to Seller)
Buyer (ldquoBADrdquo) = Buyer Add Days
Interest= Divide annual interest by 360 days
then multiply by the actual calendar days
EX (annual interest 360) actual calendar
days
Taxes= Use 365 days
EXrdquo (annual taxes 365) = Daily Tax
Del Priore Realty Academy Copyright January 2021
TimeLine Triggers
GA License Law and Georgia Real Estate Commission (ldquoGARECrdquo) Rules amp Regulations
The last revision to this document is notated in the footnotes below
State legislature passes License law whereas under the authority of such GAREC passes Rules amp
Regulations (ldquoRampRrdquo) relating to the professional conduct of Georgia Licensees
License law is designed to protect the public from dishonest or incompetent Agents
Since all the aforementioned are fluid refer to wwwgrecstategaus for all current license law amp
GAREC RampRs
Unless specifically noted below other notification timelines amp time triggers are thirty (30) days This also
includes standard GAREC meetings (whereas the Chairman or Vice Chairman must attend)
Immediately
bull Copies of transactional documents must be given to all signatory parties
bull An executory Purchase amp Sale Agreement must be given to all signatory parties plus all involved
Brokerage firms
bull A Licensee that has a Trust Account(s) and is filing for bankruptcy must notify the GAREC
PromptlyAs Soon as Possible
bull All funds a Licensee receives from a Client or Customer must be placed with hisher Qualifying
Broker or designated Associate Broker
bull A Listing Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoSellerrdquo)
bull A Selling Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoBuyerrdquo)
One (1) Business Day
bull If a Broker comes into possession of anotherrsquos funds and does not have an existing Trust
Account they must open one
Ten (10) Days
bull Removing the Brokerrsquos ldquoFor Salerdquo sign from a former Clientrsquos yard after a successful closing or
listing expiration
bull Must notify GAREC (regardless of whether the Licensee is found innocent or guilty) (i) after an
administrative civil or criminal court action or (ii) a final court disposition All court
documentation must be included in the notification This is the only exception to the thirty (30)
day notification rules
bull A Fidelity Bond (required for a Broker hired to provide Community Association Management
services amp handles $60000+ at any one time) must have a minimum of ten (10) days cancellation
notice from the insurance company for non-payment
Sixty (60) Days
bull Candidates must submit a certified criminal history report (a GCIC Background Check can be
obtained for a fee from your local Sheriffrsquos Department) with a new license application At the
time of submission the report cannot be sixty-one (61) days old
bull Applicants must appeal a GREC notice of rejection within
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021 Page 4 of 12
Agency The Broker is always the Agent of the Principal
Fiduciary Relationship= implies loyalty trust amp confidence
Compensation= does not create an Agency relationship To be eligible for consideration of a
fee you must i) be an actively licensed Agent amp ii) Prove to be the Procuring Cause
Appropriate Licensure is Required for (ldquoBARSALErdquo)
Buy
Appraise
Rent
Sell
Auction
Lease
Exchange
Agentrsquos Duty to a Principal (ldquoPOLANDrdquo)
Performance Skills amp standards to the best of your abilities
Obedience Follow a Principalrsquos orders within the limits of the law
Loyalty Principalrsquos interests must be placed above everyonersquos
including your own
Accountability
(not Accounting)
You must account for all transactional documentation amp funds
Notice amp Disclosure Full disclosure of any matter that may affect the business at
hand Verification from public record is part of this duty
Due Care Exercise care competence amp skill
Principalrsquos Duties to the Agent (ldquoCRIPrdquo)
Compensation Upon performance as established in the Agency agreement
Reimbursement For things outside of the Agency agreement scope (repairs
lawn maintenance)
Indemnification For any loss that is not the Agentrsquos fault
Performance Cooperation amp assistance
Termination of Agency (ldquoREADIESrdquo)
Revocation By Broker Principal may pursue breach if there isnrsquot a
justifiable reason
Expiration Termination date in the Agency agreement
Agreement Mutual Rescission
Death Of Principal or Broker A Salespersonrsquos death will not impact
the Agreement
Incapacity If either party is deemed legally incompetent or declares
bankruptcy
Extinction Destruction of property
Subject of Law Change in law that could make the Agentrsquos tasks illegal
(listing is acquired through Eminent Domain)
Del Priore Realty Academy Copyright January 2021 Page 5 of 12
Illegal Practices of Federal Fair Housing
Blockbusting (Agents)
Encouraging owners to sell due to a protected classrsquo influx into
the area They must be shown the widest possible variety if
preferences arenrsquot expressed
Steering (Agents)
Limiting a ClientrsquosCustomerrsquos choices based on protected
categories
Redlining (Lenders) Denying a qualified borrower purely on the basis of the
particular neighborhood
Agentrsquos Duty to a Customer (ldquoHADrdquo) (Agency does not exist)
Honesty Provide accurate factual information free of fraud or
misrepresentation
Accountability (not accounting)
Account for and care for monies amp valuables
Due Care Care amp competency
Since the Broker isnrsquot an Agent of the Customer this lacks Performance Obedience Loyalty
amp the higher standard of care
Contracts
Expressed In writing
Implied Verbal agreement
Unilateral One party makes a promise
Bilateral Two parties A promise for a promise
Executory Contract is signed but there are unfulfilled promises
Executed Promises have been fulfilled amp Title has transferred
Valid Legal and binding
Void Illegal amp not binding The contract will not be legally
recognized so it never existed
Voidable
One+ essential elements are missing The injured party is the
only one that can rescind or honor the terms
Fraud Mutual Mistake Innocent Misrepresentation Duress or
Undue Influence It lacks Genuine Assent
Enforceable Legal and binding written contract
Unenforceable Cannot be supported in a court of law Possibly a verbal
agreement
Del Priore Realty Academy Copyright January 2021 Page 6 of 12
Essential Elements of a Contract (ldquoCOMICrdquo) Competent Parties All parties must be legally competent amp have the authority to
act Grantor must be of legal age
Objective
(Lawful Purpose)
Not intended for illegal purposes Property can be legally
conveyed
Mutual Assent Through the Offer and Acceptance process Both parties must
agree to every single contract detail
In Writing Except for Leases of one year or less all contracts must be in
writing (Statute of Fraud)
Consideration Valuable Consideration or Good Consideration for a Gift Deed
(ldquoLove amp Affection)
Remedies for Breach of Contract Contractual Liquidated damages Mediation or Arbitration
Law Suit for damages
Suit for Specific Performance
Recession (If the Plaintiff was pressured forced
misrepresented or under duress)
Listing Agreements Exclusive Agency One Agency contract for the listing The Broker responsible
for securing a ready willing amp able buyer (ldquoProcuring
Causerdquo) is eligible for the fee However if the Seller is the
Procuring Cause (ldquoFSBOrdquo) payment is not due to anyone
Exclusive Right to Sell
(Most Common)
One Agency contract for the listing Regardless of whorsquos the
Procuring Cause including the Seller the listing Broker is due
a fee
Open Listing non-Exclusive Agency contracts with multiple Brokers The
first to be the Procuring Cause is eligible for the fee However
if the Seller is the Procuring Cause (ldquoFSBOrdquo) payment is not
due to anyone
Net Listing
(Illegal in GA)
Seller dictates a minimum net price (Sales Price-closing costs-
commissions) necessary to consider an offer Any monies
over that net price is considered the Brokerrsquos fee (Commission
could equate to 3 or 60)
Marketing Listings
Multiple Listing Service
(ldquoMLSrdquo)
This is one industry source widely used to share listing
information with other Licensees
Del Priore Realty Academy Copyright January 2021 Page 7 of 12
Termination of a Leasehold Estate (ldquoDECAFrdquo) Death of Lessee
Eviction of Lessee
Condemnation of Real Property
Agreement (Mutual Rescission)
Foreclosure
Lending Loan Instruments
Promissory Note Evidence of debt used in all Security Instruments
Lien-theory (non-Judicial) States
Mortgage 2 parties Mortgagor (Borrower) amp Mortgagee (Lender)
Title-theory (Judicial) States
Security Deed (used in
GA)
2 parties Grantor (Borrower) amp Grantee (Lender)
Deed of Trust 3 parties Trustor (Borrower) Beneficiary (Lender) amp Trustee
(neutral 3rd party holding Bare Title)
Security Instrument Clauses
Prepayment Penalty Fee based on a of remaining Principal for paying-off the loan
before maturity
Acceleration (ldquoDue on
Defaultrdquo)
For any Contract breach
Alienation (ldquoDue on
Salerdquo)
Title cannot be conveyed or assumed unless the Lender pre-
approves
Defeasance When the loan is paid in full borrower is released from liability
amp gains Legal Title
Also protects Buyer if Lender accepts less than the Principal
balance at Foreclosure
Foreclosure
Judicial (Lien-theory) Strict Foreclosure Sale Must go through the court system
Non-Judicial (Title-
theory) (Georgia)
Power of Sale clause in Security Instrument allows Lender to re-
gain the property without the court process However to do so
they must advertise the property beforehand In GA itrsquos currently
4 weeks
Deed in Lieu of
Foreclosure (ldquoFriendly
Foreclosurerdquo)
Defaulted borrower may willingly surrender Title before
Foreclosure proceedings to minimize credit damage The caveat
being the Lender must be willing to do so
Secondary Mortgage Market Federal National Mortgage Association (ldquoFNMArdquo) Fannie Mae
Federal Home Loan Mortgage Corporation (ldquoFHLMCrdquo) Freddie Mac
Government National Mortgage Association (ldquoGNMArdquo)
Ginnie Mae
GNMA is the only Government agency Purchases low-income loans
Del Priore Realty Academy Copyright January 2021 Page 8 of 12
Protected Classes Law Existing Category Added Category
Civil Rights Act of 1866 NA Race
Federal Civil Rights Act of
1968
(ldquoFederal Fair Housing
Actrdquo)
Race Color Religion amp National
Origin of Birth
Prohibits discrimination in the Real Estate industry of the protected classes
Fair Housing Act of 1974 Race Color Religion amp
National Origin of Birth
Sex
Fair Housing Act of 1988 Race Color Religion
National Origin of Birth amp
Sex
Familial Status amp
Handicapped (one with a record of mental or
physical impairment to include
alcoholism cancer or AIDS)
Americans with Disabilities
Act (ldquoADArdquo)
Prohibits discrimination based on disability amp allows for
reasonable accommodation or modification(s)
Except for Race a private homeowner who occupies a 1-4-unit property may discriminate if
advertising does not contain discriminatory content (ldquoMs Murphy Lawrdquo)
Fair Housing
(ldquoRealtors Can Really Sell Houses Fast Nowrdquo)
Race
Color
Religion
Sex
Handicap
Familial Status
National Origin
Valuation amp Appraisal Definitions
Appraisal= Unbiased opinion of Market Value by an Appraiser Sets the upper limits of
Value
Appraisal Fee= Based on the amount of work amp time
Market Value= the most probable selling price in an Armrsquos-length Transaction
Market Price= Fact The actual Sales Price
Parties are objective and unrelated with unrelated motivations The 4 requirements of an
Armrsquos-length Transaction are
bull Valuable Consideration (cash) is exchanged
bull Property was on the open market for a reasonable time for the market conditions
bull Parties were under no undue pressure
Del Priore Realty Academy Copyright January 2021 Page 9 of 12
bull Parties were well-informed amp acting in their own best interests
Appraisal Process Steps
1 Define the problem 4 Analyze data through i) Market Data
Approach ii) Cost Approach or iii) Income
Approach
2 Make preliminary study 5 Reconciliation amp Final Estimate
3 Gather Data 6 Prepare Appraisal Report
Four (4) Necessary Components of Value (ldquoDUSTrdquo)
Demand Actual need or desire + the ability to pay for it Desired by most
Utility More use more Value
Scarcity Short supply relative to demand
Transferability Ability to convey Title with relative ease
Economic Principals of Value (leads to the development of a credible appraisal)
Supply amp Demand Limited inventoryhigh demand= higher Market Price
Highest amp Best Use Legal use that will likely produce greatest net return
1 Legally allowable 2 Physically possible 3 Financially feasible
amp 4 Maximum utility
Substitution Applies to all three (3) approaches Sets the upper limit on Value
Conformity Cookie cutter neighborhoods Property consistency helps Value
Change Economic amp social forces can impact Value more than the
property itself
Development phase growing amp developing
Equilibrium phase growth ends amp value levels off
Decline phase deterioration sets in amp values fall
Progression amp
Regression
Regression Most expensive property loses value because of
lesser homes around it
Progression Least expensive gains value because of nicer homes
around it
Competition If the market is flooded with listings value drops
Increasing amp Decreasing
(Diminishing) Returns
Increasing Returns a dollar spent will add dollars to value
Decreasing Returns a dollar spent will not even return that
dollar in value
Contribution How an improvement adds or detracts from the whole property
Anticipation (Basis of
Income Approach)
Positive or negative impact due to expectation of a future event
(Current value + expected income amp benefits)
Influencing Factors on Value
Situs (location) Or area preference Most important factor
Size amp Shape Of a lot
Depth Tables The front of a lot has more value than the back Ties to Size amp Shape
Soil Characteristics Considered for basements septic systems erosion
Key Lots Irregular lot that may become valuable in Assemblage
Del Priore Realty Academy Copyright January 2021 Page 10 of 12
Assemblage Process of combining 2+ individual adjoining lots Plottage= resulting
increase in value
Approaches to Value
1 Market Data or Sales Comparison Approach
Value is based on the Principal of Substitution for residential properties amp vacant land
Fair Market Value= SOLD Comparable Properties by Adjusting for Differences
Adjustments
Comps should be
sold within the last 3-
6 months
Preferably within 1
mile of the Subject
NEVER adjust the
subject property
ldquoCIArdquo If Comp is
inferior ADD to the
Comp for that itemrsquos
value
ldquoCBSrdquo If Subject is
better SUBTRACT
from the Comp for
that itemrsquos value
Reconciliation Comp with the fewest adjustments to Subject gets the highest emphasis
(highest percentage) Less reliable in slow or unstable markets
Comparative Market Analysis (ldquoCMArdquo) is used by Licensees to evaluate Fair Market
Value for a listing price or offer 3-5 comparable properties is an acceptable ldquoNrdquo Unlike the
Market Data Approach that uses sold properties a CMA uses sold amp actively listed properties
2 Cost Approach (only method where land is evaluated separately)
Value is based on the Principal of Substitution Used for special purpose amp new construction
It is also used to evaluate Hazard Insurance
Fair Market Value= (Replacement Cost ndash ldquoStraight-Linerdquo or ldquoAge-Liferdquo Depreciation +
Land Value)
Land NEVER depreciates
Reproduction Cost= Cost to produce an
exact replica using a Comparative Unit
Method Olderhistorical buildings
Replacement Cost= Cost using similar
materials to produce a satisfactory substitute
using a Comparative Unit Method Special
purpose amp new buildings
Square Foot Method Single-family homes Measures exterior
dimensions of
Improvement
1 (L W)= Sq Ft
2 (Sq Ft Price per
Sq Ft)= Cost
Cubic Foot Method Warehouses Measures volume of
Improvement
1 (L W H)=
Cubic Feet
2 (Cu Ft Price per
Cu Ft)= Cost
Unit in Place
Method
Used in Hazard Ins Cost of each assembled amp installed
component
Quantity Survey
Method
Best for new
construction
Detailed cost of every
single thing (nails
bricks etc)
Detailed breakdown
Del Priore Realty Academy Copyright January 2021 Page 11 of 12
Accrued Depreciation
Depreciation= re-capturing the cost of a purchase over a certain time period as allowed by
IRS regulations
Curable= Cure costs less than resulting
value
Incurable= Cure costs exceed the value of
the correction Doesnrsquot make sense
Physical Deterioration= normal wear amp tear exposure to weather lack of proper
maintenance
Functional Obsolescence= obsolete amp doesnrsquot meet current expectations EX outdated floor
plan old systems unorthodox architecture (For test this applies to appliances other than
black white or SS)
Economic Obsolescence= Incurable since external to property amp beyond control EX high
taxes crime unemployment flight patterns factory railroad
Actual Age= Improvementrsquos historical age Effective Age= Condition updates amp utility
that may make it less than Actual Age
Land Value= May be based on a CMA or i) Sq feet ii) front footage or iii) acreage
1 Acreage= (Sq Ft 43560) 2 (Acreage Price per Acre)= Land Value
3 Income or Capitalization Approach
The Appraiser looks at 3 things relative to the propertyrsquos income i) Quantity ii) Quality
(how safe is it) and iii) Durability (how long can the income be sustained)
Cap Rate (ldquoCRrdquo) = Rate of Return on
Investment (ldquoROIrdquo) Direct correlation to CR
amp investment risk Lower the CR the higher
the value
Commercial
Uses net vs gross income amp converts income
into Value
CR Steps
1 (Potential Gross Income ndash Vacancy ndash
Collections) = Effective Gross Income
(ldquoEGIrdquo)
2 (EGI ndash Operating Expenses) = Net
Operating Income (ldquoNOIrdquo)
3 (NOI Price) = CR
4 (NOI CR) = Fair Market Value
1 (100 CR)= Full Capitalization ( of years
it will pay for itself)
4 Capitalization Approach (ldquoGRMrdquo amp ldquoGIMrdquo)
Like the Income Approach the Appraiser looks at 3 things relative to the propertyrsquos income i)
Quantity ii) Quality (how safe is it) and iii) Durability (how long can the income be
sustained)
Gross Rent Multiplier (ldquoGRMrdquo) Residential
rentals 1-4 units
Ratio between price amp annual rental income
before expenses
The lower the GRM the more attractive
investment
GRM Steps
1 (Comp Sold $ monthly rent) = GRM
2 (Subjectrsquos monthly rent GRM) =Fair
Market Value
Gross Income Multiplier (ldquoGIMrdquo) Small
commercial + residential 5+ units
GIM includes annual rent + income from
other sources
GIM Steps
1 (Comp Sold $ Gross annual income) =
GIM
2 (Subject gross annual income GIM) =Fair
Market Value
Del Priore Realty Academy Copyright January 2021 Page 12 of 12
Appraisal Reports
Letter of Opinion Informal report thatrsquos not recognized or accepted
Short Form Summary of such is the most common format Used by lending
institutions amp Government agencies (Fannie Mae amp Freddie
Mac)
Narrative Report Most encompassing Usually required for appraising
commercial property or legal cases (Condemnation under
Eminent Domain settling Estates in probate etc)
Letrsquos Look at Math Key Formulas
1 Acre= 43560 sq ft Township= 36 Sq Miles
Government Rectangular Survey
Principal Meridian Lines run N-S
Base Lines run E-W
Section= 1 sq mile amp 640 acres
Taxes amp Interest
Transfer Tax = (Sales Price 500) $150 Intangible Tax= (Loan Amount 100) 010
Upfront Mortgage Insurance Premium (ldquoUFMIPrdquo)= 175 (0175)
Closing Calculations
Jan=31 April= 30 June= 30 Sept= 30
Feb= 28 May= 31 July= 31 Oct= 31
March= 31 June = 30 August= 31 Nov= 30 amp Dec= 31
Seller (ldquoSACrdquo) = Seller Accrual Closing
Date (goes to Seller)
Buyer (ldquoBADrdquo) = Buyer Add Days
Interest= Divide annual interest by 360 days
then multiply by the actual calendar days
EX (annual interest 360) actual calendar
days
Taxes= Use 365 days
EXrdquo (annual taxes 365) = Daily Tax
Del Priore Realty Academy Copyright January 2021
TimeLine Triggers
GA License Law and Georgia Real Estate Commission (ldquoGARECrdquo) Rules amp Regulations
The last revision to this document is notated in the footnotes below
State legislature passes License law whereas under the authority of such GAREC passes Rules amp
Regulations (ldquoRampRrdquo) relating to the professional conduct of Georgia Licensees
License law is designed to protect the public from dishonest or incompetent Agents
Since all the aforementioned are fluid refer to wwwgrecstategaus for all current license law amp
GAREC RampRs
Unless specifically noted below other notification timelines amp time triggers are thirty (30) days This also
includes standard GAREC meetings (whereas the Chairman or Vice Chairman must attend)
Immediately
bull Copies of transactional documents must be given to all signatory parties
bull An executory Purchase amp Sale Agreement must be given to all signatory parties plus all involved
Brokerage firms
bull A Licensee that has a Trust Account(s) and is filing for bankruptcy must notify the GAREC
PromptlyAs Soon as Possible
bull All funds a Licensee receives from a Client or Customer must be placed with hisher Qualifying
Broker or designated Associate Broker
bull A Listing Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoSellerrdquo)
bull A Selling Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoBuyerrdquo)
One (1) Business Day
bull If a Broker comes into possession of anotherrsquos funds and does not have an existing Trust
Account they must open one
Ten (10) Days
bull Removing the Brokerrsquos ldquoFor Salerdquo sign from a former Clientrsquos yard after a successful closing or
listing expiration
bull Must notify GAREC (regardless of whether the Licensee is found innocent or guilty) (i) after an
administrative civil or criminal court action or (ii) a final court disposition All court
documentation must be included in the notification This is the only exception to the thirty (30)
day notification rules
bull A Fidelity Bond (required for a Broker hired to provide Community Association Management
services amp handles $60000+ at any one time) must have a minimum of ten (10) days cancellation
notice from the insurance company for non-payment
Sixty (60) Days
bull Candidates must submit a certified criminal history report (a GCIC Background Check can be
obtained for a fee from your local Sheriffrsquos Department) with a new license application At the
time of submission the report cannot be sixty-one (61) days old
bull Applicants must appeal a GREC notice of rejection within
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021 Page 5 of 12
Illegal Practices of Federal Fair Housing
Blockbusting (Agents)
Encouraging owners to sell due to a protected classrsquo influx into
the area They must be shown the widest possible variety if
preferences arenrsquot expressed
Steering (Agents)
Limiting a ClientrsquosCustomerrsquos choices based on protected
categories
Redlining (Lenders) Denying a qualified borrower purely on the basis of the
particular neighborhood
Agentrsquos Duty to a Customer (ldquoHADrdquo) (Agency does not exist)
Honesty Provide accurate factual information free of fraud or
misrepresentation
Accountability (not accounting)
Account for and care for monies amp valuables
Due Care Care amp competency
Since the Broker isnrsquot an Agent of the Customer this lacks Performance Obedience Loyalty
amp the higher standard of care
Contracts
Expressed In writing
Implied Verbal agreement
Unilateral One party makes a promise
Bilateral Two parties A promise for a promise
Executory Contract is signed but there are unfulfilled promises
Executed Promises have been fulfilled amp Title has transferred
Valid Legal and binding
Void Illegal amp not binding The contract will not be legally
recognized so it never existed
Voidable
One+ essential elements are missing The injured party is the
only one that can rescind or honor the terms
Fraud Mutual Mistake Innocent Misrepresentation Duress or
Undue Influence It lacks Genuine Assent
Enforceable Legal and binding written contract
Unenforceable Cannot be supported in a court of law Possibly a verbal
agreement
Del Priore Realty Academy Copyright January 2021 Page 6 of 12
Essential Elements of a Contract (ldquoCOMICrdquo) Competent Parties All parties must be legally competent amp have the authority to
act Grantor must be of legal age
Objective
(Lawful Purpose)
Not intended for illegal purposes Property can be legally
conveyed
Mutual Assent Through the Offer and Acceptance process Both parties must
agree to every single contract detail
In Writing Except for Leases of one year or less all contracts must be in
writing (Statute of Fraud)
Consideration Valuable Consideration or Good Consideration for a Gift Deed
(ldquoLove amp Affection)
Remedies for Breach of Contract Contractual Liquidated damages Mediation or Arbitration
Law Suit for damages
Suit for Specific Performance
Recession (If the Plaintiff was pressured forced
misrepresented or under duress)
Listing Agreements Exclusive Agency One Agency contract for the listing The Broker responsible
for securing a ready willing amp able buyer (ldquoProcuring
Causerdquo) is eligible for the fee However if the Seller is the
Procuring Cause (ldquoFSBOrdquo) payment is not due to anyone
Exclusive Right to Sell
(Most Common)
One Agency contract for the listing Regardless of whorsquos the
Procuring Cause including the Seller the listing Broker is due
a fee
Open Listing non-Exclusive Agency contracts with multiple Brokers The
first to be the Procuring Cause is eligible for the fee However
if the Seller is the Procuring Cause (ldquoFSBOrdquo) payment is not
due to anyone
Net Listing
(Illegal in GA)
Seller dictates a minimum net price (Sales Price-closing costs-
commissions) necessary to consider an offer Any monies
over that net price is considered the Brokerrsquos fee (Commission
could equate to 3 or 60)
Marketing Listings
Multiple Listing Service
(ldquoMLSrdquo)
This is one industry source widely used to share listing
information with other Licensees
Del Priore Realty Academy Copyright January 2021 Page 7 of 12
Termination of a Leasehold Estate (ldquoDECAFrdquo) Death of Lessee
Eviction of Lessee
Condemnation of Real Property
Agreement (Mutual Rescission)
Foreclosure
Lending Loan Instruments
Promissory Note Evidence of debt used in all Security Instruments
Lien-theory (non-Judicial) States
Mortgage 2 parties Mortgagor (Borrower) amp Mortgagee (Lender)
Title-theory (Judicial) States
Security Deed (used in
GA)
2 parties Grantor (Borrower) amp Grantee (Lender)
Deed of Trust 3 parties Trustor (Borrower) Beneficiary (Lender) amp Trustee
(neutral 3rd party holding Bare Title)
Security Instrument Clauses
Prepayment Penalty Fee based on a of remaining Principal for paying-off the loan
before maturity
Acceleration (ldquoDue on
Defaultrdquo)
For any Contract breach
Alienation (ldquoDue on
Salerdquo)
Title cannot be conveyed or assumed unless the Lender pre-
approves
Defeasance When the loan is paid in full borrower is released from liability
amp gains Legal Title
Also protects Buyer if Lender accepts less than the Principal
balance at Foreclosure
Foreclosure
Judicial (Lien-theory) Strict Foreclosure Sale Must go through the court system
Non-Judicial (Title-
theory) (Georgia)
Power of Sale clause in Security Instrument allows Lender to re-
gain the property without the court process However to do so
they must advertise the property beforehand In GA itrsquos currently
4 weeks
Deed in Lieu of
Foreclosure (ldquoFriendly
Foreclosurerdquo)
Defaulted borrower may willingly surrender Title before
Foreclosure proceedings to minimize credit damage The caveat
being the Lender must be willing to do so
Secondary Mortgage Market Federal National Mortgage Association (ldquoFNMArdquo) Fannie Mae
Federal Home Loan Mortgage Corporation (ldquoFHLMCrdquo) Freddie Mac
Government National Mortgage Association (ldquoGNMArdquo)
Ginnie Mae
GNMA is the only Government agency Purchases low-income loans
Del Priore Realty Academy Copyright January 2021 Page 8 of 12
Protected Classes Law Existing Category Added Category
Civil Rights Act of 1866 NA Race
Federal Civil Rights Act of
1968
(ldquoFederal Fair Housing
Actrdquo)
Race Color Religion amp National
Origin of Birth
Prohibits discrimination in the Real Estate industry of the protected classes
Fair Housing Act of 1974 Race Color Religion amp
National Origin of Birth
Sex
Fair Housing Act of 1988 Race Color Religion
National Origin of Birth amp
Sex
Familial Status amp
Handicapped (one with a record of mental or
physical impairment to include
alcoholism cancer or AIDS)
Americans with Disabilities
Act (ldquoADArdquo)
Prohibits discrimination based on disability amp allows for
reasonable accommodation or modification(s)
Except for Race a private homeowner who occupies a 1-4-unit property may discriminate if
advertising does not contain discriminatory content (ldquoMs Murphy Lawrdquo)
Fair Housing
(ldquoRealtors Can Really Sell Houses Fast Nowrdquo)
Race
Color
Religion
Sex
Handicap
Familial Status
National Origin
Valuation amp Appraisal Definitions
Appraisal= Unbiased opinion of Market Value by an Appraiser Sets the upper limits of
Value
Appraisal Fee= Based on the amount of work amp time
Market Value= the most probable selling price in an Armrsquos-length Transaction
Market Price= Fact The actual Sales Price
Parties are objective and unrelated with unrelated motivations The 4 requirements of an
Armrsquos-length Transaction are
bull Valuable Consideration (cash) is exchanged
bull Property was on the open market for a reasonable time for the market conditions
bull Parties were under no undue pressure
Del Priore Realty Academy Copyright January 2021 Page 9 of 12
bull Parties were well-informed amp acting in their own best interests
Appraisal Process Steps
1 Define the problem 4 Analyze data through i) Market Data
Approach ii) Cost Approach or iii) Income
Approach
2 Make preliminary study 5 Reconciliation amp Final Estimate
3 Gather Data 6 Prepare Appraisal Report
Four (4) Necessary Components of Value (ldquoDUSTrdquo)
Demand Actual need or desire + the ability to pay for it Desired by most
Utility More use more Value
Scarcity Short supply relative to demand
Transferability Ability to convey Title with relative ease
Economic Principals of Value (leads to the development of a credible appraisal)
Supply amp Demand Limited inventoryhigh demand= higher Market Price
Highest amp Best Use Legal use that will likely produce greatest net return
1 Legally allowable 2 Physically possible 3 Financially feasible
amp 4 Maximum utility
Substitution Applies to all three (3) approaches Sets the upper limit on Value
Conformity Cookie cutter neighborhoods Property consistency helps Value
Change Economic amp social forces can impact Value more than the
property itself
Development phase growing amp developing
Equilibrium phase growth ends amp value levels off
Decline phase deterioration sets in amp values fall
Progression amp
Regression
Regression Most expensive property loses value because of
lesser homes around it
Progression Least expensive gains value because of nicer homes
around it
Competition If the market is flooded with listings value drops
Increasing amp Decreasing
(Diminishing) Returns
Increasing Returns a dollar spent will add dollars to value
Decreasing Returns a dollar spent will not even return that
dollar in value
Contribution How an improvement adds or detracts from the whole property
Anticipation (Basis of
Income Approach)
Positive or negative impact due to expectation of a future event
(Current value + expected income amp benefits)
Influencing Factors on Value
Situs (location) Or area preference Most important factor
Size amp Shape Of a lot
Depth Tables The front of a lot has more value than the back Ties to Size amp Shape
Soil Characteristics Considered for basements septic systems erosion
Key Lots Irregular lot that may become valuable in Assemblage
Del Priore Realty Academy Copyright January 2021 Page 10 of 12
Assemblage Process of combining 2+ individual adjoining lots Plottage= resulting
increase in value
Approaches to Value
1 Market Data or Sales Comparison Approach
Value is based on the Principal of Substitution for residential properties amp vacant land
Fair Market Value= SOLD Comparable Properties by Adjusting for Differences
Adjustments
Comps should be
sold within the last 3-
6 months
Preferably within 1
mile of the Subject
NEVER adjust the
subject property
ldquoCIArdquo If Comp is
inferior ADD to the
Comp for that itemrsquos
value
ldquoCBSrdquo If Subject is
better SUBTRACT
from the Comp for
that itemrsquos value
Reconciliation Comp with the fewest adjustments to Subject gets the highest emphasis
(highest percentage) Less reliable in slow or unstable markets
Comparative Market Analysis (ldquoCMArdquo) is used by Licensees to evaluate Fair Market
Value for a listing price or offer 3-5 comparable properties is an acceptable ldquoNrdquo Unlike the
Market Data Approach that uses sold properties a CMA uses sold amp actively listed properties
2 Cost Approach (only method where land is evaluated separately)
Value is based on the Principal of Substitution Used for special purpose amp new construction
It is also used to evaluate Hazard Insurance
Fair Market Value= (Replacement Cost ndash ldquoStraight-Linerdquo or ldquoAge-Liferdquo Depreciation +
Land Value)
Land NEVER depreciates
Reproduction Cost= Cost to produce an
exact replica using a Comparative Unit
Method Olderhistorical buildings
Replacement Cost= Cost using similar
materials to produce a satisfactory substitute
using a Comparative Unit Method Special
purpose amp new buildings
Square Foot Method Single-family homes Measures exterior
dimensions of
Improvement
1 (L W)= Sq Ft
2 (Sq Ft Price per
Sq Ft)= Cost
Cubic Foot Method Warehouses Measures volume of
Improvement
1 (L W H)=
Cubic Feet
2 (Cu Ft Price per
Cu Ft)= Cost
Unit in Place
Method
Used in Hazard Ins Cost of each assembled amp installed
component
Quantity Survey
Method
Best for new
construction
Detailed cost of every
single thing (nails
bricks etc)
Detailed breakdown
Del Priore Realty Academy Copyright January 2021 Page 11 of 12
Accrued Depreciation
Depreciation= re-capturing the cost of a purchase over a certain time period as allowed by
IRS regulations
Curable= Cure costs less than resulting
value
Incurable= Cure costs exceed the value of
the correction Doesnrsquot make sense
Physical Deterioration= normal wear amp tear exposure to weather lack of proper
maintenance
Functional Obsolescence= obsolete amp doesnrsquot meet current expectations EX outdated floor
plan old systems unorthodox architecture (For test this applies to appliances other than
black white or SS)
Economic Obsolescence= Incurable since external to property amp beyond control EX high
taxes crime unemployment flight patterns factory railroad
Actual Age= Improvementrsquos historical age Effective Age= Condition updates amp utility
that may make it less than Actual Age
Land Value= May be based on a CMA or i) Sq feet ii) front footage or iii) acreage
1 Acreage= (Sq Ft 43560) 2 (Acreage Price per Acre)= Land Value
3 Income or Capitalization Approach
The Appraiser looks at 3 things relative to the propertyrsquos income i) Quantity ii) Quality
(how safe is it) and iii) Durability (how long can the income be sustained)
Cap Rate (ldquoCRrdquo) = Rate of Return on
Investment (ldquoROIrdquo) Direct correlation to CR
amp investment risk Lower the CR the higher
the value
Commercial
Uses net vs gross income amp converts income
into Value
CR Steps
1 (Potential Gross Income ndash Vacancy ndash
Collections) = Effective Gross Income
(ldquoEGIrdquo)
2 (EGI ndash Operating Expenses) = Net
Operating Income (ldquoNOIrdquo)
3 (NOI Price) = CR
4 (NOI CR) = Fair Market Value
1 (100 CR)= Full Capitalization ( of years
it will pay for itself)
4 Capitalization Approach (ldquoGRMrdquo amp ldquoGIMrdquo)
Like the Income Approach the Appraiser looks at 3 things relative to the propertyrsquos income i)
Quantity ii) Quality (how safe is it) and iii) Durability (how long can the income be
sustained)
Gross Rent Multiplier (ldquoGRMrdquo) Residential
rentals 1-4 units
Ratio between price amp annual rental income
before expenses
The lower the GRM the more attractive
investment
GRM Steps
1 (Comp Sold $ monthly rent) = GRM
2 (Subjectrsquos monthly rent GRM) =Fair
Market Value
Gross Income Multiplier (ldquoGIMrdquo) Small
commercial + residential 5+ units
GIM includes annual rent + income from
other sources
GIM Steps
1 (Comp Sold $ Gross annual income) =
GIM
2 (Subject gross annual income GIM) =Fair
Market Value
Del Priore Realty Academy Copyright January 2021 Page 12 of 12
Appraisal Reports
Letter of Opinion Informal report thatrsquos not recognized or accepted
Short Form Summary of such is the most common format Used by lending
institutions amp Government agencies (Fannie Mae amp Freddie
Mac)
Narrative Report Most encompassing Usually required for appraising
commercial property or legal cases (Condemnation under
Eminent Domain settling Estates in probate etc)
Letrsquos Look at Math Key Formulas
1 Acre= 43560 sq ft Township= 36 Sq Miles
Government Rectangular Survey
Principal Meridian Lines run N-S
Base Lines run E-W
Section= 1 sq mile amp 640 acres
Taxes amp Interest
Transfer Tax = (Sales Price 500) $150 Intangible Tax= (Loan Amount 100) 010
Upfront Mortgage Insurance Premium (ldquoUFMIPrdquo)= 175 (0175)
Closing Calculations
Jan=31 April= 30 June= 30 Sept= 30
Feb= 28 May= 31 July= 31 Oct= 31
March= 31 June = 30 August= 31 Nov= 30 amp Dec= 31
Seller (ldquoSACrdquo) = Seller Accrual Closing
Date (goes to Seller)
Buyer (ldquoBADrdquo) = Buyer Add Days
Interest= Divide annual interest by 360 days
then multiply by the actual calendar days
EX (annual interest 360) actual calendar
days
Taxes= Use 365 days
EXrdquo (annual taxes 365) = Daily Tax
Del Priore Realty Academy Copyright January 2021
TimeLine Triggers
GA License Law and Georgia Real Estate Commission (ldquoGARECrdquo) Rules amp Regulations
The last revision to this document is notated in the footnotes below
State legislature passes License law whereas under the authority of such GAREC passes Rules amp
Regulations (ldquoRampRrdquo) relating to the professional conduct of Georgia Licensees
License law is designed to protect the public from dishonest or incompetent Agents
Since all the aforementioned are fluid refer to wwwgrecstategaus for all current license law amp
GAREC RampRs
Unless specifically noted below other notification timelines amp time triggers are thirty (30) days This also
includes standard GAREC meetings (whereas the Chairman or Vice Chairman must attend)
Immediately
bull Copies of transactional documents must be given to all signatory parties
bull An executory Purchase amp Sale Agreement must be given to all signatory parties plus all involved
Brokerage firms
bull A Licensee that has a Trust Account(s) and is filing for bankruptcy must notify the GAREC
PromptlyAs Soon as Possible
bull All funds a Licensee receives from a Client or Customer must be placed with hisher Qualifying
Broker or designated Associate Broker
bull A Listing Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoSellerrdquo)
bull A Selling Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoBuyerrdquo)
One (1) Business Day
bull If a Broker comes into possession of anotherrsquos funds and does not have an existing Trust
Account they must open one
Ten (10) Days
bull Removing the Brokerrsquos ldquoFor Salerdquo sign from a former Clientrsquos yard after a successful closing or
listing expiration
bull Must notify GAREC (regardless of whether the Licensee is found innocent or guilty) (i) after an
administrative civil or criminal court action or (ii) a final court disposition All court
documentation must be included in the notification This is the only exception to the thirty (30)
day notification rules
bull A Fidelity Bond (required for a Broker hired to provide Community Association Management
services amp handles $60000+ at any one time) must have a minimum of ten (10) days cancellation
notice from the insurance company for non-payment
Sixty (60) Days
bull Candidates must submit a certified criminal history report (a GCIC Background Check can be
obtained for a fee from your local Sheriffrsquos Department) with a new license application At the
time of submission the report cannot be sixty-one (61) days old
bull Applicants must appeal a GREC notice of rejection within
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021 Page 6 of 12
Essential Elements of a Contract (ldquoCOMICrdquo) Competent Parties All parties must be legally competent amp have the authority to
act Grantor must be of legal age
Objective
(Lawful Purpose)
Not intended for illegal purposes Property can be legally
conveyed
Mutual Assent Through the Offer and Acceptance process Both parties must
agree to every single contract detail
In Writing Except for Leases of one year or less all contracts must be in
writing (Statute of Fraud)
Consideration Valuable Consideration or Good Consideration for a Gift Deed
(ldquoLove amp Affection)
Remedies for Breach of Contract Contractual Liquidated damages Mediation or Arbitration
Law Suit for damages
Suit for Specific Performance
Recession (If the Plaintiff was pressured forced
misrepresented or under duress)
Listing Agreements Exclusive Agency One Agency contract for the listing The Broker responsible
for securing a ready willing amp able buyer (ldquoProcuring
Causerdquo) is eligible for the fee However if the Seller is the
Procuring Cause (ldquoFSBOrdquo) payment is not due to anyone
Exclusive Right to Sell
(Most Common)
One Agency contract for the listing Regardless of whorsquos the
Procuring Cause including the Seller the listing Broker is due
a fee
Open Listing non-Exclusive Agency contracts with multiple Brokers The
first to be the Procuring Cause is eligible for the fee However
if the Seller is the Procuring Cause (ldquoFSBOrdquo) payment is not
due to anyone
Net Listing
(Illegal in GA)
Seller dictates a minimum net price (Sales Price-closing costs-
commissions) necessary to consider an offer Any monies
over that net price is considered the Brokerrsquos fee (Commission
could equate to 3 or 60)
Marketing Listings
Multiple Listing Service
(ldquoMLSrdquo)
This is one industry source widely used to share listing
information with other Licensees
Del Priore Realty Academy Copyright January 2021 Page 7 of 12
Termination of a Leasehold Estate (ldquoDECAFrdquo) Death of Lessee
Eviction of Lessee
Condemnation of Real Property
Agreement (Mutual Rescission)
Foreclosure
Lending Loan Instruments
Promissory Note Evidence of debt used in all Security Instruments
Lien-theory (non-Judicial) States
Mortgage 2 parties Mortgagor (Borrower) amp Mortgagee (Lender)
Title-theory (Judicial) States
Security Deed (used in
GA)
2 parties Grantor (Borrower) amp Grantee (Lender)
Deed of Trust 3 parties Trustor (Borrower) Beneficiary (Lender) amp Trustee
(neutral 3rd party holding Bare Title)
Security Instrument Clauses
Prepayment Penalty Fee based on a of remaining Principal for paying-off the loan
before maturity
Acceleration (ldquoDue on
Defaultrdquo)
For any Contract breach
Alienation (ldquoDue on
Salerdquo)
Title cannot be conveyed or assumed unless the Lender pre-
approves
Defeasance When the loan is paid in full borrower is released from liability
amp gains Legal Title
Also protects Buyer if Lender accepts less than the Principal
balance at Foreclosure
Foreclosure
Judicial (Lien-theory) Strict Foreclosure Sale Must go through the court system
Non-Judicial (Title-
theory) (Georgia)
Power of Sale clause in Security Instrument allows Lender to re-
gain the property without the court process However to do so
they must advertise the property beforehand In GA itrsquos currently
4 weeks
Deed in Lieu of
Foreclosure (ldquoFriendly
Foreclosurerdquo)
Defaulted borrower may willingly surrender Title before
Foreclosure proceedings to minimize credit damage The caveat
being the Lender must be willing to do so
Secondary Mortgage Market Federal National Mortgage Association (ldquoFNMArdquo) Fannie Mae
Federal Home Loan Mortgage Corporation (ldquoFHLMCrdquo) Freddie Mac
Government National Mortgage Association (ldquoGNMArdquo)
Ginnie Mae
GNMA is the only Government agency Purchases low-income loans
Del Priore Realty Academy Copyright January 2021 Page 8 of 12
Protected Classes Law Existing Category Added Category
Civil Rights Act of 1866 NA Race
Federal Civil Rights Act of
1968
(ldquoFederal Fair Housing
Actrdquo)
Race Color Religion amp National
Origin of Birth
Prohibits discrimination in the Real Estate industry of the protected classes
Fair Housing Act of 1974 Race Color Religion amp
National Origin of Birth
Sex
Fair Housing Act of 1988 Race Color Religion
National Origin of Birth amp
Sex
Familial Status amp
Handicapped (one with a record of mental or
physical impairment to include
alcoholism cancer or AIDS)
Americans with Disabilities
Act (ldquoADArdquo)
Prohibits discrimination based on disability amp allows for
reasonable accommodation or modification(s)
Except for Race a private homeowner who occupies a 1-4-unit property may discriminate if
advertising does not contain discriminatory content (ldquoMs Murphy Lawrdquo)
Fair Housing
(ldquoRealtors Can Really Sell Houses Fast Nowrdquo)
Race
Color
Religion
Sex
Handicap
Familial Status
National Origin
Valuation amp Appraisal Definitions
Appraisal= Unbiased opinion of Market Value by an Appraiser Sets the upper limits of
Value
Appraisal Fee= Based on the amount of work amp time
Market Value= the most probable selling price in an Armrsquos-length Transaction
Market Price= Fact The actual Sales Price
Parties are objective and unrelated with unrelated motivations The 4 requirements of an
Armrsquos-length Transaction are
bull Valuable Consideration (cash) is exchanged
bull Property was on the open market for a reasonable time for the market conditions
bull Parties were under no undue pressure
Del Priore Realty Academy Copyright January 2021 Page 9 of 12
bull Parties were well-informed amp acting in their own best interests
Appraisal Process Steps
1 Define the problem 4 Analyze data through i) Market Data
Approach ii) Cost Approach or iii) Income
Approach
2 Make preliminary study 5 Reconciliation amp Final Estimate
3 Gather Data 6 Prepare Appraisal Report
Four (4) Necessary Components of Value (ldquoDUSTrdquo)
Demand Actual need or desire + the ability to pay for it Desired by most
Utility More use more Value
Scarcity Short supply relative to demand
Transferability Ability to convey Title with relative ease
Economic Principals of Value (leads to the development of a credible appraisal)
Supply amp Demand Limited inventoryhigh demand= higher Market Price
Highest amp Best Use Legal use that will likely produce greatest net return
1 Legally allowable 2 Physically possible 3 Financially feasible
amp 4 Maximum utility
Substitution Applies to all three (3) approaches Sets the upper limit on Value
Conformity Cookie cutter neighborhoods Property consistency helps Value
Change Economic amp social forces can impact Value more than the
property itself
Development phase growing amp developing
Equilibrium phase growth ends amp value levels off
Decline phase deterioration sets in amp values fall
Progression amp
Regression
Regression Most expensive property loses value because of
lesser homes around it
Progression Least expensive gains value because of nicer homes
around it
Competition If the market is flooded with listings value drops
Increasing amp Decreasing
(Diminishing) Returns
Increasing Returns a dollar spent will add dollars to value
Decreasing Returns a dollar spent will not even return that
dollar in value
Contribution How an improvement adds or detracts from the whole property
Anticipation (Basis of
Income Approach)
Positive or negative impact due to expectation of a future event
(Current value + expected income amp benefits)
Influencing Factors on Value
Situs (location) Or area preference Most important factor
Size amp Shape Of a lot
Depth Tables The front of a lot has more value than the back Ties to Size amp Shape
Soil Characteristics Considered for basements septic systems erosion
Key Lots Irregular lot that may become valuable in Assemblage
Del Priore Realty Academy Copyright January 2021 Page 10 of 12
Assemblage Process of combining 2+ individual adjoining lots Plottage= resulting
increase in value
Approaches to Value
1 Market Data or Sales Comparison Approach
Value is based on the Principal of Substitution for residential properties amp vacant land
Fair Market Value= SOLD Comparable Properties by Adjusting for Differences
Adjustments
Comps should be
sold within the last 3-
6 months
Preferably within 1
mile of the Subject
NEVER adjust the
subject property
ldquoCIArdquo If Comp is
inferior ADD to the
Comp for that itemrsquos
value
ldquoCBSrdquo If Subject is
better SUBTRACT
from the Comp for
that itemrsquos value
Reconciliation Comp with the fewest adjustments to Subject gets the highest emphasis
(highest percentage) Less reliable in slow or unstable markets
Comparative Market Analysis (ldquoCMArdquo) is used by Licensees to evaluate Fair Market
Value for a listing price or offer 3-5 comparable properties is an acceptable ldquoNrdquo Unlike the
Market Data Approach that uses sold properties a CMA uses sold amp actively listed properties
2 Cost Approach (only method where land is evaluated separately)
Value is based on the Principal of Substitution Used for special purpose amp new construction
It is also used to evaluate Hazard Insurance
Fair Market Value= (Replacement Cost ndash ldquoStraight-Linerdquo or ldquoAge-Liferdquo Depreciation +
Land Value)
Land NEVER depreciates
Reproduction Cost= Cost to produce an
exact replica using a Comparative Unit
Method Olderhistorical buildings
Replacement Cost= Cost using similar
materials to produce a satisfactory substitute
using a Comparative Unit Method Special
purpose amp new buildings
Square Foot Method Single-family homes Measures exterior
dimensions of
Improvement
1 (L W)= Sq Ft
2 (Sq Ft Price per
Sq Ft)= Cost
Cubic Foot Method Warehouses Measures volume of
Improvement
1 (L W H)=
Cubic Feet
2 (Cu Ft Price per
Cu Ft)= Cost
Unit in Place
Method
Used in Hazard Ins Cost of each assembled amp installed
component
Quantity Survey
Method
Best for new
construction
Detailed cost of every
single thing (nails
bricks etc)
Detailed breakdown
Del Priore Realty Academy Copyright January 2021 Page 11 of 12
Accrued Depreciation
Depreciation= re-capturing the cost of a purchase over a certain time period as allowed by
IRS regulations
Curable= Cure costs less than resulting
value
Incurable= Cure costs exceed the value of
the correction Doesnrsquot make sense
Physical Deterioration= normal wear amp tear exposure to weather lack of proper
maintenance
Functional Obsolescence= obsolete amp doesnrsquot meet current expectations EX outdated floor
plan old systems unorthodox architecture (For test this applies to appliances other than
black white or SS)
Economic Obsolescence= Incurable since external to property amp beyond control EX high
taxes crime unemployment flight patterns factory railroad
Actual Age= Improvementrsquos historical age Effective Age= Condition updates amp utility
that may make it less than Actual Age
Land Value= May be based on a CMA or i) Sq feet ii) front footage or iii) acreage
1 Acreage= (Sq Ft 43560) 2 (Acreage Price per Acre)= Land Value
3 Income or Capitalization Approach
The Appraiser looks at 3 things relative to the propertyrsquos income i) Quantity ii) Quality
(how safe is it) and iii) Durability (how long can the income be sustained)
Cap Rate (ldquoCRrdquo) = Rate of Return on
Investment (ldquoROIrdquo) Direct correlation to CR
amp investment risk Lower the CR the higher
the value
Commercial
Uses net vs gross income amp converts income
into Value
CR Steps
1 (Potential Gross Income ndash Vacancy ndash
Collections) = Effective Gross Income
(ldquoEGIrdquo)
2 (EGI ndash Operating Expenses) = Net
Operating Income (ldquoNOIrdquo)
3 (NOI Price) = CR
4 (NOI CR) = Fair Market Value
1 (100 CR)= Full Capitalization ( of years
it will pay for itself)
4 Capitalization Approach (ldquoGRMrdquo amp ldquoGIMrdquo)
Like the Income Approach the Appraiser looks at 3 things relative to the propertyrsquos income i)
Quantity ii) Quality (how safe is it) and iii) Durability (how long can the income be
sustained)
Gross Rent Multiplier (ldquoGRMrdquo) Residential
rentals 1-4 units
Ratio between price amp annual rental income
before expenses
The lower the GRM the more attractive
investment
GRM Steps
1 (Comp Sold $ monthly rent) = GRM
2 (Subjectrsquos monthly rent GRM) =Fair
Market Value
Gross Income Multiplier (ldquoGIMrdquo) Small
commercial + residential 5+ units
GIM includes annual rent + income from
other sources
GIM Steps
1 (Comp Sold $ Gross annual income) =
GIM
2 (Subject gross annual income GIM) =Fair
Market Value
Del Priore Realty Academy Copyright January 2021 Page 12 of 12
Appraisal Reports
Letter of Opinion Informal report thatrsquos not recognized or accepted
Short Form Summary of such is the most common format Used by lending
institutions amp Government agencies (Fannie Mae amp Freddie
Mac)
Narrative Report Most encompassing Usually required for appraising
commercial property or legal cases (Condemnation under
Eminent Domain settling Estates in probate etc)
Letrsquos Look at Math Key Formulas
1 Acre= 43560 sq ft Township= 36 Sq Miles
Government Rectangular Survey
Principal Meridian Lines run N-S
Base Lines run E-W
Section= 1 sq mile amp 640 acres
Taxes amp Interest
Transfer Tax = (Sales Price 500) $150 Intangible Tax= (Loan Amount 100) 010
Upfront Mortgage Insurance Premium (ldquoUFMIPrdquo)= 175 (0175)
Closing Calculations
Jan=31 April= 30 June= 30 Sept= 30
Feb= 28 May= 31 July= 31 Oct= 31
March= 31 June = 30 August= 31 Nov= 30 amp Dec= 31
Seller (ldquoSACrdquo) = Seller Accrual Closing
Date (goes to Seller)
Buyer (ldquoBADrdquo) = Buyer Add Days
Interest= Divide annual interest by 360 days
then multiply by the actual calendar days
EX (annual interest 360) actual calendar
days
Taxes= Use 365 days
EXrdquo (annual taxes 365) = Daily Tax
Del Priore Realty Academy Copyright January 2021
TimeLine Triggers
GA License Law and Georgia Real Estate Commission (ldquoGARECrdquo) Rules amp Regulations
The last revision to this document is notated in the footnotes below
State legislature passes License law whereas under the authority of such GAREC passes Rules amp
Regulations (ldquoRampRrdquo) relating to the professional conduct of Georgia Licensees
License law is designed to protect the public from dishonest or incompetent Agents
Since all the aforementioned are fluid refer to wwwgrecstategaus for all current license law amp
GAREC RampRs
Unless specifically noted below other notification timelines amp time triggers are thirty (30) days This also
includes standard GAREC meetings (whereas the Chairman or Vice Chairman must attend)
Immediately
bull Copies of transactional documents must be given to all signatory parties
bull An executory Purchase amp Sale Agreement must be given to all signatory parties plus all involved
Brokerage firms
bull A Licensee that has a Trust Account(s) and is filing for bankruptcy must notify the GAREC
PromptlyAs Soon as Possible
bull All funds a Licensee receives from a Client or Customer must be placed with hisher Qualifying
Broker or designated Associate Broker
bull A Listing Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoSellerrdquo)
bull A Selling Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoBuyerrdquo)
One (1) Business Day
bull If a Broker comes into possession of anotherrsquos funds and does not have an existing Trust
Account they must open one
Ten (10) Days
bull Removing the Brokerrsquos ldquoFor Salerdquo sign from a former Clientrsquos yard after a successful closing or
listing expiration
bull Must notify GAREC (regardless of whether the Licensee is found innocent or guilty) (i) after an
administrative civil or criminal court action or (ii) a final court disposition All court
documentation must be included in the notification This is the only exception to the thirty (30)
day notification rules
bull A Fidelity Bond (required for a Broker hired to provide Community Association Management
services amp handles $60000+ at any one time) must have a minimum of ten (10) days cancellation
notice from the insurance company for non-payment
Sixty (60) Days
bull Candidates must submit a certified criminal history report (a GCIC Background Check can be
obtained for a fee from your local Sheriffrsquos Department) with a new license application At the
time of submission the report cannot be sixty-one (61) days old
bull Applicants must appeal a GREC notice of rejection within
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021 Page 7 of 12
Termination of a Leasehold Estate (ldquoDECAFrdquo) Death of Lessee
Eviction of Lessee
Condemnation of Real Property
Agreement (Mutual Rescission)
Foreclosure
Lending Loan Instruments
Promissory Note Evidence of debt used in all Security Instruments
Lien-theory (non-Judicial) States
Mortgage 2 parties Mortgagor (Borrower) amp Mortgagee (Lender)
Title-theory (Judicial) States
Security Deed (used in
GA)
2 parties Grantor (Borrower) amp Grantee (Lender)
Deed of Trust 3 parties Trustor (Borrower) Beneficiary (Lender) amp Trustee
(neutral 3rd party holding Bare Title)
Security Instrument Clauses
Prepayment Penalty Fee based on a of remaining Principal for paying-off the loan
before maturity
Acceleration (ldquoDue on
Defaultrdquo)
For any Contract breach
Alienation (ldquoDue on
Salerdquo)
Title cannot be conveyed or assumed unless the Lender pre-
approves
Defeasance When the loan is paid in full borrower is released from liability
amp gains Legal Title
Also protects Buyer if Lender accepts less than the Principal
balance at Foreclosure
Foreclosure
Judicial (Lien-theory) Strict Foreclosure Sale Must go through the court system
Non-Judicial (Title-
theory) (Georgia)
Power of Sale clause in Security Instrument allows Lender to re-
gain the property without the court process However to do so
they must advertise the property beforehand In GA itrsquos currently
4 weeks
Deed in Lieu of
Foreclosure (ldquoFriendly
Foreclosurerdquo)
Defaulted borrower may willingly surrender Title before
Foreclosure proceedings to minimize credit damage The caveat
being the Lender must be willing to do so
Secondary Mortgage Market Federal National Mortgage Association (ldquoFNMArdquo) Fannie Mae
Federal Home Loan Mortgage Corporation (ldquoFHLMCrdquo) Freddie Mac
Government National Mortgage Association (ldquoGNMArdquo)
Ginnie Mae
GNMA is the only Government agency Purchases low-income loans
Del Priore Realty Academy Copyright January 2021 Page 8 of 12
Protected Classes Law Existing Category Added Category
Civil Rights Act of 1866 NA Race
Federal Civil Rights Act of
1968
(ldquoFederal Fair Housing
Actrdquo)
Race Color Religion amp National
Origin of Birth
Prohibits discrimination in the Real Estate industry of the protected classes
Fair Housing Act of 1974 Race Color Religion amp
National Origin of Birth
Sex
Fair Housing Act of 1988 Race Color Religion
National Origin of Birth amp
Sex
Familial Status amp
Handicapped (one with a record of mental or
physical impairment to include
alcoholism cancer or AIDS)
Americans with Disabilities
Act (ldquoADArdquo)
Prohibits discrimination based on disability amp allows for
reasonable accommodation or modification(s)
Except for Race a private homeowner who occupies a 1-4-unit property may discriminate if
advertising does not contain discriminatory content (ldquoMs Murphy Lawrdquo)
Fair Housing
(ldquoRealtors Can Really Sell Houses Fast Nowrdquo)
Race
Color
Religion
Sex
Handicap
Familial Status
National Origin
Valuation amp Appraisal Definitions
Appraisal= Unbiased opinion of Market Value by an Appraiser Sets the upper limits of
Value
Appraisal Fee= Based on the amount of work amp time
Market Value= the most probable selling price in an Armrsquos-length Transaction
Market Price= Fact The actual Sales Price
Parties are objective and unrelated with unrelated motivations The 4 requirements of an
Armrsquos-length Transaction are
bull Valuable Consideration (cash) is exchanged
bull Property was on the open market for a reasonable time for the market conditions
bull Parties were under no undue pressure
Del Priore Realty Academy Copyright January 2021 Page 9 of 12
bull Parties were well-informed amp acting in their own best interests
Appraisal Process Steps
1 Define the problem 4 Analyze data through i) Market Data
Approach ii) Cost Approach or iii) Income
Approach
2 Make preliminary study 5 Reconciliation amp Final Estimate
3 Gather Data 6 Prepare Appraisal Report
Four (4) Necessary Components of Value (ldquoDUSTrdquo)
Demand Actual need or desire + the ability to pay for it Desired by most
Utility More use more Value
Scarcity Short supply relative to demand
Transferability Ability to convey Title with relative ease
Economic Principals of Value (leads to the development of a credible appraisal)
Supply amp Demand Limited inventoryhigh demand= higher Market Price
Highest amp Best Use Legal use that will likely produce greatest net return
1 Legally allowable 2 Physically possible 3 Financially feasible
amp 4 Maximum utility
Substitution Applies to all three (3) approaches Sets the upper limit on Value
Conformity Cookie cutter neighborhoods Property consistency helps Value
Change Economic amp social forces can impact Value more than the
property itself
Development phase growing amp developing
Equilibrium phase growth ends amp value levels off
Decline phase deterioration sets in amp values fall
Progression amp
Regression
Regression Most expensive property loses value because of
lesser homes around it
Progression Least expensive gains value because of nicer homes
around it
Competition If the market is flooded with listings value drops
Increasing amp Decreasing
(Diminishing) Returns
Increasing Returns a dollar spent will add dollars to value
Decreasing Returns a dollar spent will not even return that
dollar in value
Contribution How an improvement adds or detracts from the whole property
Anticipation (Basis of
Income Approach)
Positive or negative impact due to expectation of a future event
(Current value + expected income amp benefits)
Influencing Factors on Value
Situs (location) Or area preference Most important factor
Size amp Shape Of a lot
Depth Tables The front of a lot has more value than the back Ties to Size amp Shape
Soil Characteristics Considered for basements septic systems erosion
Key Lots Irregular lot that may become valuable in Assemblage
Del Priore Realty Academy Copyright January 2021 Page 10 of 12
Assemblage Process of combining 2+ individual adjoining lots Plottage= resulting
increase in value
Approaches to Value
1 Market Data or Sales Comparison Approach
Value is based on the Principal of Substitution for residential properties amp vacant land
Fair Market Value= SOLD Comparable Properties by Adjusting for Differences
Adjustments
Comps should be
sold within the last 3-
6 months
Preferably within 1
mile of the Subject
NEVER adjust the
subject property
ldquoCIArdquo If Comp is
inferior ADD to the
Comp for that itemrsquos
value
ldquoCBSrdquo If Subject is
better SUBTRACT
from the Comp for
that itemrsquos value
Reconciliation Comp with the fewest adjustments to Subject gets the highest emphasis
(highest percentage) Less reliable in slow or unstable markets
Comparative Market Analysis (ldquoCMArdquo) is used by Licensees to evaluate Fair Market
Value for a listing price or offer 3-5 comparable properties is an acceptable ldquoNrdquo Unlike the
Market Data Approach that uses sold properties a CMA uses sold amp actively listed properties
2 Cost Approach (only method where land is evaluated separately)
Value is based on the Principal of Substitution Used for special purpose amp new construction
It is also used to evaluate Hazard Insurance
Fair Market Value= (Replacement Cost ndash ldquoStraight-Linerdquo or ldquoAge-Liferdquo Depreciation +
Land Value)
Land NEVER depreciates
Reproduction Cost= Cost to produce an
exact replica using a Comparative Unit
Method Olderhistorical buildings
Replacement Cost= Cost using similar
materials to produce a satisfactory substitute
using a Comparative Unit Method Special
purpose amp new buildings
Square Foot Method Single-family homes Measures exterior
dimensions of
Improvement
1 (L W)= Sq Ft
2 (Sq Ft Price per
Sq Ft)= Cost
Cubic Foot Method Warehouses Measures volume of
Improvement
1 (L W H)=
Cubic Feet
2 (Cu Ft Price per
Cu Ft)= Cost
Unit in Place
Method
Used in Hazard Ins Cost of each assembled amp installed
component
Quantity Survey
Method
Best for new
construction
Detailed cost of every
single thing (nails
bricks etc)
Detailed breakdown
Del Priore Realty Academy Copyright January 2021 Page 11 of 12
Accrued Depreciation
Depreciation= re-capturing the cost of a purchase over a certain time period as allowed by
IRS regulations
Curable= Cure costs less than resulting
value
Incurable= Cure costs exceed the value of
the correction Doesnrsquot make sense
Physical Deterioration= normal wear amp tear exposure to weather lack of proper
maintenance
Functional Obsolescence= obsolete amp doesnrsquot meet current expectations EX outdated floor
plan old systems unorthodox architecture (For test this applies to appliances other than
black white or SS)
Economic Obsolescence= Incurable since external to property amp beyond control EX high
taxes crime unemployment flight patterns factory railroad
Actual Age= Improvementrsquos historical age Effective Age= Condition updates amp utility
that may make it less than Actual Age
Land Value= May be based on a CMA or i) Sq feet ii) front footage or iii) acreage
1 Acreage= (Sq Ft 43560) 2 (Acreage Price per Acre)= Land Value
3 Income or Capitalization Approach
The Appraiser looks at 3 things relative to the propertyrsquos income i) Quantity ii) Quality
(how safe is it) and iii) Durability (how long can the income be sustained)
Cap Rate (ldquoCRrdquo) = Rate of Return on
Investment (ldquoROIrdquo) Direct correlation to CR
amp investment risk Lower the CR the higher
the value
Commercial
Uses net vs gross income amp converts income
into Value
CR Steps
1 (Potential Gross Income ndash Vacancy ndash
Collections) = Effective Gross Income
(ldquoEGIrdquo)
2 (EGI ndash Operating Expenses) = Net
Operating Income (ldquoNOIrdquo)
3 (NOI Price) = CR
4 (NOI CR) = Fair Market Value
1 (100 CR)= Full Capitalization ( of years
it will pay for itself)
4 Capitalization Approach (ldquoGRMrdquo amp ldquoGIMrdquo)
Like the Income Approach the Appraiser looks at 3 things relative to the propertyrsquos income i)
Quantity ii) Quality (how safe is it) and iii) Durability (how long can the income be
sustained)
Gross Rent Multiplier (ldquoGRMrdquo) Residential
rentals 1-4 units
Ratio between price amp annual rental income
before expenses
The lower the GRM the more attractive
investment
GRM Steps
1 (Comp Sold $ monthly rent) = GRM
2 (Subjectrsquos monthly rent GRM) =Fair
Market Value
Gross Income Multiplier (ldquoGIMrdquo) Small
commercial + residential 5+ units
GIM includes annual rent + income from
other sources
GIM Steps
1 (Comp Sold $ Gross annual income) =
GIM
2 (Subject gross annual income GIM) =Fair
Market Value
Del Priore Realty Academy Copyright January 2021 Page 12 of 12
Appraisal Reports
Letter of Opinion Informal report thatrsquos not recognized or accepted
Short Form Summary of such is the most common format Used by lending
institutions amp Government agencies (Fannie Mae amp Freddie
Mac)
Narrative Report Most encompassing Usually required for appraising
commercial property or legal cases (Condemnation under
Eminent Domain settling Estates in probate etc)
Letrsquos Look at Math Key Formulas
1 Acre= 43560 sq ft Township= 36 Sq Miles
Government Rectangular Survey
Principal Meridian Lines run N-S
Base Lines run E-W
Section= 1 sq mile amp 640 acres
Taxes amp Interest
Transfer Tax = (Sales Price 500) $150 Intangible Tax= (Loan Amount 100) 010
Upfront Mortgage Insurance Premium (ldquoUFMIPrdquo)= 175 (0175)
Closing Calculations
Jan=31 April= 30 June= 30 Sept= 30
Feb= 28 May= 31 July= 31 Oct= 31
March= 31 June = 30 August= 31 Nov= 30 amp Dec= 31
Seller (ldquoSACrdquo) = Seller Accrual Closing
Date (goes to Seller)
Buyer (ldquoBADrdquo) = Buyer Add Days
Interest= Divide annual interest by 360 days
then multiply by the actual calendar days
EX (annual interest 360) actual calendar
days
Taxes= Use 365 days
EXrdquo (annual taxes 365) = Daily Tax
Del Priore Realty Academy Copyright January 2021
TimeLine Triggers
GA License Law and Georgia Real Estate Commission (ldquoGARECrdquo) Rules amp Regulations
The last revision to this document is notated in the footnotes below
State legislature passes License law whereas under the authority of such GAREC passes Rules amp
Regulations (ldquoRampRrdquo) relating to the professional conduct of Georgia Licensees
License law is designed to protect the public from dishonest or incompetent Agents
Since all the aforementioned are fluid refer to wwwgrecstategaus for all current license law amp
GAREC RampRs
Unless specifically noted below other notification timelines amp time triggers are thirty (30) days This also
includes standard GAREC meetings (whereas the Chairman or Vice Chairman must attend)
Immediately
bull Copies of transactional documents must be given to all signatory parties
bull An executory Purchase amp Sale Agreement must be given to all signatory parties plus all involved
Brokerage firms
bull A Licensee that has a Trust Account(s) and is filing for bankruptcy must notify the GAREC
PromptlyAs Soon as Possible
bull All funds a Licensee receives from a Client or Customer must be placed with hisher Qualifying
Broker or designated Associate Broker
bull A Listing Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoSellerrdquo)
bull A Selling Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoBuyerrdquo)
One (1) Business Day
bull If a Broker comes into possession of anotherrsquos funds and does not have an existing Trust
Account they must open one
Ten (10) Days
bull Removing the Brokerrsquos ldquoFor Salerdquo sign from a former Clientrsquos yard after a successful closing or
listing expiration
bull Must notify GAREC (regardless of whether the Licensee is found innocent or guilty) (i) after an
administrative civil or criminal court action or (ii) a final court disposition All court
documentation must be included in the notification This is the only exception to the thirty (30)
day notification rules
bull A Fidelity Bond (required for a Broker hired to provide Community Association Management
services amp handles $60000+ at any one time) must have a minimum of ten (10) days cancellation
notice from the insurance company for non-payment
Sixty (60) Days
bull Candidates must submit a certified criminal history report (a GCIC Background Check can be
obtained for a fee from your local Sheriffrsquos Department) with a new license application At the
time of submission the report cannot be sixty-one (61) days old
bull Applicants must appeal a GREC notice of rejection within
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021 Page 8 of 12
Protected Classes Law Existing Category Added Category
Civil Rights Act of 1866 NA Race
Federal Civil Rights Act of
1968
(ldquoFederal Fair Housing
Actrdquo)
Race Color Religion amp National
Origin of Birth
Prohibits discrimination in the Real Estate industry of the protected classes
Fair Housing Act of 1974 Race Color Religion amp
National Origin of Birth
Sex
Fair Housing Act of 1988 Race Color Religion
National Origin of Birth amp
Sex
Familial Status amp
Handicapped (one with a record of mental or
physical impairment to include
alcoholism cancer or AIDS)
Americans with Disabilities
Act (ldquoADArdquo)
Prohibits discrimination based on disability amp allows for
reasonable accommodation or modification(s)
Except for Race a private homeowner who occupies a 1-4-unit property may discriminate if
advertising does not contain discriminatory content (ldquoMs Murphy Lawrdquo)
Fair Housing
(ldquoRealtors Can Really Sell Houses Fast Nowrdquo)
Race
Color
Religion
Sex
Handicap
Familial Status
National Origin
Valuation amp Appraisal Definitions
Appraisal= Unbiased opinion of Market Value by an Appraiser Sets the upper limits of
Value
Appraisal Fee= Based on the amount of work amp time
Market Value= the most probable selling price in an Armrsquos-length Transaction
Market Price= Fact The actual Sales Price
Parties are objective and unrelated with unrelated motivations The 4 requirements of an
Armrsquos-length Transaction are
bull Valuable Consideration (cash) is exchanged
bull Property was on the open market for a reasonable time for the market conditions
bull Parties were under no undue pressure
Del Priore Realty Academy Copyright January 2021 Page 9 of 12
bull Parties were well-informed amp acting in their own best interests
Appraisal Process Steps
1 Define the problem 4 Analyze data through i) Market Data
Approach ii) Cost Approach or iii) Income
Approach
2 Make preliminary study 5 Reconciliation amp Final Estimate
3 Gather Data 6 Prepare Appraisal Report
Four (4) Necessary Components of Value (ldquoDUSTrdquo)
Demand Actual need or desire + the ability to pay for it Desired by most
Utility More use more Value
Scarcity Short supply relative to demand
Transferability Ability to convey Title with relative ease
Economic Principals of Value (leads to the development of a credible appraisal)
Supply amp Demand Limited inventoryhigh demand= higher Market Price
Highest amp Best Use Legal use that will likely produce greatest net return
1 Legally allowable 2 Physically possible 3 Financially feasible
amp 4 Maximum utility
Substitution Applies to all three (3) approaches Sets the upper limit on Value
Conformity Cookie cutter neighborhoods Property consistency helps Value
Change Economic amp social forces can impact Value more than the
property itself
Development phase growing amp developing
Equilibrium phase growth ends amp value levels off
Decline phase deterioration sets in amp values fall
Progression amp
Regression
Regression Most expensive property loses value because of
lesser homes around it
Progression Least expensive gains value because of nicer homes
around it
Competition If the market is flooded with listings value drops
Increasing amp Decreasing
(Diminishing) Returns
Increasing Returns a dollar spent will add dollars to value
Decreasing Returns a dollar spent will not even return that
dollar in value
Contribution How an improvement adds or detracts from the whole property
Anticipation (Basis of
Income Approach)
Positive or negative impact due to expectation of a future event
(Current value + expected income amp benefits)
Influencing Factors on Value
Situs (location) Or area preference Most important factor
Size amp Shape Of a lot
Depth Tables The front of a lot has more value than the back Ties to Size amp Shape
Soil Characteristics Considered for basements septic systems erosion
Key Lots Irregular lot that may become valuable in Assemblage
Del Priore Realty Academy Copyright January 2021 Page 10 of 12
Assemblage Process of combining 2+ individual adjoining lots Plottage= resulting
increase in value
Approaches to Value
1 Market Data or Sales Comparison Approach
Value is based on the Principal of Substitution for residential properties amp vacant land
Fair Market Value= SOLD Comparable Properties by Adjusting for Differences
Adjustments
Comps should be
sold within the last 3-
6 months
Preferably within 1
mile of the Subject
NEVER adjust the
subject property
ldquoCIArdquo If Comp is
inferior ADD to the
Comp for that itemrsquos
value
ldquoCBSrdquo If Subject is
better SUBTRACT
from the Comp for
that itemrsquos value
Reconciliation Comp with the fewest adjustments to Subject gets the highest emphasis
(highest percentage) Less reliable in slow or unstable markets
Comparative Market Analysis (ldquoCMArdquo) is used by Licensees to evaluate Fair Market
Value for a listing price or offer 3-5 comparable properties is an acceptable ldquoNrdquo Unlike the
Market Data Approach that uses sold properties a CMA uses sold amp actively listed properties
2 Cost Approach (only method where land is evaluated separately)
Value is based on the Principal of Substitution Used for special purpose amp new construction
It is also used to evaluate Hazard Insurance
Fair Market Value= (Replacement Cost ndash ldquoStraight-Linerdquo or ldquoAge-Liferdquo Depreciation +
Land Value)
Land NEVER depreciates
Reproduction Cost= Cost to produce an
exact replica using a Comparative Unit
Method Olderhistorical buildings
Replacement Cost= Cost using similar
materials to produce a satisfactory substitute
using a Comparative Unit Method Special
purpose amp new buildings
Square Foot Method Single-family homes Measures exterior
dimensions of
Improvement
1 (L W)= Sq Ft
2 (Sq Ft Price per
Sq Ft)= Cost
Cubic Foot Method Warehouses Measures volume of
Improvement
1 (L W H)=
Cubic Feet
2 (Cu Ft Price per
Cu Ft)= Cost
Unit in Place
Method
Used in Hazard Ins Cost of each assembled amp installed
component
Quantity Survey
Method
Best for new
construction
Detailed cost of every
single thing (nails
bricks etc)
Detailed breakdown
Del Priore Realty Academy Copyright January 2021 Page 11 of 12
Accrued Depreciation
Depreciation= re-capturing the cost of a purchase over a certain time period as allowed by
IRS regulations
Curable= Cure costs less than resulting
value
Incurable= Cure costs exceed the value of
the correction Doesnrsquot make sense
Physical Deterioration= normal wear amp tear exposure to weather lack of proper
maintenance
Functional Obsolescence= obsolete amp doesnrsquot meet current expectations EX outdated floor
plan old systems unorthodox architecture (For test this applies to appliances other than
black white or SS)
Economic Obsolescence= Incurable since external to property amp beyond control EX high
taxes crime unemployment flight patterns factory railroad
Actual Age= Improvementrsquos historical age Effective Age= Condition updates amp utility
that may make it less than Actual Age
Land Value= May be based on a CMA or i) Sq feet ii) front footage or iii) acreage
1 Acreage= (Sq Ft 43560) 2 (Acreage Price per Acre)= Land Value
3 Income or Capitalization Approach
The Appraiser looks at 3 things relative to the propertyrsquos income i) Quantity ii) Quality
(how safe is it) and iii) Durability (how long can the income be sustained)
Cap Rate (ldquoCRrdquo) = Rate of Return on
Investment (ldquoROIrdquo) Direct correlation to CR
amp investment risk Lower the CR the higher
the value
Commercial
Uses net vs gross income amp converts income
into Value
CR Steps
1 (Potential Gross Income ndash Vacancy ndash
Collections) = Effective Gross Income
(ldquoEGIrdquo)
2 (EGI ndash Operating Expenses) = Net
Operating Income (ldquoNOIrdquo)
3 (NOI Price) = CR
4 (NOI CR) = Fair Market Value
1 (100 CR)= Full Capitalization ( of years
it will pay for itself)
4 Capitalization Approach (ldquoGRMrdquo amp ldquoGIMrdquo)
Like the Income Approach the Appraiser looks at 3 things relative to the propertyrsquos income i)
Quantity ii) Quality (how safe is it) and iii) Durability (how long can the income be
sustained)
Gross Rent Multiplier (ldquoGRMrdquo) Residential
rentals 1-4 units
Ratio between price amp annual rental income
before expenses
The lower the GRM the more attractive
investment
GRM Steps
1 (Comp Sold $ monthly rent) = GRM
2 (Subjectrsquos monthly rent GRM) =Fair
Market Value
Gross Income Multiplier (ldquoGIMrdquo) Small
commercial + residential 5+ units
GIM includes annual rent + income from
other sources
GIM Steps
1 (Comp Sold $ Gross annual income) =
GIM
2 (Subject gross annual income GIM) =Fair
Market Value
Del Priore Realty Academy Copyright January 2021 Page 12 of 12
Appraisal Reports
Letter of Opinion Informal report thatrsquos not recognized or accepted
Short Form Summary of such is the most common format Used by lending
institutions amp Government agencies (Fannie Mae amp Freddie
Mac)
Narrative Report Most encompassing Usually required for appraising
commercial property or legal cases (Condemnation under
Eminent Domain settling Estates in probate etc)
Letrsquos Look at Math Key Formulas
1 Acre= 43560 sq ft Township= 36 Sq Miles
Government Rectangular Survey
Principal Meridian Lines run N-S
Base Lines run E-W
Section= 1 sq mile amp 640 acres
Taxes amp Interest
Transfer Tax = (Sales Price 500) $150 Intangible Tax= (Loan Amount 100) 010
Upfront Mortgage Insurance Premium (ldquoUFMIPrdquo)= 175 (0175)
Closing Calculations
Jan=31 April= 30 June= 30 Sept= 30
Feb= 28 May= 31 July= 31 Oct= 31
March= 31 June = 30 August= 31 Nov= 30 amp Dec= 31
Seller (ldquoSACrdquo) = Seller Accrual Closing
Date (goes to Seller)
Buyer (ldquoBADrdquo) = Buyer Add Days
Interest= Divide annual interest by 360 days
then multiply by the actual calendar days
EX (annual interest 360) actual calendar
days
Taxes= Use 365 days
EXrdquo (annual taxes 365) = Daily Tax
Del Priore Realty Academy Copyright January 2021
TimeLine Triggers
GA License Law and Georgia Real Estate Commission (ldquoGARECrdquo) Rules amp Regulations
The last revision to this document is notated in the footnotes below
State legislature passes License law whereas under the authority of such GAREC passes Rules amp
Regulations (ldquoRampRrdquo) relating to the professional conduct of Georgia Licensees
License law is designed to protect the public from dishonest or incompetent Agents
Since all the aforementioned are fluid refer to wwwgrecstategaus for all current license law amp
GAREC RampRs
Unless specifically noted below other notification timelines amp time triggers are thirty (30) days This also
includes standard GAREC meetings (whereas the Chairman or Vice Chairman must attend)
Immediately
bull Copies of transactional documents must be given to all signatory parties
bull An executory Purchase amp Sale Agreement must be given to all signatory parties plus all involved
Brokerage firms
bull A Licensee that has a Trust Account(s) and is filing for bankruptcy must notify the GAREC
PromptlyAs Soon as Possible
bull All funds a Licensee receives from a Client or Customer must be placed with hisher Qualifying
Broker or designated Associate Broker
bull A Listing Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoSellerrdquo)
bull A Selling Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoBuyerrdquo)
One (1) Business Day
bull If a Broker comes into possession of anotherrsquos funds and does not have an existing Trust
Account they must open one
Ten (10) Days
bull Removing the Brokerrsquos ldquoFor Salerdquo sign from a former Clientrsquos yard after a successful closing or
listing expiration
bull Must notify GAREC (regardless of whether the Licensee is found innocent or guilty) (i) after an
administrative civil or criminal court action or (ii) a final court disposition All court
documentation must be included in the notification This is the only exception to the thirty (30)
day notification rules
bull A Fidelity Bond (required for a Broker hired to provide Community Association Management
services amp handles $60000+ at any one time) must have a minimum of ten (10) days cancellation
notice from the insurance company for non-payment
Sixty (60) Days
bull Candidates must submit a certified criminal history report (a GCIC Background Check can be
obtained for a fee from your local Sheriffrsquos Department) with a new license application At the
time of submission the report cannot be sixty-one (61) days old
bull Applicants must appeal a GREC notice of rejection within
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021 Page 9 of 12
bull Parties were well-informed amp acting in their own best interests
Appraisal Process Steps
1 Define the problem 4 Analyze data through i) Market Data
Approach ii) Cost Approach or iii) Income
Approach
2 Make preliminary study 5 Reconciliation amp Final Estimate
3 Gather Data 6 Prepare Appraisal Report
Four (4) Necessary Components of Value (ldquoDUSTrdquo)
Demand Actual need or desire + the ability to pay for it Desired by most
Utility More use more Value
Scarcity Short supply relative to demand
Transferability Ability to convey Title with relative ease
Economic Principals of Value (leads to the development of a credible appraisal)
Supply amp Demand Limited inventoryhigh demand= higher Market Price
Highest amp Best Use Legal use that will likely produce greatest net return
1 Legally allowable 2 Physically possible 3 Financially feasible
amp 4 Maximum utility
Substitution Applies to all three (3) approaches Sets the upper limit on Value
Conformity Cookie cutter neighborhoods Property consistency helps Value
Change Economic amp social forces can impact Value more than the
property itself
Development phase growing amp developing
Equilibrium phase growth ends amp value levels off
Decline phase deterioration sets in amp values fall
Progression amp
Regression
Regression Most expensive property loses value because of
lesser homes around it
Progression Least expensive gains value because of nicer homes
around it
Competition If the market is flooded with listings value drops
Increasing amp Decreasing
(Diminishing) Returns
Increasing Returns a dollar spent will add dollars to value
Decreasing Returns a dollar spent will not even return that
dollar in value
Contribution How an improvement adds or detracts from the whole property
Anticipation (Basis of
Income Approach)
Positive or negative impact due to expectation of a future event
(Current value + expected income amp benefits)
Influencing Factors on Value
Situs (location) Or area preference Most important factor
Size amp Shape Of a lot
Depth Tables The front of a lot has more value than the back Ties to Size amp Shape
Soil Characteristics Considered for basements septic systems erosion
Key Lots Irregular lot that may become valuable in Assemblage
Del Priore Realty Academy Copyright January 2021 Page 10 of 12
Assemblage Process of combining 2+ individual adjoining lots Plottage= resulting
increase in value
Approaches to Value
1 Market Data or Sales Comparison Approach
Value is based on the Principal of Substitution for residential properties amp vacant land
Fair Market Value= SOLD Comparable Properties by Adjusting for Differences
Adjustments
Comps should be
sold within the last 3-
6 months
Preferably within 1
mile of the Subject
NEVER adjust the
subject property
ldquoCIArdquo If Comp is
inferior ADD to the
Comp for that itemrsquos
value
ldquoCBSrdquo If Subject is
better SUBTRACT
from the Comp for
that itemrsquos value
Reconciliation Comp with the fewest adjustments to Subject gets the highest emphasis
(highest percentage) Less reliable in slow or unstable markets
Comparative Market Analysis (ldquoCMArdquo) is used by Licensees to evaluate Fair Market
Value for a listing price or offer 3-5 comparable properties is an acceptable ldquoNrdquo Unlike the
Market Data Approach that uses sold properties a CMA uses sold amp actively listed properties
2 Cost Approach (only method where land is evaluated separately)
Value is based on the Principal of Substitution Used for special purpose amp new construction
It is also used to evaluate Hazard Insurance
Fair Market Value= (Replacement Cost ndash ldquoStraight-Linerdquo or ldquoAge-Liferdquo Depreciation +
Land Value)
Land NEVER depreciates
Reproduction Cost= Cost to produce an
exact replica using a Comparative Unit
Method Olderhistorical buildings
Replacement Cost= Cost using similar
materials to produce a satisfactory substitute
using a Comparative Unit Method Special
purpose amp new buildings
Square Foot Method Single-family homes Measures exterior
dimensions of
Improvement
1 (L W)= Sq Ft
2 (Sq Ft Price per
Sq Ft)= Cost
Cubic Foot Method Warehouses Measures volume of
Improvement
1 (L W H)=
Cubic Feet
2 (Cu Ft Price per
Cu Ft)= Cost
Unit in Place
Method
Used in Hazard Ins Cost of each assembled amp installed
component
Quantity Survey
Method
Best for new
construction
Detailed cost of every
single thing (nails
bricks etc)
Detailed breakdown
Del Priore Realty Academy Copyright January 2021 Page 11 of 12
Accrued Depreciation
Depreciation= re-capturing the cost of a purchase over a certain time period as allowed by
IRS regulations
Curable= Cure costs less than resulting
value
Incurable= Cure costs exceed the value of
the correction Doesnrsquot make sense
Physical Deterioration= normal wear amp tear exposure to weather lack of proper
maintenance
Functional Obsolescence= obsolete amp doesnrsquot meet current expectations EX outdated floor
plan old systems unorthodox architecture (For test this applies to appliances other than
black white or SS)
Economic Obsolescence= Incurable since external to property amp beyond control EX high
taxes crime unemployment flight patterns factory railroad
Actual Age= Improvementrsquos historical age Effective Age= Condition updates amp utility
that may make it less than Actual Age
Land Value= May be based on a CMA or i) Sq feet ii) front footage or iii) acreage
1 Acreage= (Sq Ft 43560) 2 (Acreage Price per Acre)= Land Value
3 Income or Capitalization Approach
The Appraiser looks at 3 things relative to the propertyrsquos income i) Quantity ii) Quality
(how safe is it) and iii) Durability (how long can the income be sustained)
Cap Rate (ldquoCRrdquo) = Rate of Return on
Investment (ldquoROIrdquo) Direct correlation to CR
amp investment risk Lower the CR the higher
the value
Commercial
Uses net vs gross income amp converts income
into Value
CR Steps
1 (Potential Gross Income ndash Vacancy ndash
Collections) = Effective Gross Income
(ldquoEGIrdquo)
2 (EGI ndash Operating Expenses) = Net
Operating Income (ldquoNOIrdquo)
3 (NOI Price) = CR
4 (NOI CR) = Fair Market Value
1 (100 CR)= Full Capitalization ( of years
it will pay for itself)
4 Capitalization Approach (ldquoGRMrdquo amp ldquoGIMrdquo)
Like the Income Approach the Appraiser looks at 3 things relative to the propertyrsquos income i)
Quantity ii) Quality (how safe is it) and iii) Durability (how long can the income be
sustained)
Gross Rent Multiplier (ldquoGRMrdquo) Residential
rentals 1-4 units
Ratio between price amp annual rental income
before expenses
The lower the GRM the more attractive
investment
GRM Steps
1 (Comp Sold $ monthly rent) = GRM
2 (Subjectrsquos monthly rent GRM) =Fair
Market Value
Gross Income Multiplier (ldquoGIMrdquo) Small
commercial + residential 5+ units
GIM includes annual rent + income from
other sources
GIM Steps
1 (Comp Sold $ Gross annual income) =
GIM
2 (Subject gross annual income GIM) =Fair
Market Value
Del Priore Realty Academy Copyright January 2021 Page 12 of 12
Appraisal Reports
Letter of Opinion Informal report thatrsquos not recognized or accepted
Short Form Summary of such is the most common format Used by lending
institutions amp Government agencies (Fannie Mae amp Freddie
Mac)
Narrative Report Most encompassing Usually required for appraising
commercial property or legal cases (Condemnation under
Eminent Domain settling Estates in probate etc)
Letrsquos Look at Math Key Formulas
1 Acre= 43560 sq ft Township= 36 Sq Miles
Government Rectangular Survey
Principal Meridian Lines run N-S
Base Lines run E-W
Section= 1 sq mile amp 640 acres
Taxes amp Interest
Transfer Tax = (Sales Price 500) $150 Intangible Tax= (Loan Amount 100) 010
Upfront Mortgage Insurance Premium (ldquoUFMIPrdquo)= 175 (0175)
Closing Calculations
Jan=31 April= 30 June= 30 Sept= 30
Feb= 28 May= 31 July= 31 Oct= 31
March= 31 June = 30 August= 31 Nov= 30 amp Dec= 31
Seller (ldquoSACrdquo) = Seller Accrual Closing
Date (goes to Seller)
Buyer (ldquoBADrdquo) = Buyer Add Days
Interest= Divide annual interest by 360 days
then multiply by the actual calendar days
EX (annual interest 360) actual calendar
days
Taxes= Use 365 days
EXrdquo (annual taxes 365) = Daily Tax
Del Priore Realty Academy Copyright January 2021
TimeLine Triggers
GA License Law and Georgia Real Estate Commission (ldquoGARECrdquo) Rules amp Regulations
The last revision to this document is notated in the footnotes below
State legislature passes License law whereas under the authority of such GAREC passes Rules amp
Regulations (ldquoRampRrdquo) relating to the professional conduct of Georgia Licensees
License law is designed to protect the public from dishonest or incompetent Agents
Since all the aforementioned are fluid refer to wwwgrecstategaus for all current license law amp
GAREC RampRs
Unless specifically noted below other notification timelines amp time triggers are thirty (30) days This also
includes standard GAREC meetings (whereas the Chairman or Vice Chairman must attend)
Immediately
bull Copies of transactional documents must be given to all signatory parties
bull An executory Purchase amp Sale Agreement must be given to all signatory parties plus all involved
Brokerage firms
bull A Licensee that has a Trust Account(s) and is filing for bankruptcy must notify the GAREC
PromptlyAs Soon as Possible
bull All funds a Licensee receives from a Client or Customer must be placed with hisher Qualifying
Broker or designated Associate Broker
bull A Listing Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoSellerrdquo)
bull A Selling Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoBuyerrdquo)
One (1) Business Day
bull If a Broker comes into possession of anotherrsquos funds and does not have an existing Trust
Account they must open one
Ten (10) Days
bull Removing the Brokerrsquos ldquoFor Salerdquo sign from a former Clientrsquos yard after a successful closing or
listing expiration
bull Must notify GAREC (regardless of whether the Licensee is found innocent or guilty) (i) after an
administrative civil or criminal court action or (ii) a final court disposition All court
documentation must be included in the notification This is the only exception to the thirty (30)
day notification rules
bull A Fidelity Bond (required for a Broker hired to provide Community Association Management
services amp handles $60000+ at any one time) must have a minimum of ten (10) days cancellation
notice from the insurance company for non-payment
Sixty (60) Days
bull Candidates must submit a certified criminal history report (a GCIC Background Check can be
obtained for a fee from your local Sheriffrsquos Department) with a new license application At the
time of submission the report cannot be sixty-one (61) days old
bull Applicants must appeal a GREC notice of rejection within
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021 Page 10 of 12
Assemblage Process of combining 2+ individual adjoining lots Plottage= resulting
increase in value
Approaches to Value
1 Market Data or Sales Comparison Approach
Value is based on the Principal of Substitution for residential properties amp vacant land
Fair Market Value= SOLD Comparable Properties by Adjusting for Differences
Adjustments
Comps should be
sold within the last 3-
6 months
Preferably within 1
mile of the Subject
NEVER adjust the
subject property
ldquoCIArdquo If Comp is
inferior ADD to the
Comp for that itemrsquos
value
ldquoCBSrdquo If Subject is
better SUBTRACT
from the Comp for
that itemrsquos value
Reconciliation Comp with the fewest adjustments to Subject gets the highest emphasis
(highest percentage) Less reliable in slow or unstable markets
Comparative Market Analysis (ldquoCMArdquo) is used by Licensees to evaluate Fair Market
Value for a listing price or offer 3-5 comparable properties is an acceptable ldquoNrdquo Unlike the
Market Data Approach that uses sold properties a CMA uses sold amp actively listed properties
2 Cost Approach (only method where land is evaluated separately)
Value is based on the Principal of Substitution Used for special purpose amp new construction
It is also used to evaluate Hazard Insurance
Fair Market Value= (Replacement Cost ndash ldquoStraight-Linerdquo or ldquoAge-Liferdquo Depreciation +
Land Value)
Land NEVER depreciates
Reproduction Cost= Cost to produce an
exact replica using a Comparative Unit
Method Olderhistorical buildings
Replacement Cost= Cost using similar
materials to produce a satisfactory substitute
using a Comparative Unit Method Special
purpose amp new buildings
Square Foot Method Single-family homes Measures exterior
dimensions of
Improvement
1 (L W)= Sq Ft
2 (Sq Ft Price per
Sq Ft)= Cost
Cubic Foot Method Warehouses Measures volume of
Improvement
1 (L W H)=
Cubic Feet
2 (Cu Ft Price per
Cu Ft)= Cost
Unit in Place
Method
Used in Hazard Ins Cost of each assembled amp installed
component
Quantity Survey
Method
Best for new
construction
Detailed cost of every
single thing (nails
bricks etc)
Detailed breakdown
Del Priore Realty Academy Copyright January 2021 Page 11 of 12
Accrued Depreciation
Depreciation= re-capturing the cost of a purchase over a certain time period as allowed by
IRS regulations
Curable= Cure costs less than resulting
value
Incurable= Cure costs exceed the value of
the correction Doesnrsquot make sense
Physical Deterioration= normal wear amp tear exposure to weather lack of proper
maintenance
Functional Obsolescence= obsolete amp doesnrsquot meet current expectations EX outdated floor
plan old systems unorthodox architecture (For test this applies to appliances other than
black white or SS)
Economic Obsolescence= Incurable since external to property amp beyond control EX high
taxes crime unemployment flight patterns factory railroad
Actual Age= Improvementrsquos historical age Effective Age= Condition updates amp utility
that may make it less than Actual Age
Land Value= May be based on a CMA or i) Sq feet ii) front footage or iii) acreage
1 Acreage= (Sq Ft 43560) 2 (Acreage Price per Acre)= Land Value
3 Income or Capitalization Approach
The Appraiser looks at 3 things relative to the propertyrsquos income i) Quantity ii) Quality
(how safe is it) and iii) Durability (how long can the income be sustained)
Cap Rate (ldquoCRrdquo) = Rate of Return on
Investment (ldquoROIrdquo) Direct correlation to CR
amp investment risk Lower the CR the higher
the value
Commercial
Uses net vs gross income amp converts income
into Value
CR Steps
1 (Potential Gross Income ndash Vacancy ndash
Collections) = Effective Gross Income
(ldquoEGIrdquo)
2 (EGI ndash Operating Expenses) = Net
Operating Income (ldquoNOIrdquo)
3 (NOI Price) = CR
4 (NOI CR) = Fair Market Value
1 (100 CR)= Full Capitalization ( of years
it will pay for itself)
4 Capitalization Approach (ldquoGRMrdquo amp ldquoGIMrdquo)
Like the Income Approach the Appraiser looks at 3 things relative to the propertyrsquos income i)
Quantity ii) Quality (how safe is it) and iii) Durability (how long can the income be
sustained)
Gross Rent Multiplier (ldquoGRMrdquo) Residential
rentals 1-4 units
Ratio between price amp annual rental income
before expenses
The lower the GRM the more attractive
investment
GRM Steps
1 (Comp Sold $ monthly rent) = GRM
2 (Subjectrsquos monthly rent GRM) =Fair
Market Value
Gross Income Multiplier (ldquoGIMrdquo) Small
commercial + residential 5+ units
GIM includes annual rent + income from
other sources
GIM Steps
1 (Comp Sold $ Gross annual income) =
GIM
2 (Subject gross annual income GIM) =Fair
Market Value
Del Priore Realty Academy Copyright January 2021 Page 12 of 12
Appraisal Reports
Letter of Opinion Informal report thatrsquos not recognized or accepted
Short Form Summary of such is the most common format Used by lending
institutions amp Government agencies (Fannie Mae amp Freddie
Mac)
Narrative Report Most encompassing Usually required for appraising
commercial property or legal cases (Condemnation under
Eminent Domain settling Estates in probate etc)
Letrsquos Look at Math Key Formulas
1 Acre= 43560 sq ft Township= 36 Sq Miles
Government Rectangular Survey
Principal Meridian Lines run N-S
Base Lines run E-W
Section= 1 sq mile amp 640 acres
Taxes amp Interest
Transfer Tax = (Sales Price 500) $150 Intangible Tax= (Loan Amount 100) 010
Upfront Mortgage Insurance Premium (ldquoUFMIPrdquo)= 175 (0175)
Closing Calculations
Jan=31 April= 30 June= 30 Sept= 30
Feb= 28 May= 31 July= 31 Oct= 31
March= 31 June = 30 August= 31 Nov= 30 amp Dec= 31
Seller (ldquoSACrdquo) = Seller Accrual Closing
Date (goes to Seller)
Buyer (ldquoBADrdquo) = Buyer Add Days
Interest= Divide annual interest by 360 days
then multiply by the actual calendar days
EX (annual interest 360) actual calendar
days
Taxes= Use 365 days
EXrdquo (annual taxes 365) = Daily Tax
Del Priore Realty Academy Copyright January 2021
TimeLine Triggers
GA License Law and Georgia Real Estate Commission (ldquoGARECrdquo) Rules amp Regulations
The last revision to this document is notated in the footnotes below
State legislature passes License law whereas under the authority of such GAREC passes Rules amp
Regulations (ldquoRampRrdquo) relating to the professional conduct of Georgia Licensees
License law is designed to protect the public from dishonest or incompetent Agents
Since all the aforementioned are fluid refer to wwwgrecstategaus for all current license law amp
GAREC RampRs
Unless specifically noted below other notification timelines amp time triggers are thirty (30) days This also
includes standard GAREC meetings (whereas the Chairman or Vice Chairman must attend)
Immediately
bull Copies of transactional documents must be given to all signatory parties
bull An executory Purchase amp Sale Agreement must be given to all signatory parties plus all involved
Brokerage firms
bull A Licensee that has a Trust Account(s) and is filing for bankruptcy must notify the GAREC
PromptlyAs Soon as Possible
bull All funds a Licensee receives from a Client or Customer must be placed with hisher Qualifying
Broker or designated Associate Broker
bull A Listing Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoSellerrdquo)
bull A Selling Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoBuyerrdquo)
One (1) Business Day
bull If a Broker comes into possession of anotherrsquos funds and does not have an existing Trust
Account they must open one
Ten (10) Days
bull Removing the Brokerrsquos ldquoFor Salerdquo sign from a former Clientrsquos yard after a successful closing or
listing expiration
bull Must notify GAREC (regardless of whether the Licensee is found innocent or guilty) (i) after an
administrative civil or criminal court action or (ii) a final court disposition All court
documentation must be included in the notification This is the only exception to the thirty (30)
day notification rules
bull A Fidelity Bond (required for a Broker hired to provide Community Association Management
services amp handles $60000+ at any one time) must have a minimum of ten (10) days cancellation
notice from the insurance company for non-payment
Sixty (60) Days
bull Candidates must submit a certified criminal history report (a GCIC Background Check can be
obtained for a fee from your local Sheriffrsquos Department) with a new license application At the
time of submission the report cannot be sixty-one (61) days old
bull Applicants must appeal a GREC notice of rejection within
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021 Page 11 of 12
Accrued Depreciation
Depreciation= re-capturing the cost of a purchase over a certain time period as allowed by
IRS regulations
Curable= Cure costs less than resulting
value
Incurable= Cure costs exceed the value of
the correction Doesnrsquot make sense
Physical Deterioration= normal wear amp tear exposure to weather lack of proper
maintenance
Functional Obsolescence= obsolete amp doesnrsquot meet current expectations EX outdated floor
plan old systems unorthodox architecture (For test this applies to appliances other than
black white or SS)
Economic Obsolescence= Incurable since external to property amp beyond control EX high
taxes crime unemployment flight patterns factory railroad
Actual Age= Improvementrsquos historical age Effective Age= Condition updates amp utility
that may make it less than Actual Age
Land Value= May be based on a CMA or i) Sq feet ii) front footage or iii) acreage
1 Acreage= (Sq Ft 43560) 2 (Acreage Price per Acre)= Land Value
3 Income or Capitalization Approach
The Appraiser looks at 3 things relative to the propertyrsquos income i) Quantity ii) Quality
(how safe is it) and iii) Durability (how long can the income be sustained)
Cap Rate (ldquoCRrdquo) = Rate of Return on
Investment (ldquoROIrdquo) Direct correlation to CR
amp investment risk Lower the CR the higher
the value
Commercial
Uses net vs gross income amp converts income
into Value
CR Steps
1 (Potential Gross Income ndash Vacancy ndash
Collections) = Effective Gross Income
(ldquoEGIrdquo)
2 (EGI ndash Operating Expenses) = Net
Operating Income (ldquoNOIrdquo)
3 (NOI Price) = CR
4 (NOI CR) = Fair Market Value
1 (100 CR)= Full Capitalization ( of years
it will pay for itself)
4 Capitalization Approach (ldquoGRMrdquo amp ldquoGIMrdquo)
Like the Income Approach the Appraiser looks at 3 things relative to the propertyrsquos income i)
Quantity ii) Quality (how safe is it) and iii) Durability (how long can the income be
sustained)
Gross Rent Multiplier (ldquoGRMrdquo) Residential
rentals 1-4 units
Ratio between price amp annual rental income
before expenses
The lower the GRM the more attractive
investment
GRM Steps
1 (Comp Sold $ monthly rent) = GRM
2 (Subjectrsquos monthly rent GRM) =Fair
Market Value
Gross Income Multiplier (ldquoGIMrdquo) Small
commercial + residential 5+ units
GIM includes annual rent + income from
other sources
GIM Steps
1 (Comp Sold $ Gross annual income) =
GIM
2 (Subject gross annual income GIM) =Fair
Market Value
Del Priore Realty Academy Copyright January 2021 Page 12 of 12
Appraisal Reports
Letter of Opinion Informal report thatrsquos not recognized or accepted
Short Form Summary of such is the most common format Used by lending
institutions amp Government agencies (Fannie Mae amp Freddie
Mac)
Narrative Report Most encompassing Usually required for appraising
commercial property or legal cases (Condemnation under
Eminent Domain settling Estates in probate etc)
Letrsquos Look at Math Key Formulas
1 Acre= 43560 sq ft Township= 36 Sq Miles
Government Rectangular Survey
Principal Meridian Lines run N-S
Base Lines run E-W
Section= 1 sq mile amp 640 acres
Taxes amp Interest
Transfer Tax = (Sales Price 500) $150 Intangible Tax= (Loan Amount 100) 010
Upfront Mortgage Insurance Premium (ldquoUFMIPrdquo)= 175 (0175)
Closing Calculations
Jan=31 April= 30 June= 30 Sept= 30
Feb= 28 May= 31 July= 31 Oct= 31
March= 31 June = 30 August= 31 Nov= 30 amp Dec= 31
Seller (ldquoSACrdquo) = Seller Accrual Closing
Date (goes to Seller)
Buyer (ldquoBADrdquo) = Buyer Add Days
Interest= Divide annual interest by 360 days
then multiply by the actual calendar days
EX (annual interest 360) actual calendar
days
Taxes= Use 365 days
EXrdquo (annual taxes 365) = Daily Tax
Del Priore Realty Academy Copyright January 2021
TimeLine Triggers
GA License Law and Georgia Real Estate Commission (ldquoGARECrdquo) Rules amp Regulations
The last revision to this document is notated in the footnotes below
State legislature passes License law whereas under the authority of such GAREC passes Rules amp
Regulations (ldquoRampRrdquo) relating to the professional conduct of Georgia Licensees
License law is designed to protect the public from dishonest or incompetent Agents
Since all the aforementioned are fluid refer to wwwgrecstategaus for all current license law amp
GAREC RampRs
Unless specifically noted below other notification timelines amp time triggers are thirty (30) days This also
includes standard GAREC meetings (whereas the Chairman or Vice Chairman must attend)
Immediately
bull Copies of transactional documents must be given to all signatory parties
bull An executory Purchase amp Sale Agreement must be given to all signatory parties plus all involved
Brokerage firms
bull A Licensee that has a Trust Account(s) and is filing for bankruptcy must notify the GAREC
PromptlyAs Soon as Possible
bull All funds a Licensee receives from a Client or Customer must be placed with hisher Qualifying
Broker or designated Associate Broker
bull A Listing Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoSellerrdquo)
bull A Selling Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoBuyerrdquo)
One (1) Business Day
bull If a Broker comes into possession of anotherrsquos funds and does not have an existing Trust
Account they must open one
Ten (10) Days
bull Removing the Brokerrsquos ldquoFor Salerdquo sign from a former Clientrsquos yard after a successful closing or
listing expiration
bull Must notify GAREC (regardless of whether the Licensee is found innocent or guilty) (i) after an
administrative civil or criminal court action or (ii) a final court disposition All court
documentation must be included in the notification This is the only exception to the thirty (30)
day notification rules
bull A Fidelity Bond (required for a Broker hired to provide Community Association Management
services amp handles $60000+ at any one time) must have a minimum of ten (10) days cancellation
notice from the insurance company for non-payment
Sixty (60) Days
bull Candidates must submit a certified criminal history report (a GCIC Background Check can be
obtained for a fee from your local Sheriffrsquos Department) with a new license application At the
time of submission the report cannot be sixty-one (61) days old
bull Applicants must appeal a GREC notice of rejection within
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021 Page 12 of 12
Appraisal Reports
Letter of Opinion Informal report thatrsquos not recognized or accepted
Short Form Summary of such is the most common format Used by lending
institutions amp Government agencies (Fannie Mae amp Freddie
Mac)
Narrative Report Most encompassing Usually required for appraising
commercial property or legal cases (Condemnation under
Eminent Domain settling Estates in probate etc)
Letrsquos Look at Math Key Formulas
1 Acre= 43560 sq ft Township= 36 Sq Miles
Government Rectangular Survey
Principal Meridian Lines run N-S
Base Lines run E-W
Section= 1 sq mile amp 640 acres
Taxes amp Interest
Transfer Tax = (Sales Price 500) $150 Intangible Tax= (Loan Amount 100) 010
Upfront Mortgage Insurance Premium (ldquoUFMIPrdquo)= 175 (0175)
Closing Calculations
Jan=31 April= 30 June= 30 Sept= 30
Feb= 28 May= 31 July= 31 Oct= 31
March= 31 June = 30 August= 31 Nov= 30 amp Dec= 31
Seller (ldquoSACrdquo) = Seller Accrual Closing
Date (goes to Seller)
Buyer (ldquoBADrdquo) = Buyer Add Days
Interest= Divide annual interest by 360 days
then multiply by the actual calendar days
EX (annual interest 360) actual calendar
days
Taxes= Use 365 days
EXrdquo (annual taxes 365) = Daily Tax
Del Priore Realty Academy Copyright January 2021
TimeLine Triggers
GA License Law and Georgia Real Estate Commission (ldquoGARECrdquo) Rules amp Regulations
The last revision to this document is notated in the footnotes below
State legislature passes License law whereas under the authority of such GAREC passes Rules amp
Regulations (ldquoRampRrdquo) relating to the professional conduct of Georgia Licensees
License law is designed to protect the public from dishonest or incompetent Agents
Since all the aforementioned are fluid refer to wwwgrecstategaus for all current license law amp
GAREC RampRs
Unless specifically noted below other notification timelines amp time triggers are thirty (30) days This also
includes standard GAREC meetings (whereas the Chairman or Vice Chairman must attend)
Immediately
bull Copies of transactional documents must be given to all signatory parties
bull An executory Purchase amp Sale Agreement must be given to all signatory parties plus all involved
Brokerage firms
bull A Licensee that has a Trust Account(s) and is filing for bankruptcy must notify the GAREC
PromptlyAs Soon as Possible
bull All funds a Licensee receives from a Client or Customer must be placed with hisher Qualifying
Broker or designated Associate Broker
bull A Listing Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoSellerrdquo)
bull A Selling Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoBuyerrdquo)
One (1) Business Day
bull If a Broker comes into possession of anotherrsquos funds and does not have an existing Trust
Account they must open one
Ten (10) Days
bull Removing the Brokerrsquos ldquoFor Salerdquo sign from a former Clientrsquos yard after a successful closing or
listing expiration
bull Must notify GAREC (regardless of whether the Licensee is found innocent or guilty) (i) after an
administrative civil or criminal court action or (ii) a final court disposition All court
documentation must be included in the notification This is the only exception to the thirty (30)
day notification rules
bull A Fidelity Bond (required for a Broker hired to provide Community Association Management
services amp handles $60000+ at any one time) must have a minimum of ten (10) days cancellation
notice from the insurance company for non-payment
Sixty (60) Days
bull Candidates must submit a certified criminal history report (a GCIC Background Check can be
obtained for a fee from your local Sheriffrsquos Department) with a new license application At the
time of submission the report cannot be sixty-one (61) days old
bull Applicants must appeal a GREC notice of rejection within
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021
TimeLine Triggers
GA License Law and Georgia Real Estate Commission (ldquoGARECrdquo) Rules amp Regulations
The last revision to this document is notated in the footnotes below
State legislature passes License law whereas under the authority of such GAREC passes Rules amp
Regulations (ldquoRampRrdquo) relating to the professional conduct of Georgia Licensees
License law is designed to protect the public from dishonest or incompetent Agents
Since all the aforementioned are fluid refer to wwwgrecstategaus for all current license law amp
GAREC RampRs
Unless specifically noted below other notification timelines amp time triggers are thirty (30) days This also
includes standard GAREC meetings (whereas the Chairman or Vice Chairman must attend)
Immediately
bull Copies of transactional documents must be given to all signatory parties
bull An executory Purchase amp Sale Agreement must be given to all signatory parties plus all involved
Brokerage firms
bull A Licensee that has a Trust Account(s) and is filing for bankruptcy must notify the GAREC
PromptlyAs Soon as Possible
bull All funds a Licensee receives from a Client or Customer must be placed with hisher Qualifying
Broker or designated Associate Broker
bull A Listing Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoSellerrdquo)
bull A Selling Agent must present all offers amp counteroffers to hisher Brokerrsquos Principal (ldquoBuyerrdquo)
One (1) Business Day
bull If a Broker comes into possession of anotherrsquos funds and does not have an existing Trust
Account they must open one
Ten (10) Days
bull Removing the Brokerrsquos ldquoFor Salerdquo sign from a former Clientrsquos yard after a successful closing or
listing expiration
bull Must notify GAREC (regardless of whether the Licensee is found innocent or guilty) (i) after an
administrative civil or criminal court action or (ii) a final court disposition All court
documentation must be included in the notification This is the only exception to the thirty (30)
day notification rules
bull A Fidelity Bond (required for a Broker hired to provide Community Association Management
services amp handles $60000+ at any one time) must have a minimum of ten (10) days cancellation
notice from the insurance company for non-payment
Sixty (60) Days
bull Candidates must submit a certified criminal history report (a GCIC Background Check can be
obtained for a fee from your local Sheriffrsquos Department) with a new license application At the
time of submission the report cannot be sixty-one (61) days old
bull Applicants must appeal a GREC notice of rejection within
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021
bull Licensees must appeal a GAREC notice of license revocation within
bull GAREC must respond to a Petition for Declaration ruling on the applicability of a License law(s)
or Rule(s) relating to a particular situation within (this does not apply if GAREC refers the matter
to the Attorney General)
bull If a partnershiprsquos limited liability company (ldquoLLCrdquo) or corporationrsquos (think a Brokerage firm)
Qualifying Broker either (i) dies (ii) resigns or (iii) is fired the firm has sixty (60) days to
secure a new replacement
During the candidate search a Partner (in a partnership) Member (in an LLC) or Officer (in a
corporation) are charged to sign documents amp disburse Trust Account funds
Ninety (90) DaysThree (3) Months
bull The time from passing the State exam that new Salespeople amp Community Association Managers
must file a GAREC application to avoid doubled fees
bull A Fidelity Bond (required for Brokerrsquos with Community Association Management duties that are
responsible for $60000+ in funds at any time) must cover the total of three (3) months of total
assessments due from the owners
Six (6) Months
bull If a new Licensee has enrolled and paid for the mandatory twenty-five (25) hour post-license
coarse within the first twelve (12) months of licensure heshe may request a six (6) month
extension if it has not been completed
One (1) Year
bull From the date of passing the State exam the GAREC application must be filed
bull It is optimal for new Salespeople amp Community Association Managers to file within ninety (90)
days since fees double on day ninety-one (91)
bull Brokerrsquos amp Associate Brokers are not penalized as long as it is done within the first twelve (12)
months
bull If a Listing Agent fails to put an expiration date in a Purchase amp Sale Agreement (Effective amp
Expiration dates are mandated) the expiration date defaults to one (1) year from the Effective
Date
bull
Two (2) Years
bull If an Applicant has a felony conviction or crime of moral turpitude record heshe will not be
eligible for consideration until two (2) years after successful completion of their sentence
bull A civilian must file a court action within two (2) years to be eligible to pursue reimbursement
under the Education Research amp Recovery Fund (ldquoFundrdquo)
Three (3) Years
bull Brokers must keep all transactional records including but not limited to contracts bank
statements amp Trust Account(s) (every deposit amp disbursement from such) record
Four (4) Years
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-
Del Priore Realty Academy Copyright January 2021
bull License renewals must be completed every four (4) years on the last day of the Licenseersquos birth
month
Five (5) Years
bull Each of the six (6) GAREC members serve staggered five (5) year terms
bull An Applicant with a history of multiple convictions is not eligible for licensure consideration
until five (5) years after their successful sentence completion
bull A Licenseersquos records (including any disciplinary actions) are maintained for five (5) years
Anyone can access them through written request
Ten (10) Years
bull An applicant for a Brokerrsquos or Broker Associatersquos license is not eligible for licensure
consideration until ten (10) years after a conviction sentence or incarceration release
bull Once GARECrsquos Fund has reimbursed a consumer due to a Licenseersquos actions andor negligence
that Licenseersquos revoked license cannot be re-instated until (i) heshe has repaid the Fund with
interest and (ii) ten (10) years has passed since payment
Fifteen (15) Years
bull Applicant records are maintained for
bull Miscellaneous written requests are maintained for
Twenty (20) Years
bull Upon request a retiring Licensee that has maintained hisher license on active status for twenty
(20) years may keep their license certificate (the family of a deceased Licensee may request the
same)
Forty (40) Years
bull GAREC will maintain information regarding Licenseersquos whose license has been suspended or
revoked It is published on their domain website
An example is when the Fund pays for damages pertaining to a Licensee
Miscellaneous
An Affiliate (a Licensee ldquoGeneral Agentrdquo) must gain prior written permission from hisher Qualifying
Broker for everything except
bull Transactions where the Licensee is the Principal Prior written notification not permission is the
only requirement
- Approaches to Appraisals
- Estimate of Cost to Buyer (GAR F840)
- Estimate of Net to Seller (GAR F837)
- Real Estate Calculations
- Study Guides
- Timeline Triggers for GA License Law
-